320. Letting Go

If you're a C. E. O., there are a lot of ways to leave your job, from abrupt firing to carefully planned succession (which may still go spectacularly wrong). In this final episode of our "Secret Life of a C. E. O." series, we hear those stories and many more. Also: what happens when you no longer have a corner office to go to — and how will you spend all that money?​

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

• 5:00Speaker 00

  From WNYC Studios, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

• 5:22Stephen J. Dubner?

  We've spent the past several episodes speaking with the CEOs, past and present, of Facebook, Microsoft, PepsiCo, General Electric, Virgin, Yahoo, the Carlyle Group, Bridgewater Associates, and Reddit, also the academics who know them best. The first episode looked at what a CEO actually does and why they're paid so much. We followed that with a look at how our CEOs got to the top. Next was an in-depth conversation with Indra Newy of PepsiCo, a conversation that was turned into a global meme called Lady Doritos. The episode after that was, fittingly, about crisis management, and then a look at why female CEOs are so rare and why they're often asked to run companies that are in trouble. On today's episode, the end of the road. It's a road that, from what we've been hearing, is fairly exhausting.

• 6:08Speaker 02

  Today, I woke up at 4:00 AM.

• 6:10Speaker 03

  I was starting a company without financial resources. I try to read two books a week.

• 6:14Speaker 04

  I fought so hard against that and fought and fought.

• 6:20Stephen J. Dubner?

  The worst way to go, I think we'd all agree, is involuntarily. That's what happened to Carol Bartz, who was fired from Yahoo after just a couple of years. The chairman of the board fired her by phone.

• 6:32Speaker 04

  He didn't have the nerve to see me face to face. Now, I like to think he didn't have the nerve because he knew I would have probably punched him out.

• 6:42Stephen J. Dubner?

  Ellen Pao was interim CEO of Reddit. She says she was pushed to aggressively grow the company.

• 6:49Speaker 05

  I had warned the board, like, this is going to be, you know, pretty ugly. It's going to be, you know, a mess for a while.

• 6:58Stephen J. Dubner?

  It was a mess. Pao lasted just eight months.

• 7:02Speaker 05

  At the end of the day, I think the... Bored, you know, didn't have a stomach for it.

• 7:06Stephen J. Dubner?

  But she's still working back in venture capital where she came from.

• 7:10Speaker 05

  I am the Chief Diversity and Inclusion Officer at the KPOR Center and a venture partner at KPOR Capital.

• 7:16Stephen J. Dubner?

  Carol Barts, who pretty much came out of retirement to run Yahoo, stayed there this time. And she's enjoying life. I love quesadilla. I just think it's so simple, tortilla, cheese, and whatever you have. And for the pleasure of being fired from Yahoo in 2011, Barts walked away with a compensation package of roughly $16 million. Golden parachutes are standard issue for fired CEOs. Here's Jeff Sonnenfeld of the Yale School of Management.

• 7:47Speaker 06

  You know, Carly Fiorina, who sliced shareholder wealth in half at Hewlett Packard and created a chaotic strategic pileup of computer carcasses and made the company larger and far weaker, she somehow had a huge package to leave.

• 8:03Stephen J. Dubner?

  A package that was reportedly worth something like $100 million.

• 8:13Stephen J. Dubner?

  One reason CEOs are paid so much, both during their terms and even afterward, is that the job has become increasingly difficult.

• 8:22Speaker 07

  You know, in the 1950s, CEOs, basically, they got the job and they could stay until they were ready to retire.

• 8:28Stephen J. Dubner?

  David Rubenstein is a co-founder and, until recently, co-CEO of The Carlyle Group. It's one of the biggest private equity firms in the world.

• 8:37Speaker 07

  I think it's much harder today because today you have much more scrutiny of what you're doing. It used to be the case that activist investors were not taken that seriously by boards. Now, an activist can, with 1% or 2% of the stock, really change who the CEO might be or change the direction of the company. I think the scrutiny in terms of everybody on social media watching what every company's doing all the time is much greater than it used to be.

• 9:08Stephen J. Dubner?

  Today, the scrutiny and the pressure can be relentless, even for someone who's had great success like Satya Nadella.

• 9:15Speaker 08

  Thank you so much.

• 9:18Stephen J. Dubner?

  Nadella, the CEO of Microsoft, isn't close to retirement. He's only 50 and he got the job just three years ago. Already, he's been credited for pulling the company out of a serious stall. Microsoft's market cap has risen roughly $400 billion since Nadella started.

• 9:35Speaker 08

  The idea that a lot of progress has been made is not how I look at it. We are clearly grounded in all the things that we can do better, whether it's the products we build, the capability we create, or the culture we have. And on all three fronts, I feel there's a lot to be done. I'm proud of the progress, but it's not sufficient.

• 10:00Stephen J. Dubner?

  Obviously, the role of CEO is vast and there are many duties and obligations. There's deal making, there's strategic planning and customer relations and technical elements. You are, after all, an engineer and daily personnel management. Can you rank for me your different duties from kind of least favorite to most?

• 10:22Speaker 08

  I have to admit, the most favorite is when I get to meet these engineers who know no fear or no conceptual boundary and can dream of the most impossible things. There's no question. I mean, for me, that's when I get energized. And I'd say my least favorite thing would be when someone says, you know, come, just do these ribbon cutting type of things.

• 10:51Stephen J. Dubner?

  And would you say podcast interviews rank closer to the ribbon cutting or the meeting with engineers?

• 10:57Speaker 08

  You know, talking to you is one of my great pleasures.

• 11:01Stephen J. Dubner?

  All right, now I know you're a good liar because that sounded very credible.

• 11:12Stephen J. Dubner?

  One reason that being CEO is so hard is that, as Indra Newy told us, when you're the CEO, you are it.

• 11:19Speaker 02

  When you become CEO overnight, you are the person calling all the shots. It's a very daunting job.

• 11:26Stephen J. Dubner?

  Daunting and potentially lonely.

• 11:30Speaker 02

  Incredibly lonely.

• 11:31Speaker 04

  People don't talk about this a lot, but it is a very lonely job.

• 11:35Stephen J. Dubner?

  Carol Bartsch again.

• 11:36Speaker 04

  There's really no one you can talk to about concerns in the company. The board is there, and many times there's at least one or two board members that are pretty easy to confide in. But for the most part, you know, they show up six times a year. And also, it's a little dangerous to talk about today's problem because then they never forget it. And so, you know, then they keep asking, well, how is such and such doing? And you're like, oh, my God, that was put to bed six months ago. I should never have said anything.

• 12:20Speaker 09

  It's hard for CEOs, I think, to get fully candid advice because they're there at their own on the top.

• 12:26Stephen J. Dubner?

  That's Nicholas Bloom, an economist at Stanford.

• 12:29Speaker 09

  It's hard for them to talk with their peers. Remember, there's antitrust. So, you know, if the head, CEO of McDonald's start to talk to the CEO of Kentucky Fried Chicken, they'd be taken to court. So, they can't really talk that well to their peers. So, who can they talk to? The, you know, the people below them who are never fully honest. We've seen it over the centuries and, you know, millennia with kings that are lonely at the top. They surround themselves with courtiers and, you know, advisors. And on the one hand, they want honest advice. On the other hand, you know, they have a tendency, particularly in medieval England, you know, to chop the heads off the people that didn't agree.

• 13:06Stephen J. Dubner?

  As I said, this sentiment came up in several interviews, but not every interview.

• 13:11Speaker 10

  All that crap about lonely at the top and nonsense, pure nonsense.

• 13:18Stephen J. Dubner?

  That's Jack Welch, former longtime CEO of General Electric.

• 13:22Speaker 10

  No, it's not lonely at all. That's the biggest myth in the world. You got your friends there. You're all sharing everything you have. I mean, rarely do you have such an opportunity and a job to totally change lives, make people rich, send their kids to college, get vacation homes. I mean, it's a turn-on. I used to call guys in my office and give them a million bucks. Do you realize how good that feels? And some of them would cry, "Here's a million dollars. Stop." They'd go home thrilled, thinking of the party they're having in their house that night.

• 14:08Speaker 03

  No, I don't get lonely. I mean, I love people.

• 14:11Stephen J. Dubner?

  That's Richard Branson, founder of The Virgin Group. He started with one record shop and now has dozens of companies, including the space travel firm Virgin Galactic.

• 14:20Speaker 03

  Maybe I'm lucky. I don't know. But I mean, there are occasions, because I'm a recognizable face around the world, that I can maybe get just a little bit too many selfies in a day.

• 14:31Stephen J. Dubner?

  Is that why you want to go to space, to avoid all that?

• 14:34Speaker 03

  Well, maybe that's why I live on an island, anyway.

• 14:37Stephen J. Dubner?

  You've admitted that Virgin Galactic may not be the best bang for the buck when it comes to maximizing profits. You also admit that the Virgin board has not been thrilled with the endeavor. Why is this so important to you?

• 14:52Speaker 03

  You only live once, and there are millions of people who'd love to become astronauts, who'd love to go to space, me included. And I love a challenge.

• 15:09Stephen J. Dubner?

  Perhaps the biggest challenge for any CEO is the transition, whether it's sudden and involuntary or a well-executed succession plan.

• 15:20Speaker 02

  The day you become CEO, you have to think about grooming a successor.

• 15:23Stephen J. Dubner?

  Indra Nui has been CEO of PepsiCo since 2006.

• 15:27Speaker 02

  How do you, you know, take people and give them bigger assignments?

• 15:32Stephen J. Dubner?

  It wasn't always thus. The process of grooming and choosing a successor wasn't always so methodical.

• 15:39Speaker 06

  When I started doing this work in the 1970s, virtually every CEO would have some version of, oh, that's taken care of. That's right here. And they'd open up a drawer and pull out an envelope with the names in here.

• 15:51Stephen J. Dubner?

  Jeff Sonnenfeld again.

• 15:52Speaker 06

  Who is that person? Shouldn't we all know who that is? Certainly, we on the board should know. What's the training that person has? What's their preparation? And what are the alternatives? Have we benchmarked some people against the outside? That was the way things were in the 70s.

• 16:07Stephen J. Dubner?

  What about the 80s?

• 16:08Speaker 06

  In the 1980s, people were being stacked, whether or not it was through mergers or whatever. Commitments were being made. Okay, this person will be the next CEO. We were coming out with some very recipe-like HR practices that somebody is ready now and ready in five years and whatever.

• 16:26Stephen J. Dubner?

  And who was responsible for writing these successor recipes?

• 16:30Speaker 06

  There was often a czar of some sort of executive development that were poured directly to the CEO that had tremendous kingmaker or queen-making power. You were worried about that person. They were legendary. They could derail people's careers. There's a lot of personal prejudice and ethnic and gender, racial bias often built into those roles. So that was a real problem in the 80s.

• 16:53Stephen J. Dubner?

  Okay. Glad we're out of the 80s. What about the 90s?

• 16:56Speaker 06

  Then, you know, we started to see the supremacy of certain functions that, with all the deal-making frenzy, that somehow finance had this primacy and CFOs had raced past COOs.

• 17:09Stephen J. Dubner?

  One firm that participated in that deal-making frenzy was General Electric under Jack Welch. He stepped down in 2001, having run GE for 20 years.

• 17:20Stephen J. Dubner?

  You'd been there a while, and you were getting on in years, but you, I'm guessing, if you'd really wanted to, you could have powered through some more years. How do you know as a CEO that it's time to go?

• 17:31Speaker 10

  The reason I left was not that I was tired. The problem was you have expectations in a bureaucracy, and the expectations of these talented, wonderful people. I didn't do it because I was tired or bored. I loved it. I did it because it was the right thing to do for the rest of the people. And I would have expected it when I was there, that there's a certain rhythm. And 65 was the rhythm in GE.

• 18:01Stephen J. Dubner?

  Meaning Welch was going to be 65 years old, and it was time for someone else to have their turn at the top. He and the GE board meticulously plotted his succession.

• 18:13Stephen J. Dubner?

  Their candidate list began with two dozen names. Over the next four years, Fortune Magazine reported, Welch tried to fill the gaps in all the candidates' resumes and test their ability to grow. Finally, the two dozen were narrowed down to three. After another round of auditions, Welch and the board made their decision.

• 18:33Speaker 10

  I told the two guys that weren't going to get it, I told all three six months before, all three of you are going to have new jobs. One of you is going to be running GE, and two of you are going to be CEOs elsewhere.

• 18:48Stephen J. Dubner?

  The two who didn't get the job indeed wound up as CEOs elsewhere. Jim McNerney at 3M, and later at Boeing, and Robert Nardelli at Home Depot, and after that, at Chrysler. The man who did get the GE job, Jeff Immelt, who would go on to run GE until 2017. His record was, at best, mixed. The firm's value fell a great deal. Some blamed Immelt, some blamed economic forces, and some blamed Welch for having built a conglomerate with so many moving parts that it was unsustainable. Welch famously pushed GE well beyond its manufacturing and technology roots into businesses like insurance and financial services, businesses that GE has since sold off.

• 19:34Stephen J. Dubner?

  I'm just curious, did you regret that you had to take on so much of financial services to drive profit?

• 19:40Speaker 10

  No.

• 19:41Stephen J. Dubner?

  You didn't?

• 19:42Speaker 10

  No, I thought we had tons of leverage there. We had a great balance sheet. We had a talent in financial services. We had our own homegrown financial management program where we could put people. We built great businesses and I would still be in it if I was running it.

• 20:03Stephen J. Dubner?

  Oh, really? That's interesting. So you wouldn't have divested all...

• 20:06Speaker 10

  Wells Fargo is doing beautifully with the assets they bought.

• 20:09Stephen J. Dubner?

  Yeah, well, it helps when you're making up a fake million accounts here and there, right?

• 20:15Speaker 10

  Well, that's not the businesses they bought.

• 20:18Stephen J. Dubner?

  So you're saying that you would not have divested the financial services stuff if you were still in it?

• 20:23Speaker 10

  No, I'm not saying that. I'm saying that I might not have gotten in the trouble that they got in by exploding in real estate, but that's second guessing. You can't second guess a CEO. That happened eight years after I left. That's the normal tenure for two CEOs. To talk about what I would have done or what somebody else would have done when I was there is unfair.

• 20:52Stephen J. Dubner?

  In 1999, not long before you retired from GE, you said that your ultimate success would be determined by how well your successor grows the company over the next 20 years. When you said that, GE's market cap was up north of 450 billion. Now, it's almost 20 years later, it's just north of 200 billion. So, talk to me about that. I know that you were very...

• 21:15Speaker 10

  I don't talk about that.

• 21:16Stephen J. Dubner?

  You don't? Why not? I mean, it's public record. I mean, we know that...

• 21:20Speaker 10

  You can comment on it any way where you want, but I haven't commented on my successor once in the 20 years and I don't intend to comment now. You can judge me any way you want on whether I picked the right guy or not. You gave numbers and one from those numbers would question how well I did, but I'm not commenting. And if you want to give me a black mark, give me a black mark. I did the best I could. I picked the guy.

• 21:58Stephen J. Dubner?

  I'm curious whether you carry over this tradition from the US presidential tradition, where it's a kind of standard for the former president to stay out of things? Or did you come up with this on your own?

• 22:08Speaker 10

  My predecessor came up with it. He never commented on me. And I radically changed everything he did. And he sat quietly and was a friend.

• 22:21Stephen J. Dubner?

  The transition from Jack Welch to Jeff Immelt was considered so sensible, so thorough, that business schools taught it as a perfect example of how to search for and install a successor. Oh, well. It doesn't mean it wasn't sensible and thorough, or that Immelt was the wrong man. It just means that business is hard. Most big firms throughout history do lose their mojo. The CEO who recently replaced Immelt, John Flannery, he's not having a very good time either. When we spoke with Welch, GE's market cap was just above $200 billion.

• 23:02Stephen J. Dubner?

  It's since fallen to roughly $130 billion. Coming up on Freakonomics Radio, if you think that kind of CEO transition is hard, how about one where the CEO started the company?

• 23:16Speaker 11

  How do you do the right checks and balances? Should you have a board? Should you not have a board? What are the processes and all of that?

• 23:22Stephen J. Dubner?

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• 24:07Stephen J. Dubner?

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• 24:34Stephen J. Dubner?

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• 25:06Stephen J. Dubner?

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• 26:01Speaker 07

  Generally, the companies that are going to make it are the companies that have a CEO, founder, who has driven the company for the first couple of years.

• 26:09Stephen J. Dubner?

  That, again, is David Rubenstein of the Carlyle Group. He's worked with and seen every kind of CEO transition imaginable in medium sized firms looking to get bigger, in big firms looking to reboot, and what he's talking about here, in startups that outgrow their CEO founders.

• 26:27Speaker 07

  And then you'd bring in a CEO who's better at managing a more mature company than somebody who's getting it off the ground.

• 26:33Stephen J. Dubner?

  What about when the startup CEO wants to stay and plainly isn't the right person for the job? How do you handle that?

• 26:41Speaker 07

  It can be a very complicated conversation. Typically, outside investors will may have the majority voting stake or the majority of the board by years three or four, and they might have the ability to vote out the CEO, but it's not pleasant. So sometimes you give the CEO different responsibilities.

• 26:58Speaker 03

  I've delegated pretty well all the CEO roles.

• 27:06Stephen J. Dubner?

  And that, again, is Richard Branson of The Virgin Group, a conglomerate with many companies in many industries. Branson started Virgin when he was a teenager. Now he's 67.

• 27:18Speaker 03

  And I actually believe that people should delegate early on in their businesses so they can start thinking about the bigger picture. And we accept that some things they'll do differently than us, some things they'll do better than us.

• 27:32Stephen J. Dubner?

  It strikes me that even the most public facing of those CEOs is much less public facing than you. In many ways, the Virgin brand is really Richard Branson. That, at least, is my assessment. I'd love to hear your assessment and how you see yourself as a representative of your firm.

• 27:53Speaker 03

  You know, if you go back to when I was 15, 16, I didn't have any money. And I was starting a company without financial resources. So, you know, I would do anything I could to get Virgin on the map, even if it meant, you know, jumping in boats or balloons and trying to break world records, et cetera. I think that worked. I think the Virgin brand is here to stay and hopefully will outlast me. And that was the original plan.

• 28:26Stephen J. Dubner?

  You know, that's what I wanted to ask you next. I'm glad you brought it up. What would Virgin look like beyond Richard Branson? And I'm curious if you think about succession.

• 28:36Speaker 03

  Well, I'd be irresponsible not to. First of all, we're all a company run by wonderful people. We have a chairman and chief executive who run the group on a day-to-day basis. And I've got two wonderful children who do their own thing, but they dive in and out. But I'm still enjoying myself. So for the next 10 or 20 years, I'm still going to be very much involved, I hope.

• 29:05Speaker 06

  He is kind of elusive.

• 29:07Stephen J. Dubner?

  Jeff Sonnenfeld again.

• 29:09Speaker 06

  He's a moving target. He, I think, has an inspirational quality. No matter what the crisis is, or the success is, it's very Richard-centric. You can't list, with Jack Welch, you can list, like them or not, you can list 20, 25, 30, very high-profile, and for the most part, very successful progeny. Some of them loved him, some of them didn't. But his very strong record of leadership creation and identification with Branson. I don't know, can people name? One, two, three? I mean, that is a sign of grandiosity that isn't something which is generally used as a yardstick outside of the world of entertainment.

• 29:55Stephen J. Dubner?

  So Jeff Sonnenfeld, as a CEO-observer, isn't so impressed with how Richard Branson has managed the next generation of leader. There's another founding CEO of a much younger company that Sonnenfeld also disapproved of.

• 30:09Speaker 06

  I thought he showed an incredible audacity to not learn and listen as a leader.

• 30:14Stephen J. Dubner?

  He's talking about Mark Zuckerberg of Facebook.

• 30:16Speaker 06

  He was obviously technologically brilliant, but self-absorbed, if not even disdainful, of the people who were giving him the money to make him so wealthy, sending out videos of himself with the hoodie on, not going out and meeting on the roadshows with investors.

• 30:31Stephen J. Dubner?

  At least that's what Sonnenfeld used to think.

• 30:33Speaker 06

  Oh, my gosh, has he changed. He's a reminder that, yeah, adults can learn and grow. He had a great board, great mentors, and also, he's just been a great learner. He has been remarkably different now as a leader than he was when he first became CEO.

• 30:50Stephen J. Dubner?

  Zuckerberg, despite rumors of his political ambitions, seems ready to stay at Facebook for a while at least. After all, he's only 33. So he's got time before he starts thinking about letting go. As Sanenfeld says, he's shown remarkable growth. Here's what Zuckerberg told us recently about managing employees.

• 31:09Speaker 12

  The real art, I think, is not when you know that you have someone who's a superstar, who's going to make great decisions, but deciding to let people do things that you disagree with because on principle and you know it's just going to free up more creativity and people will feel like there's more potential to try different things in the future that may be better if you let them go do those things, even if you disagree with them.

• 31:38Stephen J. Dubner?

  Still, the time will come eventually to let go. At some point Zuckerberg may start asking his elders how they did it, what worked, what didn't work, and what it feels like.

• 31:51Speaker 11

  Well, first of all, I know that I don't know how anything's going to go until I actually experience it.

• 31:58Stephen J. Dubner?

  That's Ray Dalio, the founder of Bridgewater Associates, the world's largest hedge fund.

• 32:03Speaker 11

  I have a saying, if you haven't done it three times successfully before, you probably don't know how to do it.

• 32:09Stephen J. Dubner?

  Dalio founded Bridgewater in the 1970s. It had some early failures.

• 32:13Speaker 11

  I was so wrong. I had to let clients go. I lost money. I got so broke that I had to borrow $4,000 from my dad.

• 32:24Stephen J. Dubner?

  Bridgewater is not a typical company. Built in Dalio's image, it became famous for practicing what he called radical honesty and radical transparency. It wasn't for everybody.

• 32:36Speaker 11

  The senior partner said that you're making people uncomfortable. You're demoralizing them with your straightforwardness.

• 32:44Stephen J. Dubner?

  But it worked. Today, the firm manages roughly $160 billion.

• 32:50Speaker 11

  And so when I undertook the process of transitioning, I said, well, I think that this is going to go quick, maybe two or three years. But I'm not actually sure of how it would go.

• 33:02Stephen J. Dubner?

  I'd love you to talk for just a second, Ray, about when you stepped down as CEO a few years ago and installed a new CEO, but then had to step back in as temporary co-CEO. I'm just curious. What happened? What did you miss?

• 33:16Speaker 11

  So I realized, like, the transition from a founder-owned company to an independent company is, you know, classically very challenging. And so how do you approach that? How do you strike that balance? I wanted to be totally a mentor, being there for other people and letting them do it the way that they wanted to do it. And then I found myself in the surprising position of having them struggle with that, unacceptably struggle with that.

• 33:47Stephen J. Dubner?

  And this was a guy who you'd hired as a kid, essentially, and had been around forever, and I gather were very close with, yes?

• 33:52Speaker 11

  Yep, you know, for like 20 years. And, you know, I love the guy. I mean, literally, wonderful, deep relationship, brilliant man. And I think it was largely my fault, too. I think I gave him too much. You know, when the business grew up, there were two things. I had to get my head into all the investment and economic stuff that I do, and then also run a business simultaneously. And any one of those things is too much for any human being, me included. And then to take that and then sort of to give it to this person, you know, I made the mistake essentially of giving too much.

• 34:29Stephen J. Dubner?

  The man in question here is named Greg Jensen. He's still at Bridgewater, but as co-CIO now, Chief Investment Officer.

• 34:37Speaker 11

  So we had that evolution, but we didn't anticipate it.

• 34:41Stephen J. Dubner?

  Jensen and Bridgewater were in the news again recently. The Wall Street Journal reported that Bridgewater had paid a settlement of more than $1 million to a former employee Jensen had an affair with, apparently while he was running the firm. He was also accused of sexually harassing at least one other female employee. Jensen called the report, quote, "inaccurate and salacious," and Dalio defended him as "a man of high character." Whether Jensen's behavior contributed to his demotion is unknown, but when he was demoted, Ray Dalio stepped back in to co-run the firm, along with a tech executive recruited from outside Bridgewater. That guy lasted less than a year. Finally, in April of 2017,

• 35:24Stephen J. Dubner?

  Dalio put Bridgewater in the hands of two longtime insiders, and he remained, along with Greg Jensen, co-CIO.

• 35:33Stephen J. Dubner?

  So what happened that Dalio was finally ready to step down again?

• 35:37Speaker 11

  We learned a structure. And I learned a whole bunch of things that I never understood before, like about governance.

• 35:44Stephen J. Dubner?

  That's the thing about being CEO of a firm you started. It's your firm. It's got your shape and idiosyncrasies. Part of the reason people start their own companies in the first place is to escape the cookie cutter mentality. But that can leave you, as it left Dalio, with a lot of blanks to fill in later during a CEO transition that lasted a lot longer than he had anticipated.

• 36:06Speaker 11

  How do you do the right checks and balances? Should you have a board? Should you not have a board? What are the processes and all of that? So it became a learning process that evolved over seven years.

• 36:17Stephen J. Dubner?

  Another founding CEO who recently stepped down, but not aside completely, is David Rubenstein. His new title is co-executive chairman.

• 36:26Speaker 07

  I have a theory that if you retire, you know, you could go downhill quickly. And I have a theory that if you relax too much, your immune system relaxes, germs come in and they see a relaxing immune system, they attack, and all of a sudden, you're in trouble. So I don't want to relax too much because I'm afraid that bad things will happen.

• 36:43Stephen J. Dubner?

  Jack Welch is another former CEO who's kept very, very busy.

• 36:47Speaker 10

  I started my own school.

• 36:49Stephen J. Dubner?

  It's called the Jack Welch Management Institute, which is what exactly?

• 36:54Speaker 10

  An MBA program, online, fully online, fully accredited for all working adults.

• 37:01Stephen J. Dubner?

  And there's also this.

• 37:02Speaker 10

  I've given thousands of speeches around the world. I've taught at MIT for six years.

• 37:13Stephen J. Dubner?

  We don't have good data on this, but it would seem that the kind of person who's capable of becoming a CEO is often, like Jack Welch and David Rubenstein, not the kind of person who wants to just chill out. Plus which, golf is not Rubenstein's thing.

• 37:30Speaker 07

  I concluded that with respect to golf, that it was too frustrating and too humiliating because I have the view that if I have a business meeting with somebody and they think that I'm competent and intelligent, if I were to go on the golf course, I would destroy the illusion of competence and intelligence.

• 37:46Speaker 13

  I really love golf. My first year I retired, I played 100 rounds.

• 37:50Stephen J. Dubner?

  That's Steve Ballmer, who ran Microsoft from 2000 to 2014. So plainly, he's in the pro golf camp. Ballmer's departure from Microsoft was a bit messy, with some hurt feelings.

• 38:04Stephen J. Dubner?

  I'm curious, going forward, how much you care, or I guess, how do you care about Microsoft's future success?

• 38:12Speaker 13

  Well, when I ran Microsoft, I was always consistent in saying, the number one measure of whether I did a good job or not would be what Microsoft would look like 10 or 15 years after I left. And so I can't do anything at this stage. You know, I'm just a, I'm just an outside, independent guy. On the other hand, of course, I'm rooting for the company for three reasons. I'm a shareholder because it is the mark of whether I did a good job or not. And part of that is the succession plan. And oh, by the way, I got a lot of friends who work over there and I think the world of.

• 38:47Stephen J. Dubner?

  And don't be fooled by all that golf bomber plays. He's got a lot of other stuff going on.

• 38:51Speaker 13

  Hoopers, hoopers, hoopers. I own a basketball team.

• 38:55Stephen J. Dubner?

  The Los Angeles Clippers is Ballmer's team. He's also involved in a lot of philanthropies, including a website called USA Facts, which synthesizes 30 years' worth of data from federal, state, and local governments. It's sort of a fiscal colonoscopy of the American government.

• 39:13Speaker 13

  If I'm a citizen, I don't want to know just where the government got its money, from whom, and where it's been. But is it working at all? Or at least, what activity is it generating? Do we like the kind of outcomes we're getting?

• 39:31Stephen J. Dubner?

  That's the thing about the afterlife of the CEO. You've got money, you've got connections, you've still got name recognition, if not as much actual leverage, but you've also got freedom of speech. Being a CEO often means trying to never say anything to anybody that any other person could possibly construe as controversial. The idea is probably best expressed in a quote from long ago, and quite possibly apocryphal, attributed to the basketball superstar and endorsement machine, Michael Jordan. There was a Democratic Senate candidate from Jordan's home state of North Carolina, Harvey Gant, who wanted Jordan's support.

• 40:12Stephen J. Dubner?

  Gant is black, as is Jordan, and Gant was running against an old-school, white Republican incumbent, Jesse Helms, who was widely viewed as a racist. But Jordan declined to support Gant. Here's what he reportedly said. Republicans buy sneakers, too. Michael Jordan was smart enough to know that even though he was still a basketball player, he was also the CEO of Michael Jordan, Inc. So, most CEOs are as anodyne as it gets, especially about politics. But when you're no longer speaking on behalf of your firm, you can say whatever you like. Take Jack Welch.

• 40:56Stephen J. Dubner?

  Here's what he said in the fall of 2017, when I asked why he hadn't quit President Trump's Business Advisory Council, like many other CEOs did, after Trump spoke out in defense of a white nationalist protest in Charlottesville, Virginia.

• 41:12Speaker 10

  I felt you're better off inside the tent, staying on the commission, seeing them making your position known than being outside. So I was one of the two or three that disagreed. But I wasn't an active CEO. I was the only retiree on there. So I didn't bang the table, but I thought it was a bad decision to express your frustration. But I understand if you've got a lot of employees and they're rebelling over it, you might want to get out of town.

• 41:47Stephen J. Dubner?

  What's your assessment so far of President Trump's leadership style?

• 41:52Speaker 10

  Well, I give him a D minus on management practices, and I give him an A plus on policies.

• 42:02Stephen J. Dubner?

  You think you could run him through your management institute and get that D minus up to a B or something?

• 42:07Speaker 10

  Well, this is a guy that ran his own company. So he does things like, I didn't disagree with removing James Comey, I disagreed with the way he did it. But he abandons soldiers in his army very quickly. I don't, leaders of a corporation wouldn't do that.

• 42:29Stephen J. Dubner?

  So you think it's a function of him being in a family corporation where everybody around him is a little bit too obedient, perhaps?

• 42:36Speaker 10

  Yeah, that's causing him problems.

• 42:38Stephen J. Dubner?

  Do you think someone of his age, experience, and position now, with everybody watching every move, do you think it's possible for someone like that to change as fundamentally as you're suggesting he change?

• 42:48Speaker 10

  We'll see.

• 42:51Speaker 10

  I think he's changed. I think he's changed for the better in many ways in some speeches he gives. But the consistency isn't there by any means. I mean, he gives a UN speech that was remarkably effective, first class, and by the weekend, he was having a fight with the NFL. You didn't hear another day of the UN speech.

• 43:21Stephen J. Dubner?

  David Rubenstein of the Carlyle Group doesn't shoot from the hip like Welch. In fact, his career has been marked by a quiet sense of discretion and propriety. Here's what Jeff Sonnenfeld of Yale said when he learned that Rubenstein was stepping down as CEO of Carlyle, but was going to stay on as an executive chairman.

• 43:43Speaker 06

  So it's a shame only that he's stepping down. If he was to be moving beyond Carlyle, you would have prayed that he could have been lured into any presidential administration. You could almost randomly look at any cabinet position, for example. Literally, whatever role it was, it wouldn't be better served with him there.

• 43:59Stephen J. Dubner?

  Rubenstein has been a Washington fixture for decades. He's recruited many former politicians to work at Carlyle. He himself got his start in the Carter White House.

• 44:10Speaker 07

  So at 27, I was the deputy domestic policy adviser to the President of the United States, a job I obviously wasn't qualified for.

• 44:16Stephen J. Dubner?

  Now, I've read that you stayed late at your job to make sure that your memos were on top of the president's briefing pile.

• 44:23Speaker 07

  It's, for better or worse, completely true.

• 44:25Stephen J. Dubner?

  And I've read that your net worth is a little north of $2.5 billion. Is that accurate, if you care to confirm or not?

• 44:33Speaker 07

  You know, I've never calculated it. I see what Forbes says. It's more than I ever dreamed I would have. I have signed the Giving Pledge, and I'm committed to giving away not half of the money, as the Giving Pledge suggested people do, but to giving it all away. So whatever it is, I will give it away.

• 44:52Stephen J. Dubner?

  His giving is already well underway. In fact, you have to wonder if Washington itself might be crumbling if not for David Rubenstein. He gave 18 and 1/2 million dollars to restore the Lincoln Memorial, 7 and 1/2 million to repair the Washington Monument after earthquake damage, 75 million to the Kennedy Center, 2 million to the National Zoo to bring in some elephants. He also buys a lot of historical documents and has them put on public display.

• 45:20Speaker 07

  I bought the Magna Carta and then other historic documents like the Emancipation Proclamation or rare copies of Declaration of Independence. So the 13th Amendment came to me and so I would buy them. I bought the first book ever printed in the United States.

• 45:32Stephen J. Dubner?

  What was the first book ever printed in the United States?

• 45:35Speaker 07

  It's called the Bay Psalms Book, printed in 1640. The first printing press was brought here in 1638. This was the first book printed. There are about seven copies. One was auctioned off a couple of years ago and I won it and I paid the highest price ever paid for a book. I'm not sure I'm happy to brag about that. I think it's about to be put on display at the Smithsonian.

• 45:56Stephen J. Dubner?

  Why is this how Rubenstein chooses to spend his money and time?

• 46:01Speaker 07

  I would say in my case, I am giving back money to my country because I came from very modest circumstances. My parents didn't have any money. They didn't have any education. I rose up with a last name like Rubenstein to be able to do what I did. And I do feel that I owe this country because I don't think I could have done this in other countries. And so I'm giving it back in this way and to education and to medical research. My biggest concern is I'm now 68 years old and actuarial tables being what they are, it's unlikely that I'll live another 68 years and maybe not even another 38 years. So I wish I had all the resources I have, the access, the willingness to do the kind

• 46:45Speaker 07

  of things I can do and the ability to do the kind of things I do when I was 37. I would give away all the money I have today, every penny, if I could be five years younger.

• 46:53Stephen J. Dubner?

  Just five years, really? That's quite an arbitrage.

• 46:56Speaker 07

  Life is so pleasurable. Even if you're not wealthy, you know, money doesn't... Especially make you happy. Some of the saddest people I know are the wealthiest people I know. And some of the poorest people I know are some of the happiest people I know. You know, Thomas Jefferson said, "Life is about the pursuit of happiness." But he didn't tell us how to actually get happiness. And it's the most elusive thing in life is personal happiness. Very few people achieve it. I think I'm personally happy, but you know, I think I was happy before I was wealthy. So, you know, I don't know that the wealth has made me happier.

• 47:38Stephen J. Dubner?

  I'm Stephen Dubner. This is Freakonomics Radio. And that concludes our special six-part series, The Secret Life of a CEO. Thanks to David Rubenstein and all the other CEOs who spoke with us: Steve Ballmer, Carol Bartsch, Richard Branson, Ray Dalio, Satya Nadella, Indra Nooyi, Ellen Pao, Jack Welch, and Mark Zuckerberg. We'll be releasing many of their complete interviews over the coming weeks, so keep your ears out. Thanks also to all the academics who contributed their research and commentary, especially Jeff Sonnenfeld. And most of all, thanks to you for listening. Coming up next time on Freakonomics Radio, what happens when a bunch of economists set up an experimental preschool to help underperforming kids?

• 48:23Stephen J. Dubner?

  Okay, so now is where the real problem starts.

• 48:27Speaker 14

  It was one of the most difficult things I think we could have tried to do.

• 48:31Stephen J. Dubner?

  And why preschool may already be too late to attack the education gap.

• 48:36Speaker 15

  By the end of the age of three, children born into poverty will have heard 30 million fewer words than their more affluent peers.

• 48:45Stephen J. Dubner?

  That's next time on Freakonomics Radio. Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode, like most of the CEO series, was produced with great distinction by Max Miller. Our staff also includes Alison Hockenberry, Greg Rosalsky, Stephanie Tam, Merritt Jacob, Virica Ruthers, Harry Huggins, and Brian Gutierrez. For this series, the sound design is by David Herman with help from Dan DeZula. The music you hear throughout our episodes was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts or any number of podcast portals. You should also check out our archive at Freakonomics.com, where you can stream or download every episode we've ever made. You can also read the transcripts and find links to the underlying research.

• 49:29Stephen J. Dubner?

  Our show can also be heard on NPR stations across the country. Check your local station for the schedule, as well as on Sirius XM, Spotify, even your better airlines. We can also be found on Twitter, Facebook, or via email at [email protected]. Thanks for listening.

• 49:59Stephen J. Dubner?

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• 50:30Stephen J. Dubner?

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• 51:08Speaker 16

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• 51:32Speaker 17

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