#229 Sidney Harman (Founder of Harman Kardon)

What I learned from reading Mind Your Own Business: A Maverick's Guide to Business, Leadership and Life by Sidney Harman ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- [3:46] Foxes and Hedgehogs [7:17] The thing with Hedgehogs is that they never give up. They keep at it – and they don’t ever get bored because they just love what they do – and they have a lot of fun along the way. [8:27] In the Company of Giants: Candid Conversations With the Visionaries of the Digital World [9:38] “The essence of commitment is making a decision. The Latin root for decision is to ‘cut away from,’ as in an incision. When you commit to something, you are cutting away all your other possibilities, all your other options” From the book The Lombardi Rules: 26 Lessons from Vince Lombardi—The World's Greatest Coach [11:16] The New New Thing: A Silicon Valley Story by Michael Lewis [13:12] I regard myself as guardian of the company’s soul. [15:05] Steve Jobs liked to say the Beatles were his management model—four guys who kept each other in check and produced something great. [15:50] Avoid recklessness, encourage daring. [18:08] His main point here is the fact that he started the company in defiance of conventional wisdom [24:08] Bloomberg by Bloomberg [26:16] I believe that refusing to accept business orthodoxy uncritically can open your eyes to opportunity. [34:56] We were free to follow our best instincts. We were free to bring totally new thinking to what we were doing. [38:44] Treat hard work and your smarts respectfully, but recognize that they are neither decisive nor do they guarantee anything. Most of all, I told myself, don’t underestimate determination and persistence, and never quit. [40:25] Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys [41:51] I loved building a business. What could be better? The products were wonderful. They employed technology wisely. They made beautiful music. My instinct for marketing—for selling, for emotive advertising—was not only indulged, but rewarded. [43:00] Mavericks do not play well with others. [55:12] It did not require a genius to recognize that I was looking at the future. [58:34] Reducing business matters to their essence, whittling away that which obscures or is unnecessary, has served me well. I admire greatly those who practice the art. [59:48] A company requires an articulated mission, a philosophical base, a moral compass, critical judgment, and the realization that it is a dynamic, living instrument populated by complex human beings. [1:05:05] The best leaders are catalysts who prompt others to reach beyond their most natural abilities to find something they had previously thought beyond their reach. [1:18:03] I have found that by insisting on simple explanations, the mystery disappears and with it most of the nonsense. [1:23:12] It is vital that everyone know what business he is in. [1:28:23] Opportunity can be attacked with enthusiasm. [1:30:01] The person who invests in writing, who exercises the discipline to do it well, and who uses it frequently, will possess a matchless instrument for discovery, clarity, and persuasion. ---- Get access to the World’s Most Valuable Notebook for Founders at Founders Notes.com ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  I am 84 years old as I write this book. I do it because I believe, finally, that the time is right. I had not intended this to be an autobiography, but as it developed, the book has unavoidably taken on some of the characters of a memoir. Still, I feel that my 60 years in business have yielded some valuable lessons about management and people that are worth passing on. Those lessons debunk much of business orthodoxy, much of business dogma. I recognize that my life would be far less interesting were Harmon International a struggling company. In fact, it is very successful, combining sophisticated digital technology and creative

• 0:43David Senra?

  marketing with unconventional attitudes and practices. And surprisingly, perhaps in today's world, it does so while generating solid profits and consistent growth. Harmon Kardon, our original division, is now celebrating its 50th anniversary. By most standards, that's a long time. I can honestly say that I do not feel that way, not about Harmon Kardon and not about me. It has been an exciting and all-too-short journey. In this book, you'll find no secret formula for success. You may, however, find it useful as you think critically about what works for you and what does not, what matters to you and what does not.

• 1:27David Senra?

  My hope is that the book will help you generate your own style, your own compass. Then, it'll help you find your own voice. Ideally, it should prompt you to ask, "What do I believe in? How do I use the knowledge of who I am and what I believe in when managing my business?" If the book is successful, it will be because of the lessons it helps you draw for yourself. Through this effort, I have learned once again that writing is not the simple transfer of fully-formed intellectual inventory from brain to paper. Time and time again, I have found myself surprised, occasionally puzzled, and often delighted at what has transpired. Writing is discovery.

• 2:11David Senra?

  It is, as Dylan Thomas said, "the blank page on which I read my mind." I hope that this book leads to discovery for you also. That is an excerpt from the book I'm going to talk to you about today, which is Mind Your Own Business: A Maverick's Guide to Business Leadership and Life, and it was written by Sidney Harmon. Okay, so before I jump back into this fantastic little book, I want to tell you how I discovered it. There's this investor name, he's a venture capitalist, his name is Ho Nam, and I follow him on Twitter and I saw him say something. He says, "I've known multiple founders who buy back their companies at a fraction of the price and make it successful again after it was ruined. I call that double dipping. I've once heard of a triple dip."

• 2:54David Senra?

  And he says Sidney Harmon did this with Harmon International, so that's you start a company, you sell it, then you buy it back at a later date, that's the double dip, right? And then you sell it again, and then you buy it back again, that's the triple dip. And that's exactly what Sidney Harmon experienced in his career. And then that piqued my interest because he said this book that Sidney wrote was a hidden gem by a great practitioner. And as I made my way through the book, I thought his assessment was correct. This book is like 193 pages, something like that. I bought the Kindle version, so I'm working off this notebook right now. It says I have 202 highlights and 101 notes. So that's crazy. That gives you an idea of the insights per page in this book. Hopefully I can convince you to purchase it, to buy it, and then use it as a guide throughout your career.

• 3:36David Senra?

  Before I jump, I do want to talk about one other thing because he compares Sidney Harmon, Ho Nam has this framework of thinking, and I think he gets it from this other book. So I'm going to leave this post I'm about to read from in the show notes. I encourage you to read the whole thing. You think you can read it in like two minutes or something like that. It's called Foxes and Hedgehogs. And I thought this was a fantastic idea, too. It says, so I'm just going to read some highlights from this post because I think it sets up the person that I'm about to introduce you to in case this is your first experience with Sidney Harmon. So it says, "For centuries, writers, poets, and philosophers have pondered the dichotomy of the fox and the hedgehog. In a business context, we first read about these characters in Jim Collins' book, Good to Great. The fox is a cunning creature, able to devise a myriad of strategies for sneak attacks

• 4:21David Senra?

  upon the hedgehog. The fox is fast, sleek, beautiful, and crafty. The fox looks like a winner." The hedgehog, on the other hand, is a doughtier creature. So I had to Google that word. I don't know what that word is. And it means unfashionable and without style in appearance. Okay? So the fox is beautiful, looks beautiful. The hedgehog has no style. He's just really plain. The hedgehog waddles along, going about his simple day, searching for lunch and taking care of his home. But despite the greater cunning of the fox, the hedgehog always wins. So then he writes, "In our business, we also thought about the fox and the hedgehog. And by observing them carefully, we've learned a few things." So he's saying, "These are..." Some of these comments may seem unconventional and a bit tongue-in-cheek, but they're based on real-life characters in Silicon Valley.

• 5:05David Senra?

  So he says, "Foxes tend to be serial entrepreneurs. Hedgehogs tend to stay at one company forever. Foxes are very smart and quick on their feet. In meetings, if VCs try to nail them with tough questions, they will fire back great answers. Hedgehogs don't like meetings. Foxes are well-connected and excel at various games played in Silicon Valley. Naturally, foxes are great at raising capital. They thrive in bubble markets. Hedgehogs would rather bootstrapped. Foxes are very social. They can be found hobnobbing with VCs at cocktail parties. Hedgehogs are too busy to attend. If you introduce a hedgehog to someone for a networking opportunity, he might give you a funny look. If he can't figure out how it's relevant, he will politely blow you off." And this next paragraph about hedgehogs, I think, highlights why he's interested in them, because, of course, these are the...

• 5:50David Senra?

  Usually, the hedgehogs are the ones that build the super valuable companies. And he says, "It's not that hedgehogs are antisocial. They can be very friendly once you get to know them. If you're interested, a hedgehog may even talk your ear off about every little boring nuance of his business, unless you're a competitor, in which case he will pepper you with endless questions. Hedgehogs are surprisingly resourceful. They are naturally curious about everything and anything related to their pursuits. Over time, hedgehogs acquire deep, relevant knowledge and expertise."

• 6:23David Senra?

  And just keep in mind all the traits I'm reading to you because he's going to give some fantastic examples. A lot of these founders, we've read books on and we've done podcasts on, so you'll know who they are. And he talks about who the hedgehogs that he admires. So it says, "Their single-minded approach may appear risky at times, but they are conservative by nature. Hedgehogs don't speculate or make foolish bets. If all their eggs are in that one basket, they follow Mark Twain's advice and watch that basket very carefully." You and I have discussed that sentence on this podcast dozens of times. That is a very common mindset in the history of entrepreneurship. "We do acknowledge that even hedgehogs don't always win. Hedgehogs can be roadkill along the manly, dusty, windy,

• 7:08David Senra?

  pothole-filled roads in business. There are plenty of successful foxes." And then he's going to reference two hedgehogs that you and I are both familiar with. "The thing with hedgehogs is that they never give up. They keep at it and they don't ever get bored because they love what they do and they have a lot of fun along the way. They can even be downright silly at times. Picture for a moment Sam Walton leading the Walmart cheer or Warren Buffett strumming his ukulele in front of large crowds." Another great sentence here. "We observe that some clever foxes do masquerade as hedgehogs, but not the other way around. In the end, hedgehogs are the ones who build great, lasting companies. As

• 7:50David Senra?

  entrepreneurs, they are the rarest of breeds. Those who can start something new, make it work, stick with it, and build something special, and ultimately inspire others along the way with their determination, dedication, and commitment." So remember, I'm telling you this because Sidney Harmon is a hedgehog. And so then at the very end, he's like, "Here's some examples of famous hedgehogs. I'm just going to read the ones that we've done podcasts on. Edison, Thomas Edison, Einstein, Michael Dell. I'm going to read his new autobiography or maybe his original autobiography. I mentioned Michael Dell in the podcast I did on the book in The Company of Giants. Larry Ellison, Bill Gates, Andy Grove, Bill Hewlett, Steve

• 8:35David Senra?

  Jobs, Gordon Moore. Ken Olson is also in the book, in The Company of Giants. David Packard." Tom Watson, and then he lists some of his favorite hedgehogs, Sam Walton. I'm only listing the ones I've done podcasts on. Sam Walton, Warren Buffett. He mentions Rose Blumkin. I have to include her because she's one of my favorite characters I've ever discovered. And she's also in the Warren Buffett, the multiple Warren Buffett podcasts I've done. Jim Casey, UPS. Jim Casey's actually, that book I discovered through Ho Nam. That was Founder's number 182. Christina, there's a longtime subscriber to Founder's Christina, who actually is the one that made me aware of Ho Nam through that book, through Jim Casey's book. I've mentioned her before on the podcast. She's just a fountain of good ideas.

• 9:18David Senra?

  And she just now, even to this day, like last week, she sent me another book recommendation that's coming soon. So Sam Walton, Warren Buffett, Rose Blumkin, Jim Casey, and I think that's everybody else on the list. He mentions other people like Forrest Gump and Yoda, which was really funny. And I'll end this with a quote from the end of this essay. "The essence of commitment is making a decision. The Latin root for decision is to cut away from, as in an incision. When you commit to something, you are cutting away all other possibilities, all your other options." Okay, so let's go back to Sidney Harmon and his very unique career. And he says, "I've been in business for over 60 years, and through those 60 years, I have

• 10:02David Senra?

  done it differently." Hence the subtitle to this book. "Let me state up front the principle that has guided me. There is the traditional way to conduct your business and do your job, as for the most part, it is taught, as it is taught in business schools and practiced in industry. There is the deeply flawed new economy way." And so this is an important distinction to keep in mind. He's writing this right after the first internet bubble. So he's saying, "Look, there's an old school way that's done in the northeast of America. Then you have the crazy internet stuff that's going on at this time on the west coast." He's like, "I'm going to take pieces of both, but I reject both of them." I'm going to take pieces that I like from each and combine that with my own original thinking, and I'm going to come up with what I call the Maverick Way.

• 10:46David Senra?

  And so that is the entire point of the book, something you and I have discussed over and over again. You're going to spend a third of your life working. You should develop a philosophy on business, and it should be uniquely your own. And so that's what Sidney's about to tell us. And then there is the Maverick's Way that looks not to the dogma of the past, nor to existing models of action and behavior, but struggles to determine what is truly effective regardless of traditions and trends. It is a mutant of the old, old, and the new, new. So it's funny, because right around the time that he published this book, the book I did a long time ago on Jim Clark, which is Michael Lewis's book, The New New Thing. I think it's like Founder's 23, or something like that. Many years ago. So he's doing this play on word. So he's like, well, if Michael Lewis is saying the new way technology companies, and again,

• 11:31David Senra?

  he thinks of his company as a technology company, but one that just happens to make hardware. And so it's like, if technology companies are the new new, and then we have the traditional way of doing business in America is the old, old, the Maverick Way is a mutant of these two. And he describes that as, "It's a way of thinking that retains the enduring values of the old and the vigor of the new." And so he's going to give us some characteristics about what that means. "The Maverick's Way of conducting business forswears the leader as a commanding general. It rejects the practice of top-down authoritative command. Rather, it proposes the leader as a catalyst, conscience, and inspirer. It embraces technology, but only in the service of the customer." So that's something I need to, now that I've reread the book, and I'm reading these highlights

• 12:15David Senra?

  for a second or third time. He talks about that over and over again. He's like, "Listen, technology is meant to serve us. We are not its servants. It serves a purpose in your business. It is not what your business is, though. But only in service of the customer, not to its intimidation or for its own sake. It sees that much of what ails business today arises from the narrowness of preparation, the emphasis on specialization, and the failure to build the philosophical base or sound judgment based on critical thinking." Okay, so before we go any further, I also want to give you an indication of how he approaches business. He looks at, he mentions Warren, he greatly admires Warren Buffett and Charlie Munger. When you're reading this book, it's like he has the soul of like a Warren Buffett, but

• 12:59David Senra?

  from a founder's perspective as opposed to an investor's perspective. And there's also like this romantic love affair in the way he talks about company building. This is not, this is somebody who has soul in the game. This is not somebody who's doing it just for the money. I'm going to skip to the very last highlight, which he says, this is the very last highlight, and then I'll come back to where I'm at in the book. And this just gives you an idea. When I read you this sentence, you're like, okay, I know, I've seen this, this kind of person before. We've studied these people before. There's a lot of the, the traits that was in that essay I was just reading to, from, that Sidney has. And he says, "I regard myself as the guardian of the company's soul." That is not something that you're going to hear very commonly.

• 13:41David Senra?

  It is also a sign that, okay, I want to buy this, this person's products. "I regard myself as the guardian of the company's soul." You might recognize the name. So I recognize, I didn't recognize Sidney Harmon, but once I put, I put together Harmon Cardin, because they're, I think he said at the time they published his book, 60 or 70, it says like 60 or 70% of the company's revenue comes from, they're the high-end audio manufacturers for like cars, like BMW, Mercedes, Audi. So that's like, if you get in a BMW, you'll see Harmon Cardin, that's at least where I knew it from. He gets into, he's still in the introduction, like setting us up his life story, and he

• 14:21David Senra?

  talks about the importance of having a clarity of thought for a leader of the company when, essentially teaching your employees. He says, "Developing a reasoned analysis and evaluation that you can communicate to others is the mark of a true leader. A leader who's able to exercise critical judgment, rather than one who forces the facts to fit a predetermined conclusion."

• 14:41David Senra?

  So at the top of his company, this is gonna, what he's about to say here, what Sidney's about to say here, is very similar to what Steve Jobs said. Sidney has a great analogy on teams. So before I read this, I'm gonna read a quote from, I think this came from, what book is it? Yeah, this is the book, The Billionaire and the Mechanic, and it's about Larry Ellison, but Larry Ellison and Steve Jobs were best friends. And so it says, "Steve liked to say that the Beatles were his management model, four guys who kept each other in check and produced something great." Sidney's version of that idea is this idea of a jazz quartet. And so this is essentially a great analogy on teams. "At Harmon, I liken our executive team to a jazz quartet in which each player is a master of his instrument,

• 15:23David Senra?

  but subordinates his playing to that of the group. The improvisation invention that characterized the best jazz quartets arise from the careful listening and response each musician gives to the playing of the others. It is that interaction, inspired and encouraged by the quartet leader," which that's Sidney in this case, "that leads to wonderful, even inspired, music. And so it should be in business." He has another idea for you. "In your business, you avoid recklessness, but you encourage daring. Daring, on the other hand, is the conscious decision to go forward after careful consideration of the risk, consequences, and potential rewards. A daring action may or may not work, but it is worth the try. A good leader encourages daring action and

• 16:07David Senra?

  does not penalize it when it fails." And then he gets into some other traits of famous founders that he admires. So he says, and this is on Bill Gates being nimble. And so he says, "I do not know Bill Gates, I've never met him, and I disagree with some of the tenets of his company, but I respect the fact that he is daring and impressively nimble. I define nimbleness as the willingness to challenge orthodoxy," which is extremely important to Sidney, "to question dogma, to reject counsel that this is the way it's always been done, and to move quickly to implement a new vision. Bill Gates is clearly nimble. He turned the Microsoft Leviathan around on a dime when he concluded that the cyber world was exploding and that the future of his company could not be written entirely in the Windows operating system." And then this is very fascinating, what he does here.

• 16:51David Senra?

  He talks about how two different responses to the same phenomenon can both be daring. So he just described Bill Gates' response to the Internet. And now he's going to respond, he's going to, he's going to compare that to Warren Buffett's response to the Internet. Warren Buffett, whom I know and admire, and he talks about a lot, he really does admire him, refused, refused to follow the lemmings onto the Internet and over the cliff because it did not feel right to him. He just didn't get it. Even as Gates, after careful consideration, determined to chart a new direction for Microsoft, Buffett, after equal consideration, decided against engaging in the Internet. And this is his punchline about this entire section, which I think is really summarizes the important point he's trying to make us, make to us.

• 17:35David Senra?

  Though these two friends reached very different conclusions, the process of evaluation, judgment, and action was the same. Certainly, each was daring in his own way. And then he's going to tell us what his, like, how he was daring at the very beginning of his career. He's 35 years old when he starts his own company. He says, "My first act of daring, I would say, was joining Bernard Kardon in 1953 to create Harman Kardon. I quit a well-paying, well-paying job to start a business in a very new field. A year later, we had created the first integrated, high-fidelity audio receiver." Conventional wisdom, his main point here is the fact that he started, the company starts in defiance of conventional wisdom. "Conventional wisdom had it that you could not create high fidelity without using separate components.

• 18:19David Senra?

  Yet the advantages of a complete, integrated, all-in-one receiver seemed manifest to us. And in other words, it was obvious to me, I trust my own judgment, I'm just going to go with this. It would be simpler to install and simpler to operate." Then he talks about two years later, they had to change the entire focus of the company. They could have kept on doing what they're doing, they could do, they could make money. In an immediate term, but essentially what he's saying is like, we discovered a new technology. We knew right away that this technology was going to change things. It was going to render what we were working on obsolete. Let's go all in on the new technology early. And so that's, that's an idea, you know, definitely is applying, that is applicable today. This idea is like, no, no, I'm, I'm certain that there's a fundamental technological shift happening in my industry.

• 19:04David Senra?

  I need to go all in on this new technology earlier. And so he says, virtually overnight, we abandoned to carefully develop new product line and created a totally new series of stereo amplifiers, the very first in the industry. And this is why I'm telling you all this stuff. Don't worry about, I don't, I don't even know what any of these, like he uses mono, mono aural sound and, you know, all these stereophonic, I don't know what any of this stuff is. But the, the idea behind it is the important part. So we saw the new technology early, we're the very first in the industry. The new, this new product was, was ready just in time for the 1955 trade show. Why is that important? That decision triggered a huge success and gave us an initial lead over the competition that lasted years. So that is the main point of reading this, this complicated section to you.

• 19:48David Senra?

  If you've identified a new technology, you believe that it's going to change everything. You've got to go all in on that new technology early. And if you're right, you're going to have a gigantic advantage over competition, at least usually for a period of years, if the history of entrepreneurship is any indicator of that. And what's really smart about Sidney is he, right in this book, he talks about, he's like, listen, that same idea I just told you, I used that same idea to much success a few decades later. They're building audio equipment, 1950s, 1960s, 1970s. Those are analog audio equipment. Then he picked up early, same thing. Wait, digital's changing everything that's going on. And then that says decades later, driven by similar daring. That's what he calls this decision to, to, to make that jump. Think about how hard that is. I have a product that's working. It's fantastic. It's highly reviewed.

• 20:31David Senra?

  People think it's the highest quality, but we know that, that the technology and industry is changing so fast that eventually, maybe not five, 10 years from now, we can milk this for a while and make money, but eventually it's going to be rendered obsolete. And so let's say we stick with that path, we're still focused on the development of an old technology. We can wring out profits, but we, but the problem is, our attention and our focus has value clearly. So by us, by us staying with what we know. And ignoring the change, instead of being ahead of everybody else, we're going to be left behind. So we've got to make the difficult decision and say, hey, even though this product's successful now, we've got to jump to what's happening next and we've got to go now. That's a pretty crazy idea and a pretty crazy experience to have in the 1950s. And then again, he's just got these things. Reputation is persuasive. If somebody's going

• 21:16David Senra?

  to repeat something in these books, I'm going to bring it to your attention because there's a reason why you have really smart, driven people telling you the same thing in different ways over and over again. They want to get this idea into your head. Technology is a means, not an end. I was equally certain that we must not subordinate intelligent management and marketing to the technology. Technology must never be permitted to tyrannize. It must be the servant. This lesson is ignored at great peril. Another thing he repeats over and over again, founders must, he said in the introduction, like, you've got to be more of a generalist, right? Doesn't mean you can't. He niches down. His product and his industry is very niche. But from a founder, the founder, in his opinion, founders must know how the whole enterprise works. Business school thinking, so this section is labeled business school thinking. Business in the business schools have too long lionized the

• 22:01David Senra?

  specialist. The person who's learned how to do one thing, do it well, but who, as a consequence, has almost no idea how the whole enterprise works. Time and again, in small companies and large, I have encountered senior executives who live lives of silent terror. It seems to them that the company has a life in motion of its own and they live in fear that they will somehow be found out. And so he has a really interesting, I don't think I've ever come across this thought idea. He's like, you should think of, you should be a poet. And I'm pretty sure, I don't think he means this literally, I'm pretty sure he means poets as a metaphor for system thinkers. He says, instead, so he just told you what businesses and business schools teach. He's like, this is what I say.

• 22:42David Senra?

  I say, get me some poets as managers. Poets are our original system thinkers. They contemplate the world in which we live and feel obliged to interpret and give expression to it in a way that makes the reader understand how the world turns. Poets, those unheralded system thinkers, are our true digital thinkers. It is from their myths that I believe we will draw tomorrow's new business leaders. So I put a question mark. I'm assuming he means that as a metaphor, but that sentence right there makes me see, no, he means that literally. So he doesn't expound, I'm not sure. But his main point here is you've got to think of systems. You can't, like, you're a founder. You have to know, you have to... Understand how everything works in your company together.

• 23:25David Senra?

  It's you're building a system, not just a little narrow silo that you can just hide in. He spends a great deal of the time in the book talking about his thoughts on leadership. He says you should think of leading your company as if you're a first among equals. Another way to think about that is you lead from the front. I am proud of the fact that although the four top executives at Harmon could hardly be more different, they have melded into a virtuoso jazz quartet. I do not claim that I have melted them. I have come to see that the best role for a leader is in fact to serve as a first among equals. And in that capacity, the leader must contribute to the meld. Another thing he repeats over and over again, this is on the value of hard work. I feel like we're just come a couple of days ago, just released that Bloomberg podcast

• 24:10David Senra?

  that really feels you're reading the book. He's taunting you. He's like, you're not working hard enough. I'm going to kick your ass. You don't want it as bad as I do. Like it's very, he's got a sense of bravado for sure that appears in that pages and it's, he's challenging you. Hard work counts. I typically get to my office late in the morning, about nine or nine thirty, because I exercise in the morning. But I work uninterrupted throughout the day and I am nearly always there well after our staff has left and everybody knows it. So that's again about leading from the front. This is also going to lead later in the book, I think have a quote and his schedule, he goes into detail about his schedule. His schedule is insane. Like he talks about, you know, the hours that he's doing everything else. And I'm like, wait a minute, you mentioned a wife and kids in there somewhere. Sidney, what happens?

• 24:54David Senra?

  And he's like, oh, we got divorced. Yeah, well, this guy's crazy. As you can imagine, somebody that's eighty-four and fully engaged. Towards the end, it's very interesting. At the end, he has this, this last chapter that he calls Sidney's Almanac. So play on Benjamin Frank, or Poor Richard's Almanac, Charlie Munger's Almanac, which we've seen, we did the Naval Almanac. So Sidney has a chapter where he just, it's just random thoughts on life. And he talks about, he's like, listen, you, this is his blueprint. He's like, you need to work out every day. He's like, at eighty-four years old, I still have a trainer. I have somebody who helps me stretch. I work out every day. I work. And he's like, I'm fully engaged mentally. He's like, it's really important to never not be fully engaged in your work because he feels that the mind goes, once the mind goes first, the mind goes first, then the body goes.

• 25:39David Senra?

  And so he's like, if I retired, or if I didn't have anything that was fully mentally engaged in, I wasn't passionate about, I know I would wither physically.

• 25:49David Senra?

  Then he goes until like, you know, get a lot of sleep, but don't like you don't eat a lot. So he's like, I work out every day and then I have a bunch of like, I have three small meals. And he's like, that's why people, even though I'm in my 80s, they think I'm in my 60s and stuff like that. So that's actually really important to him. He brings it up right here. We're still in the very beginning of the book. He's like, listen, I'm getting to the office at nine, nine or nine 30 because I've prioritized that I'm going to work out before I go to work. But then, once I get there, I'm going to stay there all the time. Now, he talks about how he creates his own ideas. I believe that refusing to accept business orthodoxy uncritically can open your eyes to opportunity. And then he talks about the experiences that he had throughout his life, which influenced his philosophy. My own critical sensibility was honed by early guidance from my mother,

• 26:30David Senra?

  from my own voracious reading, by teaching educationally disenfranchised kids, and by the contrasts and contradictions I observed when simultaneously running an experimental college and a traditional business. And that's what I meant about his schedule. He'd work out of, this is, I think, in the 1970s at this point. Starts the day with a workout, then goes to work for like, the first seven hours of the day, takes a paper, like a brown paper bag lunch, drives across town to this college, just like Quaker College he helped set up, changes in his car, eats his lunch real quick, and then spends another like, seven or eight hours there. So I was like, okay, Sidney, you just told me your day from seven to 10, seven in the morning to 10 at night, you're occupied. And that's why I was like, oh, this guy's definitely getting divorced. And then, when I got to the end

• 27:15David Senra?

  of this paragraph, I just jotted down, this guy's really interesting. In succeeding pages, I'll discuss the keys to genuine leadership, anthropology as the keys to marketing, creating products and services that respond to how people really live, and combining old ideas with new ideas. I'll also touch on the rewards found in writing, public speaking, storytelling, and humor. These are generally not traditional business subjects. In combination of all of this, in combination, all of this can build a vigorous, creative, confident executive, and a company that is sure of foot and capable of responding to crises. In James Baldwin's memorable phrase, "A company that knows its name."

• 27:53David Senra?

  And then he gets into this point that we're all creating an arc of our lives. The way to think about this, that really is my interpretation, is like, we're all writing a book. The story of our lives are going to be read not only by us, but to people that we don't love, the people that are around us. And so his point is like, the center of this, of my life had, has been my business. You know, it goes back to I'm the guardian of the company's soul. Clearly, he loves what he's doing. All of us, one way or another, create the arc of our lives, and all of us do it best when we shine in use. So, service to the people, is the way to think about that. The creation and growth of Harmon International has been the center of my arc. So now he goes a little bit into his early life. Talks about, right after graduating college, he was hired by an electronics firm to work in the engineering department. So that's how he starts out. He starts out as an engineer. I think then he goes into administration, then he goes into sales, which he was really

• 28:38David Senra?

  good at. And, but he gives us some advice, that you got it, when you go into, like, have confidence when you go into, in this case, he's talking about a job interview, because you might be terrified, but everybody is terrified. Really, no one knows, like, this idea is like, there's just really no adults. Everybody's kind of making it up as they go along. I remember how a kid just out of university, I was terrified by the interview. Still, I had persuaded myself that, for totally different reasons, the interviewer was terrified too, and that virtually everyone is. Now, his inner monologue on this is very interesting. I'm going to read this entire paragraph to you. "That awareness of the other guy, being terrified or not sure, whatever the case is, has served me well over the years. Often, in situations that would normally cause alarm or jitters, like a contract negotiation,

• 29:20David Senra?

  a dispute, a golf match, I have reminded myself, if you're uneasy, if you're scared, the overwhelming likelihood is that he is too. Each of us is possessed of human frailty. His uncertainty probably arises out of different material from mine, but he's less than totally confident in himself. I am not at such a disadvantage." So I'm skipping over a little bit about his early career. He's already moved into sales, which I mentioned earlier, but really, his main point is like, you got, like, I get all my ideas from talking to customers. That's his perspective. And he's like, I don't agree with, you know, Henry Ford, not asking customers. I'm sure he might not, even though he admires Apple, I don't, I'm sure he probably disagrees with Steve Jobs' approach to this. There's obviously multiple approaches, multiple solutions. His point is, this is what worked for me, so I'm going to tell you about it.

• 30:03David Senra?

  Over time, I became more skilled at travel and selling. I became increasingly aware of what the end buyer needed. That prompted me to press for new products when I returned. And often, those products succeeded simply because they met those needs. And I found out their needs because I talked to them. To this day, over half a century later, I can say that no valuable enduring product of mine ever arose from contemplation in my office. It may have occurred there for others, but never for me. I know of no substitute for the firing line, for listening to the customer, for identifying and responding to a real need. So this is in the 1940s. He is, this is his one boss. I'm pretty sure this is the only job he had before he started his own company. Then he never had a boss again. Reminds me of Bill Gurley's advice, develop mentors in your field. He talks about this guy many, many years later.

• 30:48David Senra?

  And this is boss, Mr. Bogan. Mr. Bogan was a very cautious, very tentative, rather, let me start that over. A very cautious, tentative affection began to grow between Mr. Bogan and me, even as his son and son-in-law joined the company. I was given the office immediately adjoining his. So he starts working extremely hard, and he realizes that Mr. Bogan is noticing. It was my view then, and it is my view now, that Mr. Bogan honored determination and respected courage. He winds up going, he gets drafted into the army for World War II. Comes back, and he says, "I returned to the Bogan Company for another seven years as general manager and heir apparent to Mr. Bogan." And so this is the very beginning of TV, the TV broadcasting industry.

• 31:32David Senra?

  And so a new industry is emerging. The technology is new. It works, but barely. So a lot of entrepreneurs are actually attracted to this field, this new technology, because they see an opportunity to build a business that solves the inadequacies of the new technology. And so Sidney sees this as well, but he develops a new product line, but he's doing this within the company that he's working for. But this is important, because this is where he starts to work with his soon-to-be partner. And so he goes to bat and he starts fighting for this. He says, "Listen, there was no way we could sell those products," the boss argued, "at the ridiculously low prices that others were offering." "Yes, we can," I said, "if you permit Bernie Kardon to design a product to be tooled and produced in quantity." I fought another battle and won another tentative. "Show me."

• 32:16David Senra?

  I mean, yeah, go for it, but you have to prove this. "I reviewed and rated every booster amplifier. Don't worry about what they are." And every one of the markets suffered from having too many controls. My charge to Bernie was simple. "Give me a booster with one control and we will eat their lunch." And he did. Once we started making them, this new product, we never stopped. The company flourished and I was made general manager. My salary increased. And this is why he places such a strong emphasis on the word daring so many times throughout the book. You have to be daring. He's making money. He's got a good job. And he leaves. So he wants to make a product. First of all, he realizes, "Okay, I'm making products that I would like to use because I clearly understand the industry and I know what is possible.

• 33:00David Senra?

  And I know that other people like the product because I like it." And so he's like, "We're going to make products that we like to use." They're just kind of experimenting, him and Bernie. "And we love what we make. Let's go see if Mr. Bergen, if the boss, will back us on this." He doesn't, so then they have to leave. "In the early 1950s, Bernie Kardon and I began to have some serious fun. We borrowed a couple of the public address amplifiers and modified them to improve their performance. We paid attention to hum, distortion, frequency response, among other traits that I'm going to skip over. We loved the result, as did our friends and neighbors." And he says, "There must be a sufficient number of people like us who would love to buy equipment that does what these things do," I told Mr. Bergen. "As of now, they can't. None exists."

• 33:43David Senra?

  Once again, he yielded reluctantly and we produced a couple of high fidelity amplifiers, although they were, for us and our times, and at times remarkably successful. His heart, meaning Mr. Bogan, was never in it. Our hearts were. There was also his son and son-in-law, to whom he intended to pass on the company. I realized that it was time to leave. So in 1953, Harmon Kardon was formed. Bernie and I capitalized it with a total of $10,000, $5,000 from each of us. Although we did not appreciate it then, we were part of a handful of small companies that became pioneers in the newly developing field of high fidelity.

• 34:23David Senra?

  And then, just like Bloomberg said, "While I have since learned a great deal in my business life, I have no doubt that those years at Bogan," so think about, he was at this company for, I think, like 12 years, Bloomberg was at Solomon Brothers for 15, "I have no doubt that those years at Bogan were key, were key formative years. They had prepared me better than many to build and run a business." And so it's at the very beginning of the company that he starts to develop this maverick way of thinking. "Because our products were altogether new and among the first high-fidelity tuners and amplifiers, and because there were no rules, we were free to follow our best instincts. We were free to bring totally new thinking to what we were doing."

• 35:03David Senra?

  And so, they start out, they're in this tiny little factory of sorts, and this is just very common along startups. "I would walk visitors around the floor in the most circuitous manner, leaving most of them confused, but with a sense that there was more than really existed. And then I would conclude the tour with the comment that there was little point in visiting the other floors because all the other floors were all alike. Of course, there were no other floors." So this is a fantastic paragraph because he's talking about, listen, we're, high fidelity's clearly going to be in high demand, it's higher sound quality, of course, the customer's going to want it. The audio, like amplifier and speaker business at this time was dominated

• 35:45David Senra?

  by these gigantic companies, he names them, but I really just want to tell you his takeaway. Together, they were the establishment. They were run by traditional business types. They were oblivious to the world changing around them. So he's talking about the advantage that startups have, small groups of intelligent, hardworking people have over large existing companies. Startups can focus on one thing, they've got these giant, almost like conglomerates that are going up against, they're oblivious to the world changing around them, confident that size alone would preserve their dominance. They were already the dinosaurs. They proved soft, easy prey.

• 36:19David Senra?

  Okay, so a small company, a small new company, has a product to sell. They found distribution through trade shows, like a bunch of other competitors. But he instinctively understood, from the very beginning, the need to differentiate, not only in the products, but how it's presented. And he says, "The owners of these new, small businesses set up their displays and manned them throughout the show." The exhibitors' displays all looked very much alike. So you have new products, you've ever been to a trade show, you know exactly what he's talking about. New products hung on pegboard walls or shelves, the business owners eager to explain and demonstrate them. Everywhere that is, except in the Harmon Kardon Room. "We had no shelves, we had no pegboards, and no fluorescent lights.

• 36:59David Senra?

  We cleaned, we cleared the room and brought furniture from our homes to set up a gentle, gracious living room with framed prints on the wall, a sofa, chairs, and soft incandescent lighting." And why is he doing that? Because that is the actual environment that the customer is going to use their products in. You're going to put up your home stereo system in your living room or that area. It's not, there's no pegboards at your house, no fluorescent lights, all that other stuff. Everybody else is playing classical music extremely loud. He's like, "Well, that doesn't make any sense." Because he's like, "We're gonna play Frank Sinatra." And it's like, "Well, why'd you do that?" Because every other vendor's playing classical music, but no one heard classical music on the radio. Frank Sinatra is the most popular artist, musician, at this time.

• 37:44David Senra?

  Everybody had heard Frank Sinatra on the radio. Why is that important? Because he's producing high-fidelity radio equipment. And so, if in the past, you know what Frank Sinatra sounds like on not-high-fidelity, and now you can tell the difference of the product. Like, what is my product actually achieving? What is the problem it's solving? It sounds better. Remember hearing Frank on your low-quality speakers? Now, listen to Frank on my high-quality speakers. Instead, we played Frank Sinatra in our quiet, comfortable room. This was at the height of Frank Sinatra's popularity. Relatively few people had heard Frank live. Most had listened to them on their three-tube AC/DC table radios. They also listened to him every day in the car. And how much better he sounded in our room. It was not uncommon for our visitors to demand, "Where is he?"

• 38:29David Senra?

  That sound was so good, they thought he was here. We were sure that we were on to something, and that something guided the company through its relatively explosive early years. He's going to talk about hard work over and over again in this book. "We worked astonishingly long hours, but we were in love. Treat hard work and your smarts respectively, but recognize that they are neither decisive, nor do they guarantee anything. Most of all, I told myself, don't underestimate determination and persistence and never quit." So, "never quit," I don't know if I was clear there. He's talking about the way he was thinking, like his inner monologue when he was at the very beginning of his company. He's like, "Listen, treat..." So, he's talking to himself, "Treat hard work and your smarts respectively, but recognize that they are neither decisive, nor do they guarantee anything. Most of all, I told myself, don't underestimate determination and persistence and never quit."

• 39:14David Senra?

  And he talks about, really what he's trying to do is like, "I'm just trying to..." The reason I work hard is not because I'm guaranteeing my success, I'm just improving my odds. He's going to compare his mindset at the beginning of his company with what he learned about reading about Abraham Lincoln. This is fantastic. Abe Lincoln, I reminded myself, ran for the state legislature and lost. He ran for the House of Representatives in the US Congress and lost. He ran twice for the US Senate, and he was defeated both times. He ran for vice president and lost. Do you see what he's doing here? Eventually, he was elected when he ran for president. "The trick, I decided, was to use all my resources to improve the odds. Improving the odds, I came to realize, was the essence of most business activity and most decisions.

• 39:58David Senra?

  Knowing that made the occasional failure less traumatic." So, he's going to say, "Hey, this is what J. Paul Getty said. I'm going to take J. Paul Getty's quote, and I'm going to repurpose it for my own career." J. Paul Getty once famously said, "The secret to success is get up early, work hard, and find oil." I would paraphrase it for myself this way. Get up early, work hard, pay attention to detail, and fight to improve the odds. A few months ago, I read the autobiography of the founder of Trader Joe's. He says in there right away that the best businesses to run are cults. He said Trader Joe's was a cult for the overeducated and underpaid. It is their ferocious dedication to his company, to Trader Joe's brand, and the fact that

• 40:43David Senra?

  they would spread it through word of mouth that helped grow in the early days of Trader Joe's. Same thing happened to Harmon Kardon here. Those early years established to Harmon Kardon as a cult brand. The college campuses were the breeding grounds for a generation who loved music and felt that the best way to listen to it was in the dorm room with our equipment. Even today, I hear people tell me, "Hey, man, I grew up with HK, Harmon Kardon." In three years, our sales had grown into the millions. And our net worth, remember, they started the company with $10,000, our net worth had escalated from $10,000 to over $600,000. And then this was very surprising to me, and it's also another illustration. He's speaking about his business the way you would speak about your lover.

• 41:28David Senra?

  Listen to this. "It was then that Bernie Kardon decided to retire. The crazy hours and necessary discipline of growing a business were antithetical to how he wanted to live his life. I was obliged to find the funds to buy him out, and that led me to discover Wall Street. In 1956, Harmon Kardon became a public company, just as the first electronic stock boom was getting underway. I loved building a business. What could be better?" This is the lover part. "The products were wonderful. They employed technology wisely. They made beautiful music. My instinct for marketing, for selling, for emotive advertising was not only indulged, but rewarded. Everything worked. I loved music, and I found it everywhere in my life.

• 42:11David Senra?

  I imagined immense possibilities and helped provoke them. I encouraged our people, and they rewarded me. I paid attention to the details, and that attention paid off in spades." And I mentioned earlier, this is a short book. This guy has no fluff. He gets right to it, like a lot of entrepreneur biographies does. And so, like, we get right into this. I was like, "Wait, what just happened here? You were in love. Now you're divorcing your lover." But he sells his business. And in his defense, I mean, now, what he's about to do is gonna, it's gonna seem obvious, right, in retrospect for us, because you and I have studied this over and over again. He agrees to merge it. And he's like, "Oh, it's gonna be a bigger, greater company. I'm gonna run it. It's gonna be fantastic. I'm gonna have this great partner. We know how this is gonna end." So I wrote this.

• 42:56David Senra?

  I wrote, uh, let's see. "This is an obvious mistake. Sidney is a maverick. Mavericks do not play well with others. It is their disagree..." This is my own writing. "It is their disagreeableness that causes them to create great products." And so what happens is, nonetheless, in 1962, I succumbed to an interesting temptation. I had encountered an unusual man, Milton Shap, Milton Gerard Shap. He had built a business in Philadelphia called Gerard Electronics. The company was the pioneer in the then emerging cable TV business. Milton suggested that we merge his company Gerard with Harmon Kardon. I saw a great opportunity and supported the idea with enthusiasm. And then this is very weird. That's literally the only note I left here.

• 43:40David Senra?

  So, once we'd merged, Shap would be chairman of the new Gerard Corporation. I would be president and CEO. It was an exciting time, and we proceeded quickly and relatively smoothly to form the new company. As a precaution, we also wrote a buy-sell agreement. This is weird. "If we ever found ourselves in irreconcilable disagreement, we had the business equivalent of a prenuptial agreement. Each would offer a price for the other's interests. The low bidder would be obliged to sell his interests to the other. So we have an agreement. If we ever break up, whoever was willing to pay more gets it." Milton, and then what the hell is going on here? So Milton had a personal reason for promoting the deal. He made it clear to me. He wished to run for the United States Senate. The merger would free him from full engagement in the business.

• 44:25David Senra?

  I welcomed the plan because it promised me a free hand at managing a new, larger company. Of course, it's not how it's gonna work out. The honeymoon did not last long. Milton had a way of swooping in without notice, pronouncing his strong views.

• 44:40David Senra?

  You have two founders that have both built independently successful businesses. They're going to come together. Why would you think this is going to work out? On many business matters, I found the, his interventions troublesome and inadequately considered. I also objected to his use of the company facilities to support his political campaign. As I reflect on it now, I realize that we were both in error. So then they have this huge disagreement, which is going to result in Sidney losing his company. So this is the first, remember, we said the triple dip? This is the, this is the first time he loses a company, or sells it, rather. So they're fighting over the future of cable TV. And so Milton's like, all right, let's invoke our buy-sell agreement. And Sidney's like, this is going to be great. This guy's running for office, he's not going to want to run the company. Wrong. I was confident that he wished to sell.

• 45:25David Senra?

  He was actively running for governor of Pennsylvania at the time, and I was certain he would not wish to be seriously involved. I was wrong. He outbid me, and I had to sell my interests. I was unemployed.

• 45:38David Senra?

  That's terrible. So now he loses control of his company, he's unemployed, doesn't know what to do. So he's like, okay, I'm taking some of the money I got from the sale, and I'm going to invest it in this other company, which was a public company. It's like a burgeoning conglomerate you could think of. It's called Jervis Corporation. And so he says, I became totally engaged at Jervis, and increased my eventually, and I eventually changed the company's name to Harmon International. And this is what I mean, he just moves around rapidly. He's like, listen, we make jet engines and automobile, mirrors for automobiles, and then just immediately goes into, oh, my God, I got my other company back. So this is the double dip, right? A few years later, we repurchased Harmon Kardon from Jared. So from the other guy he just had a falling out with.

• 46:20David Senra?

  That repurchase began the transformation of the company and my return to the audio business. In 1969, we acquired JBL. So it's another audio manufacturer. JBL is also high-end. This is where he gets into the, he calls it the automotive OEM market. And so JBL, Harmon Kardon, there's another one called Becker that he buys. I think he does like 20 acquisitions in the book, which he's also, interesting enough, he's against large acquisitions. I'll talk more about that later. But, so this is where he gets essentially what's going to be the path forward to his business. Like, I'm going to own all these high-fidelity, high-quality OEM automobile manufacturers, companies that are supplying the carmakers with high-end audio equipment. I guess the easiest way for me to explain that to you.

• 47:05David Senra?

  So it's, we acquired JBL, that's gonna be one of them. Harmon International was reclaiming a leadership role in the audio business. And over the next seven years, its annual sales grew to 135 million. And I wrote, what in tarnation? Because it just goes super fast. And then, here we go, he's gonna sell the company again. In late 1976, then-President-elect Jimmy Carter asked me to be his new Deputy Secretary of Commerce. The note I left myself here is funny. I said, "This guy has mastered the terse memo, like Olguvii's boss." So when I read a bunch of books on David Olguvii, he had worked for this guy. I think the guy's last name was like Stevenson. He was a, uh, he was partial influence for the fictional character of James Bond. So Olguvii's boss was the partial influence for James Bond.

• 47:51David Senra?

  And he wound up being like a spy and diplomat and all these other things. But he would write, when you, when you, when you got something back from him, he would say, he'd answer it three ways. Yes, no, or I think with a question mark, which meant, "Come see me," if I remember that correctly. But essentially, David learned from that, it's like, "Cut your words." It's just like Churchill said, it's like, "It's slothful not to compress your thoughts." So, the reason I said that is because I was like, "This guy has mastered the terse memo." Because everything I'm telling you, this is all happening in one chapter. It just goes from, "I had the company, we had a disagreement, I sold it." And it just runs through this really, really rapidly. So it says, "The President's counsel notified me that if I were to place my Harmon stock, even if I was gonna place it in a blind trust, my ownership of a majority of the company's equity would place me in an awkward position. There would be too many issues."

• 48:36David Senra?

  So he winds up having to sell his company, essentially what's happening here. And this was interesting, I did not hesitate. He winds up saying, like, "Business is love." He hated politics, he was very happy, this is, but it was interesting, he just felt it was a duty. Like, "I was called upon, I have to serve, I have to sell the company." He sells his company, he never mentions a price, I had to go and look this up independently. He sells his company for $100 million in 1976.

• 49:03David Senra?

  So that's the equivalent of almost a half a billion dollars today. So up until this point, I gotta tell you who he sold it to. So before this, he had rejected a number of offers by a conglomerate called Beatrice Foods. So then I called them back to indicate that the company was available. The qualification was that I could not be a part of it. My lack of involvement represented no problem at all for Beatrice, and the deal was made. Harmon became one of its many subsidiaries, and I became a wealthy man. I could then turn my attention to my new job. And now, two paragraphs later, we're back at the triple dip. Okay? He buys the company back for $50 million. And he's making fun of these large conglomerates. He echoes Buffett here. He's like, these just giant companies run by people who don't know what the hell they're doing, can destroy immense amounts of wealth easily.

• 49:48David Senra?

  And they do this because they just acquire for no reason. You know, if you read Warren Buffett's shareholder letters, he goes over this over and over again. "In 1980, with my government service behind me, I was approached again by Beatrice Foods. The venture as a diversified conglomerate had been disastrous. Most of their acquisitions had performed poorly. Harmon had done especially bad. Beatrice was in turmoil and under enormous pressure from the banks and shareholders. No one at Beatrice understood the high-fidelity business, so why the hell would you buy a business you don't understand?" But again, we know this from the history of business, history of entrepreneurship. This is going to happen over and over again. It happened in the past, happens today, will happen in the future. You could take advantage of them, which is exactly what Sidney did. No one had any affection for it, and the people at Harmon were demoralized. Beatrice needed me. I had an eager seller and therefore a very attractive opportunity.

• 50:32David Senra?

  So then he buys it back for half of what he had just sold it for four years earlier. So then he goes through all these different partners. Remember, he had this idea of this jazz quartet as a way of, like, the best way to assemble, like, a management team. You're listening, you're an expert in your own instrument, but you also listen to the play, and you respond to the play of your other people, and you have one person at the front. He's got, he goes through person after person. So this guy Jerry hires him. Jerry discouraged my active participation. Even when the company was struggling to survive, we agreed this stranger's not working. So he gets rid of him. I promoted Don to run the company. Don and I tried to make it work, but we were increasingly incompatible. Are we seeing a pattern here? On this gravestone, this guy's gonna say he does not play well with others. I mean, that's not totally accurate.

• 51:16David Senra?

  That's a note I left myself as I got in the book, when I read this part of the book. Later on, he finds the right team. He's going, basically what I'm telling you here is, he's hiring and firing. A good amount of executives until he finds the right team members. So he said, I began to wonder whether I could make it work with anyone. I became convinced that the company would drown in meetings. And that Don and I would not, were not an effective team. I am certain that he agrees. That is a nice way to put it. He finally finds somebody 12 years later. And so he says, I hired this other guy named Bernie. This is not his partner from 40 years earlier in the story. Who had been the chief financial officer was a wise choice. Bernie had grown up with an army background.

• 51:56David Senra?

  He was open to sharing and learning and quickly displayed a facility for engaging others. He sees his role as being a compliment to the work of others, which is again, really important to Sydney's operating ethos, I would say. He and I have totally different personalities with different strengths, but I had a genuine partner and our relationship has grown stronger over the years. The meetings ended, the army of consultants disappeared. So he talks about the old school way that people inside the business were running it. And we got back to work. So this is where from here on in his career, their OEM, like that's the majority of their business, talks about the fact that there's a lot of changes in the automobile industry. I just want to point out like he picks up, this is on the acquisition. So he buys this company called Becker.

• 52:39David Senra?

  And he says, this is important because buying Becker made him go down this route that winds up growing and he uses, and I have numbers for you later on, winds up growing quite a bit from where it was. So he's buying Becker, even though Becker's not doing well at the time. So he says, we had little concrete basis for this acquisition. The books were in disarray, the customers were alienated and the employees were dispirited. Still, our fundamental understanding of the business and a powerful instinct about what it could be persuaded us that there must be a pony in that barn. The determination to act on the end streak and the courage to commit the funds. As a result, Harmon transformed Becker and in the process Becker transformed Harmon. So what does that mean? We built a very successful business centered on the premium music reproducing

• 53:24David Senra?

  systems that we were manufacturing for the automakers. And then this is what he referenced earlier about multiple decades in the future. He's going to use that same idea where he transitions from realizing, hey, now we need to shift from analog to digital. Part of that became because he visited a Becker factory after he bought the company. And so it's just a fantastic story. There's, this is going to be a rather longer part. I'm going to read the whole thing to you. And I said, this is a great story. He knows how to adapt. Shortly after the acquisition, I visited Becker's factories in Germany's Black Forest. There was a small group of newly enthused engineers that had sent out a remarkable display. On a table that was 15 feet long, they had placed the analog equipment. So boxes representing the equipment that were necessary to provide music and television,

• 54:08David Senra?

  reproduction, multimedia, and voice-activated telephone and navigation, weather control, internet access in a car. So all the stuff that your navigation system and your audio system in your car now does. I think almost every car has this now, right? So this is the analog version of that. And this is a visual display that he's seeing. Sitting on top of the many boxes where the wires and cable harnessing needed to connect all the equipment, it looked for, it looked for all the world like a six-month collection of my teenager's dirty laundry. Then on a table less than one quarter that size, the engineers had placed boxes representing the digital equipment that would provide the same functions. Atop that equipment set would look like to be a single strand of wiring.

• 54:49David Senra?

  That strand was Becker's newly developing optical BUS. Employing such technical architecture would make it possible to provide all those functions at a size, weight, and cost simply unimaginable in the analog world. And this is the idea that he builds. This is like his third or fourth act, right, in the company? This is what he does for the rest of his career. It did not require a genius to recognize that I was looking at the future. When I returned to the States, I told Bernie, this is his partner, that we had better find us a digital engineer. Today, we have 1,200 digital engineers in the company.

• 55:30David Senra?

  And so he's gonna give us a summary of what his company does. Our systems are, in effect, the central nervous systems of a new generation of automobiles, including BMW, Mercedes, Porsche, and Audi.

• 55:44David Senra?

  So he has an entire chapter on ethics. He's writing this chapter right after the Enron scandal. He talks about, you know, something that entrepreneurs that we study, Ed Thorp, Warren Buffett, Charlie Munger, these ones pop to my mind, is just how much shenanigans and fraud and lying that takes place in business. Any kind of market has, like, Ed Thorp made the point, he's like, you know, I've been in this business for 50 years, every day the newspaper has a new, you know, some kind of scam or fraud. This is nothing new, it's something that's happened since the very existence of the first markets, a couple hundred years before we were alive. And so Sidney talks a lot about this, just some highlights. "It does no good to make money at the sacrifice of one's soul.

• 56:27David Senra?

  A honest, healthy company guided by honest leadership is much more likely to succeed in the long term than one that allows and encourages dishonesty in any form. Just as employees prefer to work for an hon-" This is all taking place on different pages, by the way. "Just as an employee prefers to work for an honest company, investors prefer to place their money where they can find integrity in management." And then he tells, like, he's a really great storyteller, he says it's critically important in business. And so he's got a great story, one you're gonna see in this story, how he thinks business in a, like, a romantic way, that I keep mentioning. But it's about whittling away everything that is not important. So I use this term, like, a short term, a short maxim that, like, compresses this idea, comes from Bruce Lee, "Hack away the unessential."

• 57:12David Senra?

  So he calls it "whittling away what ain't hoss." This is fantastic, I'm gonna read the whole thing to you. "Although the majority of business chieftains think of themselves in military or sports school stage, there's plenty of room for those who think in creative and romantic terms, and plenty of room to inform the business with lessons taken from other life experiences. In the late 1960s, my lifelong interest in learning led me to Friends World College." That is that experimental college I mentioned earlier. In my first years, uh, is he president? Yeah. So he says, "In my first year as president, I traveled through the South with my predecessor. Uh, we stopped at a farmhouse to borrow the, to borrow a telephone." So this is in the 1960s. "As we made our way up the porch steps,

• 57:57David Senra?

  we stopped in astonishment. An old farmer sat on the back porch. He was silently whittling away a broomstick. As his hands flashed, we saw the most remarkable, startling, beautiful carving of a flying horse." So he's, this farmer's sitting there, and he's transforming the, uh, a handle on a broomstick into this beautiful carving of a flying horse. And so his predecessor's name is Morris. He asked the farmer, "Morris said, 'Do you have any idea how incredible, how incredible what you're doing is?'" The farmer replied, "Psh, all I do is whittle away everything that ain't hoss. I have treasured that man's insight every since, ever since. Reducing business matters to their essence.

• 58:41David Senra?

  Whittling away that which obscures or is unnecessary has served me well. I admire greatly those who practice the art." He's got another great story. The one I left myself is, he just gets it. He's been building businesses for five decades at this point. I think, or actually six, I might be wrong about that. The level of instinct and intuition that he has is just incomprehensible. So he says, "Earlier, uh, recalling my first experience as an entrepreneur, I mentioned the corner candy store proprietors that he observed when he was a kid. I observed as a young man. Uh, they would arrive early, turn the sign in the window from closed to open, walk behind the counter, and wait. During the day, they would respond to whatever traffic appeared

• 59:25David Senra?

  and however long the day might go on. When it was over, the lights were shut off, the sign turned around, and the door locked. That part of life had ended for the day. I sensed then, and I know now, that running a business demands a different perspective." Sadly, however, many executives of complex, good-sized companies think that they're running bigger versions of a candy store. This simply does not work. A company requires an articulated mission, a philosophical base, a moral compass. Here, he's not, again, this is more of like this romanticism that he has. A moral compass, critical judgment, and the realization that it is a dynamic, living

• 1:00:07David Senra?

  instrument populated by complex human beings. A company must forever reinvent itself as it confronts new problems and new opportunities. You cannot simply unlock the door in the morning, survive the day, turn the sign, and leave. It is no candy store. And now, later in the book, he, he's, up until this point, he's mentioned the word leadership, being a leader, over and over again. Now he's going to say, okay, I'm going to, I'm going to distill for you right now my 60 years of leadership experience. Okay, so he says, "Leading such an organization is vitally important because it's, because so many people and their families are directly influenced by that leader's direction.

• 1:00:48David Senra?

  These are important keys to leadership, as I've learned them over the last 60 years." Number one, the leader leads. He doesn't number them, actually, so I'll ignore that part. The leader leads. He or she is not a caretaker. He is obliged to set the targets, the standards, and the example. The leader defines the company. He should do so explicitly. Its purpose, its goals, and its processes are his responsibility. The leader inspires. People want to be more than, people want, people want work to be more than drudgery. They want to see meaning in their jobs that justifies and warrants the hours they devote to them.

• 1:01:32David Senra?

  Inspiration promises something beyond wages, a sense that the company has a greater meaning, its own values, and its own reason for existence. A leader must find a way to deliver that message and keep on delivering it. I love this one. The leader should be the evangelist. Believing in the mission, committing to honorable, ethical conduct, and wishing for creative products in marketing are not enough. The leader must sell those views restlessly and relentlessly.

• 1:02:02David Senra?

  This is something he's already mentioned earlier, but he repeats, "The leader must see the company as a coherent whole. It is not enough to be a marketing guru or a manufacturing or financial star. The leader must see the interrelatedness and interdependence of those disciplines and must promote the whole of it." Oh, this is fantastic. Again, something he repeats. "The leader should never underestimate the value of disciplined, hard work. I'm not talking about clock and hours. Years ago, Gary Player, the great South African professional golfer known for his unmatched diligence, met with a journalist after winning a major tournament. A reporter commented, 'You were very lucky today, Gary.' His reply? 'I notice that the harder I work, the better I play, and the better I play, the luckier I get.'

• 1:02:46David Senra?

  The leader promotes closure. It is important that matters of consequence are driven to constructive conclusion. Many otherwise skilled executives have difficulty making a decision, closing the deal, wrapping the matter up, and moving on. Business leadership includes the ability to recognize that the moment is right and the time has come. If the moment is right, get it done, finish the job, wrap it up." I think this one's particularly important in the information age. It's just the amount of information available is just beyond our comprehension. So you have to know what you don't know. The leader knows what he doesn't know. No one knows everything. And the willingness of a leader to acknowledge that he does not know everything is a great attribute.

• 1:03:27David Senra?

  Many outrageous errors are made in industry by people who barge ahead, failing to recognize that they are out of their depth in an area in which they are not properly equipped or because they are unwilling to acknowledge that they don't even understand the vocabulary. And so his point is like, "I don't do this." Earlier, he talks about parts of when he did some business, but also when he was serving in government. And he's like, "Listen, anytime I do not understand what the other guy is talking about, I ask for clarification." He doesn't care. He's like, "No one knows everything. I'm not gonna look stupid. I'll look dumber if I just sit here and act like I know what he's talking about." The leader knows the meaning of two minutes. I use this as a metaphor. Respecting his own time and respecting the time of associates is important.

• 1:04:11David Senra?

  I have been turned off time and time again when someone who has been asked to speak briefly to me goes on endlessly, indifferent to the fact that there are other speakers or that the audience has its own time limitations.

• 1:04:23David Senra?

  Another way to think about this, master the terse memo, I guess. I'm gonna say this one, and I know you're gonna get mad at me because I repeat this so much, but it just happens over and over again. "The leader teaches. There is no more important responsibility than the development of those around him." Jim Senegal says, "If you're not spending 90% of your time teaching, you're not doing your job." Sidney's saying that you're the leader, you're the teacher, "there's no more important responsibility than the development of those people that are around you." And then he says, "The leader develops others." This, in my mind, is the singular distinction of a handful of great leaders. In the Tao Te Ching, they say that the leader, having accomplished great things, the leader, having accomplished great things, the people all feel they did themselves. Oh, I really like this one, too. "The very best leaders go beyond the mere setting of an example."

• 1:05:07David Senra?

  "The best leaders are catalysts." He used that word catalyst over and over again, it's very interesting. "The best leaders are catalysts who prompt others to reach beyond their most natural abilities, to find something they had previously thought beyond their reach." Then he talks about the one leader that he learned the most from. "I learned a great deal about leadership from Mr. Bogan, my first and only boss. He gave diligence a very good name." So, that's another thing Sidney repeats all over again, the importance of being diligent, pay attention to details, know exactly what the hell's going on in your business. And he's given an example of that. "Mr. Bogan devoted every Saturday to the adding machine. I would come into work and find him in the accounting office, personally cranking out every receipt, every invoice, all the billing. He knew where the pulse of the business was and never took his finger off of it. I came to respect the importance of attention to detail.

• 1:05:51David Senra?

  I never lost it." This reminded me, so what I wrote down when I got to that part, is Henry Singleton, after he left Teledyne, he was like the third largest landowner in the United States or something like that. I forgot the exact number, but he owned a lot of land, a lot of real estate. He went to go work on a ranch, and he said something in that book that was interesting. He's like, "I write every single check, that, every single expense for my ranch, I write myself." And he said that, when he said the reason he did that, it was interesting. He called it "a form of discipline."

• 1:06:23David Senra?

  And then we see, this is just a fantastic anecdote about his boss. We see this old school toughness that these people had. And he talks about when he worked there, he said terrified of the boss, the bookkeeper was always the first employee to arrive. Yet on that day, he was not only 30 minutes late, but bleeding from a head wound. His clothes were torn and dirty. "I'm so sorry," he offered as he staggered from the elevator. "I left for work early, but a group of ruffians threw me down three flights of subway steps." After a brief pause, Mr. Bogan responded, "Three flights of steps doesn't take 30 minutes." And then as the book progresses, we get more into his philosophy. Really, it's like more romance is the way I would call this.

• 1:07:08David Senra?

  When you run a business, he sees this as a living thing. When you run a business, you never leave it. You never approach the day as something merely to get through, something to get behind you. Each day is a new adventure, a new experience, and a new challenge. If the business lives, then so do you. I forgot who it was. It might be Toby Luque, the founder of Shopify. I've mentioned this before, I just can't remember who said it, but he said, he once said that building a business was one of the most pure forms of self-expression. I thought that was a fantastic way to put it. Then we're going to see more like Warren Buffett thinking. He says, "Listen, I'm the one writing the annual reports here." Like many firms farm out the creation of the annual report to advertising agencies or report specialists. We do not.

• 1:07:51David Senra?

  We write every word of our annual report, and I am its principal author. I believe if the manager of a company cannot summon an authentic voice to review and evaluate company operations by the year, that manager should find himself a new job. As you can imagine, Sidney mentioned, he was a voracious reader, lifelong. He loved education, he's got a lot of thoughts about that, so he talks about, this is in the 1970s, what I mentioned earlier, when I realized that there's no way this guy has personal relationships. He's spending half his time in the 1970s building this educational institution. I think it's called Friends World College. And so he says, "This college operates with the conviction that young people learn best when they take responsibility for their own education. This view contradicted educational tradition, which held that teachers possessed the knowledge

• 1:08:34David Senra?

  and information students needed, and that it was their responsibility to somehow deliver it to the students. Our college viewed that the teacher as a resource, rather than as the unchallenged fountainhead." This seems very, like, what he's saying is extremely obvious to you and I, because we're lifelong learners, we're clearly doing this on our own time. Like, of course it is. I don't think many people understand this, which is baffling to me. So it says, you know, "The teacher is a resource." Yes. Rather than the unchallenged fountainhead. So if you think of all these entrepreneurs, and when we pick up these biographies and autobiographies, they're such to become our teachers, right? And that's the way. It's like, "There's a resource I'm tapping into. I'm tapping into the fact that this guy had 60 years of education. He's been thinking about business longer than I've been alive."

• 1:09:18David Senra?

  And I pick up the book, and I don't read it, like, "Okay, I'm just gonna..." They teach, they tell you explicitly, "You should be, you should question it. Like, don't just accept, in general, conventional wisdom, like, think through yourself." It applies to what they're telling you in the book. Like, these books are a resource, rather than as an unchallenged fountainhead. That's just fantastic writing. "The college looked to the student to design and execute his or her own study program, of course." Charlie Munger would tell you to build your own curriculum, right? "At its best, it was the embodiment of Horace Mann's metaphor of the student and the teacher on a log, teaching and learning." Right? So he's talking about the responsibility between the student and the teacher. They're both teaching and they're learning at the same time. It's a two-way street. It's not like, he's against top-down hierarchy, which he repeats over and over again.

• 1:10:03David Senra?

  And so he applied that in business. He's applying the same idea to this different, this domain, the educational domain. "From a distance, an observer would not be able to tell who was the teacher and who was the student. Each taught and learned from the other. The effect would be electrifying, and I was often the most stimulated on the campus." So that's pretty crazy, that he's most stimulated in the campus, on the campus. That's the second half of his day. He'd already spent the first half of his day building his own company. Now, granted, he's now 20, at this point in the story, where he's like 25 years down in the building of his company, but he just found a new way to, like, get excited about these things. And then he gets into why this experiment, like, working at this experimental college was helpful to his business. And so he says, although I believed I was supervising an important new experiment in

• 1:10:46David Senra?

  American education, I have failed to realize that at the same time in my business life, I was running a traditional autocratic top-down company. Somehow, I had not recognized the disconnect between what I was learning about supervision and responsibility at the college and the very different way I supervise and manage my employees. He talks about it over and over again. The importance of being fully engaged in your work. When you're younger, it's extremely easy. He's like, don't give this up. I'm 84 years old. I'm on the ball. I'm in this every day. I'm paying attention to what's going on. And so, part of this is because he was interested in building a life of the opposite of what I'm about to describe to you. He says, "I imagine myself getting out of bed in the morning, looking forward only to returning in the evening, with no wish to do anything, but grab a beer and sit before the TV.

• 1:11:29David Senra?

  What must it be like, I wondered, to be convinced that what you're doing now, you'll do for the rest of your life? To have a sense of your own worthlessness?" I really do hope you pick up the book, because you're gonna find more stories like this. He's explaining, he's a fantastic storyteller. And so, I'm gonna read this whole, just, what a story. I'm gonna read this to you. It's gonna happen over, I think, like, two or three pages. It's fantastic. And he says, "I was first persuaded I had the instincts of an entrepreneur at the end of our first year in business." So now, he's an old man looking back at the first year he started his company. "In that year, we produced a tuner and an amplifier. At the end of the year, I found myself with an inventory of 100 pieces."

• 1:12:12David Senra?

  And so, he's starting a new, like, the success, like, the improved version of that product is already going into production. So, like, what the hell am I gonna do with these old products? That's essentially the problem he's trying to solve, okay? "Eager to cleanse the old inventory, I authorized our sales representative to offer the entire quantity to this company called Radio Television Supply Corporation. That offer, I understood it needed to be a bargain." So, he's like, "Let's reduce the price." So, they offered it to the owner of that company. This guy's name is Sol. This was 1953, a half century ago. And for us, it was a very big deal. Indeed, I authorized the salesman to telephone me. Collect from Sol's office. He's gonna refer to him as Mr. Schuper. So let me not confuse you. From Mr. Schuper's office.

• 1:12:54David Senra?

  When he did, I heard Mr. Schuper's voice patronizing me. And so again, he's a young kid. This is a guy who has many more decades of experience in business. And we've seen this over and over again. Ingvar Kamprad had the same experience with an older entrepreneur. He wind up doing a negotiation. He makes a mistake and the old entrepreneur, and they're competitors at the time. He said it's taking advantage of him. He's like, listen, what you're doing, that's a big mistake. You can't do this. And so they're arguing. He's like, you accepted my deal way too early. And he taught him like the art of negotiation. He did this even though he's a potential competitor. Because again, there's something in it where you have these older entrepreneurs that want to educate the new generation. They are us and we are them is the way to think about it. And we're going to see that here. How are you, kid? I'm fine, Mr. Schuper.

• 1:13:39David Senra?

  Good, kid. I understand that you want to unload 100 of these amplifiers. A good move. Send them along and I'll put my check for $7,000 in the mail tonight. Okay, Mr. Schuper, but there seems to be a misunderstanding. The price is $80. That means the check is for $8,000. You a gambling man, son? And he says, the scourge of Las Vegas, Mr. Schuper. So saying yes. And then Mr. Schuper says, I'll toss you for it. Meaning coin toss. Gulp? $1,000 was a lot of money to me back then. You're on, I said. Good, Mr. Schuper says. Toss, I'll call. I managed a horse. No, you toss and I'll call. That was the moment.

• 1:14:22David Senra?

  My immediate instinct was to anticipate how the next steps would develop. I had arrived as an entrepreneur. What does he mean? Check this out. And this is something he does multiple times in his career. So let's go back to this, he's saying, "No, you call. Alright, you toss, I'll call." A moment's hesitation, and then from Mr. Schuber. "Okay, I've tossed. What's your call?" "Tails," I said. There was a terrifying pause at the other end of the line. Finally, an annoyed voice. "Okay, ship the damn things. I'll send you $8,000 tonight." 12 months later, I encountered Mr. Schuber at a hotel in Chicago. "You son of a bitch," he said to me.

• 1:15:03David Senra?

  "I tossed heads, but I was sure that if I said so, you would think I was cheating a poor kid." "You got me." It was a lesson. Bless this guy's heart. Bless, I really hope, as older entrepreneurs, like, they just... It's, like, do you really want to beat up on some young kid? You know you have the experience, you're smarter, you've just seen a lot more. You're gonna wind up kicking that kid's ass. You know that. And look what he does. He's like, "You son of a bitch, I was cheating, uh, I tossed heads, but I was sure that if I said so, "You would think I was cheating a poor kid. You got me." "It was a lesson I never forgotten. It would serve me well thereafter." In the fall of 1886, so now we're talking about 33 years after this happened, check this out.

• 1:15:49David Senra?

  "In the fall of 1986, six years after reacquiring Harmon International from Beatrice, "This is that triple dip, "And operating as a highly leveraged privately-owned company, we determined to go public. "I found myself sitting in an impressive meeting room at the prestigious investment firm Goldman Sachs." Goldman was then, as it is now, widely regarded as one of the preeminent banking firms in the world. "And we were about to launch an IPO." "I represented Harmon International." "And Robert Rubin, who would eventually become the legendary Secretary of the Treasury under President Clinton, "Was the Goldman lead." "There were 20 Goldman people in that room, and at least 100 more on the conference call as we hammered out the offering, price, "And the spread." So you just defined "spread," in case you don't know, is the term used to identify the commission percentage earned by the bank. Okay, so they're arguing, it was like, "What, how much money are you gonna make on me, basically?"

• 1:16:34David Senra?

  We managed to agree on an offering price, but disagreed on the rate. Goldman proposed 6%, and Harmon proposed 4%. After considerable agreement, I summoned that earlier experience and suggested, 33 years later, mind you, that's wild, right? And suggested to Bob Rubin, "It's late, and we've been arguing this for a long time." What do you say we toss for it? He quickly responded, and it's amazing how much this works. Maybe he says something about the gambling nature of entrepreneurs, I don't know. He quickly responded, "You're on." When I said, "Great, you toss, I'll call." He reacted, "I'm the senior figure here, you toss, I'll call." I tossed, he called, he lost, we did the deal 4%. And then he gets to his unexpected point of the story. "High finance, as it is practiced in the real world, is frequently a great deal simpler, less complicated,

• 1:17:18David Senra?

  less sophisticated, and less mysterious than it is usually presented. But much of high finance depends on that very aura of sophistication and inside knowledge." So his whole point is like, think about this, we just, we couldn't, we're taking a company public for God's sake. We can't agree on the spread, and we settle with something as simple as a coin toss. But much of high finance depends on that very aura of sophistication inside knowledge, the aura. So he's saying it's actually not true. "It is a good thing to recognize that nearly all of it reduces to pretty straightforward common sense. And it is a very good thing not to be intimidated and not to hesitate to ask, 'Please explain the process to me. I know very well how to make the product we sell, but yours is another world, and I need some help understanding it.'" That may seem an invitation to more, not less, artfulness,

• 1:18:02David Senra?

  or deceitfulness, or whatever term you want to put on this. "But I have found that by insisting on simple explanations, the mystery disappears, and with it, most of the nonsense." And so that idea, it's really, he's talking about the importance of simple communication, because simple communication enhances understanding. You're building an organization, the more people you add to, the more complex it gets, the more simple you have to speak, right? And he compares the experiences he has and realization in business and education and in government, why this is important, and he's like, "Listen, this is exactly what Warren Buffett gets." And so he goes into this, "There is something to be said for a top manager who understands the material but is not an expert. It is the very seeking of understanding and the requirement that it be expressed in

• 1:18:46David Senra?

  simple and unambiguous language that can assure a minimum of heavy-handedness. The numbers are merely symbols for the important stuff. What counts is knowing what the numbers really mean. I buy into nothing that I do not understand, and the more convoluted or sophisticated the material, the more determined I am to understand it." So he says, "I have never forgotten my experience in government being snowed in by someone who knew the jargon and used it to obscure rather than clarify." So they were trying to take advantage of my inexperience and the fact that if they used these big words and these acronyms, that they seemed to be like the one in a position of authority. As a result, I always reject the suggestion that this is too complex for you to understand. I prefer the Warren Buffett view.

• 1:19:29David Senra?

  If I don't understand it, I'll invest the time and energy to get that understanding. If you can't teach and persuade me, then I will pass on it." So then he gets into this idea of stock buybacks. Warren Buffett talks about this, a great deal, Henry Singleton. Really, I want to read this paragraph to you because we've talked in the past like for public companies, but it just hit me after reading Bloomberg's autobiography that this might be a prudent action for private companies too. Where he talked about the Merrill Lynch deal, where he buys them out two times. They'd at one time owned 30% of the company. He winds up buying in two separate transactions that 30% back. And the reason that you might want to do that is because the fact that you know, like if you, when you have a series of investment decisions to make, what you're going to do with your cash, why would you want to buy back a percentage of your company?

• 1:20:13David Senra?

  Because you know more about that company than anybody else does. And this is exactly what Sidney says here. "The best reason to employ the company's cash to buy its own stock is the judgment that the purchase represents the best investment that the company can make. After all, the CEO knows more about the company, about its process, and about its stock price than any other company or any other investment for which the company might use its funds."

• 1:20:31David Senra?

  So this is what I mentioned earlier about he's an advocate for small well thought out acquisitions. He does not like financial engineering. He uses that example like you'll see like, okay, what if we combine, we have two public companies. What if we combine our two companies, the stock will be more than ours combined. So he's like, the primary motivation for your acquisition is an increased share price. And he's like, that, again, this is what Buffett has told us over and over again. He's like, that doesn't make any sense to him. He's just like, this is the way I did it. Harmon had been consistent, has had consistent success in acquisitions because we have chosen these small, well, he saw as we have sought underlying value and have been guided by key strategic considerations rather than by funny money arithmetic. So that's what he's talking about, financial engineering.

• 1:21:15David Senra?

  Again, I repeat this, but he just sounds a lot like what I've learned about Munger and Buffett. This guy has a very similar thought process. Because we have, we have usually acquired companies that were in significant financial difficulty, our costs have been modest. Although we've made 20 acquisitions since 1980, acquisition is not the way we have grown. The acquired companies were invariably very small at the time we found them. We built them over the years. So he says, for example, when our US automotive OEM company, which is main, like revenue of his business now, was purchased in 1981, its annual sales were 15 million. Okay. So he bought it when it's 15 million. 20 years later, the sales are now 500 million. When we acquired Becker in 95, its sales that year were 150 million, and it was generating

• 1:22:00David Senra?

  enormous losses. Today, they have a billion in sales from that same company he bought, and the company is very profitable. It is also growing at almost 50% a year. And then, I don't mean to repeat this, but he repeats it, so I gotta repeat it to you. This is more on how he agrees with Buffett as opposed to what is popular at the time. Warren Buffett's Berkshire Hathaway clearly follows the strategy of value-driven acquisitions. I think Buffett would say that his requirements are straightforward and consistent. Number one, do not bother me with highly sophisticated technology. I want a business that is easy to understand. Number two, the business must have excellent and dedicated management. Number three, I must be able to buy at a low multiple of earnings or a low multiple of cash flow. The Buffett track record over the past 30 years is an impressive testament to the discipline with which he sticks to that model.

• 1:22:41David Senra?

  In contrast, there are transactions designed by financial engineers, which he repeats over and over again. The basic idea is to use the currency of one company to buy another company that fits a financial model. Strategic fit be damned. Often the suggested targets come from investment bankers who are primarily seeking transaction fees. That is something that's come directly out of the mouth of Charlie Munger. And then, but I have to add this one paragraph. This is really important. He's just saying, "It's not for me. If you're into that, then do it." He's saying, "There is surely room for financial engineers in the business world. That's just not the business I'm in. And it is vital that everyone knows what business he is in." He's got some really interesting ideas about marketing.

• 1:23:25David Senra?

  He talks about the importance of understanding psychology. And so he says, "Marketing demands attention." That is his first sentence, but I also would say it's like the summary of the section. "Marketing demands attention. Like life, it is always one thing after another. It sits atop a gathering of tectonic plates and they keep shifting, altering..." Shifting. "Altering the relationships among theme, packaging, negotiation, advertising, brand, and distribution." This is fascinating, so I'm not skipping any parts, right? I'm going to read this and it's tired. Two more paragraphs for you. And he talks about knowing, say, "Marketing demands attention and you must know what business you are really in." And he's going to give two examples of that. "The beauty of marketing is just that. There is no one and only right way. No standard operating procedure, no template.

• 1:24:07David Senra?

  But it's fundamental is this: know what business you are really in. Apple does not think it makes computers. It believes that it makes tools for creative minds. JetBlue does not behave as though it is in the airplane business. It is in the business of facilitating your life through transportation." And he says, "You've got to focus on this. This is not something you're going to outsource." "I believe that marketing is a central responsibility of management." Steve Jobs also believed that. He met with the marketing team every Wednesday and reviewed every ad. He looked at every ad before it could go out. Every TV ad, every billboard, every print ad. All of them.

• 1:24:51David Senra?

  He is telling you, actually, one of my favorite maxims ever. Actions express priority. It's not what you say that's important to you, it's what you do that's important to you. It's how we understand what's important to other people by just viewing their actions, right? Well, Steve Jobs is telling us with his actions that marketing is extremely important to him. We're also going to see more of Steve Jobs' view, Nike's view as well. It's, well, first, I have a sentence for you. "Our goal has been to create a customer for life." So, he's talking about the importance of prioritizing long-term thinking. It's like, if I capture a customer now and they buy me for four decades because I'm always prioritizing for the long term, it's a lot better than trying to just get a sale today. Even if I maybe sell them a crappy product, or maybe once they buy the product, they have crappy service, whatever the case is, they're just never going to interact with

• 1:25:36David Senra?

  my company again. It doesn't make any sense. Don't optimize for the short term. Your goal is to create a customer for life. And so, he goes through about some of his early ads. Remember, they're producing high-end audio equipment. And so, Steve Jobs identified this with Nike. He's like, "Look at Nike's ads." He's like, "They don't even talk about the product. They don't talk about the laces and the rubber they use." He goes, "What does Nike do?" "They celebrate great athletes." And he's like, there's a great speech on YouTube, but he's just like, "And that's what we're going to do." And so, that's why he, that's when Steve Jobs had the idea, is like, to do the "Here's the Crazy One" commercial, where, when he comes back to Apple, he's like, "We're going to celebrate the great thinkers and influential people of our time, because we know some of them are alive today, some of them are dead, but if they were alive today, they'd use a Mac. They would use our products."

• 1:26:20David Senra?

  And so, you know, "Here's to the crazy ones, the rebels, the troublemakers, the misfits." That's where I got the idea for the misfit feed. So, his same thing, it's the same idea. We, and so, I don't even know, I think I'm going to skip over my point here, or the point, but the part from the book was that his early ads would just celebrate great musicians. And it'd be, you'd have like, I don't know, like, some of these people I'd never even heard of, because they're, you know, this is three or four decades before, it's like three decades before they're even alive, but their print ad would just be a great musician, and then their little name, Harmon Kardon, on there. So, it says, "We continue to celebrate the artistry of great musicians in our advertising." So, Harmon Kardon, celebrating great musicians, Nike selling great athletes, Apple selling great creative thinkers.

• 1:27:07David Senra?

  Now, this is the last chapter of the book. He just goes into like really random thoughts on life. Upon rereading this book, I have considered that I have drawn from the experience of writing it. My reflections are embodied in the following paragraphs. This is my almanac. So, think about wise words from an eighty-four-year-old founder. I remember that, and this is why, you know, I kind of like get excited. And I've done this multiple times when I'm reading these books by these older people, older, successful people, know a lot of things, the greatest way, the most succinct way it's ever been put. I was listening to this interview with an athlete one time, and he'd flown all the way from New Zealand to Los Angeles. And they're like, he's giving an interview, or a podcast, rather. Like, why, you know, flying from New Zealand to LA is a long journey. It's like, why are you out here?

• 1:27:50David Senra?

  He was meeting with another athlete in his sport that was like a generation older. And they're like, oh, why are you meeting with them? And he's like, because he knows some shit. That's the most succinct way I could think. It's like when I'm reading the words of an eighty-four-year-old founder. This guy has built a successful company for six decades. He knows some shit. Some stuff I do not know. Yes, I want to read this book. So, it says, "Getting to know what you believe in is tough work, but once you've done it, it challenges that once seemed insuperable lend themselves to solution. Disappointment or failure can be placed in perspective, and opportunity can be attacked with enthusiasm." Talks about being a complete human. "For me, life is exciting and rewarding when I am mentally and physically alert.

• 1:28:32David Senra?

  I work at both parts, my body and my mind. I work to develop and improve particular skills, writing, speaking, physical stamina, the exercise of curiosity, and the ability to succeed financially." I'm just, again, these are just random little thoughts as you could, as you would expect to see in like a Poor Charlie's almanac or a Poor Richard's almanac. He's talking really about developing an inner compass, which to me is very similar to Buffett's inner scorecard idea. "If you know why you're doing what you're doing, the hard decisions in life that you will inevitably face will become easier." That's the note of myself. This is what he says. "I am not just aimlessly making my way. I am instead setting a reasoned course. I am prepared to accommodate new information and change circumstances, and then act accordingly.

• 1:29:17David Senra?

  By proceeding honorably and enthusiastically and with energy and determination, I will improve the odds. If it all works, good. If it does not, I am prepared to fold my cards and walk away. My inner compass will surely guide me to another worthwhile undertaking."

• 1:29:34David Senra?

  He's got fantastic, fantastic ideas on writing, which he started with the very beginning. He's like, "Writing is discovery." That's freaking fantastic. He says, "Sadly, writing is lightly regarded in business and often dismissed as unnecessary." He's like, "That's stupid." "Writing is a unique and powerful instrument. Writing is discovery. Anyone who has done any serious writing has experienced the surprise that comes when reading in the morning that which he wrote the night before. The person who invests in writing, who exercises the discipline to do it well, and who uses it frequently, will possess a matchless instrument for discovery, clarity, and persuasion. It is a tool for thought. Most business schools seem to share the same dismal view of writing that is common in

• 1:30:19David Senra?

  business. It is rarely treated as a major tool to be developed and honed." He's in the section, maybe he doesn't come out and say it, but it sounds like a little bit of regret. "Sylvia Herrmann and I divorced in 1970 after 25 years of marriage and four lovely children. We were unable to overcome the tension and pressures in our marriage that were generated by my 24/7 days." So, he's saying, "It's my fault. I was a workaholic, and that's going to create tension and pressure." You can't have a relationship. You just can't. If you're working from 7:00 in the morning until 10:00 at night, like, come on. Then he talks about the importance of just being prepared. And the way I think about this is the David Ogilvie quote.

• 1:31:01David Senra?

  "Those who approach their work unprepared are ignorant amateurs, if you're not learning from the experience before you." And he talks about when you're interviewing people, he says, "Nothing leaves me more astonished than the evidence that so many otherwise serious people come to an interview with no preparation. Really? How much trouble is it to learn something about the company, and for that matter, to learn something about the interviewer? I can tell you that were I to be interviewed by Jack Welch, the moment would come when he would hear me say something to the effect of, 'That is so interesting. I had wondered about that very point when reading Chapter 7 of your book. You said of a job candidate, 'The man displayed business vision and edge.' What did you mean by edge? Whether the substance of the question is crucial or not, there is little doubt that Mr. Welch would respond to the fact that I had read his book and thought about it.'"

• 1:31:44David Senra?

  Then he says, "I'm 84, yet I work out every day, and I really love my work. It is creative, demanding, interesting, always new, and very rewarding. I have lived a long life. I continue fully engaged, fully responsible, and fully committed."

• 1:32:00David Senra?

  And then he, the last thing he's going to say, and then I'll close on something else that, because this is important for us to know, because a lot of us, we're still in the climbing aspect, we're at the beginning, maybe middle of our careers, and they're going to tell you, you need to, you should be document, you're overestimating what you think you're going to remember. Don't do it. So he says, "I wish I had a collection of products, newspaper clips, memos, and other historical artifacts of my long life in business, education, and government." I don't. It never occurred to me that what I was doing, that I was doing anything worth preserving in print or product. I urge you not to fall into the same error. Keep a record of what you're doing. It need not be a diary, but preserve

• 1:32:40David Senra?

  the appropriate, relevant memorabilia. I suspect that you'll be grateful that you did." I'm going to quote Phil Knight in his autobiography, Shoe Dog, says the exact same thing. So let's, these are two smart, accomplished entrepreneurs. Let's avoid their mistakes. "I struggle to remember. I close my eyes and I think back, but so many precious moments from those nights are gone forever. Numberless conversations, breathless laughing fits, declarations, revelations, confidences. They've all fallen into the sofa cushions of time. I remember only that we always sat up half the night, cataloging the past, mapping out the future. I remember we took turns describing what our little company was, and what it

• 1:33:24David Senra?

  might be, and what it must never be. How I wish, on just one of those nights, I'd had a tape recorder, or kept a journal, as I did on my trip around the world." That is where I'll leave it. If you want to buy the book, using, if you use the link that's in the show notes, you'll be supporting the podcast at the same time. Some, some podcast players are not populating links, I've been told. So, anything I say, just go to founderspodcast.com. I'll leave the links up there as well. You could also see every single book I've ever done. You could just go to this URL. It's amazon.com/shop/founderspodcast. So you see this book, you'll see every single other book that I've done in reverse chronological order. If you buy a book doing that, you'll be supporting the podcast at the same time.

• 1:34:07David Senra?

  And if you want to buy a gift subscription, I will leave a link as well. If you don't see that link in your podcast player, you can go to founderspodcast.com, and you'll see, you'll see a link up there for, to buy a gift subscription as well. That is 229 books down, 1,000 to go. And I'll talk to you again soon.