Tough Things First Podcast
The Tough Things First podcast is where you receive short bursts of Ray Zinn’s leadership, executive and entrepreneur’s wisdom. Tough Things First podcasts are typically five minutes long, giving you one important concept to ponder for the rest of the day.
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How does one deal with obstreperous people and employees? Ray Zinn and his wife DeLona chat about how people who like breaking rules benefit companies and society, and how to keep them from running amok.
Guy Smith: Well, good morning everyone in podcast land. My name is Guy Smith, I’m your guest host for today’s episode of the ‘Tough Things First’ podcast. This is a special, special edition. Not only do we have our perpetual guest, Ray Zinn, with us, but we have his delightful wife Delona, as well. We’re going to be talking about obstreperous people, especially obstreperous employees. If you hear a little giggle in my voice, it’s because I spent most of my youth as an obstreperous person. My first promotion in life came from completely breaking the rules entirely, with inside of a work environment, and so I’ve seen it from both sides, having been the obstreperous employee, and also being a manager, and having obstreperous employees working for me.
I really want to pick Ray’s brain, and Delona’s brain, because they’ve probably seen many, many more obstreperous folks than I have and they probably have better ways of handling them than I do.
First thing, good morning to both of you, Ray and Delona.
Delona Zinn: Good morning, Guy!
Ray Zinn: Well thanks, Guy, for inviting us back.
Guy Smith: Hey, thank you for letting me be the guest host again. Let’s jump right into it. Before we talk about managing obstreperous people, what is it about their personality types that actually make them obstreperous?
Ray Zinn: Let’s talk about what the definition of obstreperous is.
Guy Smith: Well, obstreperous people are people who tend to buck the rules. They tend to want to do things their way. They tend to not see the sense behind the various rules, and thus are overtly willing to go around them.
Ray Zinn: But there’s another characteristic that they have, they tend to be loud, whining, okay, and difficult to manage because they want, they’re always out there in front. So it’s kind of like the guy that want to star on the basketball court. You know, you’ve seen those guys they’re on the football field or whatever. They’re the one that are doing the high fives and slamming the football down or doing the smack talk and stuff like that. And those individuals tend not to want to follow the rules. They will sneak around, they will try to take advantage every angle that they can. We call them bending the rules I guess is referred to it sometime. So when you’re obstreperous, you’re one that you want to be recognized, you’re the one that wants be out there, the star you would. Or you’re the whiner, you’re the one that complains a lot. So obstreperous means you’re loud, whiny, you’re out there trying to promote yourself. It’s not a matter of them it’s a matter of me. What do I want and how do I want to look at things. So and they just can’t play by the rules.
We have this recent thing with the issues with the ex-director of the FBI who’s published a book, or has recently published a book and he’s going after the president of the United States, the sitting president. He’s obstreperous, in other words he has his view of how he wants to see things and he wants to be out there in front. He wants to be, he’s trying to create an aura, so that’s the difficult one to manage and control.
Guy Smith: So, there is almost kind of two flavors of it. The common theme is that they want to do things their way, they would prefer to do that as opposed to any particular set of rules. Some of them are also then glory seekers on top of that, they like the attention. I know about being the former type and got way too many stories about that.
Delona, and you have had to have run into a couple of obstreperous people, especially up at the ranch. People who, you know despite the fact that there’s some mission with inside the family, inside the ranch, whatnot, they’re going to go off on their own vector. Are you seeing the same traits that Ray sees in them?
Delona Zinn: For the most part, yeah. We’ve even had it even within our own children as they were growing up. There was some that no matter what the rule was they always were willing to bend or break the rule and a lot of them, there was one that wanted to take it right to the very edge as far as he could go. But there was a certain point where he would not go beyond but he always stretched everything right to the very end as far as he could go and as a parent it was very frustrating to see that because we had others that were more willing to live by the rules and everything. But-
Ray Zinn: But he was the more creative one-
Delona Zinn: He was, he was more, [crosstalk 00:05:41] he had very smart-
Ray Zinn: -music and-
Delona Zinn: Very very smart, intelligent-wise and a quick learner, very quick learner-
Ray Zinn: Very articulate.
Delona Zinn: -was very bored with school because he was, they didn’t challenge him enough. There wasn’t enough challenge there.
Guy Smith: Are you sure you didn’t adopt my missing brother here? Because he sounds a lot like me.
Ray Zinn: Well the whole purpose of this podcast though is how do you deal with that obstreperous personality. Because on the one hand they’re very creative but on the other hand they like to bend the rules, they like to operate outside the box as you would and so they don’t like to be confined. In other words, don’t tell me what I can’t do, tell me what I can do. They just go beyond, which is good, I mean, we want to test the waters as you would, want to make sure that we have examined all aspects of it but not to the point where it’s deleterious, where it damages the company or damages the organization. As long as you, as you’re dealing with obstreperous people, employees or family or whatever, as long as you treat them with respect and show understanding and willingness to work with them you can keep them within the rules and the bounds of the family or the organization as long as you don’t become their enemy.
You recognize them for who they are, they tend to be quite creative, quite innovative, but again they’re gonna want to push the envelope, they’re gonna want to go outside the current rules that you have. And so what I tried to do when I was running Micrel for 37 years was make sure that the rules were flexible, that they were kind of more general as opposed to being so tight that you couldn’t maneuver within that. I found that people tend to bring the rules where they used to work back to their current company ’cause that’s what they’re used to. You have to make it flexible enough that allows their understanding and what makes sense to operate within the bounds that you want within your company.
I’d say that probably daily I was dealing with issues where people would come in and say, “well he, or he or she, is doing this or that you know and that’s not according to company policy” and so forth and I was always doing, well I said, “Well, what policy is it you’re referring to?” Well, they couldn’t re-tell me. They would just make up their own policy saying, “well I thought this was the policy” or “I thought that was the rule” and I say, “Well, show me.” Then they find out that they made up their own rule or policy that this person was violating or not following in their mind.
Guy Smith: And this gets to economic theory in kind of a way because these people are motivated by something that typical employees maybe even typical human beings aren’t, and as you say they are creative so you don’t want to de-motivate them. So what is their motivation for breaking the rules and how do you then allow them to stretch the boundaries to avoid becoming de-motivated, knowing that if you put the clamps on them too hard they will become de-motivated and leave and take their creativity with them?
Ray Zinn: That’s always the challenge because you want some structure, you don’t want to have an anarchist organization. So you have to have structure and as long as you give them the courtesy to allow them to be creative and innovative but yet let them operate within the bounds of the company, they’re motivated and they’ll stay productive. It’s when you start telling them no you can’t do that, or no you can’t do that, no you can’t do that, is when they’re either gonna leave or they’re gonna shut down. What you say, when someone does something that is not in accordance with company policy you just say, “Yes I agree with you but here’s what we need to do.” So it starts out with a yes not, “No you can’t do this.” Say, “Yes you can do that, but we need to do this in concert.” I was constantly dealing with people who were wanting to do something that from a policy point of view was not in accordance with what we has as a direction of the company.
And as they say, “Blessed are the flexible for they shall not get bent out of shape.” So what I try to do was be flexible so they didn’t bend everybody out of shape. What I try to do is make sure that the policies we had within the company were flexible.
Guy Smith: You know and occasionally putting the obstreperous person in charge of what they’re breaking works. My first promotion in life was when I worked for McDonnell Douglas in the Kennedy Space Center. I hacked a NASA computer, I reconfigured it to run faster and being of a boy scout mentality I went down the hall and told the NASA administrator what I had done to his computer. And two weeks later McDonnell Douglas sent me to the other side on the river to Canaveral Air Force station and put me in charge of a Tempest Computer [inaudible 00:11:26]. This is a computing facility where all the rooms are lead-lined, you cannot get RF signals in and out and they said, “Look, if this guy really wants to bend around security let’s put him in charge of security, ’cause he’s obviously a little bit interested in it.” And so tapping that creativity and re-channeling it I think is kind of what you just said, you can have the boundaries but if you can focus it then you get someplace else.
Delona Zinn: That’s true.
Guy Smith: Well, children and employees alike, one thing that I’m interested in is bringing up people’s creativity, letting people blossom. Is there value in taking people, encouraging them to be a little bit obstreperous when it’s maybe not their nature? Is that a good tool for expanding their horizons? Developing their personalities? Making them better children, better employees?
Delona Zinn: Well, you can’t make somebody into something that’s not part of them. You can encourage some creativity but each person is unique and individual and it’s like trying to force a left hand-er to write right-handed. You can try to make them do it and they might be a little bit successful at doing it but their handwriting might not be as clear and precise as it would if they had done it with their left hand. So we each have individual strengths and weaknesses and I don’t think you can try to make somebody something that they don’t have in them.
Ray Zinn: We got a son, our oldest son, he was one that tried not to push the envelope. He obeyed all the rules, he was someone who was just reluctant to try anything difficult or new. I’d work with him and try to get him to try different things, to try to break, as you would, break out of this mold of being too worried. He was more pessimistic that way. And now he’s one of the most creative children that we have, it’s because I kept encouraging to push himself, to go outside of his comfort zone. And that’s how I was able to develop his creativity is by getting him to try doing the tough things first, as you would. Trying to go beyond what’s easy and simple, and he did it. I encouraged him to get a double E and he was not, from a scholastic point of view, he was not good in physics or math or anything like that but I encouraged him to do it because I thought he could do it number one but also I felt that this would be good for him, and he did. He got his double E and now he’s extremely creative and innovative.
Guy Smith: So it does work in some regards to encourage people along that way. So I’m wondering if allowing small amounts of rule breaking helps kind of crack that nut, in other words to let people who are a little bit afraid to go out and try new things, gives them the permission then to explore that creativity.
Ray Zinn: I wasn’t encouraging them to break the rules though. I was just encouraging him to go outside of his comfort zone. Not just stick with what was easy and simple and straightforward. And that’s what I meant by getting them to actualize their capability. We’re far more capable that we think we are. I have people that work for me that will try something they have no knowledge or capability of and they screw it up good. But others that are afraid, by just getting the blossom as you said earlier they did try, “Oh yeah I can do that.” Then they become encouraged and they go ahead and succeed. But as Delona said, you can’t get a left-handed person to write right-handed. You gotta kind of work within the skill set that they have. If they don’t have that innate capability, in other words if they’re a lefty and you’re trying to make them throw right-handed you’re probably wasting your time. But for those who are left-handed and you get them to do better left-handed because they think, well lefties can’t do as well as righties, well if you can get them to overcome that fear then they will blossom.
Guy Smith: And I think that’s the message for the managers, the entrepreneurs, the executives listening in on today’s podcast is don’t fear the obstreperous employee, they add value to your organization, you got to accept the fact that they’re always going to challenge you, always gonna bend the rules a little bit. But if they weren’t that kind of personality they probably wouldn’t be bringing the creativity you need in your organization to find the next best thing, to find the new way of doing the process, to improve the entire overall product line or organization or whatever it is that drives your business.
And speaking of driving your business, if you have not read Ray’s first book ‘Tough Things First’ you need to do that right away. Drop what you’re doing, go to amazon.com, buy a copy. It’s Ray’s distillation of his 37 years of founding and leading Micrel, from infancy, through IPO, and creating the most consistently profitable semiconductor company is Silicon Valley. It is required reading not only for you, but it’s becoming require reading on college campuses around the country. Academia is picking up on this book and telling their students, “If you really want the lessons delivered to you fast and hard, this is the right book to be reading.”
So thanks again for tuning into the Tough Things First podcast and tune in next week, we’ve got even more content coming your way then.
The American Constitution is an interesting document, and one that seems to be in disuse or abuse. Ray Zinn and his wife DeLona discuss why societal acceptance of the letter and intent of the constitution is important.
Guy Smith: Hello everyone, and welcome to another edition of the Tough Things First Podcast. My name is Guy Smith, I’m your guest host today, and we’re going to take a little bit of a different angle today. We’re going to be talking about the United States Constitution. You may have some quandary as to why we would be bringing this subject up, but when you think about it, the government is an organization.
Our perpetual guest managed the company he founded for 37 years, a large organization. There’s a lot to be learned about the way things do work and the way things don’t work, and with everyone believing that Washington is not working at the moment, some people are claiming that the Constitution itself is not working. So, I think it’s an interesting topic. For me, somebody who’s studied constitutional law on an amateur basis for longer than I care to admit, it’s always interesting to me.
So, we also have a special, special guest today. Not only do we have Ray Zinn, but we have his charming wife, Delona, with us. Good morning to the both of you.
Delona Zinn: Good morning, Guy.
Ray Zinn: Hi, Guy. Sure good to have you back with us again.
Guy Smith: Great to be here again. So, let’s jump right into this. I’m fascinated that we have people in this country who believe that the United States Constitution as a whole is obsolete, that it’s not functional. Let’s start with you, Ray. What is your take on that basic notion?
Ray Zinn: I agree with you. I think that far too many of our citizens believe the Constitution is obsolete because it doesn’t match their viewpoint. In other words, if something is not in accordance with their view, they’re going to object to it, whether it be a state law, or a federal law, or a community rule or whatever, homeowners association. If it’s something they don’t agree with, they’re going to say it’s obsolete or it’s obstructive.
I mean, you have multiple parties. You’ve got the Republicans, Democrats, you’ve got the environmentalists, you’ve got all these different … The Liberalist, as you [crosstalk 00:02:50]-
Delona Zinn: Libertarians.
Ray Zinn: Libertarian, yeah. Libertarians. You have all these different people with all these different viewpoints, and if the particular law or the particular Amendment doesn’t match their viewpoint, they’re going to think it’s obsolete.
Delona Zinn: Or it’s restricting their freedoms.
Ray Zinn: Yeah. Restricts your freedom, right.
Delona Zinn: Right.
Guy Smith: That angle I’ve always found interesting because the Constitution itself seems to be very wide open and put very few restrictions on anything. So, to my mind, somebody complaining that the Constitution is restricting freedom means that they haven’t actually read the document yet.
Ray Zinn: Or understand it.
Guy Smith: Or understand it. True. True.
Delona Zinn: Right. Or they’re just not thinking straight.
Guy Smith: Yeah.
Ray Zinn: Which is probably the case.
Guy Smith: Yeah. You know, with some of the recent past events, some people are not maybe beating up on the entire Constitution, but they’re looking at specific parts of it and complaining that this part is outdated or that part is outdated. But, we have the Amendment process. We’ve executed it 27 times. We even executed it once and then several years later said, “Oops, that was a mistake,” and backed that one out with yet another Amendment.
So, what are they missing? I mean, is the obstacle of doing an amendment to the Constitution so high that they automatically get frustrated and say it can’t be fixed ’cause I don’t have enough votes on my side to fix it?
Ray Zinn: It could be. I mean, our country is a democracy, at least speaking to the people who live in the United States. We have a democratic country, and that’s ruled by the majority. So, the majority defines whether or not there’s going to be a particular law or rule that we have to live by.
Delona Zinn: It’s interesting to me that you have all of these people from all of these other countries that have their eye on the United States, that want to come here because they like what we have, and yet when they get here, they seem to not want to uphold what we have, you know?
Ray Zinn: Well, that’s because, again, they’ve become now part of the country, if they’re here legally anyway.
Delona Zinn: Right.
Ray Zinn: They want to be part of the country, and so they want to modify it or move it to the area that they would like. So, again, it’s a me, me, me or selfish view. In other words, we’re not trying to get along in a democracy where the majority rules. It’s that I want my way, I don’t care what the majority says.
Guy Smith: Well, you know, it’s interesting, the immigrant experience. One of the happiest people I’ve ever met in my life was a taxi driver in San Diego, and I noticed that he had an accent I wasn’t quite familiar with. It was East African as opposed to West African. He had this perpetual smile on his face, and you could tell the song in his voice, he was very happy. So, I just said, “Whoa, you’re very happy,” and he said, “Oh, yes. I’m always very happy.” I said, “Well, where are you from?” And he said, “Oh, originally Somalia.” I went, “Ooh.” I said, “Which part of Somalia?” And he said, “Mogadishu.” I said, “Really?”
He told me the whole story about winning the immigration lottery, but he had to leave his mother and his sister back there, and he has never heard from them since. A lot of hardship and tragedy, but he had made it here and he figured that it doesn’t get any better than this.
Delona Zinn: I’ve run across many people like that too. I mean, they’re so grateful to be here and to have the ability to better themselves and to make something of their life, where in their own country, they never had that opportunity. I think it’s interesting. I think that you’re not hearing enough from these particular people because they’re so busy in their own life and making a living and providing for themselves. They don’t have time to go out and be a part of a group of people …
Ray Zinn: That are protesting.
Delona Zinn: … that are protesting against certain things within the Constitution. These people embrace it with their whole heart.
Ray Zinn: Let’s get back to the is Constitution dead. I mean, is it obsolete? I think with my 80 years of living here on this earth, and 80 years as a citizen of this country, and also going back to my ancestors who came over in 1690 as a pilgrim, it was eye opening to see how long my family’s been here in this country and how much we’ve appreciated what we have. I think that’s the key, is looking for the good as opposed to the bad. In other words, what is the good about it, not what is bad about it is where we have to start as we talk about is the Constitution still viable.
I live in this country for a reason, not because I was born here. It’s because this is the greatest country in the world. I’m sure those listeners who are living in their own countries will believe that their country is the greatest country in the world, which is great. I think that’s wonderful. Where you live has got to be the best because it’s your home, and your home is where you are established. I’m a [HAM 00:08:25] operator and I speak to people all over the world, and they’re very happy. Whether they’re in Romania or whether they’re in Malta or in Portugal, they’re all very, very happy. So, I’m sure that they, like me, appreciate their life and their family. They all talk about family. They like to talk about how important family is. I mean, all over the world, it’s the same. Family is what’s important.
Ray Zinn: This country has provided me and my family a legacy of advantages. So, I think the Constitution is very much alive because I have it alive in my heart. In other words, the Constitution lives within me. It was to protect our freedoms and not to restrict our freedoms. So, I look at it as a protection, not a restriction.
Delona Zinn: Exactly.
Guy Smith: Well, that definitely fits in with the general structure, it fits in with what the anti federalists were talking about when they insisted on the Bill of Rights and things like that. So, what I’m hearing around the table is that the Constitution is not broken, it’s actually working. It’s still fulfilling the basic premise that people should be free, and out of this freedom, they’re going to … Like the taxi driver from Mogadishu and whatnot, you still have this opportunity to not live with fear and dread all the time, and you have the possibility of lifting yourself up the various social and economic ladders and making it better for yourself and for the next generations.
Ray Zinn: Well, listening to the news broadcasts anyway, the media, there’s nobody seeking asylum outside the US. In other words, nobody’s leaving the US to seek asylum, and that’s, I think, a real telltale right there, is that they’re coming here to seek asylum, not that we’re leaving to go seek asylum. So, when people feel the need to seek asylum is because they lack the freedoms that we enjoy in this country.
So, I look at this Constitution as a protection of rights, not a restriction of rights. I’ve gone through every single one of the Amendments to the Constitution, and they’re all here to protect us. Every single one of them. Even the one that seems to be the hot issue, which is the Second Amendment, the right to bear arms. People look at that as it’s not protection because people are being killed with these guns, but we also have heard in England that they’re trying to restrict now the kind of knives you can have. Your knife can’t be one that you can kill somebody with, I guess. It can be a penknife or something, but not one that can kill someone. I mean, that’s restrictive to me.
Now, when we get on the airplane to fly, we can’t have any knives or anything sharp beyond two inches, or an inch and a half, whatever it is. That’s a restriction, but it’s only for temporary and to get off the airplane. So, the right to bear arms is, again, I think, one of protection, not a restriction. So, we have to use our common sense as to how we use those things that are arms, as you would, but, again, I look at that as a protection, not a restriction.
Guy Smith: You’re in very good company there. That’s been one of the fields of interest in constitutional law that I’ve always been intrigued in, and with the Heller decision of 2008, there was one curious byproduct of this that very few people noticed. That was a 5/4 decision, but when you read the written [descents 00:12:06] of the four opposing judges, none of them argue against the individual right theory. They couldn’t because the historical evidence was far against them. They argued all sorts of other things, like it should be a lesser right than free speech or whatnot, but no one actually argued against it being an individual right.
I always found that fascinating. You can look at Heller as being a 9/0 decision in terms of the individual right theory to owning arms.
Ray Zinn: But, let’s look at it for just a second, the first Amendment, which is Protection of Free Speech. We can also use that illegally or differentially, just like you can in using a firearm illegally or differentially. That wasn’t really its intended purpose. So, all these rights that we have are there to be used properly, not improperly, whether it be free speech or freedom of religion or freedom to bear arms, right to bear arms.
All of these come with the intent that they are to be used properly and within the law, not outside the law, and yet people still say … What they’ll do is, they’ll do something illegally and say, “Oh, but I’m protected because I have that right to bear arms,” or I have that right to freedom of speech or freedom of religion, I’m going to practice some Satanic thing or whatever. So, we’ve taken this protection and we’ve now turned it into a weapon, as you would. That’s not what was intended, was for these Amendments to be born as a weapon, but more as a protection.
Guy Smith: I’m glad you brought that up. There was a jurist once who was trying to explain First Amendment and said, “You can’t yell “fire” in a crowded theater.” But, I like to tell people, “Yes, you can.” If there’s a fire, you most definitely can say that.
If you’re an actor on the stage and the scene obviously calls for you to yell “fire”, you can still yell it. If you rent out the hall, invite people in and calmly explain to them that you’ve always just wanted to yell “fire” in a crowded theater and you’re now going to do it, you can still do it. It’s the endangering behavior is when it quits being a right.
Ray Zinn: Well, you know, and HAM, as a HAM operator, one of the FCC rules is, is that you can’t play music over the radio, over an amateur radio. Again, that’s not a restriction, that’s protection, because you’re trying to prevent, not violate somebody else’s rights through that activity. The music can be played if it’s incidental to the communication. In other words, if you’re talking to the space station or something and, incidentally, there’s music being played, that’s not in violation, it’s when you’re intentionally trying to play music over the air in violation of their rule.
So, again, the rules are here to protect us, not to restrict us. But, some people have looked at it as a restriction. Why can’t I just play this music? Well, because you can’t obstruct the rights of other people in that process.
Guy Smith: Well, it’s the copyright. I mean, we have many complicated international laws about preserving copyrighted songs, and one of the things that they came up with was as long as the radio signals don’t really leave a national scope, then we’re managing the copyrights inside the country, and the moment you play that on the HAM radio so that somebody on the other side of the planet’s picking it up, no one’s in control of that copyright, licensing and royalty payment anymore.
Ray Zinn: You’re back to that one Amendment that the Supreme Court changed on transportation across state lines.
Guy Smith: Mm-hmm (affirmative).
Ray Zinn: Holding what you can do with commerce, in other words. So, people tend to use that to their advantage too, and not as a way to protect, but to restrict. There’s all kinds of ways that we can view the Constitution if we look at it negatively, but if we look at it positively, that it’s here to protect us as opposed to restrict us, I think that all of these Amendments we have are here to help us.
That brings up the 28th Amendment. I’m going to pitch this at Delona first, ’cause being a mom, she probably had to manage a lot of sibling squabbles around what was equal and fair treatment. She’s giggling like she still has the scars to prove it.
So, being banded about in various circles is a proposal for the 28th Amendment, and it just simply says “Congress shall make no law that applies to the citizens of the United States that does not apply equally to the senators and/or representatives”. So, let’s talk about a broken Constitution and a fixed Constitution. Are we in a state of where the Constitution is not providing equality now because the senators and Congress people can carve our exceptions for themselves, and do we need a 28th Amendment?
Delona Zinn: You know, I think that’s been one of the biggest sticking points with … Like, the healthcare. The government was dictating that the citizens had to follow a certain program, and yet the President and the Congress, they were exempt from that same thing. So, that’s where the big up cry came within the United States, with the citizens, is that they did not think that that was fair. And it wasn’t fair. It’s not fair. I mean, if they’re going to carve out laws that are going to affect the citizens, then they should have to abide by the same laws. If they can’t, if they think it’s unfair, then they should re-look at the whole thing and see if maybe they’d better come up with something better.
Ray Zinn: That’s why the proposal, it’s a proposal, not an actual law.
Delona Zinn: Yeah.
Ray Zinn: Because, again, Congress cannot pass a law that they’re not willing to abide by themselves. So, this is a universal law around the world, in every country, is that the government shouldn’t be able to pass a law that only the others have to follow, but they don’t have to follow that law.
Delona Zinn: Yeah. You see that in a lot of the foreign countries that we have, in the third world countries, where the people have to abide by a very strict set of rules and yet the leaders of the government are so corrupt and it doesn’t matter.
Guy Smith: Mm-hmm (affirmative). I have a Muslim friend from the Middle East and he said it’s kind of interesting because if you’re Muslim and live in a Muslim country, you can’t buy a drink, but if you go to the palace, they’ll serve you up one right away.
Delona Zinn: I know that when the kids were growing up, there was this, “Well, that’s not fair. He got more than me,” or whatever. You know, sometimes things aren’t fair. Things aren’t always fair. We know that in society, and I think that that’s one of the big issues that the children need to learn in the home, is that things aren’t going to be fair, but you have to be able to not think of just yourself. There are other people you have to think of.
Guy Smith: One of my favorite episodes was the author [PJ O’Rourke 00:19:50]. One of his teenage daughters threw a tantrum one day and said, “Life isn’t fair,” and he said, “You’d better hope that it doesn’t get fair. You’re a white female in America, in an upper middle-class family. You got it good.”
Delona Zinn: Yeah. That’s true.
Ray Zinn: Well, again, the Constitution, in my mind, is not dead, is not obsolete, and I’d like everybody to leave their cotton picking fingers off of it.
Delona Zinn: Exactly.
Guy Smith: Well, I want to thank you both. This has been a fun discussion. It’s one of the topics which I thrive on. When my wife first met me, she came over to the house and she noticed this three inch thick book on my nightstand. She picked it up and she said, “Seriously? This is your light bedtime reading?” It was a book called “Constitutional Law and Politics, Volume Two”.
Delona Zinn: Oh, volume two.
Guy Smith: It was one of those thick, little tomes, which went through all the Supreme Court rulings and analyzed them down to a gnat’s eyelash, and she kidded me about that for years.
So, anyway, thanks again. This has been fun. For all the people in the audience, if you have not grabbed Ray’s books … I’m going to say plural “books”. There’s Tough Things First, that was his first book. That’s his management and leadership manifesto. Then the Zen of Zinn. This is Ray’s shorter, pithier 21st century [mean 00:21:16] driven book about what life, business, entrepreneurship, society is all about, and the ways that all those different parts are supposed to be working together.
China ShiftRead more
Economists now predict China’s economy will surpass the American economy in just a few years. In this edition of the Tough Things First podcast, guest host Rob Artigo asks Ray Zinn about that prediction and efforts on the home front to become more competitive.
Workplace conflicts are as common as the sunrise, but lingering grudges over those conflicts can be even worse. In this Tough Things First podcast, Ray Zinn offers some thoughts on why grudges can be so disruptive.
Rob Artigo: Welcome back to another edition of the Tough Things First podcast. I’m your guest host, Rob Artigo. I am a writer and entrepreneur in California. Hi, Ray.
Ray Zinn: Hello, Rob. What a lovely day we have today.
Rob Artigo: Certainly is. Workplace conflicts are nothing new. I think many of us have experienced disagreeable coworkers, or can point to at least one or two experiences where a project was derailed or harmed by conflict within the team. But whatever the reason for the conflict, you say we should never hold a grudge. Why’s that?
Ray Zinn: Because a grudge is like a cancer. It really prevents us from seeing clearly the problem. It’s like a sliver in your finger can cause great pain, even though it’s very tiny. And really it can be just almost invisible to the naked eye. It can be a real thorn in our skin. And that’s the way a grudge is. A grudge, even though it can be a small one, or we think it’s small, is like a sliver. It works its way in, and pretty soon it’s causing an inflammation, an infection maybe. And maybe even irreparable damage. As they say, for the want of a nail a shoe is lost, and for the want of a shoe a horse is lost and so forth. You can refer to a grudge like a little nail. You mean, relax, it’s a small thing. It’s not something that I think is a big problem. But grudges are very damaging, because they have enmity embedded in that problem, enmity meaning that you have bad feelings of harm for that person with whom you hold a grudge. That’s what grudges, grudges are extremely, extremely dangerous.
Rob Artigo: I like how you described it before as a hand grenade, that you’re sitting there with the pin pulled in your hand, you’re holding that little spoon from the grenade in your hand, and it’s just sitting there, and a grudge helps it, it just festers, until you’ve gotta drop that grenade and it’ll go off. So the grenade’s gonna go off eventually, and that grudge is the grenade that’ll eventually go off. You can ignore it if you want, but you got a grudge there that’s somehow or another gonna impact you down the line, and maybe in a big way, the way a grenade would.
Ray Zinn: Exactly. As you pointed out, you can only hold onto that grenade so long before it blows up. So holding a grudge only gets worse. Your hand, when you hold the hand grenade, doesn’t feel stronger. Your hand feels weaker as you try to grip that spoon to keep that hammer from releasing that firing pin. The only way you can get rid of that grudge is to not let it fester in the first place; in other words, don’t let it become a hand grenade in your hand.
Rob Artigo: How do we deal with it, then? If we have a grudge, if I’m holding a grudge or you know somebody, you’re a manager and you’re trying to deal with somebody who appears to be holding a grudge, we wanna be the bigger person. But what do we do to help address that, so that, I don’t know, in a sense, put the pin back in?
Ray Zinn: Well, judge and grudge go together. What causes a grudge is you judge. In other words, you’re having a judgment, as you were, a grudge-ment, against some individual or some situation. And that’s what ends up being the damaging item. So don’t judge. In other words, don’t blame or don’t come to a judgment on something for which you don’t have the authority to do. Judge and grudge, as I said, go together. And if you judge, then you’re more likely to hold a grudge.
Now, how do you put the pin back in after you’ve pulled it? It’s not as easy. And I don’t know how many people out there listening to this podcast understand how …
Rob Artigo: The mechanism of a grenade.
Ray Zinn: Yeah, exactly. But that pin that has to be put back in is not easy to do. It’s not, ’cause you’ve gotta line up two opposite objects together exactly, and that pin fits exactly in that space. And so lining up that spoon to that hinge point where the pin goes in is very, very difficult to do. So best not to pull the pin, and best not to have that hand grenade with the pin pulled.
Rob Artigo: Does it require us to swallow our pride and just … because it’s multi-layered. If you’re gonna deal with a grudge, you’ve gotta come up with some sort of forgiveness, even if it’s not that word to the other person. Maybe it has to be, I don’t know, but you have to come up with some forgiveness. You gotta set aside your pride. You gotta do whatever it takes to make that grudge, nullify that grudge. If you’re gonna put the pin back, it takes work.
Ray Zinn: Yes. All those that are listening, think of, do you hold a grudge? In other words, if you hold a grudge, meaning if you hold enmity toward anyone, the one that’s being damaged is the one that’s holding that hand grenade or that grudge, not the person that you hold it against. The hand grenade example is strictly just to show how much damage the grudge does, not to the person you hold a grudge against, but to yourself. As I mentioned earlier, it’s like a cancer, and it begins to spread. And once it starts to spread, sometimes you just can’t get rid of that without some help from others. Because it becomes very festering. So the best time to get rid of a grudge is the very moment that it occurs. And so if you recognize your grudge like that hand grenade before you pull the pin, then you’re more likely to not be harmed by that grudge.
So a grudge doesn’t harm the person you hold the grudge against. A grudge harms you, that holds that grudge.
Rob Artigo: Thank you for your time, Ray.
Ray Zinn: Thanks, Rob.
Rob Artigo: Find out more at ToughThingsFirst.com, Tough Things First on Facebook, and Ray, your Twitter and LinkedIn. The book is available at major book retailers and Amazon. Tough Things First. Read it, improve your productivity, and also find out more about how you can do things like release the pressure of the spring-loaded thing that is your grudge.
Ray Zinn: And also, feel free to contact us if you agree or disagree with some things we might have said on the podcast. Or if you’d like to chime in with your own ideas, we’re open. And we’re open to discuss your concerns. So let us know, send us a note, either on LinkedIn, Twitter, or on our Facebook. And also directly into, email directly to me at ToughThingsFirst.com.
Rob Artigo: Thanks, Ray.
Ray Zinn: Thank you, Rob. Good to be with you.
Pot PerilsRead more
The liberalization of marijuana laws in some U.S. states is raising questions about investments in emerging industries. In this edition of the Tough Things First podcast, Ray Zinn talks ethics in investing. Is a return on your money the most important thing?
Rob Artigo: I’m Rob Artigo, your guest host for this edition of tough things first. The podcast with Ray Zinn, the longest serving CEO in silicon valley. Founded and helmed Micrel semiconductor for the better part of four decades. Hi Ray.
Ray Zinn: Hi Rob. Yeah you make me sound like an old man.
Rob Artigo: Well, you know with age comes a wealth of knowledge and wisdom. So we appreciate having you on the podcast. I enjoy the show, The Profit with investor Marcus Lemonis. Have you heard of it?
Ray Zinn: Yes I have.
Rob Artigo: Of course you have. He recently had a special on the business of marijuana in California which is impacting pretty much every corner of American society at this point. That meaning the marijuana industry, whether it’s legal or not across the rest of the country. We’re talking about it really does impact every corner of American society.
Humble county, the area that Marcus visited, for example, is considered the capital of marijuana production. Produces just absolutely massive amounts of Marijuana. More than Californians use every year they’re producing. So in that episode, I didn’t actually watch it but I gathered from reading on CNBC about the episode, that it was a fact finding mission for Marcus, not an investment. Which made me feel a little bit better about Marcus, because I was concerned he was going to do a show about investing in marijuana and that’s my personal take on it. But one of the reasons why I think this is an interesting subject, let’s suppose someone approaches you and suggests investing in some kind of legal pot start up.
So, meets all the requirements for California’s new laws and it’s a legal pot situation. What’s your answer?
Ray Zinn: Well, I of course I did not vote for the legalization of marijuana, nor would I. For medical or for other reasons. That’s just my personal belief. But there’s one or two states that have legalized prostitution. So I wouldn’t sustain or vote for that either. I don’t see the difference between the legality or the morality of using marijuana verses the legality or morality of prostitution. I know that we squint our eyes and we try to say what’s the comparison there?
Rob Artigo: Yeah.
Ray Zinn: Well, both of them are harmful, but in different ways of course. But they harm us as individuals and the family, both of them do. So, if there was a viable alternative for something, not referring to just marijuana or prostitution, we should use that. If it does not impact us or our families. So that’s what I look at as kind of an example in my setting. When I promote a particular product. I was glad to hear that Marcus was not considering investing in marijuana, but it was more of a fact finding mission.
Certainly, there are a lot of things in life that I wouldn’t get involved in because I just don’t believe in it. I don’t drink, so I would not invest in an alcohol generation business.
Rob Artigo: Right, I actually made a note about Kramer. He said you mentioned you wouldn’t invest in alcohol. Let me pose this to you, because I’m sure you know Kramer from CNBC as well. I recall in his stock show once somebody called in and wanted to know about Phillip Morris. Up or down and Phillip Morris. He said, look I don’t even want to talk about Phillip Morris because I don’t follow it because it’s not in my portfolio and I don’t support tobacco products. He said, a man’s got to have ethical standards. That’s always stuck out to me because there are investments that I won’t participate in.
I have to admit that one of those things I wouldn’t invest in marijuana industry business either. Or support in a material way a marijuana business. So, is it fair to say that a prudent investor, and you just said alcohol and I’m sure marijuana falls in that same category of things you just don’t want to support. But any prudent investor should consider more than just a return on an investment.
Ray Zinn: Absolutely. I mean, Phillip Morris just announced that they’re going to get out of the tobacco and not be in the tobacco industry. Why? Because there’s been no demand for it. Now, I’m not sure it’s an ethical thing. I think it’s an economical reason why they’re going to abandon the tobacco industry. I can go back 50 years and would not have invested in tobacco. That’s true for a lot types of products. I remember Mike Corral, we were looking at manufacturing these sensors for e-cigarettes and I just went ballistic over that because I don’t believe in … E-cigarettes are still nicotine. Even though they’re not tobacco, they’re still, you’re allowing nicotine to enter your body.
Rob Artigo: Right.
Ray Zinn: It’s just another form of injecting a drug. I just went crazy over that one. I wasn’t supportive at all of that. Anyway, there’s a lot products that are out there that I wouldn’t support because I don’t believe they’re good for us. So you have to be who you are in your personal life and your business life. You can’t bifurcate the two and say this is business, this is personal. That’s what they call an amoral view. Amoral meaning that you let society dictate your morality. I don’t believe in being amoral.
I think that the way you believe is the way you ought to vote and the way you ought to live your life.
Rob Artigo: An argument comes back sometimes when I’ve had these discussions is that, well hey look it’s legal. They voted for it, it’s legal, it’s no big deal. It’s not a big problem. To me, it is. It is a problem. So I have to take that into consideration. I don’t necessarily need to look down on the other guy who’s invested in it or is the one promoting it or whatever. But I don’t have to be associated with that, I don’t. So because I don’t as a business person, those are my ethical standards and I’m just not going to do it, there should be nothing wrong with that position. I mean, if you ask many people would you invest in company that’s got a tractor out and mowing down the rainforest and the amazon?
They would say no, I wouldn’t vote for that because that’s my standard.
Ray Zinn: Let me give you a perfect example. I mean this is something that’s near and dear to my heart because I am Mormon. Back in the 1800s the government of, citizens of Illinois made it legal to kill Mormons. So would you, just because it’s legal, would you then say okay I can go kill a Mormon? The answer is, I don’t think any should be no just because it’s legal. Now they’ve subsequently eliminated that but just because something is made legal doesn’t mean it’s right. I use this example of the legalization of killing Mormons in Illinois in the 1850s.
So, there may be a lot of laws that come out legalizing this or legalizing that, that are not really morally good for our society. So, bear that in mind just because it’s legal doesn’t mean it’s right.
Rob Artigo: It doesn’t mean it’s healthy or good for you. It just means that’s what they’ve decided to do and you have to live with … If it were young people or underage things become available to us, alcohol, just because it’s there doesn’t mean you should take advantage of it. Doesn’t mean you need to. You have to look at what’s good for you personally, your health, your family, the community and then make a decision from there.
Ray Zinn: I’ve talked to a lot of people that have voted in favor of legalizing marijuana and they say, oh I would never use it myself, but I don’t want to keep somebody else who needs it and who wants it to use it. That’s called being amoral, A-M-O-R-A-L, amoral. Not immoral. Amoral. Meaning that it’s not … Just because you won’t use it or do it, you don’t want to deny somebody else the opportunity to use it. That’s the part where I disagree. I mean the amoral view is the issue. You ought to vote the way you believe personally that you would it. If you believe in smoking marijuana and you would smoke marijuana, that’s fine go ahead and vote for it. But if you don’t smoke it and never intend to smoke it but you vote for it.
That to me is the problem.
Rob Artigo: Well thank you again Ray. Great conversation, I appreciate it. I’m Robb Artigo and he’s Ray Zinn. Of course Ray invites you back to check out toughthingsfirst.com, you’ll find there links to his Facebook and LinkedIn and Twitter pages. Also, join the conversation you can ask questions you can send in requests. You can also ask Ray if you could guest host this very show, it would be a good thing, right Ray?
Ray Zinn: Absolutely. We’d love to have guest speakers on our podcast.
Rob Artigo: Thanks again Ray.
Ray Zinn: Thank you Robb. Always enjoy being with you.
American WorkRead more
Some CEOs are celebrating the sudden growth spurt in the American economy while worrying there aren’t enough skilled workers to meet the coming demand. Ray Zinn explains the reasons for the worry and what might help, in this edition of the Tough Things First podcast.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of the “Tough Things First” podcast. Hi, Ray, it’s good to be back.
Ray Zinn: Well, thanks, Rob. Good to be with you again.
Rob Artigo: The Commerce Department recently noted that US construction spending rose to an all-time high of 1.257 trillion dollars, which is massive, in November, of 2017, just months ago. As the construction sector overall gears up for a boom in 2018, here we are in 2018, but CEOs are saying in this particular story they’re hiring but they can’t find a lot of workers. Fifty percent of the companies reported having a difficult time filling both craft and salaried work positions. That seemed like a lot.
Ray, I know that you do tech, but you’re a master of business. Given what I’ve just described, where is America falling short?
Ray Zinn: Anytime you have this sharp of an upturn, it’s gonna ’cause it, so it’s kind of like, you know, if you’ve ever been caught in a traffic jam, you know the cars all come to a screeching stop because of an accident or some other … a lot of cars coming off the off ramp. Then it clears up once the jam is cleared. So, what we have right now is we have a logjam.
You know, things took off very rapidly. In fact, it took off more rapidly that I thought. So, I would have been caught by surprise. I figured it would take about a year, year and a half, but it happened much quicker. I think it happened in six or seven months or something like that, I think, if we go back and look at the record of how quickly this thing reversed itself. I think there was a lot of pent up demand, we had really low inventory, especially in housing. Construction had a very low inventory. We let it get to low.
The reason people let it get too low, let inventories drop low, is because they have a poor outlook for the future. They don’t see, they don’t envision things getting better. If you read the media, you know, there was little hope that Trump was gonna pull off getting this economy turned around. But he gave so much hope and so much enthusiasm that the market just took right off. I mean, the market just started to scream.
In November after he was elected, the market just took off. Why? Because they thought there was gonna be less regulation. They thought it was gonna be a more favorable climate for business. So, the market looks ahead six months, and that’s what happened. We saw the market take off, and now here we are a year later, and it’s all a reality.
Unfortunately, we weren’t ready for it. We were not ready for this level of success. So, a lot of the growth that we’re seeing is pent up. We haven’t realized it yet. So, if we can turn around and we can get people back focused again and get these inventories starting back up again, then we should see the economy growing even faster. Now, it will peak out. It’s gonna level off, because we’ll get too much inventory built. We tend to overdo and underdo things. So, the issue that I’m concerned about is we may overdo it. We may get too much inventory built back in, because that’s a sure sign that there could be a downturn.
I’m predicting that there’s going to be a slowdown in August of this year, 2018. We’ve got to be careful about that. Nothing we can do about it other than be careful, be aware that things could slow down. I’m predicting probably August. That’s a consequence of all this enthusiasm and all this building and construction and optimism is gonna force inventory overbuild.
Rob Artigo: Let’s think about what the CEOs, though, these construction CEOs, are talking about. When they said, when at least half of the companies were saying that they’re having a difficult time filling those jobs for the craft and salaried positions. I think about the craft positions, and I think that there is a lack of skilled workers because we don’t have the people who have the skills now to take the jobs. Or maybe we do. Maybe we need to get the workers to the places where the construction is actually happening. Is that one of the problems, is a locational issue where many of the skilled workers are in a place that has a slowdown, but in another part of the country they’re building like crazy and they don’t have the workers?
Ray Zinn: Let’s liken it to a drought. You know, during the drought the municipalities will charge you for overuse. In other words, there’s an escalating cost for the use of that utility when you use too much. So, they penalize you. What happens is you learn to cut back. You put in turf grass, you know, the artificial grass. You’ll cut back on the kind of shrubs that need water. Now your yard is established with these very drought resistant plants. Then when the water level, the inventory, gets up and we have lots of water, we find that people are still using less water. Then the municipality is saying, oh, no, now we’ve got all this water and nobody’s using it because they’ve cut back. So, they lose.
You know, it’s that sort of thing. People get used to not having this construction and these projects, and these people go off and find other things to do. They become skilled in software. They may be skilled in some other trade. It’s hard to pull those people back as skilled workers again when they’re off, having gone for a few years, in this case eight years, doing other things. Sometimes they are willing to come back, but they have to be retrained again. They’ve got to develop their skills again. Others don’t want to come back because they have found other jobs, and they just didn’t like the ups and downs of the construction industry. You know, we could see a real problem in the construction trades, especially, because of the lack of available manpower to do that.
Rob Artigo: You know, I think about the trainings, and I believe you were talking about what happens through the course of a construction worker’s life, for example. They have the ups and downs. You know, they go to work and start out as a helper or whatever, but they have a job. Then they don’t have a job. So, they get some more training or they find another job. If they find another job, they end up sliding away from the construction industry. If they find training, they start guiding back into the construction industry because they have new skills. As they go through their lives, this is what happens to them. It’s in and out of the job, and so it’s either find something else or get some more training. So, again, you have a diverging path each time as they go through.
What about just simple foundations getting people into trades in general? For example, trade schools. Do we need more? Do we need to incorporate those into high schools now, where we used to have stuff where you learned trades in high school, but you don’t have that anymore.
Ray Zinn: It’s naturally happen. When the demand gets good enough and people feel comfortable about going into those trades, they will. It’s kind of like the aerospace and military companies, Rockwell, and Boeing, and Grumman, and people like that. There was a big cutback because the demand for space and military dropped off tremendously over the last eight years. So, those people found other occupations. Maybe they didn’t study at school, didn’t study aerospace engineering or whatever. So, if there is a pickup in space, and that’s what Trump’s talking about now, is increasing that activity. There’s just gonna be a lack of people with those skills.
That happens in any case, whether it be a dentist, whether you’re a construction worker, whether you’re an engineer. If your demand falls off, you’re gonna go off and find some other way to provide for your family.
Rob Artigo: As always, you can reach out to Ray Zinn with your questions at toughthingsfirst.com. Continue your education and the conversation with all the podcasts, Ray’s musings, and the blogs, and links to information about the book, “Tough Things First”.
Thanks again, Ray.
Ray Zinn: Hey, Rob. Good to be with you.
You may have been told you need to do something scary every day, if you want to be successful, but does that mean bungee jumping or something else? Ray Zinn returns for another addition of the Tough Things First podcast, with guest host Rob Artigo, to discuss the difference between scary and reckless.
Rob Artigo: Welcome back to another edition of the Tough Things First podcast. I’m your guest host, Rob Artigo. I’m a writer, and an entrepreneur in California. Hi, Ray.
Ray Zinn: Hey, Rob. So good to be with you again today.
Rob Artigo: And it’s a new year, 2018. The start of a new year tends to plant. I know it does for me, and I think it does for a lot of people. It tends to plant adventurous, if not grandiose thoughts in our heads. Do you buy into the notion that to achieve big things, you must do something scary?
Ray Zinn: That’s a good way to put it. You know, I think life is scary in and of itself. I mean, if you’re really wanting to improve, nothing in life worth having comes free, and so as they say, no pain, no gain, and so if pain is scary to you, then you’ve gotta learn to deal with pain, and I know I ran my crawl for 37 years, and it is scary. It’s scary every day you come to work. One thing you can’t control is the future, and so you can control the present. You can control what you do that day, but some of the things, the decisions you make that day, will impact the future of your company, or others may affect the future of your company.
And so I come white-knuckled to work every day, and like flying a plane, I’ve got a lot of people onboard and I’m responsible for their safety, and as the CEO of a company, I’m responsible for the safety of my employees, and I don’t take it lightly, and so that’s scary.
Rob Artigo: I think sometimes, when particularly younger people hear somebody giving them the recommendation, “Do something scary every day, that’ll help you succeed. Do something that scares you every day.”, they start think literally do something scary. What am I gonna do, jump in front of a bus then dive out of the way when it gets close? That’s doing something scary, but it’s not particularly healthy. What is a healthy scary versus a not healthy scary, and obviously another way that, in a business sense, we’re talking about the word “risk”, what is a healthy risk versus a not healthy risk?
Ray Zinn: Put yourself at risk. In other words, you can’t win a race you don’t enter, and I remember when I ran some track in school, and especially if somebody I, running up against somebody I didn’t know, it was scary, because I said earlier, you can’t control the future. You can only control the present [inaudible 00:03:25] where you are. So when I got off the starting line and got into the blocks and ready to take off, it was scary, and I could choose not to enter the race. I could say, “Well, I don’t like this scary stuff and so I won’t be an athlete.” I don’t care whether you’re a football, basketball, baseball, track, soccer, whatever it is your sport is. Those are risk-takers, people who are willing to put themselves at risk. Now what is risk? Risk is personal.
You can’t put somebody else at risk unless you’re being stupid, but you can, when I talk about doing something scary, I’m talking about scaring myself, not scaring my family or scaring my neighbors or my workers. Push yourself. In other words, get outside the box. In other words, don’t stay inside the box. Go from the known into the unknown, and then a little bit further even. Push yourself. This is what we mean by doing stuff that’s scary. So anyway, that’s my view on that.
Rob Artigo: And we, the way I look at it, particularly the beginning of a new year is if you feel like, one thing I used to do, and I’m just gonna kinda backtrack here, is when it came to a new year, I would evaluate where I’m at, and I would say, “Am I going to be happy if I’m doing this same thing on January 1st, 2019? Will I be content with that?” If the answer is no, I can look at what I would have to do to change that trajectory. And sometimes, that move is risky. It’s scary, and that’s where I define risk and scary healthy, versus not healthy, as you’ve made a careful analysis of your present situation, what your goals are, what you wanna achieve, and if you have to take that giant leap of faith to get there, yeah, it’s scary.
But if you have to make the leap to change the trajectory, then why not? Go ahead and do it, and that’s a healthy kind of scary.
Ray Zinn: Well, let’s go back to what I said. The known is the box, whereas if you’re staying within the box, your cocoon, your comfort zone. That’s the box, and that’s not scary because you know everything. You can predict it. So that’s where I said, you can predict what’s gonna happen because it’s known. It’s like multiplying two times two is four. It’s predictable. It’s in the box, and that’s not scary. So to be scary, you gotta go outside the box. That means go outside your cocoon, go outside your comfort zone, and that’s where you test yourself. That’s where you find the real metal in your capability, but don’t just go outside a little bit. Go what we call the unknown. So don’t just climb out of the box, go to the unknown, and the unknown is now, where it gets really scary because now you can’t predict it. You can’t predict the outcome. But I don’t even stop there. I don’t even go just to the unknown. I go beyond the unknown. I look out beyond what would be scary.
Rob Artigo: Beyond the beyond.
Ray Zinn: I’m beyond the scary part, and when I invented the Wafer Stepper, it didn’t become a reality for 11 years, and my company said, “Gee whiz, you really got us in trouble because we expected to have value two or three years after introduction,” and that’s normal. But to do think of a product that’s out 11 years, that’s really scary because how do you see out that far? How do you see out past a year or two? And that’s the challenge. So the people who can see, have that ability that their vision can go beyond two or three years, those are visionaries.
Rob Artigo: It’s funny that the idea of the visionary in this sense is somebody who sees an end without actually seeing that path, because they’re looking into a murky, or you’re looking into the scary nothingness, and you’re gonna get beyond that, and at the other side is where you’re gonna get your reward, the product, for example, the Wafer Stepper, will be done, but you don’t know how that’s all gonna shake out. You don’t know. Oftentimes, you don’t know it’s gonna take three years, four years, five years.
Ray Zinn: Right, exactly. It was crystal clear to me the value of the stepper. It was, it was crystal clear. I could see its value. Now my management didn’t see its value, but I can see its value. The problem was I didn’t know how long before it would become value, and that’s the scary part. The unknown part is, “Okay, we can see the value in it, but when is it gonna become valuable?” And it’s kinda like, seeing a newborn baby and trying to envision it being the CEO or a president of the United States or whatever. That’s the part that’s difficult, is to see this newborn and being able to see how it’s gonna turn out before it’s hardly taken its first breath, and so when you think of a product that hasn’t even gotten its first breath, and you’re trying to say, “Okay, this thing’s gonna take off,” and then it doesn’t take off in a year or two or three or whatever, that’s the challenge because you have to have enough runway in your financing to allow you to get that product developed and then introduced and then developing revenue.
You have to have enough runway to do that, and some companies don’t. They absolutely run out of money because they’re all excited and all hyped up on the idea of the product, and underestimate how long it’s gonna take it to get it to market and actually accept in the market. So that’s the scary part. The scary part is predicting accurately enough when it’s gonna become a reality. I know for a fact that on the Wafer Stepper, that had my company known it was gonna take 11 years before that thing would get adopted, they would never let me develop it. And so thank goodness they didn’t know that. It’s kinda like if you knew you’re gonna die in an operation, you wouldn’t take the operation. And so even though that Stepper was extremely valuable, and it’s probably the most valuable piece of equipment in our industry, it didn’t become a reality for 11 years.
Rob Artigo: I know from experience that the risk that when I’ve done something, or specific thing that was a scary step, there had been times where I thought, had I known that it was gonna be this hard, would I had still taken that step? Oftentimes, my answer is yes because I don’t know yet what the outcome is.
Ray Zinn: Well, my company, when I developed the Stepper, they didn’t hold it. They didn’t have a runway. They didn’t stick with it, and so they lost out on what has now become the most important piece of equipment in our industry, and yet they held in there for a few years, maybe three years, and that’s about right. Typically, if you can’t get it out and revenue-generating in three years, you know you’re in trouble, because I don’t know how many companies can fund it all the way for 11 years, but that did happen, and if I had to do it over again, I thought it would take off too. I was all energetic about it, but as it turned out, it didn’t turn out well in the few years.
I could see that my company wasn’t behind it, and so I left and I started Micrel, actually, and I left, the one where I did the Stepper left in ’76, and started Micrel in ’78. I left because I was concerned about their commitment to the product. So pretty scary, started Micrel, pretty scary.
Rob Artigo: Wow, big things came out of that leap.
Ray Zinn: Well, I’d like to think so, anyway.
Rob Artigo: A few years, a few years of success at Silicon Valley, as CEO of [inaudible 00:12:40] company, and that leap again, it all began with the Wafer Stepper, and you didn’t know that it would turn into Micrel.
Ray Zinn: No, actually. And another thing too, when I started Micrel, because I couldn’t do this venture funding, and I didn’t want to do venture funding, everybody told me it’d fail. They’d say “You are not gonna succeed, your company’s gonna go belly-up in a year or two.” And here are 37 years later, I recently sold the company, but it was very successful. 36 out of 37 years of profitability. So yes, that one was very scary because I started with my own money, but very successful company.
Rob Artigo: Really, really good subject, Ray. So find out more at ToughThingsFirst.com, Tough Things First on Facebook, and the book Tough Things First is available at major book retailers, or just Amazon. Thanks again, Ray.
Ray Zinn: You’re welcome, Rob.
Modern companies, some tech some not, have boasted about flexible work schedules, telecommuting, or other work from home opportunities, but are there pitfalls from relying on such schedules, and is abuse likely to emerge? This Tough Things First podcast poses those questions to Ray Zinn, who understands sides of this so-called benefit that most people don’t know until it’s too late.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of the Tough Things First podcast with Ray Zinn, the longest-serving CEO in Silicon Valley. Good to be back, Ray.
Ray Zinn: Hi, Rob. Good to have you with me today.
Rob Artigo: We’ve talked a lot about, at least on Tough Things First, the podcast, about work-life balance. In some cases, as managers, we may encourage that behavior by occasionally allowing employees to work from home or flex out their hours so they can accommodate certain family activities. Have you experienced any situations where an employee abused those privileges and became less productive or less available?
Ray Zinn: Yes, I have. I mean, this is a case where the employee has either requested more flex hours. When I interview them, or I should say when my staff interviews them, because we don’t just automatically allow them to have flex hours, we want to know why. We want to dig into the purpose of it. Because generally, you can uncover problems with flex hours if a person has family problems or other issues that are not work related that is promoting them to have flex hours, because then they’re going to spend their time on their family issues and not on their business at hand. That’s what I have seen. (more…)
We’ve all heard the term “unicorn” used or overused in tech circles, but what does it really mean? Ray Zinn is back for another Tough Things First podcasts where he discusses his feelings about the unicorns out there.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of the Tough Things First podcast with Ray Zinn, the longest serving CEO in Silicon Valley. Hi, Ray.
Ray Zinn: Hello, Rob.
Rob Artigo: Thanks for having me back. Unicorns. We know that-
Ray Zinn: Yes, unicorns.
Rob Artigo: They’re mythical creatures, as we traditionally define them anyway. But now there are unicorn companies and there are unicorn employees. When you think of the unicorn in a modern sense, what do you think of?
Ray Zinn: Well, typically these are the large software companies, that technically, at least according to the PC world, they have to be a billion or more evaluation. And so both in terms of an employee, as well as a company, a unicorn, it’s a word that’s being tossed around to really indicate something’s extraordinary. But in the beginning, when you started the podcast, you talk about mythical. And so if you look at some of these huge unicorns that are like Facebook, and Google, and Uber, and the like, they don’t make any money. (more…)
ZinnStarter Fellows Quiz RayRead more
In this very special edition, students from college campuses around the country who are in the ZinnStarter program ask Ray for his wisdom on being entrepreneurs and business people.
Guy Smith: Well, welcome back to another edition of the “Tough Things First” podcast. And I’ve got to tell you, this is going to be one of the most special editions that we’ve created today. We have with us different guests. Students from different Zinn starter schools. And these schools were selected by Ray Zinn and given money so that the students there, the student entrepreneurs, could kickstart their ventures, begin to move their products, their business ideas out into the world. And they all have read Ray’s book, and they’re excited to be with us. We’re excited to have them. And of course first, we’re most excited to have Ray Zinn with us as always. How are you doing today, Ray?
Ray Zinn: Just wonderful. And I am so appreciative of all these wonderful and bright students that are joining us today from all over the United States, to be here, to kick of this first special podcast as Zinn starters. So, welcome guys and thanks again for being a Zinn Starter fellow.
Guy Smith: And I’m looking forward to this. Zinn Starter program has been an astounding success and it’s only in its second year. And we hope to expand it. Per Ray’s design, we have been recruiting what they call, land-grant colleges. Colleges that came to life simply because a hunk of land was donated to the cause. And we’re really excited because we’re finding entrepreneurs in every corner of the country. So enough of that, let’s actually get these students online because they all have questions for Ray. And I am excited to hear what’s on their mind and what kind advice they’re looking for in moving forward with their business projects. We’re gonna start with our inaugural school, the first Zinn Starter school, which was Virgin Tech. And with us is Glenn Feit. And Glenn, why don’t you tell us just the little bit about your project. (more…)
Five ActionsRead more
Making our homes, communities and the world a better place may not be as hard as it sounds. Ray Zinn and guest host Rob Artigo are back together for another Tough Things first podcast to discuss the five actions you can take to positively influence the world around you.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of the Tough Things First podcast. Hi, Ray.
Ray Zinn: Hello, Rob. Good to be with you today.
Rob Artigo: It’s great to be back.
Rob Artigo: You recently came up with another one of those great lists you’re so famous for. This one is as important, I think, to the new year as anything else I can think of considering the problems that our country’s having and what we’re hearing about in the media, social media, wherever you want to go. It just seems like this fits. You’ve come up with a list of five actions that we can take to make our homes, communities, and nation a better place. So let’s take a closer look at each one. Okay?
Ray Zinn: Sure.
Rob Artigo: Number one, not necessarily in any order of importance here. Number one, be kinder. What do you mean by be kinder?
Ray Zinn: Well, this is, again, we’re trying to make America great again or just any nation whether it be the U.S. or any other country. There’s so much animosity. I guess because the public media, I mean, the social media and the public, as you would, preaches so much about negative stuff. Everything’s negative, negative, negative. “I don’t like you. You don’t like me.” And so, I thought that what we need to focus on for 2018 to bring us back full circle to being a community, because that’s what a community is. A community is a group that works together. To improve our community is to be kinder to one another, not be so quick to say bad things. Just to be thankful, appreciative.
I received, in fact, a text from my brother this morning where he was talking about having the right heart. I think if your heart is evil, if your heart is angry, you’re going to spit that out. That’s the way it’s going to come out. Having a kinder heart means you’re going to be more empathetic. You’re going to be more willing to go out of your way to help strangers and that’s what the important thing is.
Rob Artigo: As we’ve talked about on this podcast before, too, is that your actions can be infectious. So your positive actions, if your negative actions can be infectious, and we know they are, your words can be negative and they can be infectious, that being kinder can be infectious and that can lead to just general … Because we talked about the reason for this is making actions we can take to make our homes, communities, and our nation a better place. Our community and our nation is infected or affected by our being kinder.
Ray Zinn: Exactly and that’s the point that I made about that we can learn and we can strive to be a kinder people.
Rob Artigo: Number two, we can also be nonjudgmental.
Ray Zinn: Yes. Nonjudgmental. You know, all these tweets and things that come out about this person’s bad and saying all this negative stuff is judging. Judge ye not, ye be not judged. In other words, don’t judge others because you’ll be judged by what you judge others by. If you’re a righteous judgment, then you’ll be judged that way. Jumping to conclusions or saying bad things about others is not helpful. Avoid it. I mean, the first thing we talked about is being kinder and to be kinder means to be nonjudgmental and to be a more respectful person of our fellow man, as you would. That’s another one to strive for.
Ray Zinn: So we got kindness and we have nonjudgmental. That’ll really go a long way to help our country.
Rob Artigo: And number three is interesting because I think of, this is be more righteous, and I think that oftentimes we think in modern times when people think righteous they think self-righteous. That person is self-righteous. In other words, they think they’re mightier than thou. They’re self-righteous. So when you hear the word righteous, that’s not what you’re talking about here when you’re saying be more righteous. You’re not saying be more mightier than thou. You have another idea for this.
Ray Zinn: Yeah. So right, of course, is being correct, so correctness, as you would. So righteous has a more of a godlike point to it, as opposed to being self-righteous or being bias. That’s not what we’re talking about. We’re talking about being more godlike both in terms of our willingness to help others, to feel bad for things we do wrong, to attend to those things which are more uplifting and not so earthly, as they say. I think there’s nothing more this country needs than more focus on being righteous as an individual.
You may not be a god-fearing person. You may not have a particular religion you belong to, but you can be righteous in the way you deal with others both in terms of your integrity, your honesty, and your respect for others.
Rob Artigo: Well, number four also ties into that as well. So, we have number one, be more kind, be kinder. Two, be nonjudgmental. Three, be more righteous, and four, be better listeners.
Ray Zinn: Absolutely. You know, you can’t think or listen while you’re talking. As Judge Judy often says, “You have two ears and one mouth for a reason, and use them proportionately.” I know from my friends and people I associate with that I like to know about them. I like to learn more. I know about myself. I don’t need to learn more about myself unless it’s to correct or improve, but I like to hear about others. I like to know what they think, how they feel because, again, that goes to being more kind and nonjudgmental and righteous. If we’re willing to listen to others and be kind of like that kind country doctor who you really love to have him come and visit you because he wants to hear how you feel, and so being willing to know how others feel is more important than telling them how you feel.
Now, they may ask, “How are things going?” That’s fine. And you say, if you want to say a good thing say, “I am doing just great and I hope you are too.” And then let that person tell you how they feel. But be a willing listener and that’s an important attribute. Keep your mouth closed at least half the time and open those ears up and be genuine in the way in which you listen to others. Don’t just figuratively speaking listen, just really listen intently and honestly listen.
Ray Zinn: That’s a good one. Honest listeners. Someone who is listening to you without being judgmental, who is there, who cares, and is kind in the way and respectful of you. So, open those ears and shut that mouth. That’s what that means about being a willing listener.
Rob Artigo: Yeah, and as you said before, is when you’re listening you got to be patient with the other person and it’s a good idea to eliminate distractions so that you are giving them your undivided attention.
Ray Zinn: I’ll actually sometimes repeat back what they said so that they know that you heard what they said. Don’t be afraid to say, “Oh, I see you are having difficulty with your leg,” or “Oh, you have a child that is not doing well in school,” and that tells them that you’re listening. Don’t do it every single time, but periodically just reflect back what they said, so they can see that you’re hearing what they’re mirroring, as you would.
Rob Artigo: Number five, be more forgiving.
Ray Zinn: Yes. You know, there’s nothing like forgiveness and that’s not just saying, “Well, I forgive you.” We’re talking about genuine, godlike forgiveness where you are without hesitation and without reservation you’re willing to forgive. Maybe they haven’t fully repented or fully abated what they have done to you or how they’ve harmed others, but that you’re willing to forgive them unconditionally and without judging them and saying, “Well, you know, you need to do this. You need to do that before I’ll forgive you.” Forgive them. Period.
It’s not just a word, by the way. When you say, “Oh, I forgive or I forgive you,” that’s a word. Forgiving goes to the heart. It really means the way you treat them in retrospect, how you come back to them, and they’ll know if they’re forgiven by the way in which you then treat them. Because if you haven’t forgiven them, you’ll treat them more harshly and with less understanding, but if you are kind and respectful and inviting, then they know that you have forgiven them. And if you don’t bring it up again either. If you don’t say, “Oh, you know, you did this or you did that,” then they’ll know that you have forgiven them.
It’s not easy to do. To have a forgiving heart is difficult. That’s why I add it to that list of five important ones that we can do for 2018, in order to help us be a better community, a better family, a better nation.
Rob Artigo: And those five actions that you can take are, one, be kinder, be nonjudgmental, be more righteous, be better listeners, be more forgiving. I guess bottom line is you put all those together and, as you’ve written in one of your musings from Toughthingsfirst.com, is basically be more loving.
Ray Zinn: Exactly because that’s the bottom line. The more loving you are, the more likely you are to have these five attributes that we just discussed.
Rob Artigo: As always, you can reach out to Ray Zinn with your questions at Toughthingsfirst.com. You can continue your education there and the conversation, of course, with all the podcasts, the blogs, and I mentioned the musings. You’ll also find there links to information about the book Tough Things First, also the LinkedIn connection and also Twitter and Facebook.
Thanks again, Ray.
Ray Zinn: Rob, always love to talk to you. You help inspire me with these thoughts.
Do GoodRead more
Sometimes the simplest things can improve your own life and the lives of those around you. In this special Tough Things First podcast, Ray Zinn is joined by his wife Delonna and guest host Rob Artigo to discuss a major key to living a long and happy life — the concept of doing a good turn daily.
Rob Artigo: Welcome back to another edition of the Tough Thing’s First podcast. I’m your guest host Rob Artigo. I’m a writer and entrepreneur in California. Hi Ray.
Ray Zinn: Hello Rob, still good to be with you again today.
Rob Artigo: Great to be back, and of course we have a special guest with us today. DeLona Zinn, Ray’s wife of 56 years. Hi DeLona.
DeLona Zinn: Hi Rob.
Rob Artigo: I’m excited to find out why Ray wanted you on this podcast with us. I can imagine that you share a lot of these same feelings about the topic, so that makes sense. It’s gonna be great to hear your input.
Ray Zinn: Well when you talk about doing a good turn daily, I can’t think of anybody better qualified to speak about that than DeLona. As I’ve said many times before, that if it weren’t for DeLona, I wouldn’t have any friends, and so she’s that kind of person that everybody just likes to be around her, because she’s constantly thinking of others and not so much for herself. Anyway, that’s why she’s on this podcast, and I’m gonna be delighted to get her comments on this subject.
Rob Artigo: Ray as you mentioned, the words, “To do a good turn daily,” that’s a scout motto, and around the new year, you wrote in one of your great musings that you couldn’t think of a more befitting way to start a new year that to commit to doing a good turn for others each day of our lives.
Rob Artigo: Let’s talk about that a little bit. Let’s start with where that motto comes from.
Ray Zinn: Baden-Powell, who started the scouting program back in the early 1900’s. We talk about what all the values of scouting are, the scout oath, the scout motto, and the various scout laws that define what a scout should be. This goes back over a hundred years ago. The principles are true today, even though they were initiated over a hundred years ago, the concepts of becoming a scout and being a scout are the same and apply today also.
It’s just what … That’s why we have DeLona here, because there’s been some studies done that indicate why doing a good turn is so important. So DeLona, you were reading to me last night an article that talked about that, so why don’t you kind of summarize what we learned in that article.
DeLona Zinn: Okay, thanks Ray. There was a study that has been done by a group of people, and it’s called the flourishing families project. There’s a Laura Padilla-Walker who’s involved in this. She took the study from a different angle. Most of the things that the study was trying to figure out, what causes families to struggle and what could go wrong in families. The flourishing families program, as the name implies, has focused on what goes right and strengthens families. What she found was that those who lend a hand to people they don’t even know reap a personal benefit and it increases their self worth.
Growth StrategiesRead more
How to grow or not. Mergers and acquisitions are tempting, but they are often the wrong strategy. There is more at stake than mere top-line expansion. Ray Zinn discusses M&A insanity.
Guy Smith: Well welcome back everyone to the next edition of the Tough Things First Podcast, my name is Guy Smith and as always, we’re here with Ray Zinn. Hello Ray, how are you today?
Ray Zinn: Doing just great Guy, thanks for asking.
Guy Smith: It’s always a pleasure to be with you, and I am anxious to talk to you today, because there is just a flurry of merger and acquisition activity going on. The Broadcom Qualcomm merger seems to have more chapters than any television soap opera, and a lot of people are wondering is this now the new normal or is this part of a cycle, etc., etc.
I know that you’ve watched M&As in the tech industry for 50 years or there abouts. Let’s jump right into that. This recent flurry of M&A activity, especially in the semiconductor sector, is this an aberration? Is it abnormal? Is it larger than usual?
Ray Zinn: I don’t think so. I think this is kind of an ongoing thing. It’s been happening of years. As you mentioned., I can go back close to 50 years on this and it’s pretty much the way it’s been.
There’s been a lot more M&A activity, because interest rates are low and that allows then, these companies to acquire these companies at a relatively low cost and interest wise. That has been since 2008, 2009 when interest rates have dropped down to their ridiculously low level. Therefore, this has become a more viable alternative for companies to borrow money and go out and acquire these larger forms.
I think that’s exactly what [Octam 00:02:25] is doing with Broadcom is he’s borrowing the money. He’s borrowing at a low interest rate. Then you hope that your growth rate will, at least on your earnings, will exceed the cost of money. At least that’s my view of it.
Guy Smith: Why do CEOs like M&As as a growth strategy? It’s a way to grow but there seems to be a lot of pitfalls. Why would a CEO favor M&As over other tactics for growing revenue?
Ray Zinn: Because it gives you an instant revenue growth. I mean if you acquire a company that’s nearly your size, you can get almost a 100% growth rate. Your growth rate speeds up. Another reason would be that you might get scale. In other words, if you’re a smaller company and you need some more access to customers or to certain markets, you’ll do that.
Or if you’re trying to buttress up your own market such as what Broadcom is trying to do. They’re heavily into handsets and to cellphones. The acquisition of Qualcomm just really buttresses that market that they’re in. It gives them much larger scale. In fact, they’d be the largest producer of handset components in the world.
Guy Smith: But there have been disasters in this approach, haven’t there? I mean, I grew up in Melbourne, Florida. There was a big branch of Intersil down there. If I remember correctly, Intersil went on a big M&A splurge and didn’t ingest it all very well.
Ray Zinn: That’s true. It does take quite a technique to do it. The acquisition is synergistic to your business plan, as opposed to just acquiring bulk, as you would. It’s kind of like, a weight lifter who’s doing it, or a person who’s exercising doing it to develop tone and strength in their muscles as opposed to somebody who is on steroids, that just wants to get bulked. Using steroids to get bulked is hazardous to your health.
That’s kind of what Intersil did back in the time, or back in the day as they say, is they were just getting bulk. Dave Bell said, “I’m going to be a billion dollar company.” So he went out acquiring companies just to get to a billion revenue. That’s a dangerous way to do it, unless you had some way to assimilate those acquisitions into your company.
That’s the key. The challenge is being able to get those company synergistically matriculated into your company.
Guy Smith: I’m glad you brought up that word synergy. In preparation, I went into your book Tough Things First. By the way, for the audience if you have not gotten your copy of Tough Things First, you should probably bring up a browser window, go to amazon.com and get a copy. Because if you’re looking for the bible of how to be a good leader and a good executive, and a good entrepreneur, especially in the tech industry, reading Ray’s history of his time in Silicon Valley and his time in tech in Tough Things First, is really your guide book.
By all means, go to Amazon. Get a copy.
But in preparation, here’s a passage from your book and why I was focusing on synergy. You wrote, “Regardless of the mode, merger or acquisition, or the justification for M&As, the endgame derives for the presumed, …” I put the emphasis on presumed, “synergies between the two companies. That will allegedly allow them to grow faster that they would individually.”
Part of the equation seems that there has to be some multiplier or effect of the synergies for the M&A to have some realistic benefit. Is that true?
Ray Zinn: Certainly. For example, if you were a real estate company and you decided to acquire a restaurant, even though they’re buildings involved, that may not be scale. In other words, you may not be able to synergize your sales force with the restaurant. There’s not a lot of synergy. Even though you’re going to get bulk, you’re not going to get any real synergies there.
The goal is if you’re going to acquire a company, acquire a company where there are likenesses. In other words, you have some similarity in product lines or in technology, workforce, because then you can get some synergies by scaling back some of those between the two companies, you can scale back some of the staff to minimize the cost of running because you’re basically going to run two companies as one.
You don’t need two accounting or two purchasing. You don’t need two CEOs as you would, two sale forces. Well, not necessarily two sales forces, but there’s some duplication when you bring in a company, you can cut some cost by just reducing the headcount where there is duplication.
Guy Smith: Yeah. Then the layoffs are always, as I recall, mainly from the acquired company. They tend to lose the most heads.
Ray Zinn: Yeah. That’s the shame of it.
Guy Smith: Historically speaking, in the tech industry and not just semiconductors, but in tech in large, what has been the result of this grow strategy? In terms of a batting average, how often does it really work in terms of long term sustained growth?
Ray Zinn: It depends upon the company. HP has not down extremely well. TI has done pretty good. Analog Devices has done good. Also, the company that acquired my company, Microchip has done well.
You have to be a master at synergizing or being able to integrate these companies together. It takes a special talent. It takes a special understanding of the process of synergizing to do a good job.
Guy Smith: Believe that instinctively and I believe that not every CEO has the [timlin 00:08:24] of finding those synergies, making the hard choices about what to cut, what to keep. Actually then melding the two pieces together so that they do get that multiplier effect.
We live in interesting times. We’ve got a global economy that seems to be growing fairly well again, but we’ve got interest rates getting ready to go up and take all the cheap money off the table. What would be your advice to CEOs, especially in this current business cycle in terms of using M&As? Are they too late to the game? Is it still something they should consider? Are there warning signs on the road ahead that maybe make them think twice about an M&A at this point?
Ray Zinn: As long as the interest rates sty down low, like two and a half percent or lower, then you can still borrow money relatively well, because you’re going to be hopefully, cutting some costs and synergies in the acquisition. That will help you then pay for the acquisition.
It is still a reasonable time. I think it will be for the next year or two. Certainly the inflation has not increased. We still have relatively low inflation and we have good growth.
So low inflation and good growth, even though it sounds like an oxymoron, that’s the best of both worlds. Low interest rates and low inflation but high growth. I don’t know how it get any better than that.
Now, will it stay that way? No, because inflation is part of growth. People are going to want higher salaries. We saw recently the demands of salaries are going up. They’ve increased substantially over the last year and that it will continue to increase as long as the economy grows.
You got to keep your costs in line with interest rates. If interest rates go up, you got to cut costs. If interest rates stay low, you can still grow relatively we’ll through an acquisition.
Guy Smith: That certainly make sense. I guess as long as the interest rates are low, there’s a reduction in risk to a certain extent. I expect to see more M&As even though … I also suspect they’ll be tapering off as interest rates come up. Some CEOs are just not going to want to take the gamble.
Well, any. Thanks Ray. I appreciate you giving us these insights in mergers and acquisitions. And for the Tough Things First podcast audience, by all means, if you haven’t already subscribed to this podcast, you can do that on iTunes, Google Play, Podcast Addict, any of the tools that you’re using
And while you’re there, rate and reviews so that other people find this podcast if you have found it helpful.
Thanks again, Ray and have wonderful afternoon.
Ray Zinn: Thanks, Guy. I appreciate this opportunity.
How To SucceedRead more
Despite the book and the movie of the same title, “How to succeed in business without really trying” is a fast-track that usually leads to failure. In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about the “magic bean” approach to business success.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First, the podcast, with Ray Zinn, the longest serving CEO in Silicon Valley. Hi Ray.
Ray Zinn: Hello Rob.
Rob Artigo: I’m sure you’re familiar with the title of the book and apparently Broadway play and movie, How to Succeed in Business without Really Trying.
Ray Zinn: I am. I haven’t read the book, but I’m familiar with the musical.
Rob Artigo: Well we’re talking about it because it sparked a great conversation. It lays out this title, which we think of in the business world as, well we know people like this, I think. I think I’ve met people who have this mindset where they’d like to do something without really trying, but I think you think of it as an oxymoron.
Ray Zinn: Yes. Having run Micrel in Silicon Valley, [inaudible 00:01:24] for 37 years, I can tell you that I busted my butt. I mean, I worked my tail off. And so, when I think of How to Succeed in Business without Really Trying, I’m thinking it’s kind of a joke. It must be a satire. I think the book was written in 1952. It is a belief that some people have that just going into business doesn’t take a lot of work. I mean, I’ve heard advertisements on the radio that said, “Hey you can work part time, still have your full time job, and you can make gobs of money by just hardly doing anything. All you’ve got to do is just follow our success formula, and you’ll just become filthy rich.” There is no such a thing. I mean, to me it’s a sham. Just like the title of the book is a satire. For anyone to believe that they can start a business and run it successfully year after year without really trying is truly an oxymoron.
Rob Artigo: You hit the nail of the head right there because you said that How to Succeed in Business without Really Trying being a satire of a book from Shepherd Mead, and they you brought up real things out there. And I think one of the reasons why the book is appealing is people go, “Huh?” But you’re likely to hear pitches like this that are not intended to be satire, but intended to separate you from your money.
Ray Zinn: Well you hear these advertisements and on the radio and TV glamorizing how, oh if you just follow our special formula, you will succeed and you’ll become very rich, and all you’ve got to do is just follow their formula. That is just, as they say, baloney. There is no simple way to achieve success. It’s a combination of just tremendous skills that you have to develop, as well as a lot of luck. If there’s luck involved in the business, of course then you could say you don’t have to really try. If you’re lucky, for example, you win the lottery. I mean, I don’t call it successful in business, but if you win the lottery, then you can say that, “Oh look at me. I made all this money, but I didn’t have to do anything other than buy a lottery ticket.” This get rich scheme concept of you too can be rich. You just have to follow our magic formula and we know how to do it. We’ll help you become successful is really a disservice, I think, to the average person.
When you think about running a business, don’t delude yourself into thinking it’s not a lot of work and you don’t really have to try. It’ll tax every ounce of knowledge and tenacity and energy you have to do it. It might even cost you your family. When you think about running a business, you’ve got to hope for the best, but expect the worst. And if you don’t, you’re not gonna succeed.
Rob Artigo: This kind of thing has been around for well, probably since the beginning of time because we just go back to early American history and the snake oil salesmen are out there. There’s always somebody around one corner, trying to sell you some magic beans. There is no magic formula.
Ray Zinn: I was at Costco the other day. They had this thing that you’d get on and it would vibrate your feet and it was just a foot vibrator, but you’re standing up on this, like a treadmill sort of thing, or a stepper, and it sits there and just vibrates like crazy. It has different vibration frequencies and so forth. And they say, they’re claiming, “Oh it’ll cure everything from diabetes to ED. It cures everything.” And to me, that’s a snake oil sales pitch it I ever heard one. You don’t have to do anything. All you’ve got to do, just stand here and let this thing vibrate you, and all your organs will start functioning better, and you’ll think better and you’ll become more successful and be a better parent. You’ll be, and all this stuff. You’ll lose weight. It’s just the classic snake oil. And I thought we got rid of those snake oil guys, but they had one at Costco the other day. Just stand in this thing, and it vibrates you into health. This is, again, my example of you’ve got to be careful.
By not having to do anything … Something that you get into that doesn’t require a lot of effort, I would stay away from it. If it’s too good to be true, it probably is.
Rob Artigo: And if you’re gonna buy something, and again this is a book that is essentially satire, How to Succeed in Business without Really Trying, but if you’re buying a book or you’re buying a product that promises something like this, that’s a red flag that you’re heading down a path that, hey the remedy could harm you more in this case. Maybe that bad, who knows. It probably says somewhere written on it, “Claims not evaluated by the food and drug administration.”
Ray Zinn: Exactly.
Rob Artigo: So there’s nothing to prove whatsoever that this product does what it says it’ll do, but people will buy it because they think that it’ll somehow cure all of their ills. And like you said, it just happens to cure all of these things that are major sellers out there in the pharmaceutical environment.
Ray Zinn: Yeah. Again, if it’s too good to be true, it probably is. Most of these people that write these books have never run a company.
Rob Artigo: No.
Ray Zinn: We see professors and all these other PhDs that have written all these books, but they’ve never experienced these things. They claim to have done research and that’s how they’ve backed up their statements, but we understand how good research is based on this last presidential election. Be careful about even people who base their claims on research because research is all dependent upon how the question’s asked. So be careful again, when you listen to or hear someone expound certain traits or things that will make you successful. Look at their background. Make sure that their background does comport to their experience.
Rob Artigo: Right. The bottom line here is if you want to succeed in business … How to succeed in business, that is you really must try, and you have to try hard.
Ray Zinn: Exactly. It’s like the little children’s nursery story with the little train that could, you know. You’ve just got to keep trying and trying and trying, and never give up. And having that dogged perseverance, as we talked about. Please, don’t believe it for a second that you can succeed in business without really trying.
Rob Artigo: Well, if you want to read a real book on serious success in business, you can read Tough Things First, Ray’s book. And you can find out more at ToughThingsFirst.com. You can also follow Ray on Twitter, Facebook, and LinkedIn. Thanks again, Ray.
Ray Zinn: Thanks, Rob. It’s been a great conversation.
Truth HurtsRead more
The old idiom “the truth hurts” can be a useful approach for managers trying to get to the bottom of an issue. In this Tough Things First Podcast, Ray Zinn offers his definition and explores this technique for problem solving.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First. Hi, Ray. It’s good to be back with you.
Ray Zinn: Oh, it’s always good to be with you too, Rob. Thanks.
Rob Artigo: We’ve all heard the saying, “The truth hurts.” When you hear those words, Ray, what do you think?
Ray Zinn: That’s an interesting comment, “The truth hurts,” because depending upon how we react to the truth, it tells a lot about who we are. If we react to the truth in a positive way, it means that we accept it. It may bother us, we may have guilt over it, but if we act humbly and contrite, then who’s delivering the truth to us, as you would, then it says, “Well, you know, he gets it or she gets it.” So, they feel good. They feel like they’ve made progress and that you’re going to then correct whatever issue that you have to change.
However, on the other hand, if you react negatively, meaning you then defend venomously or you act harshly, very defensive, and blow up, and yell, and scream, or walk out, or hang up, that indicates then you are guilty and … But you have no desire to change. Like they said, “Well, I’ve obviously hit a nerve,” they’ve used that term, meaning that … The way you can tell if you’ve hit a nerve or if the truth is really not being taken well by the other party is they will react extremely negative. Denial, excuses, blame, pointing fingers, and that’s an indication to you right there that they’re not going to change or unlikely going to change, and that you’ve got to take other steps to resolve the issue.
Rob Artigo: Do we have to think about how we present that truth? I think that when we use the words, “The truth hurts,” sometimes it immediately conjures up, well, yeah, you’re being mean about it when you’re giving somebody the truth. But you’re not talking about that. You’re just talking about plainly explaining to somebody the truth of the situation and you’re evaluating their reaction.
Ray Zinn: Or you’re getting to the truth. Maybe you suspect, you don’t you know for sure, but you have your suspicions. Rather than being accusatory, rather than you then shoving your finger in their face or you writing some kind of an inflammatory email or message, text message, you want to do it kindly. In other words, if you’re going to bring out a problem, always, always do it kindly. Never think of it doing it in an accusatory, finger-pointing, your voice raised way. Just do it calmly and nicely because then you can tell more accurately if the person is receiving the truth or if he is the problem by the way they react. However, if you yell and scream at them and they yell and scream back, it’s hard to discern whether or not they’re reacting to your yelling and screaming or whether they’re reacting to the truth. Or as they say, “The truth hurts.”
If you’re going to deliver a message to someone or if you want them to change or you believe that there may be an issue, do it in a very timely, calm way. Do not do it in a finger-pointing, accusatory, demeaning way because the reaction that you’re going to get from them will be somewhat responsive to the way you’re delivering the message. That’s my advice is to do it at the appropriate time, in the appropriate place, with the appropriate demeanor. Then, of course, afterwards, show forth a little bit of love and compassion for them, especially if they’re contrite. You can tell if they’re contrite because they will hang their head or they’ll get that look on their face like, “Oh my gosh”.
The way they react then will help you understand how you want to deal with it. Obviously, if they’re very contrite, very humble about it, willing to change, you’d want to put your arm around them. You’d want to make them feel comfortable and encourage them, as opposed to, “I thought you did it [inaudible 00:05:54],” rather than being … Having a nasty reaction to them being contrite, be more positive. Be even more reinforcing because then it’ll encourage them to want to do that next time, to fess up, as they say.
However, if you’re doing calmly, politely bringing up the issue to them, and they react in a very angry and infamous way, then you’re dealing with a problem that’s going to take a little bit of workaround to get it resolved. Often times when they do blow up and denial and all that, you may have to take some other kind of reinforcing action, which is less pleasant for them to get it resolved.
Rob Artigo: That’s why it’s so complicated to be a manager because you have to … You can’t just say, “This is what I’m going to do if A happen, and this is what I’m going to do if B happens,” because sometimes it’s a combination of A and B on both sides.
Ray Zinn: Yep.
Rob Artigo: Sometimes you have to … Somebody who made an error and quickly admits to it when they’ve been confronted with the truth can also require some additional, I don’t know, training, a little bit of help going forward. Same thing with the person who flies off the handle, as you use those words. You got to be ready as a manager to be able to make those decisions and do it in a way that’s, well, going to have the best outcome. It’s not going to be just A, and it’s not going to be just B. Sometimes it’s going to be both A and B.
Ray Zinn: Yep. Maybe it’s another podcast, but we talk about culpability.
Rob Artigo: Right.
Ray Zinn: Culpability varies from 0 to 100%. In many cases, there’s maybe only 10% culpability on the part of the person you’re speaking, but that’s something that they have to deal with, even if it’s 10%. Of course, if it’s 80%, then definitely they’re going to have to do it. But what people have a hard time dealing with is when they’re not at least north of 50% culpable, they don’t want to have to deal with it. Yet, I’ve given instructions where I can see subsequently after I talk to the individual that I wasn’t very clear, so I had some level of culpability in the way I delivered the instructions, and I accepted that. I said, “Well, it looks like I wasn’t very clear on what I wanted and so I take partial responsibility for the mishap or the problem.” Then you move forward.
The first thing that I suggest anyone does is when they have a problem is look at themselves first. What could I have contributed to this mess, to this dire situation? Because if you do that, then you have already gone further in understanding, putting yourself in their shoes, as to what you might have done or could have done to have mitigated that problem in the first place.
Rob Artigo: Yeah, and you’re going to be a greater asset to your employer when that employer sees you behaving that way.
Ray Zinn: Exactly.
Rob Artigo: As always, you can reach out to Ray Zinn with your questions at ToughThingsFirst.com, continue your education right here and the conversation with all the podcasts, blogs, and links to information about the book, Tough Things First. Thank you, Ray.
Ray Zinn: You are so welcome, Rob.
Business PartnersRead more
Whether to partner or not partner in a business venture can be a vexing question. In this Tough Things First podcast, Ray Zinn talks with guest host Rob Artigo about it doesn’t have to be so difficult.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First, the podcast with Ray Zinn, the longest serving CEO in Silicon Valley. Hi, Ray.
Ray Zinn: Hello, Rob. How are you doing today?
Rob Artigo: I’m doing well, thank you. In the business world, there seems to be no end to decisions that you have to make, hundreds of them a day, right? Some decisions are big and some are smaller. Ray, where does the decision about partnering with another person in a business venture fall? Is that a big decision or a small, inconsequential decision?
Ray Zinn: Oh, it’s a big decision. (more…)
Life and BusinessRead more
Tough Things First Author Ray Zinn says, “Your life is your business, but don’t make your business your life.” It may seem easy, but for many it isn’t. In this Tough Things First podcast, Ray and guest host Rob Artigo discuss the pitfalls of misplaced priorities.
Rob Artigo: Rob Artigo here, your guest host for this edition of Tough Things First the podcast. I’m a screen writer and an investigative consultant in California, being invited back is always a pleasure, Ray, hi.
Ray Zinn: Hey Rob. So good to hear your voice again.
Rob Artigo: Along with doing the Tough Things First, you’ve always been an advocate for life, work, balance. So you recently wrote, “Your life is your business, but don’t make your business your life.” What did you mean by that?
Ray Zinn: Well we are all entrepreneurs even if we don’t run a company. So our life is our business and we should run it like a business, meaning we should be careful in the way we manage our resources, both our time and our money, and also the way we interface with others.
So, you know, your life is your business and you should make it a good business. So to be successful you have to run a successful life. That’s what I meant by your life is your business.
Rob Artigo: When I look at that, “Your life is your business,” and I think about it in the way that you just explained it, it kind of gave me a different perspective. I was thinking more along the line of, you know your life is your business but don’t make your business your life, but you really mean your life is what should be your top priority because the business of your life is what you do day in and day out always. All of the actions that you do in your life are your life. As opposed to your business life, which is, you know the part of the day where you’re working at an actual business.
Ray Zinn: Exactly. So, you know if you treat your life as your business, then you will do what’s appropriate and run it in a successful way. You know we all try to go out there and earn the most money we can for ourselves and our family and we also try to negotiate like we would if we were a business. Various needs, whether it will be health benefits or whatever, we also negotiate those.
So, you know, you do run your life like a business, and you should be thinking of it that way, but on the other hand you don’t want to make your business your life. What I mean by that is, that you know, if you don’t know when to quit and go home and be part of your family, you know your family’s going to go find somebody else. So, you know, if you don’t take care of your family, somebody else will. I know people who make their business their life, and they’re miserable in my mind, I mean they, divorce is common, other personal problems creep in when you make your business your life.
I know of a CEO, he’s no longer the CEO but, of a large company in the bay area, who would call meetings at 2:00 in the morning and demand that the staff be there for those meetings. Of course, that’s very disruptive to the family and this person just did it out of pure spite, I mean he lived at his office so to speak, and it didn’t bother him to be calling meetings at all times of the day and night. It was very disruptive to their families and of course it didn’t bother him because he didn’t have a family.
So, you know, make your life your business but don’t make your business your life. I mean, people say that they have to work, you know, 15, 20 hours a day, you know six or seven days a week. That’s just not true. If, you do the tough things first, if you learn how to organize your time so that you get 20% more done, you’re not going to have to work, you know Saturday’s and Sunday’s or 12, 15 hour days to get the job done.
I know sometimes people work long hours just to make a point, you know, so they think well if I work 12, 15 hours, then my employees will do the same and I’ll get more done. That’s not true. That is absolutely a falsest. There’s no need to have to work that many hours a day. Yeah, if you want to put in 10 hours, five days a week, okay 50 hours, you know, that’s okay. I mean that’s, that seems to be kind of a norm here, especially in Silicon Valley, but it’s not necessary.
If you feel the need to work 24/7, there’s just something wrong, either in your brain, or in your business. You know, I ran Micrel for 37 years, very successfully, profitable 36 out of those 37, and I never had to work Saturday’s and Sunday’s. I never had to work 15 hours a day, you know some days I worked 12 hours and some days I worked eight or nine, but I certainly didn’t have to work 24/7. They say well, but don’t you take your work home with you, so to speak?
Well yeah you do think about work a little bit, and if I’m honest, I’d say yeah, there are times when I’m on the phone with somebody at 8:00 or 9:00 at night, but those are exceptions, not the rule.
Rob Artigo: Creative people are often in that situation, where the work sort of never goes away. As a writer, when I’m writing a story, a screen play, or a novel, or something, the story’s in my head. So when I’m, no matter where I am, the story’s still trying to work itself out. So I can, that kind of thing, in your creative process, it’s going to come out in the things that you watch, you know, the meals that you have a restaurant or something. You’re going to have things that trigger ideas and you’re going to make little notes and that sort of thing, but what you’re saying is, sometimes you’ve got to put the pen down and not write.
Ray Zinn: Exactly. Right, as I said, don’t make your business your life. Don’t make screen writing your life. As they say, there must be balance in all things and so, you want to make sure, … or moderation I guess, it’s moderation in all things. So, you want to moderate the amount of time and effort you’re spending at the job. I’m saying flat out, you know, there is no need to work 24/7. You can say yeah, but I can’t, it’s on my mind, you know I can’t shut my mind off. Well then, you have to work on that. That’s something that’s, needs to be fixed. You should be able to compartmentalize your personal life with your business. If you don’t, you know, your family’s going to suffer and then you’re going to suffer.
Rob Artigo: Yeah, you’re going to be on your way to burn out.
Ray Zinn: Exactly. You’re burned out and you don’t even know it.
Rob Artigo: Right. Exactly. I mean you just keep on working and you go into auto-pilot mode, and it is self-destructive, it’s a self-destructive cycle to place so much emphasis on the work aspect that everything else suffers, because your health suffers, your family suffers, you know, and ultimately you know, your finances will suffer, in some way, shape or form. Like you said, Tough things First your book, famously will get people to improve their productivity 20%. I mean that’s, you’re probably losing 20% when you’re burning out. So, you’re running in a deficit. So, if you do that work, life, balance that you talk about, and you’re already in burn out mode and you work on it, to get out of burn out mode, lets say it’s a productivity change of 40%. It’s a 40% swing. So, it’s another way of looking at it, is when you feel like you’re down, you make some life changes, do the tough things first, and you find your productivity increasing. But also your relaxation time and your time with your family and all that does is help you out as a person.
Ray Zinn: Yeah. If you make your business your life, your family’s going to be less supportive. Without the support of your family, I can promise you, you’re not going to be successful. So, you know, balance your time, if there’s some things that you don’t have to personally do, in fact there’s, I wrote a little thought about that just the other day.
I was talking about, you know that some things that we do that we shouldn’t be doing, are just habit. We do them because they’re just in habit and so we think you know, we just get in that routine of doing them. When in fact, we don’t have to do them, we just do them because we like doing them or it becomes a habit. So those are things you want to look at and put aside.
The second one, of course, is just delegating properly. Maybe you feel, well I’m the only one that knows how to do it, or I’m the only one that can do it. That’s just arrogant. I mean, and you’re not training anybody, you’re not teaching by that way so you know, delegate as much as you can. Get out of this mode of you’re the only one who can do it, or knows how to do it. I mean that’s, you’re not helping anybody and not helping yourself.
So take time to train somebody in a particular function that doesn’t have to be necessarily done by you. So, anyway, let’s not make our business our life, let’s make our life our business.
Rob Artigo: Thank you Ray.
Ray Zinn: Thank you Rob.
Rob Artigo: And everyone can join the conversation, continue it at toughthingsfirst.com. Your questions and your comments are welcome there and you can follow Ray Zinn on Twitter, Facebook, and LinkedIn of course, social media is very active. Ray’s out there with, as you mentioned, something he just wrote recently, what’s out? Thoughts Here and There, but it’s just a great way to continue your business education and as you say Ray, “It’s not just your education for your business, it’s about the business that is your life.”
Ray Zinn: Right.
Rob Artigo: Thanks Ray.
Kelly Perdew, Ray Zinn – discipline, leadership and being an apprenticeRead more
West Point graduate, Airborne Ranger, and Donald Trump apprentice Kelly Perdew chats with Ray Zinn about leadership, entrepreneurship and the blend of military and business discipline.
Kelly Perdew: Hi. My name’s Kelly Perdew. I am excited to be here on Tough Things First Podcast. I’m excited to talk to Ray today and ask him a bunch of questions about entrepreneurship, leadership, what’s happening in Silicon Valley, and anything else we can come up with. Thanks for having me here today, Ray.
Ray Zinn: Hey, it’s my pleasure. It’s been a while, Kelly. It’s been about a year since we first got together. We were trying to do a TV show together. Of course, that didn’t seem to go anywhere, but glad to have you back on the air. Kelly is a well-known individual. He was one of the winners on The Apprentice. He’s written a book. He’ll tell you a little bit about his book, and then we’re just going to get into our question and answers here.
Kelly Perdew: Absolutely. One of the interesting things that happened to me after being on that reality show and working with Donald Trump for a year was, a lot of people were interested in my military background, whether or not I thought that the military helped prepare me for business. I know one of your core principles is discipline.
I wrote a book about applying military leadership principles to business, but I would love to hear straight from you. I’ve only been at this now for a couple of decades, and I know you’ve been at it for a little longer than I have. As it relates to entrepreneurship, how does discipline fit into being an entrepreneur?
Ray Zinn: It’s interesting. You talked about your military background and the training you received there. My mother, I’m the oldest of 11 children, and my mother was quite a disciplinarian. I felt like I was in the military, even though I was in my home. I was raised in a pretty strict environment.
I remember my mother would get upset if we took an Oreo cookie and opened it up and scooped off the frosting before we ate the Oreo cookie. She was quite prompt in everything she did. The way she … She even said to chew your milk. She was really a fanatic about everybody had to be dressed at this certain time, up at a certain time, and we had chores that were listed on a chalkboard that we had to follow. It’s a little bit like that military structure, Kelly, that you probably had in the military and the training you had there.
I was raised in a similar environment. My grandfather on my mom’s side was a warrant officer, a staff sergeant or whatever, back in the first World War. That’s the way she was raised, she was raised in kind of a military-type environment. Of course, she passed that on to us children. Running a household of 11 children, you had to have a pretty disciplined organization. Everybody had to follow pretty much a predetermined scorecard. That’s kind of how I was raised. I’m not sure my brothers and sisters would say that they picked up that same skillset, but I certainly learned that discipline from my mother.
I define discipline as doing what you don’t like doing and doing it well, and certainly having to wash dishes as opposed to using a dishwasher back in the ’50s when you had 13 people that you were having to wash dishes for, you learned policies and procedures pretty carefully, and doing what you don’t like doing, and if you didn’t like doing it, then you had a pretty miserable life.
That’s the sum and total of what discipline is, is learning to love the things you hate. I know that sounds strange, but that’s … Again, you’ve been a military person, so you had to do a lot of things that you hated doing, and so that’s … If you didn’t learn to love it, you would fail.
Kelly Perdew: Being the oldest of 11 made you almost … You had to be a platoon leader early on.
Ray Zinn: I was a platoon leader, trust me.
Kelly Perdew: It’s interesting because as the oldest of five in my family, I was the first person that actually went into the military. I think my dad’s temperament sounds a lot like your mom’s in terms of there’s a right way to do things and a wrong way to do things and you do them the right way, do them the right way every time.
I don’t know if that’s what drew me to the military or was accentuated when I got into it, but going to West Point, it was just like being an entrepreneur. There is too much to do in a day, so figuring out how to prioritize, having a plan and sticking to that so that you can get the most important things accomplished is something I’ve seen at least as a critical success factor for an entrepreneur.
Ray Zinn: What I learned is that … In fact, this is something you probably learned also in the military, is that if you want to get something done, give it to a busy person. The busier you are, the more productive you are. In fact, I say in my book, Tough Things First, I tell my readers that if you will just do the tough things first, eat that ugly frog first, you’ll get 20% more done a day.
In other words, if you want to improve your efficiency, eat those ugly frogs very first thing. That’s what I did during the 37 years I ran Micrel, my [inaudible 00:06:08] company in Silicon Valley, is I made a list of all the things that I didn’t want to do that day before, of course, I got to work, and I would tackle those first. I would just get those out of the way. If I did all the tough things, all the ones I didn’t want to do first, then the rest of the day was fun and I was very productive and creative.
Holding over 20+ patents, I was able to start getting those creative juices flowing and get more productive work done than if I were to procrastinate and just say, “I don’t need to do that this moment, or I can put that off,” or whatever, resulted in, of course, less productivity because you’re just pushing off what you don’t want to do. That just weighs on your mind and you’re just far less productive.
Kelly Perdew: I think that completely resonates with the way I see stuff in organizations. What you said at the beginning, if you want something done, you give it to a busy person. They’re clearly attracting the requests because they get things done. They accomplish it, they’re relied upon.
When we’re going through evaluations in organizations, I always warn people that if you’re not being asked to do stuff and you don’t have people coming to you, people above you, people next to you, people below you asking for things, you better take a long, hard look at how you’re operating because you may not be around for very long.
Ray Zinn: Delegation, that’s what … You had to learn that in military, is if you didn’t delegate properly, then you weren’t running an effective platoon or organization. The same thing running a large company, like Micrel, is that you had to delegate. Delegate doesn’t mean just passing on something you don’t want to do. That’s not delegating. Delegating is assigning people tasks that need to be done that maybe you would just love to do but in order for you to train and develop your staff, you need to give them the opportunity.
Honestly, I gave most of the good things, the ones that I’d love to do, I gave those, delegated those to my people, and I took on the ones that were the hard ones, that ones that no one wanted to do. I did those. Of course, that resonated well with my staff, but it also kept me sharpened. It’s like polishing your shoes, that spit shine, as they call it, or making your bed to the point where you can drop a quarter on it and it bounces up in the air. It’s doing those things that you just detest doing.
Honestly, as I sit here with you today, Kelly, I can’t think of anything that I don’t like doing. I’ve learned to love so many things I used to hate to do that I can’t think of any right now that I really detest doing.
Kelly Perdew: That’s awesome. You just reminded me on the importance of delegation, about a lot of the questions that people would give us … Ranger school’s probably one of the hardest 67 days of no sleep, significant amounts of work, troop-leading procedures, you name it, through the swamps of Florida, the mountains in [inaudible 00:09:14] Georgia, and the deserts at proving grounds in Utah, at Dugway Proving Grounds.
People ask, “What in the world good does it do to run you to … one or two hours of sleep a night, marching 18 or 20 hours a day, to the point where you start hallucinating, you don’t eat, et cetera, et cetera. The leadership training point in a lot of that is, in a combat situation, or any situation, really, when you push yourself to the edge of exhaustion, you start to make bad decisions. If you haven’t delegated and trained the people around you enough to be able to operate, you’re going to everybody killed.
The entire precept of being able to delegate the things you’d like to do or the things that you want to do so that your team grows and you’re able to scale from a business standpoint and/or take care of your troops in the military side is dead on.
Ray Zinn: That’s that muscle memory you learned in the military. I call it mental muscle memory, so that becomes ingrained in you and you’re able to handle those tasks efficiently and effectively, whereas if you didn’t push yourself and do those things that you just detest in doing and learn to love them …Like Emerson says, “That which we persist in doing becomes easier.” Not that the nature of the task changes, but our ability to perform it becomes easier.
That’s what it takes. That’s what you learned in ranger school, is they push you to the point where you thought you couldn’t go any further. I remember some of these pioneer stories, these people pulling these hand carts and wagons, and they said that they couldn’t go any further. They said, “I can’t make it.” Then they would say, “If I can just get to that next tree or that next hill, or if I can … ” They took it and broke that challenge down to little small increments, then they accomplished it.
That’s what it takes, is that if you haven’t pushed yourself to the point of exhaustion, you haven’t learned what it means to dig deep, run on empty. That’s what it’s all about, is being able to run on empty.
Kelly Perdew: The weakest muscle, for sure, in the human body is between your ears. That’s where people gave up at ranger school. You’ve seen Navy SEAL movies and everything else, but it’s true that your body is capable of way, way more than you think it is. It’s all about mind over matter. If you don’t mind, it don’t matter.
Ray Zinn: Exactly. That’s the whole point. If you don’t mind it, it doesn’t matter. That’s what you learn.
Kelly Perdew: Ray, I got an interesting question for you, and I get asked it a lot when I’m speaking to people and talking about stuff. A lot of people who think that they want to be entrepreneurs but are holding themselves back and/or concerned about what they’re calling, and I’m making air quotation marks for everybody on the podcast right now, risk, “I’ve got a mortgage, I’ve got kids that are going to go to school and got to take care of everything. I think it’s too much of a risk for me to follow my passion and/or go after a dream and build my own company.” How do you define risk, or what would you say to somebody who asked you that type of a question?
Ray Zinn: That’s a very good point, Kelly. I’ve been asked … Long before I wrote my book, we’re talking 20 years before I wrote my book, people would say, “How’d you do it? How did you stomach taking all you had … ” See, at one point I had personally guaranteed loans that were 25 to 30% more than my total assets were. I also had to agree that if the bank had to close on that loan that I would then pay back a certain amount of my salary for the next 10 years.
Not only did I risk all of my assets, but also because of the fact that their guarantees were greater than my assets that I would then future pay back on that loan if, in fact, they had to foreclose. You talk about putting yourself at risk, I did. In fact, the bank, seven or eight years after I started Micrel, came to me and said, “Hey, it’s very expensive for us to keep you on this guarantee. You’re doing well enough now. Why don’t we just pull you off the guarantee?” I said, “I want to think about that.”
You should’ve seen … Their eyes shot above their forehead, “What? You want to stay on the guarantee?” I said, “Let me think about that.” I explained to them that having that guarantee also kept my people on their toes because they knew that all my assets and my future income was at risk if we failed as a company, and so they didn’t want me to fail. They knew that I had …
Listen, I was all in, and you’ve heard that term before in the military, “Are you all in?” I was all in. They knew it, and so if I took myself off that guarantee, then they’ll say, “Now it’s easy going for Ray. There’s no risk involved now.” I didn’t want that. It took me a while. It took me a few weeks to finally come to grips with the fact, because it was costing the bank 60 to $80,000 a year just to perfect that guarantee. Most people went, “How come that cost the bank to do it?” Because they have to go and validate all these assets that I had that the bank was using as collateral.
Finally, after much pressure that they put on me, I finally said, “Okay, I’ll take myself off the guarantee, but I don’t want to [inaudible 00:15:08] the covenants.” In other words, I still told the bank that I wanted to adhere to the covenants of the bank, even though I was off the guarantee. But I was worried. I was worried that if I did not have that guarantee that my people would then slack on me and say, “He’s not really got much at risk.”
If you’re risk-adverse, don’t do it. What makes an entrepreneur, I think, a real entrepreneur, is if he can stand the risk. Like ranger school, how many people … or Navy SEALs. How many people can really stomach the rigors of ranger school or what the SEALs go through. I think very few. I happen to personally know people that have gone through ranger school and SEAL school. One that I know made it, and the others failed. They flunked out.
Kelly Perdew: I wouldn’t call them easy, and certainly risk can have a lot of different definitions. For me and what I tell wannabe entrepreneurs, I think their perspective is a little skewed, thinking that because they’re at a large company that they’re safe from that, what they’re describing, risk. Look at a Lehman Brothers.
Look at very, very large organizations where you’re a number of a cog, if you will, inside that organization. As an entrepreneur, you have amazing amount of transparency and clarity into cash flow, and that’s what you’re talking about in terms of sweating it or making payroll, or signing a personal guarantee that could potentially put you into bankruptcy if things aren’t successful, that type of pressure. But you have clarity.
It gives you a specific amount of focus that you can exert and look at and understand, and you know how important it is to go get that client, or keep that existing client, or add that employee to be able to successfully deliver that service or product. Whereas at a large company where you’re making a salary and you think you’re safe, you’re also just a number on a paper to some people significantly higher up that could, for changes in business, changes in strategy, things you have no control of, potentially, you could be out of a job the next day with no knowledge or that light at the end of the tunnel, and you don’t even see it coming.
Ray Zinn: I know the people who work for the government love it because the fact that they don’t worry about their job. They think they have tenure. Anyway, before we close off, because I very seldom have somebody of your stature who’s actually worked with the president of the United States before, what was it like working for Donald Trump when you were on that TV program, Apprentice?
Kelly Perdew: The show, we filmed in about six weeks. I won season two and moved to New York and worked with him and his family. Ivana and Don Jr. were both a part of the organization at that time. I spent 14 months working with him in the 5th Avenue tower. Saw him on at least a weekly basis, sometimes couple times a week. His office had the same level of activity that it does now.
There would be eight or nine people waiting to get in to see him. He’s got three secretaries, all of them working the phones. He’ll have two different business deals in the room at the same time. He’ll make decisions on the cusp, on the spur of the moment. At the time, it was primarily real estate deals, an area in which he does have significant amount of experience and expertise.
At the same time that was happening, there’d be a Dominoes Pizza commercial waiting to film. There’d be the next board room for one of The Apprentice seasons filming, also, and a non-ending list of requests for his appearances, whether it was charities, or speaking engagements, or whatever it might be. The level of activity and deal-flow that was going on from 6:00 a.m. to 10:00 p.m. every day, every day of the week in his office was absolutely astronomical. It was one of the most amazing things that I’d ever seen.
Also, I would say his, even at that time, mastery of the media and ability to manipulate things to the way that he wanted to from the media side is something I’ve spoken about and written about. Watching, and learning, and seeing how he did that was pretty amazing.
Ray Zinn: What were the lessons you learned from him? Can you give me four or five lessons you learned?
Kelly Perdew: The media piece was a huge one. If you’re in business and you’re not utilizing the media to your benefit, you’re in trouble, because one or more of your competitors are going to be doing that and [inaudible 00:19:55]. Second, and this has resonated as I’ve gone from an individual angel investor to a syndicate investor over the last three years, to last month, doing our first close on a $40 million committed venture fund, is to think big, and then step back and think bigger, and then step back and think bigger, especially as an entrepreneur.
If you’re going to go solve a problem, it needs to be one that’s significant. You’re going to put something you can’t get back, your lifetime and your life energy, into it, so it needs to be big. And if it’s big or bigger, it’s much easier to get people’s attention, and that includes investors. That includes other people to come work with you. That includes clients. It’s just as easy or just as hard to raise half a million dollars as it is to raise $5 million. Sometimes it’s easier to raise the $5 million. That was something that he articulated very well and often for me when I was there.
Probably, the third thing, that I disagreed with at the time, and watching and thinking about how I’d operated as an entrepreneur up until then, but I’d asked him, “What’s the most important characteristic of somebody who you want to work with you?” His answer was, and having watched the turn style over the last months, it might sound funny, but his answer was loyalty. I said, “What about capability, or intelligence, or work ethic, or whatever?” He said, “Nope, I’ll take loyalty over any of those things all day.”
Ray Zinn: That’s taking a bullet. That’s willing to take that bullet.
Kelly Perdew: Yeah, he operated with that, too. I had the choice of working on a west side project, Trump Place, so it’s five buildings along the Hudson that are a couple billion dollar project, or being responsible for the Trump Tower Hotel and Resort, not casino, in Vegas that went up. I selected New York. I wanted to be in and around him in New York City for that year that I was working with him.
The person he put in charge of the hotel and resort in Vegas was his bodyguard of 18 years. Not a master real estate developer or somebody who’s very familiar with Vegas or anything like that, but somebody he knew he could trust with his life.
Ray Zinn: That’s good.
Kelly Perdew: I thought that was pretty fascinating.
Ray Zinn: That’s an awesome lesson. I agree. Loyalty plays an extremely important part in running a successful business. When you pick your partner, make sure he or she is a loyal person.
Again, thanks for joining us today, Kelly. It’s really nice to have somebody who’s actually had the experience of working with the current president and hearing the lessons learned from him. Your book is called what?
Kelly Perdew: It’s called Take Command.
Ray Zinn: Take Command.
Kelly Perdew: Yeah, 10 Leadership Principles I Learned in the Military and Put to Work for Donald Trump. Really short [inaudible 00:23:03] there.
Ray Zinn: Where can they buy it?
Kelly Perdew: You can either get the hardcover book or Audible on Amazon.
Ray Zinn: Okay, great. We’d like to invite our listeners to continue to follow us on Tough Things First Podcast. Go to our website, toughthingsfirst.com.
Hey, listen, great stuff, Kelly. It’s been a year since I’ve talked to you, but I’m so appreciative of you joining with me today and doing this wonderful podcast. A little longer than we like to have them, but hopefully our listeners will still want to listen to the whole thing.
Kelly Perdew: Maybe they were doing a long workout today.
Ray Zinn: There you go, a very long workout.
Gender Equality in the WorkplaceRead more
Gender equality in the workplace is not a trivial matter, and as businesses add more women at all levels of management, it’s bound to come up more often. In this edition of the Tough Things First Podcast, Ray Zinn discusses the culture at the company he founded and what it can teach us about equality in business today.
Rob Artigo: Welcome back to another edition of the Tough Things First podcast. I’m your guest host Rob Artigo. I’m a writer and entrepreneur in California. Hi Ray.
Ray Zinn: Hello Rob. So good to have you again with us today.
Rob Artigo: It’s good to be back. You ran Micrel, a very successful semiconductor company, for the better part of four decades in Silicon Valley. You were particularly proud of the culture at Micrel. Tell us a little bit about the culture. What I want to focus on is, you have a diverse work environment there. You have males and females working together, people of a variety of races. What was the culture like at Micrel?
Ray Zinn: What I try to focus on and to encourage is fairness. Fairness in all respects. So the first culture that we had was honesty. Which means you’re going to tell the truth. The next was integrity, which is doing what’s right when no one’s watching. Comes from the heart. You just know you’re doing right because you feel good about it. The third is dignity of every individual. You know, showing respect and tolerance for all, not based on their gender, their race or any other aspect, but every person has the same rights and the same capabilities to succeed in life as anyone else.
There was no discrimination at Micrel, that I’m aware of anyway. We also had a culture of no swearing, because we feel that using vulgar language or condescending language is not respectful. That’s the other thing that we did, was to focus on the way we treated one another. The last of course, doing whatever it takes and no excuses. Meaning, if you make a mistake, we all understand we make mistakes but let’s correct them.
Rob Artigo: Let’s talk about company culture and the business climate today as it relates to gender equality, or inequality as the case may be, in the work place. I’m not sure if it’s becoming a bigger issue now compared to how it was in the early years of Micrel, or if we’re just starting to see or hear more about it. But looking through the lens of so many decades of experience as a manager, as a business operator, what are you thoughts about women in the modern work place?
Ray Zinn: You know, as I mentioned one culture that we had a Micrel is dignity and respect for everyone, irrespective of their gender, race or beliefs. So it doesn’t matter who you are or what you are, it’s really how you do your job. This is the thing that we focused on. It wasn’t one of, well you know, we’ve got make sure we have our share of men, or our share of women, or our share of this particular race. We didn’t look at it that way. We looked at it as a family.
When you have families and you don’t know whether you’re going to have a boy or a girl, that’s something that’s determined by nature. We don’t need to discriminate, even at birth or during life. I was at a event where I was a speaker at San Jose State University. I told them that women are actually better than men. I actually said that, and I believe it.
I’ve been married 56 years to the same person, and I cherish that relationship deeply. I don’t put her in a box and say, “This is your job.” We just work together as a team. She knows what she can do better than I can, and I know what I can do better than she can, and we’re a team. So I don’t try to do her job and she doesn’t try to do my job. We just work together. That’s what a team’s all about, as they say there’s no I in team.
There’s another saying, behind every good man is a better woman, and I believe that. I don’t mean behind, meaning standing behind. I mean supporting. My wife has been very supportive of me because I’ve been very supportive of her. I was counseling someone regarding their marriage, or their upcoming marriage. The young man said, “Well, I’m concerned about what kind of wife she’s going to be.” I said, “You got it all wrong. You should be worrying what kind of husband you’re going to be, opposed to what kind of wife she’s going to be.” If you worry more about them than you do yourself, then you’ll succeed. I had a saying at Micrel that was, “If you worry about you, I won’t.” Meaning, if you’re going to focus on yourself, then I’m not going to worry about you because you’ll take care of yourself. But if you let me worry about you, you’re going to do a whole lot better.
Are women less capable than men? Absolutely not. As I said in my talk last night, I said, “Women are better than men.” The reason I say that is not to degrade men but to elevate women, meaning give them more value and importance, and rather than this be a male dominated world we ought to be this is a co-existing world where we work together. You know, women are in many respects far more capable and they’ll have more abilities than men do. So I don’t look at it that way, as I’ve said I’ve been married for 56 years and I love my wife dearly and I would do anything for her. That’s the way we have to look at it. I’d do anything for my children too, but my wife is my partner and I want her to feel elevated not only in my eyes but in other’s eyes.
So I always talk about, “I couldn’t get to where I am or have done what I’ve done without my wife, because she was the one that really has helped me accomplish the task that I have.” And I think that I’ve helped her accomplish what she’s been able to do. This is the way I look at it. No I in team and I want all the women out there who listen to me make this podcast, that you guys are better than we are. I have no doubt about that. My mother is really who I am. She built my moral character and I owe everything to my mother. She labored with me three days, 72 hours in childbirth. What men could even think of tolerating that?
Rob Artigo: Let’s finish up by saying, or just asking the question, put yourself back in your CEO shoes, as you’re top level manager. Let’s say that somebody has violated that culture that you had at Micrel for so long, and you have a female employee, a women who believes that either she’s been wronged or mistreated in … So, discriminated against, or somehow or another disadvantaged because she’s working with somebody who has a problem with her gender. What would you recommend to anybody out there listening who might be in that situation? Should they go to their boss? Come to you and say, “This is my situation. Can you help me work it out?”
Ray Zinn: My door is always open, so that meant that anyone could come to me and you don’t have to got to your immediate supervisor or to their supervisor. They were perfectly flexible and able to come and see me directly. Some issues where they feel disenfranchised in some way, they should come to the top and feel that they have that flexibility and that ability to do it, and not with the fear of being terminated.
So, are there when women do this just out of spite? Yes, I’ve had that happen. I’ve had dozens of employee work for me over the years and sure, there are times that I’ve had women come and inappropriately cause us to take action against a man for something that they alleged was done to them. But we looked into it and we gave it thorough investigation, even though it looked like on the surface anyway that there was some kind of game going on here.
But by and large, when women have come to me with an issue of some level of discrimination, we’ve taken it seriously and we’ve take action. Men have been fired over the actions that they did that were inappropriate. So yes, absolutely I feel in my company anyway, and I would urge those who have leadership positions in their company allow your employees to come to you directly if they have an issue with someone.
Rob Artigo: Because it’s a lot easier than going out and making it public or something before you’ve actually asked, “Hey, can you fix this?” When I was in the military many years ago, and I spent many years in the military and I can tell you from personal experience that male and female soldiers alike can do that thing where they just out of spite or something go up and make a complaint about somebody and raise a stink, so to speak, around something that really is just a personal matter.
Where there was a conflict in the relationship and as a way of getting back at somebody, somebody says and suggests something. I know when you were describing, you’ve had women that have come in and were doing something that ultimately were … Or was complaining about something that ultimately was unfounded, that that can go both ways. That can be the male half coming in and saying, “Hey, I have a problem with this women,” because of the issue, right?
Ray Zinn: I have an example. I have a friend of mine who was a dentist in the military, in the army. I think we was the level of captain, I believe. He was a good dentist and was in the military for many, many, many years, served well in foreign lands as a dentist. He had two assistants, two female assistants, military. He had often referred to them as gals, “Hey gals, let’s get going on this.” They took that offensively. He didn’t think that was offensive, obviously he wouldn’t have done it if he thought it was offensive.
But anyway, they took it up the line to his boss, that he had been calling them gals. He of course apologized, I mean once he found that calling them gals was offensive to them. He immediately stopped. But that still tarnished his record and it caused him to have to leave the military early because that stopped his ability to raise his rank in the army. So sometimes you may be offending someone, you may not even know it because everybody has a different view of how certain words or actions are perceived. Here’s an example of this poor guy, he was forced to leave the military just because two of his assistants turned him in for calling them gals.
Rob Artigo: Well, we can certainly continue this conversation for a long time. We can also plan ahead and do another podcast on this. Perhaps there’s a listener out there who’s thinking, “Wow, the two guys are talking about women in the work place and they don’t have a representation of female there.” I think that this is a good time to say, if you’re in the business world and you’re a woman who wants to talk about this sort of thing, you can be on the show.
But what you have to do is reach out to us at toughthingsfirst.com and ask. Just propose that you’d like to talk a little bit more about this. Ray would be happy to talk to you, and of course anybody else out there who wants to take a shot at being a guest host here on The Tough Things First Podcast can do so again by reaching out to us at toughthingsfirst.com. Of course find us on Facebook. Ray of course is out there on social media all over the place, Twitter. You can read his book, Tough Things First, available at major book retailers and Amazon. Thanks a lot Ray.
Ray Zinn: Thanks again Rob. It’s always good to be with you.
SPECIAL EDITION: China, chips and securityRead more
China wants to dominate semiconductors, and vertically integrate manufacturing. This is a global threat on many fronts. Ray Zinn, founder of Micrel Semiconductor, discusses why and what to do about it.
Guy Smith: Welcome back to the Tough Things First podcast. This is kind of a special edition for us. My name is Guy Smith. I’m your guest host today, and of course, we’re chatting with Ray Zinn, the longest serving CEO in all of Silicon Valley, and good morning to you, Ray.
Ray Zinn: Well, good morning to you, Guy. It’s a beautiful day outside here.
Guy Smith: It certainly is. Hey, listen, I want to dive right into this topic because I noticed that you wrote an article for Forbes magazine discussing China, semiconductors, the future of global economics, and I find this kind of a fascinating topic because we’re seeing some, what I would consider tectonic shifts in terms of the way technology is aggregated worldwide, and I know that you’ve got some interesting insights, so let’s just dive right in. Why are semiconductors so important to mainland China? What is their longterm gain here?
Ray Zinn: Well, if you recall, going back after the second World War, we were trying to get Japan back on its feet and so, we introduced the automobile to them, and of course, you saw what happened. They took off and became the world’s giant automobile manufacturer. Well, in 2001, roughly there when the dot com implosion occurred, a lot of the manufacturers decided to move their electronic manufacturing to Asia because number one, they weren’t cost competitive, and since the fall off in the dot com caused the manufacturers then to really lose a lot of money, and these are electronic manufacturers such as … Can’t remember the name of the company now because they’re no longer in existence, but the number of these large manufacturers shut down their manufacturing in North America and Europe and moved to Asian countries.
The biggest of course, was China, mainland China, and so when mainland China looked at the list of product that goes into an electronic product, it’s semiconductors, and so they thought well, we can gain a great foothold here if we can manufacture the majority of the components for the electronic system. And since semiconductors were the mainstay, that became a focal point for China, and they decided hey, we’re going to become like Japan was back in the 40s and 50s. We’re going to become, China’s decided to become the go-to country for electronics. And a lot of the contract manufacturers, like Flextronics and the likes, moved to China and set up these large electronic manufacturing plants in China. So a few years ago, we learned that China’s main goal or one of their stated goals is to be able to supply nearly all, 100 percent or nearly all of the semiconductor content directly from China, meaning that China would be the source for the semiconductor components and for that matter other components, passives and so forth for the electronic system.
And they’ve been working frantically to do that to get their goal accomplished by 2025, and so the country, the government sourced and funding over 18 billion dollars to acquire semiconductor technology, and they are frantically doing that to this very day.
Guy Smith: Wow, and I think that’s one of the fascinating things about the market mechanics at the moment because even though mainland China is a manufacturing behemoth and they’re grinding out gadgets for the entire world, they have to import most of their chips in order to build iPhones and whatnot. And so basically they’re trying to do two things vertically integrate by building more of their own semiconductors, but there’s a political aspect in that Taiwan, who they have this adversarial relationship with, is really one of the powerhouses in semiconductor manufacturing, so by vertically integrating, they end up keeping more of the money and they knock the legs out from underneath a political rival there in Asia.
Ray Zinn: That’s correct. The Taiwan semiconductor manufacturing facilities, they’re actually called Taiwan Semiconductor, is one of the largest semiconductor manufacturing plants in the entire world. They have three or four semiconductor plants spread out over the country of Taiwan, and they are the go-to place for most of the high tech firms like Broadcom and Cisco and some of the other large consumers of semiconductor components, so nearly all the main, entailing all the main semiconductor manufacturers, do use TSMC for their semiconductor components, and obviously, China’s trying to capture their unfair share of that capability, which is currently shared by, or held by Taiwan.
Guy Smith: So do you see mainland China actually making their goals by, I think you said it was 2024 and if so, what then becomes their role in the global marketplace in terms of manufacturing and selling semiconductors?
Ray Zinn: There’s two parts in manufacturing semiconductors. One is the facilities themselves, the plants to make the product, but there’s also the design component of it, and somebody’s got to design the product, and that’s where they lack a lot. So does Taiwan. The design capability to do that. Now, with design automation, at least in digital semiconductors, becoming more viable, they can design their own semiconductor products using these automated design tools. Again mainly for digital semiconductor products, which probably comprise of, 80 percent of all semiconductors are digital. Memory and microprocessors and the like are digital-type products. So that, they can probably do through design automation, but somebody’s got to come up with the requirements. Somebody’s got to say, “Well, here’s what I want,” and China is not that way. They don’t necessarily start out saying, “Okay, here’s what the world wants.” They’re more in terms of “Tell us what you want and we’ll build it,” type of thing. So the innovation, I don’t think is there as much as it is in the US. So the US is kind of the innovators of the product and then China mainland would be the manufacturers of it.
Guy Smith: Well, that brings up another interesting geopolitical reality. I’ve noticed that a number of American companies have been investing in design and innovation centers in India, everyone from Apple to Ford Motor Company, and there have been a lot of reasons why they’ve justified these investments in India. Given China’s disposition to go manufacture what other people tell them that they want, and American industry’s investing in India for design, do you think there might be a split in the Asian market that a lot of the design work will eventually float to India, but the manufacturing will float to China?
Ray Zinn: Could be. I’m not sure. It certainly, India, which could be the third largest economy in the next ten years, has come online quickly, and they’re a very well-educated society, and certainly they have the potential to do that, but I’m hoping anyway that the US wakes up and says, “We can’t just let the rest of the world do our thinking for us, and we got to do some thinking for ourselves,” and so we still can maintain the edge on making electronic components and products as opposed just to giving it all away to other countries. Unfortunately, we did this to Japan in the 50s, and we’re paying the price for that today, so I’m hoping that this doesn’t happen, that the US government recognizes the flaw in that thinking, that all we’re going to do is just be somehow a consumer of things as opposed to a producer.
Guy Smith: Well, and that brings up an interesting point because we are the world’s largest consumer of electronic gadgets. China’s manufacturing wealth is all, well not all, but largely contributed by the United States, because we buy the products that they manufacture. So is China going to have to play nice with the US, especially given the current administration’s willingness to impose trade sanctions where they think appropriate?
Ray Zinn: Well, I mean, China is willing to fire back, so I’m not sure how much we have frightened them as you would, so China’s become a large consumer of electronics themselves because their country is growing in wealth and capability, and their populace is now becoming a huge consumer of electronics, such as India is also getting on the same track. So, they will ultimately have a large, China mainland, that is, will have a large consumer base within their own country. They are many times bigger than the US size-wise. Now, more than three times our population, and so they have a large pent up demand in their country. I’m not sure how much clout the US is going to have. What I can worry about is just the security and the capability of protecting ourselves, because electronics go more into than just into consumer products, they go into military and aerospace-type systems. So, I’m hoping we retain that technology and the ability to protect ourselves.
Guy Smith: Well, not only retaining the technology itself, but having some sort of leading edge expertise in it. A lot of people noted that Japan figured out how to make automobiles a lot better than Detroit was making them, and when you compare Japanese manufacturing down to the suburbs of Detroit you can almost see visually what the net outcome after a couple of decades of that economic shift was, and now Japan is building factories in the US for a variety of reasons, but they still are the ones who are innovating the marketplace probably most. So, if China does indeed build a capacity to dominate the semi industry, what does this mean to the world economic order? I mean, there’s the military, this national security aspect that you just mentioned, but does it also put a wrinkle into the total economic fabric?
Ray Zinn: Well, I hate to say this, maybe because I’m a semiconductor veteran, but so goes semiconductors, so goes the world, and I’m not sure everybody who listens to this podcast is going to agree with me, but since our world is highly electronic based and semiconductors are the hub of that electronic base, I say so goes semiconductors, so goes the world. So if we want to give up our world leadership, and certainly we’re on that road to do so by just letting everybody else manufacture semiconductors and the developing that technology.
Guy Smith: Is there any movement with inside the American semiconductor industry to try to bring more of the work home?
Ray Zinn: I don’t see it yet. It’ll have to happen. Intel used to be the world’s largest manufacturer of semiconductors and now it’s Samsung, and that’s a Korean company, and so I’m not sure what Intel’s going to do, or others are going to do to get that back. IBM sold off their PC or their consumer computer systems manufacturing to a company called Lenovo. I think it’s called Lenovo in China, but we’re rapidly giving away the technology much like we did in the 50s to Japan with automobiles. So, it can happen, and it can happen very quickly. If you remember, I don’t know if you remember because you’re probably not old enough, but there used to be a cartoon series, Lil Abner, and there used to be, General Blue Moose was General Motors, and General Motors, you know, there was a saying, it used be so goes General Motors, so goes the world. And General Motors, of course, is now no longer the powerhouse and even in automotives, they’re no longer the powerhouse.
I think Toyota is. Once we go down that slippery slope of giving away these technologies, much like we did in the automobile industry, we’re going to be a second rate nation. And so we need to wake up and put a halt to this. Otherwise, we are going to lose. Apple by the way is currently the world’s largest user of semiconductors, and now look what’s happening. They’re manufacturing nearly all of their products in mainland China. So, this trend has to change, or we are going to lose our edge.
Guy Smith: It doesn’t bode well, but I don’t think we’re so far into the ditch that we can’t pull ourselves out, but I think it requires social will as well as political will to make that happen. Well, thank you, Ray. I appreciate it, as again, always insightful on multiple different levels, and for the audience, whatever you do make sure to subscribe to the Tough Things First podcast. You can do that on iTunes, Google Play Music, Stitcher, all the usual outlets, and if you haven’t yet, you absolutely have to get a copy of Ray’s book, Tough Things First. If you’re looking for a head to shoulders review of management, leadership, and business philosophy, especially from the entrepreneurial perspective, you can’t do better than Tough Things First. So thanks again, Ray. Always a pleasure.
Ray Zinn: Thanks, Guy. I’m always glad to be with you, hosting these podcasts. You give me cause for thinking, and that’s good.
Guy Smith: Wonderful. Well, we’ll chat again soon.
Ray Zinn: Thanks.
Business’s Fifth yearRead more
Many seemingly successful businesses hit a wall, or even fail at the five-year mark. In this Tough Things First podcast, Ray Zinn and guest host Rob Artigo explore the significant of that anniversary, and how to avoid fifth year failure.
Rob Artigo: Rob Artigo here, your guest host for another edition of Tough Things First with Ray Zinn. I’m a writer and an investigative consultant. Being invited back is always great. Thanks, Ray.
Ray Zinn: It’s nice to be with you Rob. I always enjoy speaking with you.
Rob Artigo: I got another good topic here, mostly culled from your brain and your writings that I’ve seen here or there, and one of these subjects is this idea of the fifth anniversary for a business. For some reason, a lot of businesses hit a wall or at least struggle to survive after five years. Why is it that fifth anniversary, it makes such a big difference in a company’s life?
Ray Zinn: Because that’s the product cycle life. In other words, if you look at the products that the company’s introducing or a service, it has a certain lifetime, and that seems to be around five years. Three to five seems to be the lifecycle of a service. And if we don’t rejuvenate that product cycle, then we’re likely to run out of gas. So last night I was mentoring a student at one of the universities regarding a project that he was doing, and I said to him, “Well, okay, what product do you have after this one?” And he looked at me and he says, “Well, I’m just trying to get this one out.” I said, “I understand, but what product do you have after this one?” And he said, “Well, I really haven’t thought,” and I said, “Well, do you know your product has a certain lifetime? And then it has to be rejuvenated, or it just runs out of steam.”
So I said, “There’s the Poisson life of a product.” When you introduce it, the volume’s low and then it hits its peak, and then as it hits end of life, then that volume drops off and your company … Poisson meaning binomial histogram, your revenue is going to fall off because your product has run out of gas, and so you have to have something behind it in order to sustain your revenue. Because what happens is once your revenue peaks, you’re going to have all your employees hired, you’re going to have all your expenses. That’s going to be the peak. And then as it drops off, you’re going to have lay those people off or you’ll hang onto them for a while, and your expenses go up and pretty soon you’re running in the red, and you’re going to have to either fold up your tent or you’re going to have to rejuvenate your product. So, what I suggest is that if you want to avoid that wall, that five year anniversary wall, is to have something in the hopper, second and third year or run the risk of your company burning out.
Rob Artigo: I imagine that for this particular student and for anybody being asked that question, it can be a little alarming. “I hadn’t thought about that,” or “I have a product. My whole business is dependent on this product,” but your statement is that “No, you may be able to launch your business with this product, but your whole business is having something new every five years.”
Ray Zinn: Yeah, I mean, that’s exactly what he said. He said exactly those words. “Well, I hadn’t thought about that.” And I call it having life after life. In other words, you get all enthusiastic about your product and say, “Oh, man, this is going to be a killer.” Fine. It’s going to be a killer, but it’s not forever. It’s going to get replaced by something or someone or some service. You can innovate and innovate means that you can evolve the product going from model A to model B and so forth, or you can be revolutionary or come up with a new, fresh idea and just make it the follow on as you would, that’s not evolutionary, it’s more revolutionary, and so that’s another way to do it where you actually improve, I mean, not improve, you can totally change so it becomes almost a different kind of product, or you can be groundbreaking but groundbreaking requires divine creation, meaning you got to think of something that no one’s thought of that’s going to require a new market.
It’s almost like a new idea, whether it be the electric car or some other product that takes support, meaning that you’re going to have to have infrastructure, you look at the Tesla product. It’s good if you’re commuting in town, but once you get out and try to drive any distance, you either have to have a recharging station, a charging station, or you’re going to run out of power. And you only have a certain distance you can go. And so you need the infrastructure around it. So once they put in enough charging stations, and you build it, by the way, to charge quickly, you can’t really make this a long distance vehicle. I know they try to say that, but it’s not really practical to take these electric cars on long trips because …
Rob Artigo: You can’t bring power with you.
Ray Zinn: No, well, no, yeah, but even if you had a charging station within reach, you’re still going to be sitting there for a couple hours recharging your vehicle, which means your trip gets delayed by whatever distance you have to travel in and then the charging times. So you have to have the infrastructure. If you’re going to be groundbreaking, you’ve got to have infrastructure around you to support that groundbreaking idea. When I invented the wafer stamper it was a great idea, but it didn’t have any infrastructure around it, there was no chemistry, no lenses, the light source, all the things that needed to support it just wasn’t there. And the reason was it wasn’t there was because they don’t provide the infrastructure if there’s not something that needs it. Just like nobody’s going to put these charging stations in, if there’s no cars that are going need to be charged, and so up until the electric car, like Tesla has developed, there was no need to put all these charging stations in it.
And kind of like the early days of the automobile, there weren’t gasoline stations sitting on every corner. And so it had the same limitations that the electric car does today in that you can only go as far as you could return and still get gas at your gas station.
Rob Artigo: Right, and Elon Musk went out at the expense of the company Tesla to put charging stations in along the LA corridor, so that people would have some infrastructure. It was like, in order for his business, he knew that in order for electric cars to succeed that it was going to take somebody putting in these stations. Well, when the fact that people didn’t have that many of those electric cars out there, mean that there weren’t enough of these, there weren’t these stations out so he put the charging station before the car so that it would make the car more usable or user-friendly so to speak.
Ray Zinn: Right. And there’s still limitations because I have a Tesla, and unless I want to sit at the charging station and having lunch every couple hours, I’m going to run out of electric charge, so they’re either going to have to improve the range of these vehicles, or they’re going to have to shorten the time, the charging time, because you can fill up a car in five minutes with gas from empty.
Rob Artigo: Right.
Ray Zinn: But you’re not going to recharge your Tesla or you’re electric car in five minutes.
Rob Artigo: Yeah, and a tow truck driver can come by and drop off four gallons of gas so that you can get yourself to a gas station, but nobody’s going to be able to pull up with a truck and go, “Hey, I’m going to plug this in here and sit here for three hours with you until you have enough power to go find a charging station.”
Ray Zinn: Exactly, so again, but the purpose of this podcast is to say, you’ve got to think of your life after life. In other words, what are you going to do when your product runs out of gas? And no pun intended, but this is really what happens, why these companies that take off and do real well for a couple for a few years but then after their fifth year they hit this, what we call the product wall, and they …
Rob Artigo: Then they’ve got nothing.
Ray Zinn: Or they fail because they ran out of gas.
Rob Artigo: Thank you, Ray. Great way to finish it.
Ray Zinn: Well, thank you, Rob.
Rob Artigo: Join the conversation at Toughthingsfirst.com. Your questions and your comments are always welcome. Follow Ray Zinn on Twitter, Facebook, and LinkedIn. Again, if you go to Toughthingsfirst.com, you can email Ray directly, you can talk about subjects you want to talk about on this show, you can even maybe propose an idea where you’re the host. So please do it at Toughthingsfirst.com. Thanks again, Ray.
Ray Zinn: Thank you, Rob.
Business EclipseRead more
The 2017 total solar eclipse which fascinated Americans for a week was stunning to behold, but what happens when your business is cast in total darkness? In this addition of the Tough Things First podcast, Ray Zinn discusses the corrosive nature of an eclipse within your business.
Erik Huberman of Hawke Media grills Ray ZinnRead more
Bootstrapping, sustainability, work/life and profitability. In this wide ranging special edition of the Tough Things First podcast, guest host Erik Huberman, the Founder & CEO of Hawke Media, grills Ray Zinn on the entrepreneurs life, and how their unique vision drives all things possible.
Erik Huberman: Hi. You’re listening to the Tough Things First podcast. I’m Erik Huberman, your guest host today, Founder and CEO of Hawk Media. I’m joined by Ray Zinn. How are you Ray?
Ray Zinn: I’m doing great. Thanks for hosting this podcast for us today, Erik.
Erik Huberman: No, yeah. It’s truly an honor to talk to you. I’m going to start with a pretty straight forward question. You obviously talk a lot about tough things first, and I would love to first off talk a little bit about your background. Would love you to get people up to speed on the impressive man that you are, and really go into the tough things you had to deal with, and what you focused on first, and what brought you to this philosophy.
Ray Zinn: Okay. Well, first off, I’m 80 years old. 80 years young, as Erik says. I’m 50 years older than Erik. Erik is just 30. I started Micrel 37 years ago, actually 40 years ago now. Erik, of course, just started his company just a few years ago. So, we’re in totally different time points in starting our companies. I started Micrel in 1978 with my own money, because I wanted to own the company. I didn’t want to have anyone tell me how to run the company. Probably one of the toughest things I had to do was be able to run the company profitably because we were bank funded, and you can’t run a company with bank funding unless you’re profitable. So, that was the big challenge was having a start-up that didn’t lose money.
That’s a challenge for anybody who thinks about, start a company from scratch and not lose money, because in the first year of operation, I could only have one quarter, three months, that I had a loss. That one quarter it could not be such a significant loss that it cost me to go negative for the whole year. In other words, I had to maybe lose money in one quarter, but be positive for the entire year.
How do you grow your business when you’re a start-up, no customers basically? Then on top of that you can’t lose money, because you have to pay people. Every two weeks they want to get paid. So, I had to change the strategy of my business that I originally had not had to do or not proceeded to do, and that is to run it as a profitable business. So, I operated as a service, much like you did, Erik. Your startup is very similar to mine. I offered a service. That was a [inaudible 00:03:00] service as opposed to marketing service like you’re doing, but still it was a service a business so I could have that cash flow. It wasn’t until 1985 that I had sufficient revenues coming in that I could literally start building my own products. So, we did. In ’85, we began looking at developing our own products as opposed just offering services, similar to what you’re thinking about doing, I think.
Erik Huberman: Yep.
Ray Zinn: Even though it was 40 years ago, business is business. You still want to run your company profitably, and that’s the challenge. So, doing the tough things means that some of the things that you would like to have like fancy offices, or lots of perks, and stuff like that, we had … and a big salary for two years, I didn’t even draw a salary. So, it was tough. Learning to do the tough things was really what propagated Micrel into being the company that it was when I sold it. So, that’s kind of in a nutshell a little bit about me and how I started mine, Erik. I think it’s similar to what you did, or what you’re doing, and kind of what you’re going to be facing. ’78 to ’85, so let’s say seven years or six and a half years, I operated as a service company.
Erik Huberman: Mm-hmm (affirmative). Makes sense. My question to you is, because it actually is … bizarre as it may seem to people like you and I, it’s unusual to run a business bootstrapped or for profitability these days. You would think that that would be the point, but these days it’s much what’s hyped in the news, what’s talked about is fundraising, venture capital, raising as much money as you can, grabbing market share, beating other people out.
You see companies like Uber who have never had unit economics, but their whole goal here is to make it so no one else can operate in the industry. Even Amazon, which is now been publicly traded for a long time, has only shown a profit one quarter and it was an accident, because they really want to squeeze everyone out. So, why do you think … Do you think it’s better to run a profitable business versus a company going that route? Why?
Ray Zinn: Well, again, if you want to be a unicorn, then you’re going to operate like Uber, or Amazon, or Facebook and Google. They have a different strategy. I’m not knocking them, but that’s not what I wanted. Again, I was building a company for people. I wanted an enduring company that provided people a way to make a living. So, I wasn’t looking at a in and out scenario. My strategy for the company was to build an enduring business that could last on into the centuries. It didn’t, but that was my goal when I started the company was to provide an opportunity for people to actualize an income for their family.
I wasn’t worried about me or my investors. I was focused on building a company as opposed to just building products. I wasn’t trying to run anybody out of business. I wasn’t trying to monopolize the market in my particular area of expertise. I just want to run a nice company and want to run it profitably. So, that’s what I focused on. I didn’t focus on running people out of business.
Erik Huberman: Yeah. Well, that’s interesting. It’s funny to me, and I’ve seen it now with a few companies, your outcome, even though you never intended on selling the company, your outcome personally was actually much greater than most people’s outcomes that end up selling unicorns because you personally own so much of the business that even though the business itself didn’t sell for the same amount maybe one of these unicorns will, your personal ownership in it was so great, you still had a better outcome that also seemed to be less risky, to be honest. You always ran it profitably, so there was no burn rate, there was no begging people for money, it was like you ran a good business.
So, it wasn’t this risk of just completely falling apart all the time, which you have with the other strategy. It’s just always interesting to me that this almost more conservative strategy of building a good business actually can have a greater outcome than a lot of these high flying unicorns. I’ve been studying it a lot recently, and it’s just interesting to see that it stays consistent. You talk about the age difference, we have actually a 49 year age difference. I turned 31 a week ago. Even in that difference in terms of … It doesn’t change. Business doesn’t change.
Ray Zinn: No.
Erik Huberman: If you run a profitable business, you’re going to sustain. Things like economic shifts don’t affect you as much. They still affect you and you might have to slim down a little bit, but you don’t worry about not being able to raise capital, which is a big problem in these economic downshifts.
Ray Zinn: Exactly. Again, I want to reinforce or restate that I didn’t start the company to make a lot of money. I wasn’t saying, “Hey, I want to become this filthy rich guy.” That wasn’t why I did it. I wanted to have a company that was a real company that hired real people that did real work. I wasn’t worried about, as I said, running people out of business. I wasn’t planning on taking over the world. That wasn’t the goal. If that’s what other companies want to do, fine, but that’s not what my intent was. I want to start a company, have it profitable, not having to go out looking for funding every six months.
So, I ran it profitably. I had positive cash flow and was successful in selling the company for a great deal of money, but that wasn’t the goal. That wasn’t why I did it. I did it because I wanted to build a company for people. I know that sounds a little bit corny, but that was what I did. When I started Micrel in ’78, the average age of the employees was 28. When I sold the company in 2015, the average age was 55 not because I hired older people. It’s because they were loyal, stayed with the company, and we didn’t have layoffs. So, just naturally the population after 37 years is going to age. These are very capable, very good people. We were very successful. Profitable every year except for one year. We only had one year that I lost money. I lost $50,000 in 2003, and that’s because I consolidated two dabs onto one. As a consequence, I had to write $29 million off, but I only lost $50,000 when you look at it on a gap basis.
I’m very proud of that over 37 years of only losing $50,000. I never had to go back out raising money. From the day I launched the company, never had to do it. One of the goals that I … In fact, I mentioned this in my blog and in my podcast that if you’re going to start a company, raise enough money to take you to profitability. Don’t start the company unless you can get to profitability with what you’ve raised.
Erik Huberman: Yep. I totally agree. Again, unless you want to go down that other strategy which has worked for a few people, but rarely it works. You just touched on something we were talking about earlier, which is the idea of age in the workplace. It’s actually very similar to us. Again, there’s a lot of parallels here. Our average employee age started at probably 26, 27, and maybe now is 28. It hasn’t really aged up that much. There is a propensity with start-ups in Silicon Valley and just the start-up culture to really hire young people, which it sounds like the same thing you did when you first started your business.
It can create a little bit of ages on where you’re looking at young people for the sake of being young as opposed to who is the most skilled at the job. What are your thoughts on what’s going on in Silicon Valley with kind of the older demo that is still totally capable, if not more capable, has more knowledge, and is finding hard time getting work?
Ray Zinn: Well, that’s a very good point, Erik. We didn’t intentionally hire young people. It’s just that the population that was available to me to hire, they were young. Our industry was young. It founded itself in 1957, so you’re talking only 20 years when I started Micrel. So, I didn’t have an aging population to pull from. I wasn’t intentionally hiring younger people, it’s just that it turned out that the average age of my employees was 28. By the time 37 years rolls around, our average age was 55 because the people stayed with the company and just got older.
With age comes wisdom. The fact that some of the unicorns have an unofficial policy of not hiring anybody over 45, I think, poses a problem for them, because in another 25 years, they’re going to have a population over 55 unless they have a forced retirement at 50. If they do, then of course they can keep the age down. We didn’t have that. We didn’t force people to leave, so the average age has matriculated up over time. That’s why we ended up at 55, average age of 55, when I sold the company. I think it’s a shame that these unicorns, which they tend to thrive on the yuppie type of age class to run their companies, because they feel that older people can run out of gas, long in the tooth, which is not true.
Erik Huberman: No, I agree. I actually got some great advice recently, which I’ve seen come to fruition with some of our hires. There’s definitely a time and place to have young people in the way you’re hiring. Again, I’ve talked about our average age here. There’s something to be said about someone that’s already been there. If you want to create a Super Bowl team, hire someone that’s already been to the Super Bowl and won. If you want to create an all-star company, bring on talent that’s already been there at times. That doesn’t mean everyone, but it should be a balance. I don’t think I would agree that everyone should be over 45 either. It should be a balance, but the idea is, if you can pull in some senior talent that has already been in the end zone, so to speak, has already done what you want to do and can help you avoid pitfalls.
It’s the same reason people, frankly, hire my company or probably hired Micrel back in the day with … You can do one of two things, try to do this yourself and fall into every pitfall everyone else has, or hire a consultancy or a service business that can help you avoid those pitfalls and can navigate it for you. It’s the same thing with hiring senior people. They’ve already done it.
Ray Zinn: Yeah. It’s interesting, in professional sports, they call it a young man’s game. I understand. I mean, football players tend to retire before they’re 40, because it’s a very strenuous sport and that’s the kind of age that these guys tend to retire. That’s kind of the name of the game in that sport. In our business, that’s not true. It’s not a young man’s game, even though some of the unicorns would tell you it’s a young man’s game because it seems like they believe whatever, that the older people just don’t have the energy, the enthusiasm, the drive to work 24/7, as they say, and run these kind of businesses. It’s an atmosphere that they want to develop where they have all these younger people around, and the older people, because they say, the age difference, it just becomes a problem for them. So, they tend not to hire people who are over 45.
Erik Huberman: If there’s one thing I’ve learned is, that mentality of having to work day and night all the time is not the most productive thing. Don’t get me wrong, sometimes it takes hard work. My business partner, who I would not trade for anything, is generally in here 9:00 to 6:00. He comes to work 9:00 to 6:00 every day, and he is unbelievably productive. He gets everything done, and then he gets to go home and spend time with him family. That’s his priority. You need both.
Ray Zinn: That’s a good point, Erik. In my mind, if you have to work 24/7, or let’s say classic … They even brag about, “Oh, I had to work 80 hours a week.” That’s ridiculous. I mean, if you have to work 80 hours a week to run your company successfully, you’re just not a successful leader. In my mind, 50 hours is kind of the max. If you can’t get your work done in 50 hours for whatever reason, you have to look at your problem. You have an issue that you need to resolve. I didn’t require my people to work over 50 hours a week.
I had a partner very similar to yours. My partner came in at 10:00 and went home at 10:00 at night. That’s what he wanted. So, he worked 12 hours a day, but that was his … I didn’t ask him to. That was his lifestyle. He came in at 10:00 in the morning and went home at 10:00 at night. I didn’t encourage it. In fact, I said, “Warren, you’re setting a bad example, because people think you have to work late because you’re there late.” He says, “Well, that’s the way I want to work.” That’s okay. That’s free agency, and we allowed him to do it.
Erik Huberman: Yeah. I think that’s part of it, I think the good thing here. I work longer hours than most, but that’s because there’s all these other things I can be doing that I’m having fun doing. I totally agree. If I find myself having to work 60, 70, 80 hours and not being able to get away from it, I’m doing something wrong. There’s things that are … I love what I do. I’m young. I don’t have a family to go home to yet. I have a fiancé, but she’s also very accepting right now of the choice to work hard. That being said, I don’t expect it of our people. I expect them to show up when they need to. There are going to be times where they have to work a couple longer hours, but generally that expectation, I think, is ridiculous.
Again, it’s counterproductive. People need a balance to be a productive employee, or you’re asking for just … It’s ridiculous. You don’t get well balanced people, which I think is what we’re seeing in a lot of software companies in the Valley. They’re not creating things anymore for the common person that doesn’t want to be super-efficient at their desk all the time, which seems to be what everything is after these days.
Ray Zinn: You’re going to get married here in the next year, and I promise you that if you don’t set aside time for you and your wife and your family, you’re going to lose them. You’re going to lose them in ten years. You’ll be one of the statistics. So, if you want a long-lasting marriage, and that’s the most important thing in my life is my marriage … I’ve been married 56 years. I have 22 grandchildren. Four children, 22 grandchildren, and six great-grandchildren. I’m proud of the fact that I did not have to work Saturdays and Sundays. Maybe I worked ten hours a day, but I didn’t have to work weekends.
I was made sure that I was home in time to at least work with my children on their homework and help them with their various activities at school. I was involved and engaged. I made sure that they didn’t suffer because of my work. If your work becomes your life, then you’re going to lose your family.
Erik Huberman: Yeah. I totally agree. That’s actually one of the reasons I put in the time now is so as the family starts to grow, that’s not going to be a sacrifice I have to make and also something I’m totally respectful with my business partner. I think that’s important, which again, goes back to the idea of the older generation not wanting to put in the hours that the younger generation is. First off, I don’t think you should be driving the younger generation to do that.
Ray Zinn: Exactly.
Erik Huberman: The younger you are, the more full of life you are, the more you want to take advantage of that age. I’m lucky enough to even … For the past few years, I’ve had a good balance. I’ve been able to do some really cool, fun things in my twenties that I’m glad I did that weren’t just focused around work. You want to set yourself up, but it’s always about a balance because you don’t want to be that person that hits mid-life crisis and goes, “I missed all this because I was working too hard.” You know?
Ray Zinn: Your family too, you don’t want to miss their growing up years either. Do you have any other thoughts or questions you’d like to cover during this podcast?
Erik Huberman: I’m going to close out with the same question I opened with, actually. When you’re talking to entrepreneurs when you say, “Tough things first,” what is the tough thing you most commonly see them avoiding when you feel that that is a necessary … I know that all your investments that you make, you have them read your book. What are you trying to drive that you actually think that … What’s a behavior you’ve seen that you think you’re solving there?
Ray Zinn: Yeah, that’s loving the things you hate. Most people procrastinate. They put off doing things that they should do in a timely way, and that’s called procrastination because they don’t want to do it. They hate it. Learning to love the things you hate, it’s a real art. It’s a goal. It’s something that you should strive for is to … Any of the listeners that think there’s something that they don’t want to do, they got to go out and do it now. Do it right now. What you’re going to find is, like Emerson says, “That which we persist in doing becomes easier,” not that the nature of the task becomes easier, but our ability to perform it becomes better.
Erik Huberman: Yeah.
Ray Zinn: Stick with a task until it sticks with you. That’s what I’ve seen is that people tend to ignore, leaders and entrepreneurs, tend to ignore doing the tough things. They tend to put them off or delegate them to someone else. Any leader, entrepreneur, that can learn to do the things they don’t like doing and doing well, that’s the ones that are going to succeed.
Erik Huberman: Couldn’t agree more. Well, Ray, thank you so much for allowing me to guest host your podcast. I definitely hope to do this again soon.
Ray Zinn: Well, again, I thank you, Erik, for joining me today. I admire you for starting your very successful company. You’ve done well. I think you’re up to 100 plus people now, and that’s really remarkable given you only started you … about three or four years your company is. You’ve done well, and I applaud you for what you’ve accomplished. Again, if you’re interested in seeing what Erik is doing, look him up on hawkemedia.com. It’s a h-a-w-k-e media.com.
Erik Huberman: Thank you.
Ray Zinn: Again, I want to refer the listeners back to Tough Things First, our website, toughthingsfirst.com or pick up my book from Amazon under the same name. Try to read it, and put it in practice, and you’ll become successful. Again, thanks again, Erik, for joining us today. Look forward to talking to you again.
Erik Huberman: Absolutely. Thank you as well.
Hold ‘EmRead more
In business, a winning hand starts with knowing the game and the players. In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about sizing up the competition and recognizing when it’s time to stay or go.
Rob Artigo: I’m Rob Artigo, your guest host for this addition of Tough Things First, the podcast with Ray Zinn, the longest serving CEO in Silicon Valley. I doubt you’re much of a gambler, Ray, but I’ll bet you know the poker term, and the concept of knowing when to hold ’em and when to fold ’em?
Ray Zinn: Exactly.
Rob Artigo: You got to know the game, and you got to understand the players, right? Tell me about that.
Ray Zinn: You got to know your competition. You have to acknowledge the game itself, and then you got to know when to keep going forward and when to say, throw in the towel. There is a whole combination of things that we learn from hold them or fold ’em, because that’s … How do you run a successful business over time is knowing when to get in and when to get out. Getting in at the wrong time, maybe you’re late in the game, is as bad, or getting in too early can be bad, too, because the market’s not ready for you, or just not having a very good product, and knowing when that product, or how that product is not good, such that you don’t spend a lot of effort, and money, and time developing something that’s not gonna sell.
Rob Artigo: Business shouldn’t be a matter of a gamble, and so it’s … When I mentioned that you got to know the competition and understand the players, meaning you got to know who the other businesses are, you got to know who those business operators are, and you’ve got to have that … Wealth of experience, once again, comes in. You’re many years at Micrel, so you understand the marketplace, understand who’s in the marketplace, and then you’re not really gambling, right, you are making educated decisions about when to hold ’em and when to fold ’em. You’re not going, “I’m gonna bluff,” for example?
Ray Zinn: Well, you know, gambling is a form of luck. When you say, “You have to fold ’em,” the hand you were dealt was bad, but you knew that it was bad, and so you didn’t put any more money, or time in the game, you just said, “Okay, I fold.” No matter how experienced and knowledgeable you are, you are gonna have products that are not gonna do well. In fact, the 80/20 principle applies where 20% of your products do 80% of the revenue, so that means that the other 80% of your products are not doing that well. I don’t know of a single company that has not had their own share of products that just didn’t sell. Be aware that there is some luck involved in running a successful business, but the difference between a gambler, as you would, somebody who knows the game, and the novice, is he knows when to hold and when to fold.
Rob Artigo: What are some of the ways we can size up the competition in the business environment we’re in, so that we’re educated about what’s happening?
Ray Zinn: Well, the best thing is not just look at what they have already out there, because that’s easy. What the challenge is, is where are they headed? Apple, for example, has this cloak of secrecy that they go through, and they really hold close to their vest where they’re headed, because they don’t want to give their competition any insight into how well they’re gonna do, or how well the product might do. They hold their vendors to the same level of secrecy. Being able to keep where you’re headed a secret is crucial, whether you’re making Kentucky Fried Chicken, or whether you’re making iPhones. Your sauce, or your secret formula is your ability to get ahead of the competition, because I’ll guarantee you it won’t take them more than a few months, once you come out with a product, and if it’s successful they’re gonna copy you. Fitbit found that out and so did GoPro, and Jawbone, and a number of other companies that are having trouble right now, have learned that just because you got a nifty product in the beginning doesn’t mean that you’re not going to have competition shortly thereafter.
Rob Artigo: Yeah, on The Shark Tank Show, Mr. Wonderful is always saying, “What prevents the big guys from coming in and crushing you like a bug?”
Ray Zinn: Like a cockroach?
Rob Artigo: Yeah, like a cockroach.
Ray Zinn: Well, that’s true. I mean, they will. I guarantee, if you have a successful product, and if it is something that can be somewhat readily copied, they will do it, and they will scoop that business from you. I can remember, oh I’m going to say 20 years ago, if my math is right, Samsung was number 15 in cell phones, or in mobile phones. In other words there were 14 companies ahead of them, and Apple wasn’t even on there. They weren’t even listed as … Not 20 years ago for sure. Now, today, I heard that Samsung is now larger, sells more phones then Apple does. Apple now has now risen up there, too, and companies that were the big names back in those early days, like Motorola, they’re not even around, and Nokia. Those guys don’t even exis- Blackberry, you know, those phones are nonexistent.
Rob Artigo: They were the leading edge. They were the … You would have thought … They were ubiquitous in the phone and communication environment, and yet now we don’t even think of them.
Ray Zinn: That’s a good example, because like Blackberry in their heyday, there was not a Smartphone available, so the Blackberry was one of the smartest phones out there even though it wasn’t called a Smartphone. Then, Apple jumped in with the Smartphone, with the iPhone, and then they were soon followed by Samsung, and it wasn’t long until everybody else was jumping in, but they jumped in too late, like Microsoft. They all jumped in too late, and the foothold was already there with Apple and Samsung.
You can get in too late, too. Even though you’ve got a great product and have copied well, the market may have already moved on, and you’re already out of luck. Knowing where the market’s headed, recognizing where your competition is headed, knowing your competition, is crucial to running a successful company, and so you want to keep your ear to the floor. That’s why Apple has such a strong, and defensive, secrecy program, is they know the damage and the problems you can have if people can sense where you’re headed, because that’ll now allow your competitors to jump in sooner, before you’ve released your product, and then scoop your business.
Rob Artigo: You don’t want to ever be in a situation where you are not advancing your product, and if you don’t know what’s coming, and your product all of a sudden stays on the same path, and everybody else diverts to Smartphone-ness, then your phone looks dumb, even though it was a great product for so many years.
Ray Zinn: As they say, if you snooze you lose. You got to have your ear to the floor, always know where the competition’s headed, know where the market’s headed, and be prepared to take advantage of it. That’s how you stay ahead of the curve.
Rob Artigo: You can find out more about this, and other topics, at toughthingsfirst.com, Tough Things First on Facebook, on Twitter, on LinkedIn and, of course, get your hands on the book. Ray, it’s a good book, and I think all the material together, your blogs, and other posts, and the content you have on your toughthingsfirst.com, all work together to help people continue their education, so I encourage people to reach out to you, make comments, leave some questions that can be answered later on down the road. I know you do regularly come back with a show where you answer questions from people and, obviously, there’s an archive, so people can go back and listen to all of the old podcasts, and they’re just as fresh now as they were when they were first recorded.
Ray Zinn: Remember to share. Share these podcasts with your friends. This is good material that will help them and, certainly, it will benefit us in keeping these podcasts going, if we’re seeing that they’re being downloaded and people are learning and taking advantage of them. Please share them with your friends. Thank you.
Rob Artigo: Thanks again, Ray.
Ray Zinn: Thank you, Rob.
Entrepreneurs face many challenges, any number of which can lead to failure. As critical as any is pricing your product. In this edition of Tough Things First, Ray Zinn explores why pricing is so important and how to get it right.
Rob Artigo: Rob Artigo, your guest host on this edition of Tough Things First, the podcast, with Ray Zinn. I’m a writer and an investigative consultant. Being invited back of course, Ray, is always a pleasure. Thanks for inviting me.
Ray Zinn: You’re welcome. It’s always good to have you on the program, Rob.
Rob Artigo: What if I told you you’re the next contestant on the Price is Right? The object of the Price is Right, which is the game show, is to be the contestant who estimates to the nearest dollar, oftentimes without going over, the retail price of an item or a package of items. Would you say this is the kind of skill that a business operator should possess?
Ray Zinn: Well, the ability to properly price your product is crucial. I think that’s one of the biggest challenges that most entrepreneurs face is, “How do I price my product?” If I price it too low to get scale and revenue and just maybe to damage my competition, assuming I’m going to make it up on volume, that’s a big mistake because customers always believe that prices are going to come down over time. If you don’t keep your price coming down, then they’re just going to go to someone else. Pricing too low is a dangerous game and one that a lot of VC-funded companies do just to get scale and revenue, but they’re going to pay a price for that later on.
Pricing it too high is also a problem because if you price a product high and then you lower that price later on, your customers will feel they got shafted as you would. Pricing it too high is also I think a problem. Knowing the right price is crucial in the way that you succeed. That just comes from knowing your customers, knowing the product, understanding the price erosion over time impact and just being able to, as they say, guess the Price is Right.
Rob Artigo: Yeah. This is a careful dance that you had to go through. I don’t know. How many product lines at Micrel? Many. Too many to count, probably.
Ray Zinn: Well, we had well over 5,000 products.
Rob Artigo: Wow.
Ray Zinn: We had to constantly be aware of how to price our products. That’s one of the biggest challenges that we had in marketing the products is really developing that price curve.
Rob Artigo: What are some of the tasks that are incumbent upon you to get that right? Get that price right? Market research is one. You have to look at your competitors, right? Again, like I said, it’s a careful dance. It’s an exact science.
Ray Zinn: Well, you look at your margins that you can build it for. You look at what you have to achieve and you need to look out at least three years. Don’t look at it … How much money you’re going to make in the first few months or year. Look at where it’s going to be three years from now. Make sure that in three years from now, you’re still making money because customers are going to expect a price decrease as well as over time, you should learn how to make that product better. Your yields will come up. Your quality will come up and so your margins should improve if you’ve priced it right.
Rob Artigo: It’s a careful dance. Is there a time allotted for you in there to shift? I don’t mean pivot, like change to a different product, but when you see … When you’re getting feedback, so to speak. When you get that product out there and you start seeing it, is there anything that you can do and how much leeway do you have to change? Go up or go down.
Ray Zinn: Well, in my experience, if you don’t get the price right in the beginning, there’s hardly any chance to reprice it. If you drop the price … Let’s say you came out and you priced it a little too high. You’re not selling the product. Then you lower the price. Then your customers will say, “Oh, hey. All you’ve got to do is hold out and he’ll drop the price again.” It’s a real challenge and balancing act to get that price right. If you don’t, you’re pretty doomed. It’s hard to raise it and it’s hard to lower it. The big challenge for any new business is being able to price that product effectively.
Rob Artigo: I know this is going to sound like a weird question, but is there a possibility that if you either low-ball or overshoot on the price that it conveys something to the buyer? In other words, there are people out there who go, “I want the most expensive one because that’s got to be the best one.” Maybe your product is the best, but you’ve developed such a way to make it that you can do it cheaper and your margins are fine. You like the price and you’re coming in lower than the competition. They look at that and go, “That must be cheap. That must be not a good product because it’s cheap.”
Ray Zinn: Well that could happen, too. If you price it so it looks cheap, then it’s going to be perceived as cheap. Knowing the price and the right price is crucial. It’s key to running a successful business. Now I know the companies manage to find some good, hungry vendors out there that will help make the product cheaper, but as soon as the economy turns around and that vendor then gets a chance to reprice the manufacturing of it, you find yourself in trouble because now you’ve already priced your product low to take advantage of scale of that product. Then your vendors have turned around and raised prices on you. Now your margins are going to shrink. If you try to raise your price now, you’re going to have a problem with your customers. You’ve got to think ahead. Just looking at the near-term is not a smart way to go.
Rob Artigo: Well, our listeners have gotten the price right if they are tuning in here to Tough Things First and getting some great advice. Thanks a lot, Ray.
Ray Zinn: Thank you, Rob.
Rob Artigo: You can join the conversation at toughthingsfirst.com. Your questions and comments are always welcome. Follow Ray Zinn on Twitter, Facebook and LinkedIn. Thanks again, Ray.
Ray Zinn: Thank you, Rob.
Making PredictionsRead more
Crystal balls are useless, but predicting future events and trends is not impossible. In this edition of Tough Things First, Ray Zinn describes what it really takes to predict the future.
Rob Artigo: Welcome back to another edition to The Tough Things First podcast. I’m your guest host, Rob Artigo, writer and entrepreneur here in California. Hi, Ray.
Ray Zinn: Hello, Rob. Good to be with you again today.
Rob Artigo: Ray, would you trust a weatherman who had no training or experience predicting the weather.
Ray Zinn: Well, he wouldn’t be called a weatherman, would he?
Rob Artigo: Hey, they’ll hire people to do anything these days. Who knows.
Ray Zinn: Yeah. Well, I would never hire a doctor who claimed he knew something he didn’t know. That’s for sure.
Rob Artigo: Yeah. In your experience, what does it take to predict what’s gonna happen down the road?
Ray Zinn: It takes a lot of knowledge, a huge amount of knowledge and even more importantly, experience. Experience is not a substitute for knowledge. It is, or vice versa. It is what defines your capability, is your experience.
Rob Artigo: Why is that kind of prognostication necessary when running a business? Why is it necessary to be able to forecast events down the road?
Ray Zinn: Because there’s always gonna be downturns, dips in your business. And having the ability to forecast those and then prepare for them, is what will determine your success. So the further you can look out, and in my mind, in my experience, being able to look out at least a year and a half to two years ahead of a dip or a downturn, will be crucial in your successfully running your business. So don’t minimize the ability to predict the future.
Rob Artigo: Have you ever been on a submarine? Let’s put it this way, any naval vessel, an actual US military naval vessel.
Ray Zinn: Well I’ve been on one of those sightseeing subs.
Rob Artigo: Oh, yeah. That’ll work. That’s a good example. Did they tell you to duck a lot? Watch your head?
Ray Zinn: Well, yeah. Well because I’m so short, I didn’t have to duck much. But yeah.
Rob Artigo: I think of these, if you’ve ever been on one and you’ve walked around for a while, they have very low doors and everything says watch your head on it. And you walk in there and smack your head on that hard metal. You learn something and you try not to do it again. There’s no guarantees you won’t, but you try not to do it again. But the way your mind works is, “Okay, I’m going to the sub, watch your head.” You’ve learned something. What you’re describing here is day-in and day-out of having these experiences where you hit your head on something, you stub your toe on something, you slam your finger in a car door, but metaphorically speaking here, any kind of experience where you learn something that, over decades of experience, you can’t replace that when it comes to looking down the road or seeing the dynamics in the world right now and going, “Okay, this is likely to happen in a certain period of time, and my business needs to be prepared for it.”
Ray Zinn: You know, it’s interesting that how many of us have seen somebody do something that you say, “They’re gonna regret doing that,” because we know from our knowledge and experience that doing what they’re doing is gonna be harmful to them down the road, whether it be a bad habit that they’re indulging in or whether they’re doing something stupid in their business. You’re gonna say, “I wouldn’t do that.” As my mother used to say, “Don’t run out in the street without looking both ways.” And don’t run out in the street period, but if you’ve got to cross the street, look both ways. That comes through experience, or knowledge and experience. But we still do dumb things, and the reason we do them is because we either forget the lesson we learned prior, or we just are not paying attention.
Rob Artigo: Is the environment different now than it was when you started Micrell. It was 1960, what year did you-
Ray Zinn: ’78.
Rob Artigo: 1978. 1978, you started Micrell and the dynamics of the business environment in Silicon Valley there, you had semiconductor work. Now look at the world today and way people in business operate. Are the younger people who are starting businesses, are you seeing that they’re having a harder time seeing, predicting the future, so to speak, as opposed to when you were a kid and you started Micrell?
Ray Zinn: Well, it depends upon the kind of business you’re in. In Silicon Valley, of course, high tech. That’s the business. When I started my company in ’78, things were a little different, but that’s what time changes. Time changes the difference between this year and last year. And so you just have to keep moving with the cheese, as they say. Things will change dynamically, and you’ll have to modify your plan or your strategy to match the conditions that you’re facing today. The conditions were different back then, but that doesn’t mean the principles or the things that are kind of standards, as you would, changed any of those. Those are still the same. But the conditions that you operate under are gonna change from time to time, as the world changes, as the world turns, as they say.
Being able to recognize how things are changing, the old buggy whip story. When the automobile came out, the guys who were making buggy whips soon found themselves in trouble because people had switched to cars. You don’t need a buggy whip for a car. So then all they had were people who recreationally were using buggies just to play around with, but those aren’t … The size of that market shrunk dramatically, so don’t be caught making buggy whips when there’s no demand for them.
Rob Artigo: Yeah, and you didn’t. Almost 40 years as head of Micrell and you saw several dips that your company weathered the storm. You used this knowledge base that you had to predict that certain dips were coming and do something about that.
Ray Zinn: Yeah, for example, in the ’98, ’99 timeframe when we had the dot com boom, I can see that inventories were beginning to bloom beyond what I considered normal because there’s always ratios that we look at. And I look at these ratios, look at what’s in balance and what’s out of balance. It’s kind of looking at a swimming pool and if it’s turning green, you know that you’re lacking chlorine, and you should add chlorine to get the pool back normal again. So I could see that these ratios were getting out of whack, and so I prepared my company in late ’99 for, well mid ’99, for this downturn that we experienced in 2001, when we had the implosion of the dot com.
And the way I caught that was I just looked at the inventory build-up, and I can see they’re building inventory faster than they were selling it. And so, we backed off. We got our inventories in line. Where other companies were building inventory to match the increase in demand, we were cutting back and that saved us. That allowed us to skate through the dot come implosion, which was one of the worst in our industry’s history. We came through very, very well. That’s an example of being able to predict the future and how it helped our company.
Rob Artigo: Thanks again for your time, Ray.
Ray Zinn: Thank you, Rob.
Rob Artigo: And find out more at ToughThingsFirst.com, Tough Things First on Facebook, and of course, you can find out more about the book on Facebook and ToughThingsFirst.com, but you’re also available on Twitter, and the book is available on Amazon.
Ray Zinn: And also share these podcasts with your friends. If they’re helpful to you, I’m sure they’re gonna be helpful to others. Please share these. This is how we’ll get the word out.
Rob Artigo: Good advice.
Stick To ItRead more
What is worse than procrastination? When you are often starting projects, but never finishing them. In this edition of Tough Things First, Ray Zinn and guest host Rob Artigo discuss the art of sticking to it.
Rob Artigo: I’m Rob Artigo, your guest host for this addition of tough things first, the podcast with Ray Zinn, longest serving CEO in Silicon Valley. Hi Ray.
Ray Zinn: Hello Rob. Good to be with you today.
Rob Artigo: Sticking with the task, or rather, stick with the task until it sticks to you is a line from a poem with an unknown author, but it’s been quoted numerous times. And let’s talk about stick-to-it-ivness. How do you define that?
Ray Zinn: Well stick-to-it-ivness is having a dogged perseverance to just stay with something and fight it through and that’s the whole concept of stick-to-it-ivness. I mean you’re just dogged. Dr. Ivan, I remember, resolute tenacity. You’re so dogged about staying with it, resolute to stay with it that you accomplish it even though it’s an abominable task to you and something that’s really, something that you don’t want to do and challenged in your life to do. You just stay with it and stick to it until you solve it.
Stick-to-it-ivness is, I don’t know if it’s a real word but it’s just that ability to stay with the ask until it sticks to you.
Rob Artigo: I think it’s a word. If it’s not, it should be. Thinking back to a previous podcast and we talked a little bit about fighting a losing battle. So when you’re talking about stick-to-it-ivness and what you talked about was the dogged, relentless pursuit of weathering the storm or getting through to the end of the task and being successful when it’s over. But we want to make sure we have a distinction here between that kind of effort and the kind of effort that ends up being destructive.
Ray Zinn: Exactly so. You know, don’t stick to something that’s not worth sticking to. Like, sticking to smoking when you know it’s bad for you. That’s the wrong kind of dogged tenacity or perseverance. If the values are good and you want to accomplish it, stick with it until you really enjoy doing it and that’s what I talk about in my book, Tough Things First, is to love to learn the things you hate. So that’s stick-to-it-ivness. If you can learn to love things you don’t like doing. You’ve accomplished a lot and so it takes a lot of discipline. And discipline, you know, I define as doing what you don’t like doing and doing well and having that ability to do the things you don’t like doing is a dogged perseverance. So that’s what I mean by having stick-to-it-ivness.
Rob Artigo: You walked right into the next work I was going to bring into the discussion and that is discipline. So let’s start with discipline is not something that comes about in the process. Discipline has to be there in the beginning, doesn’t it.
Ray Zinn: Yes, so it’s the willingness to do those things that you don’t want to do. That’s what discipline is. Anybody who have a rigorous exercise program or rigorous diet that you follow or a hobby that you follow and you do, it takes consistency and persistence, a persistent effort to accomplish it. So to excel at anything, you have to have a mindset that says that you’re just got going to gie up. You’re just going to stay with it until it’s done.
Rob Artigo: And you mentioned in the course of our discussion here that during this podcast, the really doing the, you didn’t say it, but doing the tough things first is to learning to love what you hate, getting those things out of the way that may be a hindrance or a distraction to you because you dislike it or because it’s unpalatable for it. Get those out-of-the-way so that the fun things, or the more interesting, exciting things that you do during the day are what you have to do the rest of the day. You’ve already gotten those other things out of the way.
Ray Zinn: Yeah, become more creative. If you could get rid of those tough tasks, the ones you don’t like doing, and you get those ones that are a pain in the neck, as they say, you’re going to be more creative the rest of the day because your mind is free of all those things that you would have or wanted to procrastinate. And you know, procrastination is the bane of humanity. So don’t put off those difficult tasks, just get them out of the way. Do them.
Rob Artigo: Do you think that’s where a lot of people break down when they are, say they begin a tasks, they think they’re focused, stick-to-it-ivness is probably one of their motto and maybe even discipline is something they think about. But discipline, again, starts from the beginning and it has to go all the way through the end. You find that’s were things start to lose it, and lose your momentum when you let those things you dislike pile up.
Ray Zinn: Well, you know, we have these New Years resolutions we talk about at the beginning of every year. In fact, we start talking about them at the end of every year. You say, well I got to come up with my New Year’s resolutions and they don’t last. If you think about the resolutions you have made, New Year’s resolutions, I doubt seriously that you either accomplished them or that you even stuck with them for more than three months and you’re not alone.
Having that mindset, a resolution doesn’t have to be at the first of the year. It’s a consistent effort to be the best and it’s not something that you decide to do at the end of each year and then give up about three months later. It’s something you have learned to do. You enjoy fighting those tough tasks, as you would. And that’s how you become the best of the best and excel at something, is when you have learned to really do the things you don’t like doing and then loving doing it. So, there’s a saying that goes, come what may and love it. So no matter what comes your way. No matter challenges or difficulties you have in your life, to say bring it on, that’s what I want to do. Give it to me. Whatever it is that no one else wants, I’ll take them.
That’s what this country is built on. Bring us your indenture. People who are needing help and will help you and this is what this country is known for, it’s willingness to help others.
Rob Artigo: And stick to it. Thanks Ray.
Ray Zinn: Right, you bet. Thank you Rob.
Rob Artigo: And I’m Rob Artigo and Ray Zinn, right there, invites you to check out his ToughThingsFirst.com website where you’ll find more information on Facebook, LinkedIn and Twitter pages. You can join the conversation there. Chime in with your questions or requests and learn more about Ray’s book, which we mentioned here in the podcast, Tough Things First.
Quitting Losing BattlesRead more
Losing battles … most people have experienced a moment when they realized they were fighting a losing battle, and many discovered it too late. In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about how to recognize those no-win situations and what to do about them.
Rob Artigo: Rob Artigo here, your guest host on this edition of Tough Things First, the podcast. I am an award-winning screenwriter and an investigative consultant. Being invited back here is always good. Ray, hi.
Ray Zinn: How are you doing, Rob? How’s your day today?
Rob Artigo: Great, great. On another podcast, you’ll remember this, we talked about the fantasy of the pot of gold at the end of the rainbow, and getting there is a losing battle. So let’s talk about that trap in particular. How do we know when we’re engaged as a business person in a losing battle?
Ray Zinn: Because you’re losing money. And so that’s one of the quick ways to find out. If you get so caught up in ego of being the CEO or being the president or the head of your organization, you’re very defensive of your group or of your operation, and you lose sight of the fact whether or not your business is actually profitable or doing well. So that, to me, is the danger of self-delusion, as you would, and believing that you’re doing great, the operation’s running fine, when in fact it really isn’t.
So you have to be your own worst enemy. If you’ve got some kind of problem with yourself, your face, your body, whatever, you want to go fix that and not try to delude yourself into saying well, I don’t look bad, I don’t have a problem, and you go on your merry way, but never improve.
Rob Artigo: Define for us, based on your experience, what you believe a losing battle looks like.
Ray Zinn: Well, it has the appearance of something that is in shambles, and you’re not able to put the proper emphasis to solve the problem. You’re fighting a battle you can’t win. And so that’s what we call a losing battle. That’s the old saying about you’ve won the battle, but you’ve lost the war. And so in this case, you fought the battle, but it cost you either your employees, your company or your product, your customer, and you’ve lost the war.
So when I think of something that’s a losing battle is when you try to win the battle and not the war. And I know that sounds like an oxymoron, but every time we get up in the morning, there’s a life issue we have to face, a life battle, as you would. So you want to overcome those battles, and not fight battles that are not going to bring about a valuable solution.
Rob Artigo: We’ll you’ve talked a little bit about how we first identify the problem. And in business, you identify the first thing, do a spreadsheet and see what your bottom line says, and if you’re losing money, you may be fighting a losing battle. But what else can we do about it when we’re facing a losing battle? I guess we have to recognize that we have a problem.
Ray Zinn: Absolutely, and decide whether or not that battle’s worth fighting. So if the battle … sometimes we fight battles which are invisible. We cause a problem, we cause a battle that really isn’t there. And maybe it’s because we’re paranoid or we have some other issue that causes us to think, oh here’s this problem, when it really isn’t a problem. So don’t cause a problem that’s not there.
And fact is, don’t cause a problem period. Be a problem-solver, not a problem-causer. So be proactive, making sure that the battle that you’re engaged in is worth fighting, and so the worst losing battle is a battle that you fight that’s not really worth it.
Rob Artigo: And that comes to mind, is pick your battles.
Ray Zinn: Carefully.
Rob Artigo: Yeah. So deciding whether or not the battle is worth fighting is an interesting concept, because we can easily misidentify what’s going on, or engage something on emotion. And going forward on emotion may … when you’re fighting a losing battle and the best thing to do is retreat and reorganize, then if you go about it with some kind of ego-driven, hard fight, even though it’s a losing battle, then you’re doomed.
Ray Zinn: Exactly. So be careful about what you want to go to war on. If it’s worth fighting, then fight. But if it’s not gonna get you to where you want to go, then don’t do it. Being able to understand which battles have value and are worth fighting for, one has to understand their own values. And so if your values are good and somebody is trying to tear down those values, then that’s worth fighting for. But don’t fight over something that’s trivial, that’s not of any consequence, or will help you in the end.
Rob Artigo: Thanks Ray. Let’s wrap up this podcast by talking real quick about the fact that people can reach out to you. This isn’t a hollow invitation. People can go to your website and ask you questions, right?
Ray Zinn: Absolutely. And I invite that.
Rob Artigo: Toughthingsfirst.com, and of course the book’s out there, and it’s a helpful tool for anybody who wants to be successful in life, let alone just business. But it’s obviously a great tool for business, and you have content on Twitter, you do stuff for Facebook, and you’re there on LinkedIn. So there are all these different avenues that people can use to get to you, and that invitation’s out there. Make a pitch for people to send you a message.
Ray Zinn: And let us know what you think of them, share them with your friends, and let’s get the word out there. These are important messages that we’re leaving, and a lot of people can benefit from them. So don’t hog them, share them.
Rob Artigo: There’s an archive there at the website as well. You can go back and listen to the back episodes. So if you’re listening to this podcast, and you like what you hear, there are … it seems like, and obviously it’s an exaggeration, but seems like an infinite number of podcasts you can go back to. And I’m not the only guest host, there are other very interesting people who have come on the show and been a guest host and enjoyed a good podcast with you, Ray.
Ray Zinn: Yeah, and I’ve talked to a fellow recently who said that he’s listened to a couple of my podcasts two or three times, and he learned something every time he listens to them. So even going back and listening to the ones you’ve listened to before is still good because you might pick up something you missed last time you heard them.
Rob Artigo: Right, your perspective might be a little bit different too.
Ray Zinn: Exactly, your conditions may have changed.
Rob Artigo: Thanks, Ray.
Ray Zinn: Thank you, Rob.
Taking ResponsibilityRead more
It’s easy to accept responsibility when things are going well, but what happens when it all goes wrong? In this edition of Tough Things First, Ray Zinn discusses having the guts to take responsibility for mistakes and the virtues therein.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First. Hi Ray. It’s good to be back with you.
Ray Zinn: Yes, Rob. It’s always good to chat with you. You always have interesting topics for us to discuss.
Rob Artigo: A lot of them, I think, come from your mind. I’m just picking your brain. As entrepreneurs, it’s easy to accept responsibility when things are going well. I know that works for me. It doesn’t take me very long to go, “Oh yeah, that was my idea.” It’s not so easy to admit it when you’re the one who’s made the mistake. Tell us about the difficulty of accepting the blame for a bad decision.
Ray Zinn: Well, we have egos, and those egos often get in our way, because it’s who we are. We don’t like to think that we make bad decisions or that we make mistakes. That’s human nature is we make mistakes. It’s not the mistake that really hurts. It’s not remedying it is what hurts us. That’s what gets in our way of solving problems, so we say, “Oh well, it can’t be a problem, because I didn’t cause it.” We tend to procrastinate or put it off, and then that problem becomes a real devastating or problem problem for the company, and you end up now making a bigger mess out of it than if you’d handled it immediately. Don’t worry about who’s fault it was. Don’t let the problem become the problem. You want to be a problem solver not a problem maker. Even if it was not your problem, solve it. If it is your problem, obviously, you’ve got to get in and solve it. Be a problem solver to a problem maker.
Rob Artigo: A large or small company, is it helpful to be the kind of leader who has that buck stops here kind of attitude?
Ray Zinn: Absolutely. The tone comes from the top. As the leader of the company, you set the tone for your company. If your company has the right kind of culture, the right kind of tone, it’ll be reflected in your people. They’ll offer better quality, better service, more loyalty. Having the right kind of tone in your leadership will make a big difference in how successful your company is, or will be.
Rob Artigo: You have your different levels of management and at each one of those levels you’ve got people who are leaders of other people. Do you recognize it when somebody else has that buck stops here kind of attitude? “This is my section,” or, “This is my product line, and I’m running it and I’m managing it. If there’s a mistake the buck stops here with me.”
Ray Zinn: Yes. In fact, we want everyone to have a buck stop there with them. If you do, then, of course, you have a very good culture within your company doing whatever it takes, no excuses, as we have had in our company for many, many, years. By the same token, there’s a good news/bad news, or the yin and the yang, as they say. When you have a buck stops here, you’ve got to be careful not to form a silo. A silo is where you isolate yourself and say, “Hey, don’t get into my pasture. Don’t get over my fence. Stay out of it.” That sometimes happens when you have a bucks stops here mentality throughout the company is they form these silos, because they don’t want anybody perturbating their particular function. When you have a buck stops here mentality or culture within your company, make sure that you’re not forming silos at the same time.
Rob Artigo: What happens to a business leader who is not willing to be buck stops here person, or not willing to accept responsibility when they’re the ones who made a mistake.
Ray Zinn: Well, it can be just exact opposite of what we talked about, about silos. Then there’s no interacting or intrafunctional relationships, because if you’re not willing to accept your responsibility for your particular problem, then the other group or organization is going to isolate themselves from you so that they’re not contaminated by your mistakes. That’s the other problem is that you’re intrafunctional relationships breaks down and you just don’t get along with other people or organizations.
Rob Artigo: If you have senior management who are, maybe, played the role of taking responsibility, but they don’t really. It’s really just in name only, or, superficially, they take responsibility. Based on your experience, your many years of experience as a business manager, did you learn to be able to recognize those people in the crowd?
Ray Zinn: Sure. There’s two types. There’s the type that’s super A personality and they’re always in everybody’s face. Then there’s those who just like shrinking violets. They’re just off in their own little corner. They don’t help as you would solve problems, because they don’t want to step on somebody’s toes. They don’t want to get involved, and so they don’t help. I mean, they refuse, almost, to point the finger and say, “Hey. This person needs to this,” or, “We need to do that in our organization.” On the other hand, the super A personality are the people, who are in your face all the time, will aggravate and cause problems, and nobody will want to interrelate with them. You’ve got both sides of it. You’ve the people who are overly aggressive and you’ve got the people who don’t speak out at all, who just stay in their own little corner and just dwindle away as you would.
Rob Artigo: You want the employee who is more active, more available, more communicative.
Ray Zinn: Absolutely, but not aggressive, not to the point where they’re in everybody’s face, because that tears down morale within your organization. You’ve got to be careful that the people who are always out there in front, in everybody’s face, maybe they’re aggressive, maybe they’re getting some things done, but they’re also causing problems in the interim. Those people can be just as harmful as the people who just sit back and do nothing.
Rob Artigo: Thank you, Ray.
Ray Zinn: Thanks a lot, Rob.
Rob Artigo: As always, you could reach Ray Zinn with your questions at toughthingsfirst.com. You can continue your education there and the conversations with all the podcasts. There’s blogs, and links to information about the book, Tough Things First. Thanks again, Ray.
Ray Zinn: Thanks, Rob.
Getting DistractedRead more
Distractions can be deadly to a business. In this edition of Tough Things First, Ray Zinn and guest host Rob Artigo discuss the chief distractions effecting your business today and how they are impacting your bottom line.
Rob Artigo: Welcome back to another edition of the Tough Things First podcast, I’m your guest host, Rob Artigo, writer and entrepreneur in California. Hi, Ray.
Ray Zinn: Hello, Rob.
Rob Artigo: Well, Ray, as with driving, distractions can be fatal to a business. What are some of the ways business operators can get distracted?
Ray Zinn: Primarily is the raising of money. Once you’ve raised your money in the very beginning of your business, that should be enough to hold you over until your business is up and running and you’re profitable, but if you only raise enough money to kind of get yourself started, then you’re gonna be back to raising money again once your business gets underway. I liken this to a scuba diver who goes down and he has about an hour’s worth of air, and then he’s gotta come back up again and either get another tank or refill his tank, so you’re limited on how much air you can have if you’re scuba diving, but in business, unless you have a scuba diving type business, you don’t wanna have to keep having to refill your tank, and so that’s the issue that I see faces a lot of entrepreneurs and startups, is the amount of time and energy it takes to raise money for your business.
Rob Artigo: Is a new market that you’re operating in, can that be a distraction for a business?
Ray Zinn: Sure, in fact, I remember talking to someone a month or so ago regarding these people that have these in-home businesses, and they say they fill their front room up with product, but they don’t sell it. So in other words, they get with the product and with the opportunity but then they say, “Well, what now, how do I get rid of this stuff out of my front room?”, and that’s the big challenge that a lot of these companies face, is they keep building and buying more inventory, but they don’t know how to move it, how to get it out of their inventories, or out of their stock room. So yes, that’s another issue, is distraction, is that having to worry about how to dispose of your inventory.
Rob Artigo: You might remain the same at your company as you did with [inaudible 00:02:51] for 37 years, but I’m sure you had changes occasionally with company leadership and that kind of thing can be a distraction.
Ray Zinn: Yup. If you don’t have a loyal base of your employees, that turnover will drive you nuts. In other words, you’d keep having to train new people. I remember a few weeks ago, I was trying to get a new fence built around my certain part of my ranch in Montana, and the contractor, he said he can’t keep people, and he’s constantly having to train new ones, and I said, “Well, what’s the problem?” He says, he’s trying to figure that out, and I said, “Well, possibly, you’re not paying them enough.”, and he said, “Well, I can only afford so much or I’m not [inaudible 00:03:35] anyone on all of his excuses.” But certainly, that is a challenge, is trying to retain employees and keep them motivated.
Rob Artigo: What are some of the results of distraction for a business? We’ve mentioned the fact that if you’re a distracted driver in a car, you could crash the car. Is that essentially the kind of thing that you can do, is essentially run off the business road?
Ray Zinn: Absolutely. Getting distracted in your business can cause you to run off the road or crash, and certainly that is the challenge that all new businesses face is staying on the road or staying on the path, or in your plan in the case of a business, so absolutely. Getting distracted by a number of things. I remember this one fellow that I knew who was distracted by his receptionist and they got kind of involved and that really ruined his business. He actually ended up going bankrupt, and his receptionist ended up suing him, so there’s all kinds of distractions that can come about. Family distractions, personal distractions, but being distracted is a thing you have to avoid if you’re gonna be successful while running a business.
Rob Artigo: Yeah, I think about this. Again, driving off the road is really a great way of thinking of losing sight of what made the company successful in the first place, so if you’re distracted, you veer off that path and you become something that you didn’t intend to become.
Ray Zinn: Yeah, and it’s easier said than done. We talk about don’t be distracted, but there’s certainly distractions out there that avoiding them is a challenge, and something you have to work diligently to do so I would caution anybody listening to this podcast, don’t be deluded. Simple, small things can become a distraction. Might be your car having problems or it might be an issue in your home. Something simple as having to replace a water heater. So there’s lots of things that can distract you. What you wanna do is find out how do you deal with distractions so that they don’t become such an issue that you run your business off the road, as you said.
Rob Artigo: Well, what are some of the remedies for distraction?
Ray Zinn: Overcoming distractions?
Rob Artigo: Yeah, think running your business and having to overcome those distractions, what are some of the ways that we might be able to accomplish that?
Ray Zinn: By staying focused on the goals that are primary parts of your business. Don’t let the little things, ’cause little things become big things. Don’t let the little things get in your way. We talk about learning to do the tough things first and so what I recommended is in my book, Tough Things First, which you can find on Amazon or any other major book retailer, is to make a list of the things you don’t want to do or the tough things you have to deal with that day, get them out of the way and the rest of the day becomes much smoother and easier to do. So tough task, or really, ones that you don’t wanna do are your major distracters, and those are the ones you wanna get rid of first, first thing every day.
Rob Artigo: Thanks for your time, Ray.
Ray Zinn: You’re welcome. Thanks for the pod.
Rob Artigo: And you mentioned it, you can check out Tough Things First for more information on the Tough Things First book, and you can also find links to Facebook, LinkedIn and your Twitter page.
Ray Zinn: Thanks, Rob.
There Is No Pot Of GoldRead more
The pot of gold at the end of the rainbow is exactly what you’d expect, a fantasy. In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about how to no when you’re chasing a fantasy.
Rob Artigo: I’m Rob Artigo here, your guest host on this edition of Tough Things First, the podcast. I’m an award-winning writer and investigative consultant. Being invited back is always a pleasure, Ray.
Ray Zinn: It’s always good to have you on the program, Rob.
Rob Artigo: Well, Ray, when I was a kid my mother told me there was a pot at the end of the rainbow. Ray Zinn: A pot of gold.
Rob Artigo: A pot of gold. There was a pot. She did, yes. She definitely included the gold part. It wouldn’t have been as interesting if it was just a pot.
Ray Zinn: Right.
Rob Artigo: Anyway, she did tell me this story for a reason. As we were driving along, and you know how it is when you’re driving along and you’ve got the rainbow, and the rainy skies, and the sun shining through the clouds a little bit, and you get that beautiful arch of that rainbow, and as you’re driving along … We would be out there driving on the highway, watching the rainbow. She would say, “Let’s go get the pot of gold at the end of the rainbow,” and as she would explain, the rainbow would move away on the horizon. We would never be able to get to that bottom of the rainbow. You could never reach there. Her message to me was really, it’s a fantasy. It doesn’t really exist. Am I wrong? Is there a pot at the end of the rainbow?
Ray Zinn: A pot of gold? A pot of gold? Well, it’s a mirage, and sometimes we chase these rainbows thinking that there’s a pot of gold. I think it’s a saying that we’ve used over and over that, because of the dark storms, and just the furiousness of the ferocity of the storm, with the weather associated with a bad storm, and then it begins to clear and you see that beautiful rainbow that appears. We say, “Boy, there’s got to be a pot of gold, because I’ve been through so much and if there’s not a pot of gold at the end of that rainbow, I’m done.”
But, in life it’s a mirage. If you think just because you’ve been through a stormy time, and it’s been extremely furious that, “Oh, there’s got to be some gold at the end of that rainbow,” we’re just kidding ourselves. There’s the ups and downs associated with the ferocity of running a business, but believing that there’s a pot of gold, it’s the one that we make, not the one the rainbow has. That’s what I mean by, don’t be fooled by that pot-of-gold story about at the end of the rainbow.
Rob Artigo: It seems to me that it would be … It’s right in line with those who see the pot and pursue it at all cost, so whatever their pot of gold is, they’re big reward down the road … Ahab and the White Whale, his pot of gold was the revenge, getting the White Whale. Therefore, he spent his life, and ultimately his obsession that killed him trying to get the White Whale. We have those kinds of things in our lives.
We can say, “That pot of gold is what I want, and I’m willing to get it at all costs, and at the expense of everything else.” Ultimately, it’s really … I know I made the mistake in the introduction I said, “The pot at the end of the rainbow.” It is, really, it could be just an empty pot.
Ray Zinn: Exactly. No, you’re right. It was just the saying of the pot of gold, but, yes, it could be just a pot, empty pot, nothing in it. Starting a business you have to start for the right reasons. If you’re starting it because of the pot of gold at the end, it’s an illusion. You’re gonna be chasing this rainbow. Don’t start your company for the wrong reason. Make sure that it is for the right reason. What are some of the right reasons that we should start a company, Rob? Do you have any thoughts as what would be a good reason to start your company?
Rob Artigo: To support my family, to build a business where I can employ others.
Ray Zinn: Okay. Certainly, those are all good. Just like building anything, depending upon the structure you want. No one would start building a home without the plans, and so you want to make sure that your plans represent what you want to build, whether it be a multi-bedroom or single bedroom, whatever it is that you’re trying to construct, make sure that your plan represents what it is you want as the finished product.
Then, as you begin building that building, make sure it’s the right materials that you’re using, that it’s not bad material, that your studs are straight, they’re not warped, and make sure that all of the preparation, the foundation, and all the things you’re putting into it, have all the right construction, and done properly according to the codes, and so forth, that you need to have a long-lasting structure.
That’s the way we should approach building a company. Make sure that we have good plans, that we have a good foundation, that the structure represents what it is that we want at the end. In fact, I have a friend who’s a contractor and he says, “Why is it that people keep changing their mind as they’re building the home? Don’t they realize that that compromises a lot of the structure of the home?”
I don’t know why he even stays as a contractor, because he bellyaches so much about the people who are building the home, the customer. He says they complain all the time. They complain about the paint, they complain about the way the structure is going up. Make sure that what you’re building is what you want, and you’re not building something that you don’t want, and that you constantly have to change, especially as you’re going through the construction phase. Proper preparation, proper planning, is all what you need up front before you start your business.
Rob Artigo: Then, of course, remember that whatever your goal is at the end, it shouldn’t be so tied to that pot of gold that you ultimately give up everything else to get there, because you’ll probably fail. Instead of being good at that one thing, you’ll fail at everything.
Ray Zinn: Well, I have a friend, by the way, who built a home, and the original cost was half of what the home actually ended up being. What he did was … He built the home, it was twice as much as had been projected, and he ended up having to sell the home. Actually, he declared bankruptcy because he couldn’t even afford to make the payments. Make sure that you don’t build your home to the point where you will bankrupt yourself, or bankrupt the company.
Rob Artigo: And, of course, do the tough things first. Right, Ray?
Ray Zinn: Absolutely. Learning to do the tough things first will prevent you from building the wrong kind of home.
Rob Artigo: As always, you can reach out to Ray Zinn with your questions at toughthingsfirst.com. You can continue your education, your business education, or your education in life and, of course, join the conversation with the podcasts, Ray’s blogs, and links to information about the book, Tough Things First. Thanks, Ray.
Ray Zinn: Thanks, Rob. It’s always good to have you on the program.
All You GotRead more
Running a business isn’t a sprint, it’s a marathon. Are you giving it all you’ve got? In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about what it takes to reach the last mile in your race.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First. Hi, Ray.
Ray Zinn: Hello, Rob, so good to have you back with me today.
Rob Artigo: It’s good to be back with you, Ray. You’re a guy with a reputation of giving it all you’ve got. That’s, most people who know you, think of you as that kind of person, but you didn’t invent that expression.
Ray Zinn: No, I did not.
Rob Artigo: You have a great example of where this might have come from, where this expression might have come from.
Ray Zinn: Where I got this was thinking of the fabled story regarding the marathon. The marathon, as those of you know that’s run in various parts of the world on a regular basis, is 26.2 miles, roughly. That’s the exact distance from a city in Greece, it’s called Marathon, to Athens. The distance is 26.2 miles. In 490 BC, there was this Greek solider, who was asked to report the results of the victory of the Greeks over the Persians. He was told to deliver this message to the higher-ups in Athens, so he ran non-stop from Marathon to Athens to deliver this message of victory to the higher-ups.
As he entered the city, he collapsed and died. He delivered the message, then he collapsed and died. They celebrate that event by what we call running the marathon. That’s where I came up with this concept of giving it all you’ve got because, certainly, he gave it all he had. They say that the chicken gives up an egg regularly, but still doesn’t lose its life, whereas a pig, he gives up his life for the bacon that we eat. That’s giving it all you’ve got.
There are many examples of that, where people literally give up their lives to succeed. That’s kind of what it takes. Maybe you don’t die, but you give up your life, meaning you suffer some of the personal things that you’d like to do, whether it be some hobby or some other form of relief, vacations and what not, to help your business succeed. Giving it all you’ve got is really extremely important.
In fact, the story is told in Jimmy Carter’s book, when he was at Annapolis, and upon graduation, of course, they’re all interviewed by Admiral Rickover, who is well known at Annapolis. He went in for his interview with Admiral Rickover and Rickover asked President Carter how he thought he did, said, “Ensign Carter, how do you think you did while you were in Annapolis?” Ensign Carter says, “Well, I think I did pretty good.” Admiral Rickover got right in his face, an inch from his nose, and said, “If not your best, why not?” Carter never forgot about that.
Giving it your all or doing your very, very best, is what it takes to succeed, not only in business, but in life. Those of you or us who want to be the very best, we have to give it the very best. Sometimes our best is not even good enough, but we have to try. That’s what we mean by giving it all we’ve got, not just giving it some of what we have.
Rob Artigo: I recently was watching a little bit on the Tour de France, obviously, in France. It’s the big bike race that is 21 stages, lasts most of the month of July. One of the things that fans tend to appreciate about the bike race is the fact that you might have people who aren’t necessarily winning, but you see them trying their hardest. Maybe they’re overcoming an illness and the fans are aware that there’s an illness going on, that they’re probably not going to finish the race that day, let alone make it to the end and make it to Paris. You see them there trying really hard and giving it all they’ve got. That’s another sporting example, of course, but the analogy is there to our everyday lives, which is when you have to put out that extra effort to achieve the goal and overcome adversity, that’s where you’re really giving the best you’ve got.
Ray Zinn: This is when I say winning is not necessarily taking first place. Winning is doing your best. Winning is giving it your all, whether you’re getting first place or you’re winning a tournament, is not important. Winning is overcoming your personal difficulties and adversities and succeeding. That’s what winning is. We shouldn’t always look at winning as taking first place. You can be a handicapped person or having some other ailment or difficulty, and still give it your all. This is the hallmark, I think, of a real winner, is someone who beats the odds, who, regardless of the difficulties, the challenges they face, they come out on top.
Rob Artigo: As always, you can reach out to Ray Zinn with your questions at toughthingsfirst.com, continue your education and, of course, the conversation with all the podcasts, Ray’s blogs and links to information about the book, Tough Things First. Also Facebook, LinkedIn and Twitter. Thanks, Ray.
Ray Zinn: Thank you, Rob. It’s been great to be with you today.
Improving The Odds Of SuccessRead more
The odds against a successful new venture are sizable. But that doesn’t mean it’s not worth taking the chance. In this edition of Tough Things First, Ray Zinn and guest host Rob Artigo discuss Ray’s list of roadblocks and what you need to do to increase your odds of succeeding.
Rob Artigo: Welcome back to another edition of Tough Things First podcast. I’m guest host Rob Artigo, writer and entrepreneur in California. Hi, Ray.
Ray Zinn: Hello, Rob. So good to have you with us today.
Rob Artigo: And it’s always good to be back. I grew up with the original Star Wars movie and I am a fan of the character Han Solo. In one scene, he says to his robot, or, rather, the robot says to him, something about the odds and then he replies, “Never tell me the odds.” So, he has the luxury of being in a movie where he can always beat the odds whether he knows them or not. We don’t really have that luxury, do we?
Ray Zinn: That’s a screenwriter’s advantage. He can make it come out however he wants.
Rob Artigo: That’s right. Well, the odds of success in a new adventure is something like 1 in 10, and that’s not a very good, I guess, outcome, or if you want to sit there and say, “My odds are 1 in 10 that I’ll succeed,” that doesn’t sound like a very good percentage. You’ve created one of your great lists, and these are always helpful to me because I always like to collect them and use them for self-evaluation and I find out that if I’m looking at either my business or my personal conduct and I look at the list, I can find out am I weak in a certain area? Have I considered this in a certain area? Where am I maybe falling short?
So, with that in mind, Ray, here’s your list of what you need to do to increase your odds of success. Number one, a highly differentiated product or service. What do you mean by that?
Ray Zinn: If you look at trying to increase your odds of success, having a mainstream product or something that is not really competitive is not going to increase your odds of success. So, what I mean by a highly differentiated product or service is something that is different, unique. Something that will catch the eye of the customer. Something that they feel they just have to have, and I think that’s been one of the reasons that many companies don’t succeed is because they really haven’t thought through the highly differentiated part. They just want to get out on their own, be their own boss, and so they just start up a business.
My son, for example, years ago, he just wanted to be on his own, and so he left a very successful job and started this company repairing air conditioners. Of course, there’s a lot of people doing that and he didn’t really think about how he highly differentiated himself by just offering the same service. But once he got into the business, he said, “Well, now, I gotta … How do I differentiate myself?” That’s too late. In other words, you want to differentiate yourself before you start your business, not after you’re stuck in the business and then have to work your way out of it because you spend more time just trying to run the business and not trying to figure out how you’re going to differentiate yourself.
So, that’s what I mean by having a highly differentiated product or service.
Rob Artigo: Also, number two on your list of things you can do to increase your odds for success is have enough cash in your business to sustain until profitability.
Ray Zinn: And that’s important because if you’re gonna spend all your time looking for money or raising money, you’re not running your business. I’ve talked to a number of start-ups and even companies that have been out seven or eight, nine, ten years and they’re still raising money. They’re in the rounds F or G or, I mean, they’re constantly raising funds to stay alive, and so the more time you spend raising money, the less time you’re spending running and growing your business.
So, that’s what I mean by don’t start your business until you have at least enough money to take you to profitability.
Rob Artigo: All right. So, what you need to do to increase your odds for success is one, a highly differentiated product or service. Two, enough cash to sustain until profitability, and now three, a great team of dedicated employees. Tell me about that.
Ray Zinn: Yes, so that’s key because having a poor team or a team that’s not committed is not gonna help you grow your business. So, selecting the right people, those that are compatible, is extremely important in seeing that your business succeeds, and I spent a lot of time when I started Micrel making sure that I had the right team on board and I think that was a hallmark of Micrel, was our ability to really attract the very best people. Bees are attracted to honey, so you’re gonna make sure that you gotta lot of honey in your company so you attract the right kind of bees to that company, and so that’s what I mean by having a very, very good company, good employees.
Rob Artigo: That ties in with number four on the list, a great and well-defined company culture, because those employees are gonna exist in that culture and they go hand-in-hand.
Ray Zinn: Absolutely. A culture is so important to keep the employees happy and motivated. I just had somebody at my home Saturday who used to be an employee of the company and most of you know that I sold my company a couple years ago, and they had to go out and look for other jobs and one of the things they mentioned to me on Saturday was, “Now, we just haven’t been able to find a company with the same culture that we had at Micrel,” and I said, “Well, you know, is that the culture you want?” and they said “Absolutely,” and I said, “Well, then you have to keep looking, then, until you find the company that has that kind of culture,” and she said, “Well, so far, I haven’t been able to do it.”
She did take a job, but she was not happy with the culture, and so having the right culture in your company will keep your employees loyal and motivated.
Rob Artigo: Yeah, and again, that’s number four, a great and well-defined company culture, so well-defined has to be there as well, that everybody understands it exists and that example you just gave is proof that at Micrel, you definitely had a well-defined company culture, because it was tangible and it was something that people carried with them when they left.
Ray Zinn: Exactly.
Rob Artigo: So, number five is a really easy one, read the book Tough Things First. We usually don’t talk about the book per se. I mean, we mention it on the podcast frequently, but we don’t normally talk at length about the content of the book. How can the book increase our odds of success?
Ray Zinn: I’ll do this by starting out by talking about a gentleman, an older gentleman, he’s in his 80s, and he’s actually retired, but he said that he bought the book. I didn’t know at the time he had, he actually brought it over for me to sign, and he was holding it in his hand kind of shaking it and says, “If I had had this book when I was back in … when I started my company, I would have been a success,” and so he was just saying how the … He said that, “Too bad that aren’t you getting those to more students and others learning and reading this book,” you know, and I said, “Well, I’m trying,” and the book really does cover a lot of factors and elements of running a successful company because being Silicon Valley’s longest-serving CEO, I have over 37 years’ experience running a company and this is all my background, all my experience in running Micrel for 37 years, I put into the book.
We were profitable 36 out of 37, which is really a record, being profitable for so many years. So, the book really contains all the elements that I think are important to having a successful business, and that’s why I put down this as the last one and read my book Tough Things First. Not that I’m trying to make money on it, ’cause that’s not it. It’s a good educational book, good one for the students and the institutions that are higher learning, it can benefit from to help these young people as they enter the workforce become more successful.
And, of course, the title of the book really says it all, doing the tough things first, or eating the ugly frog first. So, that’s the title and I say in my book and I’ll say it on the air that if you can learn to do the tough things first every day, you’ll get 20 percent more done, so who wouldn’t want to improve their efficiency by 20 percent? Now the reason, by the way, that you can get more done is you get rid of those ugly, difficult … eat that ugly frog, get rid of it. Then you have time to spend doing the more interesting and fun things because when we get the tough things first, get them done and get them out of the way, then they are not weighing on our mind. We’re not being, “Oh, I gotta get back and I gotta go do this,” or whatever. It weighs on us, all these difficult tasks.
So, when you get up in the morning, make that list of all the ones you don’t want to do and then do them first, get them out of the way, and the rest of the day will be so much more effective and you’ll get a whole lot more done.
Rob Artigo: Good advice, Ray. Thank you.
Ray Zinn: Thank you, Rob.
Rob Artigo: Of course, you can get the book at Amazon. You can also get more information on Ray Zinn at toughthingsfirst.com, which is also some links to information on Facebook and LinkedIn, and where else, Ray?
Ray Zinn: On Twitter.
Rob Artigo: And Twitter, of course.
Ray Zinn: And if you have any questions or any thoughts about what we’ve been talking about, please let me know. Please write me or call me and let me know what you think.
Rob Artigo: Don’t be shy. Thanks, Ray.
Ray Zinn: You’re welcome. Thanks, Rob.
An Entrepreneur’s Worst EnemyRead more
Sometimes the greatest challenge to success is the person staring back at you in the mirror. In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about how to meet the challenge of being your own worst enemy.
Rob Artigo: Now here’s Ray Zinn, Silicon Valley’s longest serving CEO, and today’s guest host. I’m Rob Artigo, guest host, for another edition of Tough Things First podcast with Ray Zinn. Hi, Ray.
Ray Zinn: Hello, Rob.
Rob Artigo: I’m sure you’re familiar with the phrase, “Be your own worst enemy.”
Ray Zinn: Absolutely.
Rob Artigo: That’s a good way to open up our next subject. You say, “That the most important fight is the one we have with ourselves.” So tell us about that.
Ray Zinn: Okay, what happens in life is that we’re constantly hit with challenges. And when you look at, critically if you can look at yourself in a critical way, and not let your ego get overcome these criticalities, as you would. That’s what I mean by being your own worst enemy because you can be your own worst critic if you have the heart and the mind to want to improve.
Rob Artigo: It’s funny, because there are so many different ways in life that we are forced to be critical of ourselves, and sometimes, if you can’t stomach it, you have to look the other way, and it doesn’t benefit you. And if it defeats you because you can’t handle your own criticism, I’ll give you one example. This is a good one. We’re on a podcast. Most people hate the way their voices sound. It’s just a natural reaction to hearing your own voice recorded and sent back to you. And so you think, “Oh, man. I sound terrible.”
But other people don’t see it that way, don’t hear it that way, and maybe they love the sound of your voice. But you can’t stand the sound of your voice. Any one of those ways of having to self-evaluate and being too hard on yourself can be self-defeating. And certainly, meaning, that if you can’t deal with that fight, you’re going to have a hard time dealing with other fights, as well.
Ray Zinn: Absolutely. They say, “You keep your friends close, but your enemies closer,” and so keep yourself, as your own worst emery, closer. Constantly evaluating your performance is crucial to self-improvement. Not that you want to get to the point where you talk yourself into, “I’m so bad, I’m so ugly, I’m so fat,” or whatever, that you lose objectivity. But you want to be able to look at yourself critically enough that anything flaws, your voice, whatever it is that you’re concerned about, you can make those changes, and that’s what we mean by becoming your own worst enemy.
Rob Artigo: And you say, “Stay true to your values.”
Ray Zinn: Not letting yourself go by the way of the world. Having the kinds of standards and the kind of morals that you’ll be proud of and that your family would be proud of. And that’s what we mean by being true to the values that you hold dear.
Rob Artigo: Do we really fail because of the things … Because we have failed, maybe ourselves, our family, our friends, associates, and even our country?
Ray Zinn: Yes, and that’s one of the problems that we face in this world, especially today. Is that we say, “Oh, well. He’s doing it or they’re doing it.” We look at the statistics and they say, “Well, it seems to be this is acceptable to do this sort of thing.” Whether it be lying, or whether it be distorting the truth, whether it be cheating on our spouse, whatever it is, that’s when we lose those values, and we no longer are true to the values that we hold dear.
Rob Artigo: Right, and that is a fight, because I had a conversation just yesterday with somebody on a very similar topic. And that is, sometimes in business or in other aspects of our lives, we see somebody else succeeding, and we either have witnessed or suspected they’d behave in a certain way that’s negative, and therefore, we go, “Well, we have to behave that way, or act that way, we have to maybe lie, or we have to be crooked in business in order to get ahead.” And the truth is, that they may be ahead in their own world, but they’re not ahead in life just because they’re successful in business, but they’re doing all these other things wrong. Doesn’t mean they need to be emulated or should be emulated.
Ray Zinn: Well, a funny thing happened. I was over at a friend of mine’s home, and their daughter was dressed in these jeans that had these tears in the various parts of the pants. The knees, and the thigh area, and they were raggedy. And I jokingly said to her. I said, “Oh, is your dad needing financial help?” She says, “Why?” I says, “Well, because your clothes look like they’re kind of shabby.” And she, “Oh, no. That’s the fad. Oh, no. That’s the way the fad is. And I paid actually extra for this.” I said, “You have to pay extra for the holes in your jeans?” And she says, “Yes.” And I said, “Oh, okay. Well, if your dad needs some help financially, let me know.” And she looked kind of sheepish. She says, “Oh, now I feel bad about …” She says, “Well, I don’t wear these all the time. I only do it when I’m around my friends.” So that’s the key here. We tend to be influenced by our friends, and that’s not being true to our own value to ourselves, then we’re just following the trendy things.
Rob Artigo: And in that way, in line with our topic here, is that’s how you can be your own worst enemy. The fact is, that that fight that we have with ourselves is the toughest one, because our selves say, “I want this. Or, I need that. Or, I should wear this. I want to be like those people.” We have to find … We have to be able to recognize those little battles, and those are, internal battles oftentimes, and come out on the winning end.
Ray Zinn: Yeah, it’s a slippery slope because once you start down that slope, then it’s hard to turn around, so being true to yourself means stop before you start. And that’s important to do. Stop before you start. Think about what you’re doing. Make sure that this is not going to violate your values down the road.
Rob Artigo: Yeah, and you said, “High moral standards, and also just being a good person is more important than having great wealth and accolades.”
Ray Zinn: Absolutely, because many people seek for the accolades or honors of man, and then give up the values that are true values, that make them true leaders. And so don’t follow the fads. Stay true to your values. Don’t be influenced by the ways of the world, because ultimately, that will tear you down.
Rob Artigo: Thank you, Ray.
Ray Zinn: Thank you, Rob.
Running On EmptyRead more
At some point an entrepreneur may be called upon to “Run on empty,” but how does a successful business operator get through it without losing everything in the process? In this edition of Tough Things First, Ray Zinn and guest host Rob Artigo explore the challenge of being pushed to the limit, and to keep going strong.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First: the podcast, I’m an award-winning screenwriting and an investigative consultant. Being invited back is always a pleasure, Ray.
Ray Zinn: Hey, Rob, so good to have you back on the program.
Rob Artigo: I’m sure you know the song from Jackson Browne from ’77, he released a song called “Running on Empty,” it was a huge hit at the time and it became a hit again in the ’90s with the movie Forrest Gump, and I think most people can relate to the feeling of running on empty. I’m sure, even though you’ve had great success in your life, you’ve had feelings like I’m running on empty, correct?
Ray Zinn: Absolutely. I mean, that’s a thing that most leaders don’t really understand, is how well can you run on empty.
Rob Artigo: And how would you define running on empty? Is this a completely being drained in life and you’re running out of steam to do anything?
Ray Zinn: It’s like running a marathon. There’s a point during the marathon where you hit the wall, and that wall says, “I don’t want to go anymore; I’m done.” Your body is chewing itself up. It’s living off all the reserves that you have, and the body says, “We’re done. We’re through.” And you have to be able to push through that. That’s the best example I can think of about running on empty, for those of you who’ve gotten to the point where your body just says, “I can’t go anymore.”
Or you’re psychologically drained and you say, “I can’t think anymore. I’ve lost my train of thought. I’m totally discombobulated.”
Being able to break through that, being able to go through the wall as they say in the marathon, is the ability to run on empty. And so, we all have different size gas tanks. Some have very small tanks and so they run out of gas really quick and others have huge gas tanks, and they can just keep going and going and goin and you say, “Where is he getting that energy? How can he do that? How can he continue on with all that’s happening?”
That’s what I mean by running on empty. I have a friend that recently lost his spouse, and so I was wondering how he’s doing. And he made the comment that boy, it’s draining. He says, “It’s hard to keep going right now, because I’m dealing with all the issues surrounding the loss of my spouse,” and so he’s distracted and he hasn’t been able to push through that. And so, that takes time to be able to get through the problems associated with these tragedies that will beset us in our lives.
Or, when we have some other, financial setback or whatever, marital issue, children issues, that we have to be able to push through it or we’ll sink right with the despair that we’re in.
Rob Artigo: It can be paralyzing I think, and when you reach that point where there’s the mental fatigue along with the physical fatigue and then the despair, the word despair, sinks in and starts to sort of consume your life a little bit, then you can be paralyzed by it.
Ray Zinn: Yeah, despair is a good way to put it, because that’s what happens, even when you’re running these long distances, your body gets in despair. And it just says, “We’re done! There’s no more gas in the tank.” And being able to push through that, being able to get through that despair, is the ability to run on empty and so, how do you compartmentalize the loss of a spouse, marital problems, or some financial issue?
How do you push through that and through that wall, as they say in the marathon, how do you get through that and be able to keep yourself energized, even though your body and your mind your heart is broken and you’re just beyond, as they say, repair? And that’s what we’re talking about today is being able to run on empty, being able to push through that despair, being able to overcome all the challenges and the adversity that we face in our lives is what I refer to as the ability to run on empty, and you as a leader, as an entrepreneur, you will run into these challenges, you will hit the wall so many times, and you will have to learn to be able to push through that, be able to get through that despair and continue on, because if you can’t, your employees won’t be able to do it either, because you’re the leader of the band.
Leading the charge or continuing on when it looks like everything is lost is what I call running on empty.
Rob Artigo: I guess it starts all with a mental outlook, which is not allowing yourself to see a empty road ahead or a brick wall ahead. It’s that, being able to look through the fog, the murkiness, and just have a feeling that you know that things will get better.
Ray Zinn: Yeah, I call this turning a negative into a positive. If you can do that, you will never be defeated, so look at your negative and say, “How can I turn that into a, how can I make lemonade out of these lemons?” And that’s when you will be able to break through the wall, you’ll be able to have that energy to overcome the despair that would normally beset you if you weren’t able to turn these negatives into positives.
Rob Artigo: Which is why that song we were talking about, “Running on Empty,” of course, Jackson Browne song, it was, in essence, a positive song.
Ray Zinn: Absolutely. That’s what running on empty is. Running on empty is making lemonade out of lemons, so turning that negative into a positive. You will never be defeated.
Rob Artigo: Thank you again, Ray, I appreciate being back.
Ray Zinn: Again, Rob. It’s always good to talk to you.
Rob Artigo: Now, people can reach out to you, if they have questions, or they want to talk about the show or they want to talk to you about the book, they can do that at ToughThingsFirst.com and some other sources, right?
Ray Zinn: Absolutely. Please let me know what’s on your mind!
Not Listening, No SalesRead more
Sales mistakes come in many shapes and sizes, and most can be avoided with proper planning. In this edition of Tough Things First, guest host Rob Artigo asks Ray Zinn about how to tackle the “listening” problem that impact your sales efforts.
Rob Artigo: I’m Rob Artigo, your guest host for this edition of Tough Things First. Hi Ray.
Ray Zinn: Hello Rob. So good to be with you today.
Rob Artigo: And it’s really good to be back and I’m excited to discuss this particular topic with you. The movie, based on David Mamet’s play Glengarry Glen Ross contains the quote “Always be closing.” It’s not something that was in the play but it made it into the movie. Famously made it into the movie. It’s a great quote. But, I have a problem with that absolute, and I think sometimes cynical, kind of hard sale way of thinking of things. But, business is about sales and sales aren’t always easy, right?
Ray Zinn: You’re right. Selling is a task. It’s job.
Rob Artigo: And mistakes in sales come in many shapes and sizes. So let’s look, not at the unmotivated buyers themselves, but customers who are just simply not listening. Tell us about that problem.
Ray Zinn: If you get into a selling situation, whether it be with a customer or your family or anyone else, an employee that you’re trying to retain, or if you’re trying to hire someone, or they’re trying to sell themselves to join your company, the environment has to be correct. In other words, both people have to be willing to listen. That’s very key in selling. Whether you’re selling yourself, whether you’re selling your product, whether you’re communicating with your spouse or your children. Having that environment where both parties are willing to listen is key. It doesn’t happen that much. Usually when you are communicating, there is resistance to listening on either side. That’s what I meant by when you sell, you have to be selling while they’re listening. Sometimes you’re listening and sometimes they’re listening. The ideal thing is to make sure is both parties are willing to communicate and listen to each other.
Rob Artigo: What are some of the ways that we can accomplish that task? I have a thing I call noise, and that is if there are all these distractions around you, it’s hard to listen. Are there ways to close down the environment a little bit so that it’s more advantageous to a listening situation?
Ray Zinn: Absolutely. If you’re upset, that’s not a good time. Or if they’re upset. If the subject matter is one that, you might not be upset, but if it’s the subject matter that you’re not interested in, that has to be changed. You can tell if someone’s listening by their facial expressions. If they’re smiling, if they’re sitting forward, if they’re nodding, acknowledging periodically, nodding their head. Or even if they’re shaking their head, you know they’re listening. What you like to see is more nods than shakes. Make sure that the environment you have is conducive to the communication such that your message comes across and is being properly received. It may not be received in a way that you would like, but at least they’re listening. That’s the key here, is to make sure that when you send your message that it is received on the other end.
Rob Artigo: It is the first task to square away when you’re going into a selling environment, a business selling environment, right. You have to make sure you have, as best as possible, controlled the environment and situation so that it is a listening environment.
Ray Zinn: I had a situation, not too long ago, where as I was talking with this individual, he was being interrupted. In other words, his cell phone was ringing or beeping for a message, and he kept taking it. In other words, he kept saying “Oh, excuse me.” He’d pick it up and look at it or he’d say “Oh, excise me. Let me catch this real quick.” I know he’s not listening then. On the other hand, if you’re talking to someone and their cellular device goes off and they turn it off. In other words, they hit the button on the side then it send it to voicemail or something, then you know they’re listening because they don’t want to be distracted by something. That’s another clue is if they’re being distracted, you can tell that, or they’re willing to be distracted they’re not wiling to listen. Just be aware that whoever you’re communicating with has to be listening or your message is not gonna get through.
Rob Artigo: Is there a tactful, pleasant way to invite someone to turn their phone off or shift into a different mode, a listening mode. Because your example of the phone being a distraction, everybody’s experienced that. It’s business and every aspect, not even just the selling aspect, but the everyday of communicating aspect. At home, that kind of communication can be disrupted by the phone. How do we approach the subject and be pleasant about it so we don’t lose them then and then make somebody upset.
Ray Zinn: Actually this really happened. I was communicating with one of my children and their phone kept going off and they kept looking at it, and then they put it back down again. I said “Well, okay, maybe we should talk at another time because it looks like to me what you’re doing there is more important than what I have to say.” They were really embarrassed over it and they turned their phone off, and then of course, I had their attention. All I said was “Hey, maybe there’s a better time for us to get together because it looks like to me your kind of distracted right now.” That’s how I handled it with one of my kids.
Rob Artigo: It’s a tough thing. Listening and getting somebody to listen to you and being a good listener go hand in hand. It’s a two way street. If you’re doing something distracting, for example looking at your phone all the time, it may prompt the other person to start doing it. Or, just turn them off all together. So you gotta be aware of that, too.
Ray Zinn: The bottom line Rob, is that you want to have both parties willing to listen. I call that willing listening. Where they want to hear what the other person has to say, because that’s when real communication starts. It doesn’t start when you just start moving your mouth. It actually begins when that other person acknowledges that they heard what you said. I can remember when I was a pilot, when I called the tower, they always wanted to hear me respond back. They’d say okay, you’re cleared to land and I’d say, okay I’m cleared to land. That was an acknowledgement that I heard what they said. I often do that when I’m communicating with someone. If I see or are wondering whether or not they’re hearing me, I’ll say “Well, did you understand what I said?” Or “What did you think about my point?” Then I kind of get them to rephrase what I said and that’s one way I have of understanding that they got the message.
Rob Artigo: Right and that message should be received in the best light possible.
Ray Zinn: Absolutely. The environment that you’re in is so important. If you’ve got a serious communication that you want to have, make sure the environment is right. That there’s not the distractions, the noise, the other ways that would prevent them from really understanding what you’re trying to say.
Rob Artigo: Thank you, Ray. As always, you can reach out to Ray Zinn with your questions at Tough Things First dot com, and you can continue your education in business and in life. Join the conversation with all of our podcasts and the blogs and links to information about the book, Tough Things First. Thank you, Ray.
Ray Zinn: Thanks, Rob.
Cash is KingRead more
In business money is like air … without it you die. But borrowing might not be the best strategy. In this edition of Tough Things First, Ray Zinn and guest host Rob Artigo explore why cash is king.
Rob Artigo: Welcome back to another edition of Tough Things First, the podcast. I’m your guest host, Rob Artigo, writer and entrepreneur here in California. Hi, Ray.
Ray Zinn: How you doing there, Rob? So good to be with you today.
Rob Artigo: Well, at the conclusion of this segment, Ray, we’ll tell everyone how they can reach you and if they have any questions, or if they want to look for some links on important information about Tough Things First, we’ll do that at the end of the podcast.
Ray Zinn: Super.
Rob Artigo: Cash is king. It’s one of your mottos. It’s as true, I think, today as it is yesterday many years ago. Your mother probably told you the same thing my mother told me, which is, “Money doesn’t grow on trees.”
Ray Zinn: Exactly.
Rob Artigo: Did that pay off for you in business, for example, running Micrel for 37 years?
Ray Zinn: Absolutely. She would remind me to make sure that when I left my room, I turned the light off. Also, that I didn’t waste water. She was always very frugal with regard to how we ran our household. I was the oldest of 11 children and so I learned at a very early age the importance of money and making sure that I didn’t squander the resources that I had. It’s just been very important to me throughout my entire career to guard my cash as though it were my life.
Rob Artigo: If you run out of cash, Ray, as a business owner, obviously I mean, everybody talks about this term, “Burn rate.” Let’s just talk about just simply the idea that you’re starting your business and you really need to have enough cash to keep running all the way through to profitability, correct?
Ray Zinn: Exactly.
Rob Artigo: Give me a strategy perhaps on how I can do that, effectively do that in a business environment.
Ray Zinn: As I mentioned before, it’s important to have enough cash to take you to profitability. This prohibits the need to have to continually going out and raising money. Whether you borrow it, or whether you raise equity through various seed rounds, you still have to have enough cash to start. If you don’t have enough cash to start, then don’t start. It kind of reminds me of taking off on a trip, and knowing that you have a certain distance to go, and then you don’t put enough fuel in your tank to get you there. You’re hoping that there’s going to be enough service stations, or gas stations along the way that you can keep topping your car off, but that’s not smart.
I can remember years ago when I would travel from my hometown in southern California, to my school in Provo Utah, that it was 760 miles and I had to cross a huge desert. I made sure I had enough fuel to get me at least through the desert where there were no service stations or gas stations, so that I could not run out of fuel and then be in trouble, have to either call for a tow truck, or have some other way of fueling up my vehicle. It’s important to have enough gas to get you from point A to point B. I’m afraid that many businesses don’t do it. They raise enough cash to at least get themselves started, but they can’t keep themselves running. You understand the difference?
Rob Artigo: Sure. I think of just me in my personal finances at home, the idea that I don’t really want to pay interest to anybody, because that money that’s going out should be coming in. I should be … My money saved, should be generating interest and cash for me, not the other way around. It’s just a natural instinct for me and a great way to set up your finances. I don’t want to pay interest, and if I’m a business owner, there are a lot of pitfalls in borrowing, right?
Ray Zinn: Whether you raise money through equity, or borrow with a loan, there’s still interest. I mean, the investor when he puts money into fund your company, even though it’s equity, he is expecting a return. Whether your return is a monthly interest payment, or like you do on your home, or your car, or whether you have some term on the equity that, the money that’s been put up in your company, you’re still going to have to pay for that. Money is not free, whether you borrow it, or whether you raise it through venture capital. You need to remember that. The only difference is, of course, if you borrow through equity, then there’s no monthly payment either on the principal or the interest. There will be at some point, that person who gave you that money is going to expect a return, whether it be interest or whether it be through some kind of a sale, or other equity financing.
Rob Artigo: Well, they’ll be … Often times, this will be delineated in a contract, right? It’ll say, “Before you do anything, I want this.”
Ray Zinn: Yeah, it depends upon if you’re preferred or not. Depends upon the kind of financing that you received. There are no free lunches. I mean, whether you’re borrowing the money, like you do on your home, or whether you go out and get financing through equity, there’s still a return expected.
Rob Artigo: What’s the advantage of having the cash on hand to carry you through, and how long do you need to plan out having that cash?
Ray Zinn: Well I mean, if you don’t have the cash, you can’t run your business, so cash is like air. You can’t breathe without air. That’s your lifeblood. You should have enough money to take you to profitability, whether that’s one money, or whether that’s two or three years. You still have to have sufficient cash. Now, what you can do is pretend like you’re a scuba diver and you have an hours worth of air in your tank, you can stay submerged for an hour, but then you’re going to have to come up for air. You can’t stay down forever. You could do what we call, “Scuba diving financing,” and that’s what a lot of companies do, is they just get enough money to keep them down for an hour or so, as you would, and then they’re having to go refill their tank.
That’s a constant thing. You’re constantly having to come up and refill, constantly come up and refill. The danger with that is, is that of course, they may not want to refill your tank and then you die, or you can’t go back down. You can’t submerge again. Again, it’s a matter of how long you want to stay submerged and what’s your objective for your company. My view is, or my recommendation is that you have at least two years worth of cash so that you can run your company for two years without having to refill your tank.
Rob Artigo: I have … Another one of my home philosophies for finances is, I have a certain amount of cash just sitting aside. It’s for an emergency fund. It’s only there if something were to happen where all of a sudden cash vanished. I mean, the income vanished and I needed to keep the lights on and provide food. Those are the two emergency items that I would pay for out of that fund. That’s it. I think of in running business, what you’ve just described here, is having the cash on hand to run your business in the worst case scenario for two years, because two years should be enough time to weather that storm.
Ray Zinn: Most financial people will tell you that you should be saving each month. In other words, you should be putting some money away. Same thing on running a business. If you think you’re going to need X number of dollars, then you should have X plus 10% or 15% of that, so that you have a little reserve in case something bad happens you have something to cover you until you can get back on track. When I say, “Raise enough money to last you two years,” I’m saying that even if your plan calls for X number of dollars, that you should have X plus %10 or X plus 15% just to act as a reserve in the event of some problem. Problems will happen and you’ll be happy you had that reserve.
Rob Artigo: Your message to me was, that you underscored never run out of cash. If I would put one philosophy in here, aside from cash is king, follow that up with, never run out of cash.
Ray Zinn: Yeah, you run out of cash, you run out of air, and you stop breathing, and you die. If you don’t want to die, keep enough air in your tank that you can stay submerged for however long it takes you to accomplish your goal.
Rob Artigo: Perfect, Ray. Thank you very much.
Ray Zinn: Thanks, Rob.
Rob Artigo: If you want to find out more about the Tough Things First book, or any other information, you can go to ToughThingsFirst.com, Tough Things First on Facebook. Also, again the book is available at major retailers and of course Amazon.com. Thanks, Ray.
Ray Zinn: Thanks, Rob. Good talking to you again.
Image via Create Commons license, and Russel Street
Traits and QualitiesRead more
The traits and qualities of a successful entrepreneur may be as varied as the stars in the sky, but they are achievable essentials to strive for in any business environment. In this edition of the Tough Things First podcast with guest host Rob Artigo, Ray Zinn offers his decades of experience.
Rob Artigo: I’m Rob Artigo, guest host for this edition of Tough Things First. Hi, Ray.
Ray Zinn: Hello, Rob, good to have you with us again today.
Rob Artigo: I appreciate it. Being young and driven, and I know that this is something, we see this in the faces of young people all the time. You could have a teenager who builds something and then says, “I’m going to make a business out of this,” and that’s great. Being young and driven is great, but it’s not necessarily a recipe for success if that’s all you’ve got. Age shouldn’t be a factor and, let’s face it, if you’re driven, it really does matter what the goal of that drive really is. Is it money, is it world domination, is it to build a lasting and successful business?
Ray, you’ve compiled a list, a very useful list in my opinion, of the true traits and qualities entrepreneurs need to succeed. For the listener, this is a great time to grab a pen, get ready to jot this list down, because it could be important and, I think, will be important going forward in your career, whatever level of business you are involved in. It’s kind of a long list, but we’ll do our best to get through it. Rick, let’s start with number one, passion.
Ray Zinn: If you have a the passion, you’ll be successful, providing you have the other criteria that goes along with it. We don’t want to be passionately dishonest, so we want to be passionate in a good way.
Rob Artigo: Right, and passion is not necessarily something that, we think of spontaneity, like, “Oh, I want to do this. I’m just so excited about it.” Passion is something that doesn’t run out. It’s something that lasts the test of time when it comes to developing the business. True passion means, it’s kind of like being a professional athlete, right? You start out, lots of people start out going, “I want to do this, I want to make the Olympics,” or “I want to make Major League Baseball or football,” or something and they get in there and they play and they play, but they’re the ones that get tired eventually. The passion sort of fizzles out. The ones who make it are … they’re the ones who have the passion, that last the test of time. That’s the passion you’re talking about.
Ray Zinn: Exactly.
Rob Artigo: Number two, courage.
Ray Zinn: Not being risk-adverse. In other words, if you have the courage to see things through, means that you don’t have that fear, you’re not deer in the headlights. You can see the future, you have that heart, that drive, that will have that sustainability to see things through. You’re going to run into problems. As long as you are live here on this earth, you’re going to have ups and downs. Trust me, in the 37 years that I ran Micrel, we had our share of ups and downs, many business cycles we had to overcome, the challenges of those cycles, the recessions and the problems that come along with just difficulties. Courage is the ability to see these through.
Rob Artigo: I had read about a, and the name escapes me and it’s not necessarily that important right now, but a long time ago, I would say within the last 200 years, early on in new scientific discoveries, there was a scientist [who had 00:14:25] life-long work and had made some interesting, very interesting, important discoveries, but went through a lull of depression and problems for a while and you would have thought, well, his best days are behind him. It turned out his best, what he did best came after he was age 50. His most important discoveries came after he was the age of 50. I like those stories. I find those encouraging because I believe that it’s when you are successful and then hit a dark spot, and you skid and you sink down low, that that courage really manifests itself.
Ray Zinn: Absolutely. You don’t know if you’re courageous until you’re faced, as they say, under fire. That’s the test of time, is when you’ve had the difficulties and you’ve come out the other side in a still upstanding, positive way.
Rob Artigo: Also on your list, Ray, after courage we have honesty. I think honesty is infused in everything on this list.
Ray Zinn: Yes, because that’s, if you’re not honest with yourself, you’re not going to be honest with others. Don’t kid yourself, be totally transparent in your views and be open about your goals. Honesty is the ability to be truthful at all times.
Rob Artigo: There’s a difference, though, between being honest and being truthful at all times and then saying things that are not necessarily important to be said at the time, that just ultimately end up being hurtful, right? You have to be tactful with your honesty.
Ray Zinn: Yeah, brutally honest, they call it, when you’re not being tactful. We’re not talking about that kind of honesty, we’re just talking about the kind of honesty that comes from the heart, that you’re not being brutally honest, you’re being honest.
Rob Artigo: Going hand in hand with that is the next thing on your list, integrity.
Ray Zinn: Integrity is doing what’s right when no one is watching. That’s so important because there are going to be times when you have things happen and you can hide them, if there’s something you don’t want to have to be brought to the forefront. The story I tell is about the time that I was coming home from work late and it was in the winter time and I wasn’t paying attention, and I ran a stop sign and almost hit somebody. I called the police department and said, “I’d just like to report myself, that I almost hit someone and I ran a stop sign, so here’s my driver’s license number and if you’ll just send me the ticket, I’ll go ahead and pay it.”
The policeman on the other end of the phone said, “Is this a joke? Are you kidding me? People don’t call up and confess to committing a crime.” I said, “Well, I just want to let you know that I did this,” and he hung up on me. At least I made the attempt to make good on what I did. That’s what I call being honest when no one is watching.
Rob Artigo: The central element to true integrity is what you do when you are faced with a situation where, really, it is only you who knows what it was that you did wrong.
Ray Zinn: Exactly, so that’s when you’re honest with yourself. When you’re honest with yourself, you have integrity.
Rob Artigo: Respect for others also on this list. Jot that down, respect for others. I think this is important because it goes to, and I kind of mentioned it a little bit when we were talking about honesty, that when you’re being honest and truthful with somebody, you have to be tactful about that so that you’re not saying things just because you’re telling somebody something that you know is going to actually belittle them and make them feel bad. Respect for others is understanding that that is another human being that you’re referring to and it’s on your list for a good reason.
Ray Zinn: Yeah, respectful is also regarding people’s time. In other words, don’t waste people’s time. That’s being respectful of their time. Also not using harsh or condescending language or vulgarity, that’s another way of being respectful. Showing dignity and respect for others is the hallmark of a person with real character.
Rob Artigo: How about humility? That’s on your list next. This seems to be one of those things that, if you look at what we have on the list so far, I’m going to review real quick: Passion, courage, honesty integrity and respect for others. You could say that there really is, you can’t be any one of those other things in a vacuum, by themselves. You can’t be passionate without, I think, courage and honesty. They run together. It’s important to also be humble in the process, isn’t it?
Ray Zinn: Absolutely, because humility is not being the one who’s grabbing the limelight or the one who always has to take credit, puffing your chest out, letting others take credit, letting others have the limelight. You don’t have to be the one that always gets the credit. Let others share in the joy of success. That’s true humility. Humility, I think, is one of the more important ones I have on the list because it means that you’re not in it for yourself, you’re in it for others.
Rob Artigo: I think you can tell whether or not you are truly humble in those situations when you said letting someone else get credit is when you feel a sense of satisfaction that you, as a mentor or as a manager of a company, ended up being successful because your employees were successful. You can look at what they did and be proud of their success. Even if the finger of success isn’t being pointed at you personally, you have that sense of pride and joy in that person’s success, and you’re not jealous, you’re not feeling like, hey, the camera’s not on me and it should be. No, you’re actually enjoying the fact that they are successful.
Ray Zinn: Absolutely. Humility is so important.
Rob Artigo: What about strong work ethic? That’s next on the list.
Ray Zinn: One of the cultures we had at Micrel is doing whatever it takes, no excuses. Having a good work ethic means that when you’re there, you’re putting forth your best effort. You’re not off doing other things which are not pertinent to that particular task. You’ve seen them yourself, people who just fill the time, they’re not there to contribute, they’re just there to fill a void. Having a strong work ethic, you’re busy, you’re constantly driving to improve, you come up with great ideas for the company, you’re there for the success of the company and you’re not just in it for yourself.
Rob Artigo: Penultimate on this list is one that could get people into trouble if they take it literally under every circumstance, because it can be used for evil, so to speak. It’s that magic that can be used for evil. The words are, “Willing to do whatever it takes.” I think it can be good and it can be bad. What we’re talking about here is doing whatever it takes in a good way.
Ray Zinn: Yes. To get the job done on time, with the right quality is what’s meant by that. Doing whatever it takes doesn’t mean winning at all expense, it just means that you’re not going to put the problem on the company or your team, that you’re going to be responsible for your task and make sure that your end of the bargain was upheld.
Rob Artigo: And, of course, the ability to do the tough things first.
Ray Zinn: Absolutely, that’s the key. When you learn to do the tough things first, that means that you’re going to do things that you would ordinarily procrastinate because you don’t want to do them and so you push them off to some other time in the future. Doing the tough things first means, first thing every morning when you get up, think of those things you don’t want to do and get those done now.
Rob Artigo: And, of course, Tough Things First is the name of your book and it’s important to note right here that if you want to learn more about these traits and other aspects of entrepreneurship, the book, Tough Things First, is a great way to go. Let me run through the list real quick, Ray: Passion, courage, honesty, integrity, respect for others, humility, strong work ethic, willing to do whatever it takes, ability to do the tough things first. Those are the traits and qualities an entrepreneur must have to be successful, and we appreciate it, Ray.
Ray Zinn: Thank you.
Rob Artigo: You can never stop learning about your business, about what you’re doing as a manager, as an entrepreneur, and that’s why Tough Things First is considered by many to be the raison mater class and, certainly, ongoing education is what we’re doing here and it’s at your fingertips online, in your car and, of course, the book, Tough Things First. Recommend the podcast and toughthingsfirst.com to a friend and get more information, Face Book, LinkedIn and other resources, right, Ray?
Ray Zinn: Yep, you can find us on Twitter and also on our website, Tough Things First. Thanks again, Rob, for being with me today, and all of you out there listening, don’t hesitate to ask us questions. We’re here to help. Let us know what you think and what we can do.
Rob Artigo: Thank you, Ray, appreciate it.
Ray Zinn: Thank you, Rob.
CEO Warning SignsRead more
What are the top three warning signs your business is in trouble? Ray Zinn discusses the warning signs CEOs most often ignore.
Guy Smith: Hello, everybody and welcome to another edition of the Tough Things First podcast. I’m your guest host today, Guy Smith, and as always, we’re here with Ray Zinn, the longest serving CEO in Silicon Valley and a hearty good morning to you, Ray.
Ray Zinn: Well, thanks, Guy. Good to be with you again.
Guy Smith: Well, good to be with you as always. Today’s episode is a bit different. Everyone, especially here in Silicon Valley, loves to be an optimist, but we all know that bad things do happen, so I wanted to talk about warning signs. When you’re at the top of the organization, how do you know when your organization is getting in trouble? So for example, what would be the top three warning signs that CEOs should be watching for that says my business is in trouble and I’ve got to do something different?
Ray Zinn: Well, there are different categories. For example, if your revenue is not meeting projections that you need, and if you’re off budget, if you’re costs are higher that what you budgeted for is another area that you can tell. If you do a proper cashflow analysis, and that’s a whole different podcast, if fact I’ll be teaching a class on cashflow in the next couple of months at one of the universities, so anyway, so doing a cashflow analysis will help you tell if your going to run out of money or not and for what reason, a high turnover in your company, if you’re finding a particular organization or a group that’s suffering, it is having a lot of turnover, that’s a warning sign. If you find your products are not getting accepted in the way and timeliness that you expected, that’s another warning sign. There are many a sentry.
Guy Smith: The one that caught my attention as you were going through there was the high turnover rate. I’m sure with inside of every industry there’s benchmarks on turnover rate, but what do you see is that primary cause of turnover rate? What suddenly starts the stampede? What is it that causes people to want to leave a company at much higher rate than it maybe they were before or should be now?
Ray Zinn: Well, the number one reason people leave a company is because of their immediate supervisor … they have an issue with their immediate supervisor. That’s the primary reason that we see for people leaving. Now, maybe there’s some other underlying reason, but that’s the one that’s most often given.
Guy Smith: Ray, a CEO’s got to have a dashboard, a different lights that are going off and I’ve got to imagine that there’s maybe one or two warning signs that CEOs, especially new CEOs, tend to ignore. What is it that they ignore and why do they choose to ignore a troubling sign?
Ray Zinn: I’d say the primary one is that the project is taking longer than anticipated to come out and they tend to rationalize that by saying, “Well, you know, things are harder than they really are” and “things are tougher than they really are”, so they just ignore the warning signs of the delayed project, because a delayed project is a sure sign that you have got something really systemically wrong in your organization.
Guy Smith: You’ve kind of touched on something there, which I think is a difficult thing for a lot of green CEOs to deal with, because you have to remain optimistic and you have to instill optimism in your team, but you also have to be realistic when there’s a clear warning sign. What is that trade off point of when should a CEO start being a pessimist? When should they start saying, “Oh, the ship is sinking, we’ve got to figure out how to fix the-“
Ray Zinn: You don’t have to be a pessimist to know the ship is sinking. What you want to do is be a realistic optimist, meaning you’ve got some goals that you’ve set to finish the project and one thing that happens when projects get delayed is there’s creeping elegance that comes in, they think, “Oh, you know, if we just added this one module” or ” we just”, went over here and did this thing. Creeping elegance is one of the sure killers of getting a project out on time. You have to know what’s good enough, what is going to satisfy the market? A customer may come to you and say, “Well, if you had this feature maybe then I would consider your product”. They’re going to drive you nuts. What you’ve got to do is sell what you have, not sell what they want, because, I tell you, if you wait and sell what they want, they never are satisfied, they’re always going to come up with something else that, “Gee, you should of had in your module or your product”.
Guy Smith: That’s been one of my observations, because I’ve been in the marketing trades within side of technology and there’s always this divide between sales and marketing because the salespeople, in my opinion, my humble opinion, tend to be quarterly driven and whatever the lost sale that they last had is today’s emergency and I have a feeling that that’s one of the ways that feature creep gets into products is the salespeople talking about the sale they just lost and if we only had that feature, and then that knocks the entire development organization off course for the features that actually serve a broader market.
Ray Zinn: It’s even worse than that, because if your company’s known to have these revisions coming out, then what’s going to happen is, is that the sales guys are going to stop selling it. They’re going to wait until the new one comes out, because they’re interested in having that latest and greatest thing. I loath to have sales involved with the design group because they constantly were saying, “Well, if you had this feature or that feature” and then my designers would get all excited and they would go off on a tangent. Then the sales guys would quit selling the product that I currently have. Sell what you have, not sell what you don’t have, for crying out loud. That was a challenge that I have with this current company that I mentor is they had this neat product and they had sold it and had it available for over a year and they started developing a new one and the sales guys just stopped selling the old product.
Guy Smith: I once had a boss who refused to publish the development planning timeline to anyone outside of R&D and I asked him why … Had he seriously missed the deadline before? He said, “No, we’re always on time. I just don’t want to salespeople to know when the next product is coming out because I want them to be busy selling what we got.”
Ray Zinn: Absolutely.
Guy Smith: Well, it’s nice to know that happens outside of the software industry as well. But software being so vengeful, it’s real easy to get the feature creep going in there. Well, thanks again, Ray, I do appreciate it and for all the listeners out there, do go by toughthingsfirst.com, connect with Ray on social media. His social media contact points are right there at the top of the page and we will be talking to you again next week.
Ray Zinn: Also, buy the book, Tough Things First.
Guy Smith: And, by all means, buy the book.
Revenue vs ProfitRead more
In entrepreneurial circles, you’re likely to hear talk of companies focused on revenue, while others focus on profitability. These approaches are very different and at odds in many ways. In this edition of Tough Things First, Ray Zinn and guest host Rob Artigo discuss the differences and the risks.
Rob Artigo: Welcome back to another Tough Things First podcast. I’m Rob Artigo. I’m a writer and business owner in Northern California. Thanks for having me back again, Ray.
Ray Zinn: It’s always a pleasure to have you, Rob. You’re such a cheerful person.
Rob Artigo: Well, I appreciate it, too, and it’s always nice to talk to you. It’s nothing new to say that businesses face many challenges in the future, and new businesses face challenges right now that manifest themselves in ways really not seen before. There are very strange reasons for that, including things like artificial intelligence.
Well, this podcast isn’t about that, but one trend for new entrepreneurs is particular troubling, and I know you’ve seen this. Not in all cases, of course, but we’re seeing it more and more. The focus of a new entrepreneur, and it can be a garage company, or something that’s started in the house, or a small retail business, or a startup, an app company, whatever it is, the focus ends up being on revenue growth and less on profitability. Why do you think this is a bad thing?
Ray Zinn: Well, real companies make money. That’s the bottom line. Now, because these unicorns, these SAS companies, have very high gross margins, and they don’t have a lot of product cost, they focus on revenue. In other words, they just push revenue as the growth engine for the company. It’ll may be years before they really start turning a profit because they’re focused, and so are their investors, so focused on revenue that they forgot how to make money.
They either price the service wrong, or they just focus on just getting customers and not necessarily on the bottom line. I think this comes because the gross margins are so high. There’s very little cost associated with a software product compared to a hardware product, like a computer, or car, or something like that, or some other product that has some actual cost of goods sold associated with it.
Rob Artigo: What drives this dynamic? I mean, are we seeing that the companies that might be publicly held … The companies that are publicly held have this problem as well, particularly if they’re young companies and new and recently IPOed. We’ve seen it. It could be public companies or private companies. What drives the dynamic? I mean, what are they trying to show? In other words, what’s the motive? What am I trying to get out of it? Is it just because I want to see it on paper? That’s not it. It’s got to be some way that they’re thinking they’re going to get some additional success or finances out of showing that they have revenue growth versus profitability.
Ray Zinn: Well, that’s scale. You take a company like Amazon, and Amazon’s been around for, oh, 20-plus years. I think they’ve made money only one quarter out of 20 years’ worth of operations. They’re a huge company, one of the largest companies, and they don’t have a lot of value compared, like, to Apple. Apple’s got a much higher market cap, but they make a product. They are profitable as compared to Amazon, which basically doesn’t make any money. They just have turn, or what they call turnover, which is revenue.
The problem with that is is that that’s a failing strategy because you’re constantly having to go out and borrow money or find some way to finance your operation because there’s no bottom line associated with your business, and so there’s no way to grow your equity or your cash. This is, I think, the problem and the shortfall of the ones that have no gross margin, or excuse me, high gross margins and little cost associated with their operation.
Also, a precedence has been set where these investors are expecting huge revenue growth numbers, like 30 and 40 and 50, 100% a year, and that’s not realistic, of course, for a product company. It’s realistic for a software company, but not for a product company. They’re setting a bar that’s very, very hard for these companies to match, and so they just push revenue at the expense of profitability.
Rob Artigo: When you’re giving advice to new entrepreneurs and this subject comes up, what advice do you give them about the value of being focused more on profitability rather than revenue growth?
Ray Zinn: Well, when you’re focused on profitability, you’re focused on longevity. You’re not just focused on getting in and getting out. I call it like a chain letter. The last one holding the bag is the ones that get stuck.
Rob Artigo: Yeah. Great idea.
Ray Zinn: If your company makes money, you have sustainability. In other words, you’re viable. You can continue operations. If your company doesn’t make money, you’re always out there having to leverage your revenue somehow to allow your business to continue to grow. I mean, these companies that are doing hundreds of millions of dollars in revenue but make no money, they’re constantly having to figure out how to raise money in order to stay in business because there’s no sustainability to a company that has revenue only.
Uber is another example of a company that doesn’t make money, but they got huge market valuation, billions in market cap. They don’t make any money, but they have huge revenues. I think the mistake that we’re making, and I can see this being more so now than it has been in the past 30 or 40 years, has been this focus on just revenue growth at the expense of profitability.
Rob Artigo: What do you foresee of the future of entrepreneurship? Going down the road, I mean, we’re talking about profitability versus revenue growth. That’s not the only dynamic, but where do you see this going? Where do you see the future of entrepreneurship?
Ray Zinn: Well, hopefully, not everybody’s going to be going into software or into these high gross margin businesses so that their companies are sustainable. I’m more impressed with a company’s longevity and sustainability than I am in just their revenue growth. Depends upon the business you’re in, whether you’re running a small mom-and-pop business, or whether you’re running a large corporation, the concepts are the same.
In other words, you should be creating jobs for the employees, and also your revenue should be such that you can create profits from those revenues. To me, there’s a balance. Growth only, I think, is a flawed strategy, so if you have a combination of reasonable growth … Let’s say you’re growing 5 to 15% a year, that’s not bad revenue growth, and of course, being profitable. Your profitability ought to match your revenue, meaning your profits ought to go up 5 to 15% if your revenues are going up 5, 15%. This should be the hallmark of the successful company is it has a balance of revenue and profits.
Rob Artigo: If somebody’s talking to you about their business, and they start talking about revenue growth and don’t have any answers about where they’re going with profitability, then that’s a turnoff to you and you’re suddenly going to be thinking, “These people don’t have a grasp of where they’re going. They’re quick hit kind of people, and they’re not sustained kind of people.”
Ray Zinn: Well, it’s a problem is that they don’t have sustainability. In other words, they’re just going to get in and get out. They’re hoping to be acquired by someone, and so it’s really a short-term view of their company. There are companies out there that that’s their goal. I mean, they just want to continue to get bigger and bigger and bigger. The goal, of course, for any company is to have longevity. In other words, not just get in, get out. I mean, to me, that’s just a lottery kind of a concept business. My recommendation to all of you out there who are looking at starting your business is to have a balance of revenue and profit.
Rob Artigo: Yeah, and I believe that in doing so, you wind up with … If your motive ultimately is money, you’re going to make more money in the long run if you think about things in long terms and longevity because you’re just not … The quick hit thing, yeah, you can make a bundle or even a small amount of money doing it that way, just doing some turnover, but if you’re working down the road, you’re going to make more money in the long run than in the short term.
Ray Zinn: Absolutely. Again, thanks for taking the time today, Rob, and doing this important podcast. Hopefully, our listeners will let us know how we’re doing and catch us on LinkedIn, Twitter, Facebook, go to our website, and listen to our podcasts.
Rob Artigo: All right. You can continue your education in business, which is an ongoing process always. Always be willing to learn something new, and you can with Ray Zinn. Some of the best advice for entrepreneurs anywhere. Thanks again, Ray.
Ray Zinn: You’re welcome. Thank you, Rob.
Listener QuestionsRead more
How do you go about hiring people? Ray Zinn, the longest serving CEO in Silicon Valley, talks about the qualities to look for aside from skills and general competency and answers other questions he has received from the Tough Things First audience.
Guy Smith: Good morning Silicon Valley and the rest of the world. Another episode of the Tough Things First podcast with the longest serving CEO in Silicon Valley, Mr. Ray Zinn. Good morning Ray.
Ray Zinn: Hey Guy, so good to see you again.
Guy Smith: Good to see you as always and boy, you’re sounding chipper today.
Ray Zinn: Well, I’m just feeling the spirit.
Guy Smith: Well, you must have anticipated today’s episode because this is my favorite. I’ve said it before, when people give us questions, when your listeners say, “Hey Ray, I want to bend your ear.” That’s when I see things getting very interesting. We got three questions from the field today and each one of them tickles me for an entirely different reason.
And the first one simply says, “How do you, Ray Zinn, go about hiring people? What qualities do you look for aside from skills and general competency?”
Ray Zinn: Well, I look at their track record if they’re just coming right out of school, of course I look at their … What kind of student they were, what kind of grades they got. How they did in certain courses. You know, we don’t always do excellent in all courses but I look at the courses that I think that are important, that they did well in. I also check their references, If they’ve had some work experience. I want to see how they did. I want to be able to talk to the people they worked with. I also want to just see what kind of person they are. What kind of spirit they have inside of them, as you would.
You know there’s a scout motto that I like, not scout motto, scout oath, which is, “On my honor, I will do my best to do my duty.” And that’s what I’m looking for, it’s people who were on their honor, they will do their best to do the work that they’re being paid to do in the job. And so, I have a little checklist that I use that list different things, salary, company, travel. I list these different characteristics and I ask them to put those in order of importance to them. And so, if compensation is at number one, then that’s a red flag. If they put travel as a very important thing to them and the job is really one they’re staying in the office then that’s a red flag. If they’re saying that the company is important then that’s a clue. If they say the person they work for, their supervisor’s important, that’s good. There are different things that I think are important to be a successful employee and having hired more that 10,000 people myself, I’ve gotten a pretty good idea of just what to ask them.
Guy Smith: Are there any personality traits? Anything that you see in the comportment or the things that a person talks about that suddenly makes you go, “Oh yeah, this is going to be the right person, you know, to hire today?”
Ray Zinn: I like to ask them about how do they like their last job. If they said they like the job but didn’t like the supervisor, that would be a very short interview. If they said that they like the company but didn’t like their job that they were in, that’s another red flag. So, there’s different ways you can ask the question, as you would if you were looking for a job yourself. So, there are things that you can look for that are kinda triggers it that say, “Gee, should I proceed further or back off?”
Guy Smith: Okay. Well, another one of your listeners focused on leadership and I’ll just quote him directly, “I’m really enjoying your leadership tips. Which leaders and thinkers do you admire and why?”
Ray Zinn: So, what I admire in a good leader is their consistency. If they are people person. And so, I admire those leaders who are thinking more about their people, who love their people as opposed to loving themselves or loving the position that they’re in. So, again, I’m looking for people that are … Who I have the … All honest to goodness, people centric values. The next thing I’m looking for is how their critical thinking is, when critical thinking is on issues that are really important. How do they analyze it? I mean did they go by the seat of their pants? Did they just say, “Hey.” They just take a shot and move. As Tom Peters said in his book, “Ready aim aim aim aim and there are fire.” So, depends upon … I try to get hub of just how they do what we call critical thinking.
Guy Smith: Okay, any names that pop in mind? Anyone in recent memory who you think was just a good solid leader that fit all those criteria?
Ray Zinn: Well, I think that David Packard of Hewlett Packard had those kind of leadership skills. I admired Bob Noyce at Intel. I thought he was a good leader. And certain other of the … Jack Welch of GE, I thought had some good leadership qualities. So, I just like to find people who are really people centric people.
Guy Smith: You know I’m going to agree with you on Packard, I spent a good part of my career in the Hewlett Packard industry. Not working for HP but in and around it. And you could see the quality of thought, the quality of leadership, the quality of culture with inside of HP. And how well it lasted right up I think through the Lewis Platt years. And I still know a lot of people work for HP and it’s a crying shame really that that culture vanished with Bill and Dave. It is-
Ray Zinn: I agree.
Guy Smith: It is something to weep about. Hopefully, they’ll get it back but I’m not crossing my fingers anymore. Well, last question that we have from your listeners is I think one that most of your listeners would like to ask but maybe weren’t brave enough and so fellow he said, “If you were starting a new technology company today, what markets would you find most interesting and most likely to be profitable?” And this is what I thought was interesting, “For the long term.” It sounds like he wants to build an enduring company.
Ray Zinn: That’s a good question. You know we’re living in the age of change and so, and again, it’s a difficult time because there’s so much going around about what’s gonna happen to make America great again. It’s a, should my company be a US company? Should it be a foreign company? What kind of tax structure do I need to be concerned about? And so, there’s a lot of pieces of that puzzle that have to be fitted together before you could actually determine what markets and areas you want to go into.
If you’re in Silicon Valley of course, that would mean more of a software oriented company. Most of the semiconducting companies have moved out and no longer are in Silicon Valley. So if you want to start a semiconductor company, you could still do it here but it’s not as attractive as it once was. If you’re gonna go into oil and gas business, Texas is the place. So, you have to kinda decide what is your critical expertise that you have that is gonna allow you to be successful in whatever venture you would want to undertake.
If you’re going to fast food business then obviously, you don’t want to go into doing SaaS software. So, it’s not an easy question to answer. I mean there are different markets and different risks. Bio medics has certain risks, it’s a long process, with FDA approval and pharmaceuticals. It depends upon really where you want to apply and what your skills at is.
Guy Smith: Yeah and you started to say something during that. It sounded like you were saying it was less important what the industry was but that you have to be in love with that industry. And I think I see a lot of people in Silicon Valley make that mistake. They say that this particular industry is going to be high growth but maybe they don’t have that vast passion for it. So, they never really make a great success when they jump into it.
Ray Zinn: If you’re passionate, you’ll succeed. If you’re not passionate, you probably won’t. So, pick something that you think you gotta real love and a passion for as oppose to just picking something.
Guy Smith: Okay, I think IoT right now is pretty much what the internet was back in 1995. We’re all just sitting around the camp fire and gnawing on chicken bones, trying to figure out what we’re going to do with it.
Ray Zinn: IoT is Internet of Things, that’s IoT. So, the internet has been around for the last 20 something years. So, that’s not new. And people throw the word around IoT like it’s some kind of new market and new product, it’s not. Now, we normally think of IoT now as being more wearable kind of things or very very portable. So, that’s … If you’re thinking of IoT portable, that’s possible. You ubiquitous cars, that’s kind of an IoT thing but that’s not a portable thing and this is where you can’t wear it, not wearable. So, we have to be careful about who we talk about as being truly IoT.
Guy Smith: Yeah, well, I grew up with a foot in the agricultural business. And so, I tend to think of IoT in things like hydration monitors on 12,000 acres where you’re gonna be planting next year and things like that. And I think there’s probably still a vast expanse of things that people haven’t started really thinking about in terms of what we can do with semi intelligent devices out in far flung places. But you know time is going to help that industry.
Ray Zinn: Well, RF stuff is a different animal all together. So radio frequency and so, wireless type technology is what we think of in terms of the knots and bolts of the IoT.
Guy Smith: Yeah, well anyway, that was all the questions that we have from the readers today. And thank you so much for answering those questions for them. And for our listeners, by all means tune in next week. We’re going to have another exciting episode. And in the meantime, go to toughthingfirst.com, make sure you connect up with Ray Zinn on social media, on Twitter, Facebook and LinkedIn. And We will see you next week.
Employee EngagementRead more
Low employee engagement is costly, but there are solutions. In this Tough Things First podcast, Ray Zinn discusses what a CEO can impact the day-to-day engagement levels of employees.
Rob Artigo: I’m Rob Artigo, guest host for this edition of Tough Things First with Ray Zinn. I’m a screenwriter and entrepreneur. Happy to be back again, Ray.
Ray Zinn: It’s a wonderful, beautiful day today, isn’t it, Rob?
Rob Artigo: And of course, it’s always a great time for a conversation in the podcast. Great place to learn and find out a little more about being an entrepreneur in the modern times.
So, here’s a pretty stunning figure. It definitely was to me when I found it. I was doing a little research on this subject and I found a Gallup poll from 2014, and I suspect that things are pretty similar now. It said engaged employees are rare. Engaged employees are rare, and so it was the State of the American Workplace report that said just 33% of employed residents in the United States are engaged at work, and that’s hardly more than three of ten employees in your company. Does that sound right to you, Ray?
Ray Zinn: It is. And what I’ve noticed when I did my walking around and visiting the various departments, I’ll notice certain people had their earphones in their ears, or they’ve got headphones on, and they won’t even hear me go by because they’ve got noise-canceling on and they’re listening to some music or something else. That just tells me they’re just not engaged.
Now, when I ask them about it … When I ask them to pull their earbuds out, or they turn their headset off, I say, “Hey, what are you doing?” They say, “Well, it’s not as distracting if I have my headset on.” I said, “It’s gotta be distracting because you’ve got to be listening to something on the other end, and I don’t know how you can concentrate on both things.”
Another thing I’ve noticed that they’re on the phone, cell phone, or they’re watching a football game or a baseball game or something at the same time that they’re working. And that, to me, is just not being engaged. Some just don’t even care. Some just putting in the time. Maybe they don’t like their job, they’re not interested in what they’re doing, and they just passively put in their hours and not really get a lot done.
Rob Artigo: Let me give you another example along those lines. You mentioned the headphones thing, and we’ve all seen this. Anybody who’s done any exercising, maybe a bike path … So, I’m a cyclist, and I ride out on the bike path, but I see people running, I see people walking and they have their headphones in on their bicycles, on the road, sharing the road with traffic and they have headphones on.
Ray Zinn: How dangerous.
Rob Artigo: It’s dangerous. I don’t understand. You need that sense. That’s one of your senses that keeps you alive, your ability to hear. It really is distracting. It doesn’t matter if somebody claims that it’s not a distraction. At work, I don’t mind if there is, in some cases, if you have a little radio that has a little bit of music on or something that’s soothing. Maybe a little bit soothing and relaxing throughout the course of your workday. I, as a boss, don’t really mind that so much, but if you have your headphones on, you’ve got the Giants game on in a small screen because you now can stream everything … You’ve got your Giants game streaming on the top corner of your computer screen. You’re coding like crazy on your page. I would say coding as fast as you can under the circumstances, considering you’re distracted. And then on the other thing you’ve got Facebook open, so you’re doing that, and maybe you’re blogging something. Let’s face it, it is a distraction to have headphones in and have all the distractions that you have available to you, and you can’t be engaged.
So, 33% certainly makes sense.
Ray Zinn: Yeah. Well, we had a company policy that prohibited people from doing these things. Listening to football games, basketball games, or other sports events, especially when the world soccer tournament came on. They were just glued to their iPhones or they’re streaming the results.
As much as we tell them not to do it, they still figure out a way to do it anyway.
Rob Artigo: What we want to do in this podcast is really hit to the meat of this matter, which is what we can do as bosses. As a CEO, you have to multitask without sacrificing essential oversight to day-to-day company productivity. And when we’re talking about engagement here, how does a CEO of a growing business have an impact on the day-to-day engagement levels of the employees? We’ve talked about what drives that dynamic, but how does the CEO have that day-to-day impact on engagement?
Ray Zinn: He has to set the example. If he’s got earbuds plugged in his ears, or he’s off streaming a football game, basketball game, whatever, then he’s not setting the example. The first thing he does is sets the example.
The next thing he can do is encouraging his staff to see that their people are also following company policy regarding these sorts of things. And then, of course, when I was CEO, I did a lot of walking around. I just visited different departments to see how they were operating, and I could tell those departments were lax because I saw a lot of that streaming of video and listening to music or whatever on their earbuds.
It is a distraction. People, of course, get in the habit of it, and they can’t live without it.
I notice when I come into my wife’s office here at home, she’s got these news stations on. I said, “How can you concentrate with all this background noise?” It just becomes more like a white noise. They may not be paying attention to what is being played or said, but it becomes a habit. Like people who can’t sleep without a fan going. This white noise, I think, is a distraction, and something that we should try to avoid.
As a CEO, the best thing you can do is set the example and insist that your staff does the same thing. You’ve got to walk the talk.
Rob Artigo: You just talked about what’s the most important thing, and I wanted to ask you about this because it came to mind, and that is what about simply making sure that people are taking … We have state law that says you have to take a break at certain times. Making sure that people take those breaks and get caught up on whatever they want to get caught up on on those breaks rather than doing it during the course of the workday throughout.
Ray Zinn: That’s certainly an approach. People do have to take breaks during the day. I have some people that take a walk. In other words, they get out of the office and walk around the block, as they say. I’ve seen them do that. I think getting away is okay as long as it’s not to excess. Ten, 15 minutes at the max a couple times a day, I think, is probably acceptable.
Rob Artigo: For more information on Tough Things First, the book, on how to reach out to Ray on Facebook, and via email, you can go to toughthingsfirst.com, and make sure you refer a friend. Right, Ray?
Ray Zinn: Yeah, thanks, Rob. And, hey, if you have questions or some concerns, please feel free to email us or call us. We’ll be happy to answer your questions on the air.
Rob Artigo: You get the terrific resource. Thank you again, Ray.
Ray Zinn: Thanks again, Rob.
When to Take on DebtRead more
Ray Zinn, the longest serving CEO in Silicon Valley, is famous for having leveraged himself, and not venture capital, to launch semiconductor company Micrel. Ray discusses the situations that make initial debt financing a smart move.
Guy Smith: Good morning, everybody, and welcome to the Tough Things First podcast, where we pick the brain of Mr. Ray Zinn, the longest-serving CEO in Silicon Valley. Speaking of Silicon Valley, it’s another sunny morning here and good morning to you, Ray.
Ray Zinn: Thanks, Guy. I appreciate after all this rain, we get a little sun coming out.
Guy Smith: Rain is necessary for life and so we shouldn’t complain about rain too much.
Ray Zinn: No, I’m not complaining. I’m just saying it’s nice to get a little sun once in a while, though.
Guy Smith: I was looking up plans for an ark before it finally broke, and it’s about the right timing. One of the things I want to talk about, and this a constant source of fascination for me, is the subject of debt. I don’t like the stuff, personally, but when people are starting their own companies, they have to raise money. It’s nice to go after venture capital money, but you’ve been very clear about the downsides of venture capital. There are only so many friends and family you can pick on and so some people choose to go into debt. I know that leveraged yourself fairly significantly when you started Micrel over 37 years ago. Let’s talk about when people should consider debt in order to get their business started. What situations make initial debt financing a smart move?
Ray Zinn: Going back to my time when I started Micrel, I did not want to use venture capital and, certainly, I had no family members that I could rely on. My dad had just passed away and my mother was teaching school. I still remember my siblings were at home, and there was no family that I could go to, nor did they have the resources anyway to loan me the money.
That meant I had to either consider angel money, which is a form of VC, or to go to the bank. You remember, if you’re going to take on debt, if you’re going to go to a bank, they want paid back, so you have to have a profitable company. There’s no way you’re going to get a loan from a legitimate bank if your company is not going to be profitable. A lot of startups aren’t profitable. It takes maybe two or three years for them to hit profitability.
There may be a few opportunities for them to raise money if you put up what we call personal guarantees. If you put up significant assets to cover that debt, some banks are willing to give you a period of time, a grace period, to get the company to profitability so that you can pay off the debt, because if it doesn’t happen, they’ll just collect on those personal guarantees. The strength of a person’s net worth will determine how much the bank is willing to loan them.
Let’s say you have a $200,000 home and you had $100,000 in equity in the home, the bank will loan you probably $50,000 on that equity. That’s kind of the way it works. If you’re going to borrow money, you either have to have assets to support it, meaning that it’s almost like a personal loan, or you have to have your company profitability such that the bank can see you can make the payments on that debt. That determines, really, how much debt you can take on and what banks will be willing to loan you the money. Banks loathe to loan to startups because they’re not an ongoing business in their minds.
Guy Smith: I can see a trap that some startups might get in, where they accept venture capital up front, but they do become profitable and, to go to that next round of growth, they might want to consider debt financing, which would make a lot of sense. I bet you the venture capitalists that were in those early rounds pull out the large sticks and try to keep the CEO from leveraging the company through debt at that point. Is that factual?
Ray Zinn: That’s true. That is a point. If you’re with the proper venture capital group, doing a bridge loan or getting a loan is not something that is done regularly. The venture capitalists can’t force you unless they own the company. Unless they have 51%, they can’t force you to borrow money from them. Certainly, you have, as the CEO or the chief financial officer, you have the right, if you’re the primary holder of the company, then you can just go get financing wherever you would like. There are a number of ways to do that. There’s equipment financing through leasing, there’s typical bank debt, there’s revolving lines of credit, you can borrow against your receivables, so there are a number of ways that you can borrow money. You just have to look at what’s going to best suit your needs and your company.
Guy Smith: Being risk-adverse myself, I try to stay away from debt. I’ve got to imagine that there are certain moments during the growth of a company when debt would really be a dumb idea. When should a founder run away from debt? When should they say, “No, that’s the last thing I want to do?”
Ray Zinn: If you don’t need the money, obviously, there’s not need to borrow it. If your company’s not making money, run away from it. Banks will be all over you if you can’t make that debt service. They have the right, actually, to shut you down. They can push you into bankruptcy. They’re going to set is ss the primary holder of the debt and they can push you over the edge. They’re not going to mess around. They’ll give you a little leeway, but they’re going to be hounding you to start making the payments.
You’ve got to be profitable and you have to have a way to pay off that note. Being risk-adverse is fine, but that won’t help you borrow money. It’s a matter, again, how much debt you need to take on and for what purpose. That’s the other thing that the bank is going to be looking for, is where and how are you going to use this money.
Guy Smith: I’ve seen a couple of startups get into trouble by doing the opposite path on debt, extending a little bit too much credit to their customers and eventually getting into a non-repayment system. You spoke in your book, Tough Things First, about stall horns, financial warning systems that tell the CEO something really bad is getting ready to happen. When it comes to extending debt to customers, what kind of stall horns might a CEO put in place to make sure that they aren’t being a little too giving and a little too generous with customers?
Ray Zinn: That’s a good point, Guy, because the typical payment is net 30 days. That’s what we see as generally the case. If you’re extending credit to a company that doesn’t have good credit, you want to do letters of credit or you want to do money up first. I think one of the problems that companies get into is that they start extending credit to people they shouldn’t. That’s the warning sign, is don’t extend money to companies that can’t pay, or that they’re not likely to pay. That’s the stall horn that comes on. If you do a credit check, and you should, always do a credit check. If you do a credit check and that company does not look like they have the ability to pay, don’t give them the product, which is the same thing as loaning the money.
Guy Smith: Pun intended, but I think we’re all in your debt today for kind of marshaling us through these issues. Thank you for your time again, Ray, and to all the listeners out there, by all means, go to toughthingsfirst.com, connect up with Ray personally in social media, on Twitter, on Facebook, on LinkedIn. If you have not already, make sure to get that copy of Tough Things First. It is probably the best education you’re going to get in leadership management and just getting by in life in general.
The Worst Things a CEO Can DoRead more
Employee engagement is traditionally very low, but a careless or complacent CEO can make things even worse. In this Tough Things First podcast, legendary Silicon Valley CEO Ray Zinn talks about the WORST thing a CEO can do if he or she wants to improve company morale and employee engagement?
Rob Artigo: I’m Rob Artigo, guest host for this edition of Tough Things First. I’m a screenwriter and entrepreneur in California and as always, I’m happy to be back again. Ray?
Ray Zinn: I’m likewise, Rob. Thanks for joining us.
Rob Artigo: Sure. Always, always fun. On another podcast, we talked about employee engagement, which apparently is remarkably low, generally, and how a CEO can have a positive impact on that. I’d like to tie engagement to morale and ask you this. What’s the worst thing a CEO can do if the goal is to improve engagement and morale?
Ray Zinn: Well, you know, the thing I like the least, of course, is people who are whiners. They complain. That drives me absolutely bonkers. How do we avoid or how do we minimize the complaining is by having good communication, whereby making sure our employees understand the role and the mission of the company and what their particular role is.
Rob Artigo: Have you found, in your experience, that most employees really understand their roles or that it requires some help? Sometimes, people hire somebody and they go, “All right, here’s your job.” It’s like the old cannon concept, “Fire and forget.” Just fire and forget. You just throw them out there and go, “Okay, go,” but I don’t think it’s always the case. I think most often, it’s not, where the employee doesn’t always fully understand what they mean to the company and the real purpose intended by the managers who hired them.
Ray Zinn: That’s the mistake of a manager. If your employee does not understand his role or his responsibility, that’s the fault of the manager. The manager is the one that sits down with his employees on a regular basis, ask them how they’re doing, how they like their job, what can we do better, and don’t wait until review time to sit down with your people. You got to do it on a regular basis.
Maybe once a week or at least twice a month, sit down with each of them, individually and just kind of get a little bit of a sense of how they’re doing and how they like their work, and if they’re not enjoying what they’re doing, they’re certainly not going to do a very good job for the company.
The best thing to improve company morale is to make sure your employees are engaged. The more excited they are about their job, the more likely they will come to work on time. They won’t be spending time on the radio or the TV screen and stuff or listening to music or taking walks. They just can’t wait to get to work and be involved in the business of the company.
Rob Artigo: See, to me, that’s what an engaged employee is, and I think an engaged employee is, by nature, someone who has a good – yeah. Right. The morale is high. Yeah. If you’re engaged and your morale is high, then your productivity is up there because you’re in fact doing more oftentimes, as an engaged employee, than is required of you. You’re just generally that much more productive.
Ray Zinn: What the manager will find is that the employee gets his work done on time. Work is done well. They seem to be happy. They’re smiling. They’re engaged. That’s the key, as a manager, when you’re interfacing with your people.
Look at their demeanor. Do they look happy? Do they look contented and enthusiastic? Are they asking questions? Do they want to do more? Have they come to you and said, “Hey, is there something more I can do? Is there anything else I can help the company with?” That indicates to me a happy employee.
Rob Artigo: How much more is an employee like that worth to a company? I’m not talking about financially, how much you would pay for that person, but I’m just saying, as an individual in the company, how much more is a person who is engaged with high morale than a person who just comes and does an adequate job but [crosstalk 00:04:59]?
Ray Zinn: They get 20% more done. They get 20% more done. That’s my experience is that the happy employee does 20% more than the unhappy employee.
Rob Artigo: What does the engaged, high morale employee get in return? Longevity? What does it …
Ray Zinn: Absolutely. Lots of loyalty. If you’re loyal to the company, the company will be loyal to you. I know that’s not true in all cases, but that’s the way it should be. If you’re loyal, they’re loyal and you’re more likely to get promotions. You’re more likely to get higher, better reviews, better merit increases. You sow, so shall you reap. In other words, you put your whole heart into it. You’re going to get it in return. Anyway, this is what I have observed in most cases.
Rob Artigo: Let’s not forget that the employees, in some cases, are managers in the chain of command, so those managers are employees as well. Managers, just like anybody else, can be disengaged and can have a low morale and the same things apply. Same thing that can affect an employee who is working a data entry job at entry level and then versus somebody who’s a mid-level manager. Those same dynamics apply.
Ray Zinn: Absolutely. We’re all employees. Even the CEO is an employee. If you’re not showing interest in your job, if you’re not engaged, you’re not going to be a very effective CEO. The way you tell how a morale is is you can look at some indicators like turnover, how many people are leaving the company and the reasons why they’re leaving. That’s another way you can measure how the company’s doing is look at the reasons that their employees are leaving. Look at how your projects are doing, how quickly they’re getting done. Just how people are engaged and talking to each other. The less hostility there is. That’s another indicator that things are going well, so a happy workplace is a productive workplace.
Rob Artigo: Was it your own on-the-job experience or watching others tried and failed that really helped you understand what to do and what not to do when it came to engagement and morale?
Ray Zinn: Yes. Absolutely. We learn through experience. In the 37 years I was running Micrel, I get better and better at it every year, and so that which you persist in doing, you will do better. You will improve.
Rob Artigo: Which is why we always ask people to return to toughthingsfirst.com and listen to the other podcasts because it’s somewhat of a master’s class here at Tough Things First, and this podcast is just one part of it. You can subscribe to the podcast at toughthingsfirst.com. You can follow Ray at Tough Things First on Facebook, and you can also follow your blog on toughthingsfirst.com, Ray, and you really get some interesting insights there as well. It’s a continuing education process.
Ray Zinn: We’re on LinkedIn and on Twitter too. LinkedIn, we have a lot of people asking good questions, and we’re more than happy to answer those, so feel free to get involved with us. Help us help you. That’s the bottom line of Tough Things First.
Rob Artigo: Right, and refer a friend. Thanks again, Ray.
Ray Zinn: Thank you very much, Rob.
Picking MentorsRead more
Realistically, how many startup CEOs need mentors? All of them. Ray Zinn, Silicon Valley’s longest serving CEO talks about why mentors matter and how to choose them.
Guy Smith: Welcome back to the Tough Things First podcast. I’m you’re guest host today, Guy Smith. I hope everyone is having a fantastic day. It’s always a good day here in Silicon Valley. Across the table from me, as always, is the longest-serving CEO in Silicon Valley, Mr. Ray Zinn. Good morning to you, Ray.
Ray Zinn: Hi, Guy. So nice to have you here with us today.
Guy Smith: Oh, man. It’s a good day when you wake up and your elbows don’t bump wood. That’s what I always say. I want to talk about mentors. You’re now actively in the business of mentoring startups, and startup CEOs, and founders, and whatnot. You’ve been mentored in your career. Mentoring seems to be one of the missing ingredients for a lot of startups in Silicon Valley. They get some bad advice, occasionally, from friends and family, and maybe even worse advice, once in a while, from venture capitalists. I really want to find out what it is to find a good mentor, but also to be a good mentor. Why don’t we frame this just a little bit. Realistically, how many startup CEOs need mentors?
Ray Zinn: Every one of them, in my mind. Now, when you talk about a mentor, it’s like a guide. I was talking with one of my students, as you would, last night. He was saying, “Well, you’re like Edmund Hillary. You climbed Mount Everest. You’ve done it all. You’ve accomplished all this, and we’re just starting and the bottom, and so we may not be quite as adept at running a company as you are, so we feel this, kind of this distance.” I said, “Well, wait a minute. I’m down there with you. Yes, I’ve been to the top, but I’m down here to help you get to the top. I’m not on top calling you, ‘Hey, come on up.’ I’m actually down here. I’m your guide. I’m gonna lead you to the top.” That’s really what a mentor is. A mentor is a guide. He guides you along the path that you will need to get to the top. That’s the best way I can define the real relationship of a mentor.
Now, sometimes the venture capitals look at themselves as mentors, and maybe they do to some degree, but they’re mainly focused on … By the way, my board’s the same way, the board at Micrel. They’re more interested in serving the investor because they look at that was their primary responsibility is to look out for the needs of the investor, and they tended to not guide me and lead me along, as you would. They were more criticizing me. Certainly, if you’re like a Sherpa and you’re guiding somebody to the top of Mount Everest, you’re not criticizing them. You’re helping them. You may give them some ideas, some correction along the way, because that’s what mentors do, but certainly you’re not haranguing them. A mentor doesn’t harangue. A mentor is a praising, caring, and long-suffering individual.
Guy Smith: Interesting that you use the phrase, “caring,” in there. I perceive, in Silicon Valley, that a lot of people who are acting as mentors, especially hired guns that venture capitalists will bring into a certain outfit, don’t really have a caring aspect to the mentoring that they provide.
Ray Zinn: Well, they think they do. You will never find one that says that he’s not a caring person, but they’re more caring about their shareholders as opposed to caring about their CEO or the team that they’re investing in. We have to be careful that we’re truly trusting and we’re trying to be a viable and helpful mentor, as opposed to just looking out for somebody else’s best interest.
Guy Smith: Well, one of the things I’ve noticed with the mentors that the venture capitalists assign is that they tend to be good technicians. They may be able to tell somebody a lot about marketing, or financial projections, or this, or that, but one of the things I keep seeing in Silicon Valley is this need for humanistic leadership and being a real people person. I’m wondering, do VCs ever find a good mentor that can lead a founder to being a better leader and a better person in the way that they build their culture and really help their employees [inaudible 00:05:14]?
Ray Zinn: Well, the fact that only 1 out of 10 succeed tells me they’re not doing that great a job. My view is that if you do the right job of mentoring, then you should have more like 80%, or 8 out of 10, succeed, as opposed to 1 out of 10. That’s what I think is missing. I’m mentoring a company right now, and I’m also an investor in the company. I told them, “I’m not focused on the money that I’m going to make. I’m not pushing you to sell a company. I’m helping you develop the kind of company that’ll be long-lasting, and if it’s sold along the way, okay, but that’s not the goal. The goal is to try to help build a company.” I’m not focusing on the money. I’m focusing on them, as a person, trying to develop their leadership.
Guy Smith: But if, by focusing on leadership and humanistic management, the money will follow.
Ray Zinn: If it does, great. If it doesn’t, hey, then maybe I didn’t do such a great job in my mentoring process.
Guy Smith: Well, in Silicon Valley, second only to the hunt for money is the hunt for mentors. I think most founders in Silicon Valley realize that they need a little help, that they need that Sherpa in order to find the next step. How does a founder encourage somebody who would be a good mentor but is reluctant to be a mentor to come on board?
Ray Zinn: Well, that’s what’s a board of directors is, is basically a … There’s two kinds of boards. There’s the advisory board, which is usually not considered like a true board of directors. They help advise the company, but what I found about advisory boards is they’re more there to give technical guidance or assistance and maybe help them find people and customers, but they’re not really trying to develop leadership within the company, those kind of advisors. That’s what a board really is supposed to do. When the board is looking out for the best interest of its investors, it’s really trying to strengthen the leadership of the company. That’s the way the board can most help the investor, because a strong management team will given them, at the end of the day, the economic return that they’re looking for.
Guy Smith: How about firing a mentor? Does there ever, realistically, come a time when a startup CEO says either, “You’re giving me the wrong advice,” or, “I no longer need your help”? How do you very tactfully say, “Thank you very much for making me successful. Go away”?
Ray Zinn: If you’re a public company, it’s more difficult to fire a board member, unless they’re on an advisory board, so if you’re not actually an elected office of the company or a board member, it’s easy to get rid of them. When you sit down with them, if you’re not feeling the synergies, the kind of feedback that you feel is going to help you grow as a CEO or an executive, then just say, “Hey. We don’t seem to have the chemistry, and so maybe I ought to look for someone else.” Most people understand that. I mean you can tell when you’re mentoring a company if, in fact, there are synergies there, because the person that you’re mentoring … I’m speaking out to the mentors. The person you’re mentoring actually will be a willing listener.
There’s no panacea, by the way, to running a successful company. There’s a lot of hard work, and a lot of hand holding, and a lot of praising that has to go on in order to develop that leadership. I’m speaking now to the mentors, or the guides, that you have to really have an interest in seeing them grow. If they’re not willing listeners, if they’re not like students who are in a class listening to what’s being taught, then move on, because you’re not going to help them. If there’s not that synergy there, if there’s not that chemistry … There’s not chemistry between all people, we know that, because look at the divorce rate we have in this country. Certainly, a good, willing listener is someone who will take your advice and follow it, and you can tell that in short order.
By the same token, if the executive or the person being mentored, mentee I guess they call him, is not following through, and taking your advice, and moving forward with the growth, then like a Sherpa leading you up the mountain, if he sees that you’re not going to be following the directions and the correct procedures to climb that mountain, he’s probably going to stop right there or take you back down.
Guy Smith: What motivates you to be a mentor, because you’re doing a lot of that nowadays?
Ray Zinn: Well, I like helping people. That’s the bottom line. I get my kicks, as they say, out of seeing people succeed. If I can help someone become a better person, whether they’re somebody that’s an executive or just a family member or a friend that’s having some difficulties, I like to do that. I just plain like to help people. A good mentor has to want to help people without the thought of something coming back to him.
Guy Smith: Well, the world could use a lot more mentors then. Anyway, welcome. I’m glad everyone had the chance to tune into this episode of the Tough Things First podcast. Do go to toughthingsfirst.com. Right up on the top of the website there is a social media bar. You can connect directly with Ray Zinn through Twitter, through LinkedIn, through Facebook. Of course, get a copy of Tough Things First. If you put nothing else on your bookshelf this year, that is the one book to purchase. We will see you next week with another episode.
Ray Zinn: Thanks, Guy.
Bad ManagersRead more
Leading a company of any size is a challenge, and even more so if a CEO can’t count on his or her managers. In this edition of the Tough Things First podcast, Ray Zinn addresses the key warning signs of a poor or inadequate manager.
Rob Artigo: Hi, I’m Rob Artigo, entrepreneur and screenwriter, happy to be back for another Tough Things First podcast. Hi Ray.
Ray Zinn: Hello Rob. Welcome back.
Rob Artigo: Appreciate it. The most successful entrepreneurs learn to recognize both positive and negative trends, and that includes the behavior at work of our employees and managers. So let’s focus on managers. What are some of the indicators or warning signs of a poor or inadequate manager?
Ray Zinn: Well the first thing I really notice is that they don’t respond very quickly. In other words, you send a request in for them to handle some particular assignment, and they’re slow to respond. That’s one of the quickest ways I can tell if a manager has some issues. That means they’re not responsive.
Rob Artigo: Well on that subject real quick, I think of sometimes where I expect someone to at least let me know they’re working on it, and they don’t respond and say “I’ve got the message.” Simply saying that they’ve got the message tends to help me know that they’re engaged, right?
Ray Zinn: Exactly. So when I was flying, when I would want to contact the tower or air traffic control, they would be waiting for me to respond back. In other words, they would send a request out saying “Turn right heading 370” or something like that, and then they would expect me to respond back “Okay, I’m level at 3,000, turning right heading three,” whatever. So it’s just courteous and it also shows that your responsive when you do say “Got the message, and I’m on it.” That shows a consideration and a dedication to your task.
Rob Artigo: What’s the next thing?
Ray Zinn: The next thing I can think of is, if they don’t have the answers on the tip of their tongue, in other words, if they have to search or they just hem-haw around, that’s another example that they’re not on top of their game, and that they’re having to think through what it is they’re doing, and that tells me they’re not paying attention.
Rob Artigo: Can you tell when somebody is … I don’t want to use the nasty word for it, but when somebody’s not giving you the honest scoop about the situation, they’re sort of … Like you said, if they don’t have the answer on the tip of their tongue, that’s one thing. But then to play it off as if you do, but you’re not giving the answer, you know what I’m saying?
Ray Zinn: Sure. That’s the same thing. If they just fire off something and then I later find out that the information was wrong, that just tells me they’re being flippant, or they’re just trying to act like they know what they’re doing, but they really don’t.
Rob Artigo: Okay. Another one for you is really company policies and procedures, if they’re complaining about it.
Ray Zinn: I know. Isn’t that … So, what I’ve found is that employees that are having difficulty integrating, or managers that are having difficulty integrating, is they complain about the policies and procedures. And the reason for that is that they’re used to doing it maybe the way they did at their old company, and they just can’t adapt. And so, they say you can’t teach an old dog new tricks, and so the manager who can’t adapt well indicates to me that they’re not very flexible. And as the saying goes “Blessed are the flexible, for they shall not get bent out of shape.” And so if you’re not flexible, you’re going to constantly be complaining or get bent out of shape.
Rob Artigo: And it seems to me they’re deflecting, too, and I think this goes to your next one. And that is, essentially blames others. So complaining about policies, procedures, or complaining in general, or simply saying “It was somebody else’s fault.”
Ray Zinn: I call them whiners, you know. They “Oh, you know, so and so didn’t do their part, or they didn’t finish their assignment.” And they’re constantly blaming someone else for the shortcomings that they’re having. That’s another example I’ve found of people who are … Who just don’t have their act together.
Rob Artigo: How much rope do you give them, to test their limits as they go along? I mean, if they’re doing that to a certain extent that’s one thing, and I think everybody has to depending on what the circumstances is on their desk. You know, what they have on the table that they need to get done. But how do you know?
Ray Zinn: Well, you know they say, you give them enough rope to hang themselves. So you give them enough opportunities to demonstrate that they’re on board, that they’re a team player. And if it looks like they’re not, you either reassign them, or invite them to find another place to work. And so you know you need to be open and transparent with them regarding their performance, but if they’re not willing to toe the … or pull their weight, then that’s a sign that they need to go.
Rob Artigo: And you suggest that accepting responsibility is a way to counter that, right?
Ray Zinn: Absolutely. So if … When you accept responsibility, you get the job done on time. You don’t hesitate. Even if the task is difficult to do or has some pitfalls with it, as long as you put forth your best effort and do whatever it takes to get that job done on time, I’ll be happy with their performance.
Rob Artigo: Do they come into your office, or call you or email you and tell you directly, and expect that even if it’s a big thing that they seem to have messed up, that they can count on you to listen to the circumstances and sort of see things their way when they say “Hey, look, I did this, and I was … I misunderstood something and I went forward and did it, and I messed up. And this is … The result was not good.” Maybe it was a financial problem for the company. I mean, it could be really big things sometimes, and it’s hard to accept responsibility the bigger the dilemma is.
Ray Zinn: As I have said in the past, accepting responsibility is making amends, in other words fixing the problem, not making it a problem for the company. Make it transparent to the company. No harm, no foul, as they say. So again, the purpose of taking responsibility is to make something of it. In other words, resolve the issue and make it not a problem for the company.
Rob Artigo: And of course, Ray, what we’re talking about here on this edition of Tough Things First, is how to recognize the warning signs of a poor or inadequate manager, and you said doesn’t respond quickly to requests, doesn’t have the answers on the tip of their tongue, complains about company policies and procedures, complains and blames others and doesn’t accept responsibility. And also, which goes along with this, and lastly on your list is regularly misses due dates.
Ray Zinn: That’s the challenge. We all expect everybody to pull their weight, in other words do their fair share, and when a due date is not met, that puts a hardship on the company or the department.
I was talking with a friend of mine, actually just couple days ago, and they’re building or remodeling the kitchen. And the original forecast was two and a half months to remodel the kitchen. Now these people decided to live in their house while the remodeling was done, which is a real hardship in of itself.
Then when the project got started, they said “Oh, well the city is late in getting us the permits, and so we can’t cover up this wiring or this plumbing until they do the inspection.” And that delayed it. And they had a vacation coming, you know the kids were all out of school and they wanted to take some time off and then that delayed it. And here it is, five and a half months later and they still don’t have the kitchen done.
This is an example of not meeting your commitments, and having all kinds of reasons for not finishing on time. So the unfortunate thing is, whenever there is a remodeling to be done, you have to double or triple what they tell you, because they just are not very good about meeting their commit dates.
So don’t be that way in your company. Meet your commitments. That’s so important, to meet your commitments, and make those promises means something.
Rob Artigo: Yeah, the word I always think of, as a guy who spent 20 years in journalism, was the word deadline. And if somebody gives you a deadline, if it’s approaching and you know you’re not going to meet it, maybe you need help, and maybe you need resources, or maybe you just need a little more time. but the important thing is to address it beforehand. Don’t have your boss or the CEO of the company have to call you and say “Hey, we had this important deadline and you didn’t meet it. What’s the deal?” And then you’re explaining “Well, tomorrow.” Or “It will be Thursday.” Or “Monday at the latest. I know that I can get this done by then.”
It seems to me before … You have an expectation that you are going to meet that deadline. And if you don’t meet that deadline, and you haven’t addressed it beforehand, then I think that’s an extra hit on you. I mean, you’ve got to be able to say “Look, I know what I can get done.” And I used to do this in journalism, is they would hand me the story. And they would say “Here’s the assignment. Go get this, and get it done by this particular time.”
And I knew from the assignment and where I needed to go, because I had enough experience where I would think in my mind, and I’d be able to back time. From that point, when do I need to do certain things to get it done at that time. If the deadline was unrealistic, I would tell them. Because they could say “Well look, we don’t need this part of the story, or just do the best you can, but get it to us at this time.”
Then that was different than saying “We need all these things, A, B, C, D and E, and you have to have it done at that time.” And then I just go, I don’t say anything, I go out and work on it, and then call them up at that time and go “Well, I just didn’t get it done, because it was too much.” You know, I could have been passive-aggressive and just not done it on time, and blamed them.
But at the same time, I think you’ve got to say something beforehand, because there may be something they can do. Give you some more resources or help you out, or make a call for you that might speed things up.
Ray Zinn: Well a deadline is exactly as it says, it’s a due date that can’t be missed. In other words, it’s a line that if you don’t meet it, you’re dead. And that’s why they call it a deadline. So, anyway.
Well this has been a good conversation, Rob, and hopefully our listeners, if they have some questions or other ideas or concerns, that they will email us or call us or let us know, and we’ll be happy to answer them on the air.
Rob Artigo: Right. ToughThingsFirst.com is a great place to start. You can link up with Ray Zinn’s Facebook page, email information, and also of course subscribe to the podcast. Thanks again, Ray.
Ray Zinn: Thank you, Rob. This has been a great session.
When Customers LeaveRead more
There seem to be two different types of customer defection problems. Big, sudden, critical client losses and slow trickles. Ray Zinn, the longest serving CEO in Silicon Valley, talks about how to handle each type, and what causes these defections.
Guy Smith: Hello everybody and welcome once again to the Tough Things First podcast. I’m you’re guest host Guy Smith and of course the star attraction as always, Silicon Valley’s longest serving CEO, Mr. Ray Zinn. Howdy Ray.
Ray Zinn: Howdy to you there Guy.
Guy Smith: I feel we should say howdy ’cause we both grew up on cattle ranches. I’ve recently saw a picture of you taken just last week mounted on your horse up in Montana. It looks like you have not given up your cowboy ways.
Ray Zinn: Not a chance.
Guy Smith: I’ve got my Justin boots on right now so I think so I think we’re both holding onto that.
Ray Zinn: Are they goat ropers or what?
Guy Smith: No just riding boots. I want to talk about customers leaving. One of the worst things you can have happen when you have a company of any size but especially for startups is when customers suddenly start to vanish. Occasionally you have big, sudden, mass defections of customers, occasionally it’s a slow trickle. Losing customers is always a big warning sign. Let’s talk about those two different things. The slow trickle of losing customers and some big sudden changes. What causes these kind of things and what should a CEO especially of a startup be looking in terms of when customers leave and why they leave?
Ray Zinn: I’ve always held that you don’t want to have any one customer greater than 20% of your total revenue. That’s about as much as you can handle if they leave. If you organize your organization such that you can cut back 10% or 15% without too much pain, then you can tolerate a customer in sub 20% if they leave you can handle that. That’s the first gauge that I use is that no one customer should exceed 20% of my revenue. If you’re a brand new startup, then one or two customers is all you have then they’re going to represent 50% to 100% of your business. If they leave that’s going to be a big problem. Obviously try to diversify as quick as you can your customer base because you are going to lose customers.
On average most companies lose 10% to 15% of their customers, revenue wise, a year. Either through obsolesce or competitors coming in or a number of reasons, company went out of business, whatever. You can lose 10% to 15% of your customers a year. You have to have the ability to pick those up somehow.
Guy Smith: That’s a good lesson for people who are trying to launch their companies in Silicon Valley is that you’re going to start losing customers from day one and fold that into your economic forecast. As I recall when you had Mike Krell, you lost one really big fish. I think you had Xerox and they made up a healthy portion of your revenues. Then they decided that they were going to go get out of the particular market that you were helping them serve and that caused a hit. Tell us that story in brief and how that helped you form your 20% philosophy?
Ray Zinn: At the time they were building a color printer and this is back in the mid eighties, late eighties I guess. It was a new market for them. They were known for their black and white but this color thing was just getting underway. We developed this product for them that is a custom product actually for this new color printer called Sunray. Everything was going along fine, we made a big investment, hired a lot of good people to work and develop this product. Put a lot of energy and effort into it. Sales wise it represented about 25% of our business, 1/4 of total company sales. It was in September and I remember getting a phone call from my contact at Xerox. He said that, “The CEOs had to pull the plug on the program.” He was real apologetic and felt really bad.
I sunk down in my chair, he could have knocked me over with a feather. It was a horrible experience because then I had to go tell my people, that we just lost a big customer. It wasn’t over time it was just instantaneous, meaning that their CEO is going to announce and a press release was going to announce it the following day, that Xerox is pulling out of the color printing business. As a consequence we had to do a significant layoff to cut back to be able to still run profitably. It was a painful time for me. I vowed at that point that I was never going to have a customer over 20%.
Guy Smith: It’s probably good advice. I’ve known a lot of people who had small businesses that relied on one or two major customers. I’ve got a relative in the answering service business who a good 40% of his revenue came off of one customer. When that customer left it caused a lot of consequences.
Ray Zinn: I’ve seen this over and over. This is not the first time I’ve seen this happen. I know customers right out there [inaudible 00:06:07] companies that have 30% or 40% of their revenue comes from one customer. In fact I have one friend that runs a company that 80% of his revenue comes from Apple. To me that’s just too risky.
Guy Smith: Yeah. I’ve known a couple of small semiconductor companies who were in the military aeronautics field. When the air force is your only customer and they suddenly obsolete an entire aircraft line or something like that, you’re entire company can be wiped out in the process. You now have technically zero customers. Let’s talk about the other side. Let’s talk about the slow trickle. This is the one that almost scares me more because how do you detect when you have more customers leaving than are coming in. What is the cause of that churn and what is the most typical cause that CEOs miss, that the churn is now getting out of control?
Ray Zinn: It’s called a leaky bucket phenomena. When you start seeing your revenue drop across the board, not just with one customer but with all of them, that’s a sure sign that either your pricing is … unsatisfactory to them. Your product has become obsolete so you’ve lost a fair number of seats on that particular product or idea. It could be that your competitors have come in and have carved out a piece of the business. Until they’re qualified, you get some business and it looks like you still got the customer until all of a sudden you get a phone call saying that competitor XYZ, has taken the business. It’s called the leaky bucket effect and that’s something you have to be aware. You can watch that. That’s something that if you look at a product line and then all the customers seem to be trickling off, that’s a sure sign that you have a product problem or a pricing or a competitor issue.
Guy Smith: Okay that certainly makes a lot of sense. The tech industry. You and I have spent pretty much our entire careers in the tech industry. Is this phenomena more amplified in high tech?
Ray Zinn: Because of rapid pace I would say so. The rapid pace of our industry just precipitate that issue. You can as they say, slowly go out of business when that happens. It’s like dying of cancer versus dying in an automobile accident. Both of them are bad because you’re going to be dead. In one case you just bleed to death and the other is you die slowly because of the cancer. Yes it is a phenomena of our industry that it grows fast but it also dies fast.
Guy Smith: I almost have a feeling that the sudden death syndrome is more acute in high tech because anyone who comes up with a disruptive new technology can completely vaporize an entire industry.
Ray Zinn: We all try and come up with a disruptive technology just to preserve our brand. Certainly the nature of our industry, if you’re not on the leading edge you’re going to be on the dying edge. You got to keep your brand fresh and keep your customers in your pocket.
Guy Smith: That leads to what I think is the second best management book after Tough Things First. One with the wonderful title Only the Paranoid Survive. Is that true? Do entrepreneurs especially in the tech industry need to be functional paranoid?
Ray Zinn: I threatened by Andy Grove and Andy personality wise was a paranoid. He ran Intel as a paranoid. That can breed stagnation. In other words if you are so paranoid, that you are afraid to go right or left, it’s like the deer in the headlights. You’re going to lose. I think Andy’s bottom line believe in that is that you got to be looking around all the corners. There’s got to be some skeletons hiding out there somewhere that a dog’s going to come up and bit you. That’s what he meant by that.
If you’re always afraid of your shadow, if you’re looking at every boogeymen man out there, then you’re not making the wrong decision. Make sure that if you are paranoid that you’re not paranoid of everything, you’re just already know where to look and not just react as you would.
Guy Smith: There’s value in functional paranoia but if you become scared of everything you’re going to eventually devolve into a state of immobility.
Ray Zinn: That’s paranoia isn’t it? You think everybody’s after you and you think you’re about to be taken over or die. That’s not an optimist, an optimist is not a paranoid.
Guy Smith: Yeah optimism tends to work better than paranoia or at least it has in my life. That’s probably the lesson for the entrepreneurs today is that you do have to watchful but you also have to be optimistic. More optimism than paranoia gives you pull and lift instead of drag. Thank you once again Ray. It was informative as always and for all your listeners out there, by all means two things. Drop by the Tough Things First website. You’re going to find all of Ray’s social media contact points there and you can hook up with him directly on Twitter and Facebook and LinkedIn. Of course if you haven’t already you have to read Tough Things First. It is arguably one of the best management books come down the pike in possibly in forever. It teaches you not only about leadership and management, it teaches you some real basic life skills and how all of these work together.
Ray Zinn: Some of the tidbits that we put on their twice a day, might be of help to a lot of our listeners. We post two thoughts of the day, two ideas and something for them to ponder. I’d recommend they go in and look at those tidbits and see if they’re of help to them.
Guy Smith: Excellent advice. Tune into Twitter and get those in real time and we will see you next week for another edition of the Tough Things First podcast.
CIO … OptionalRead more
Is a Chief Information Officer necessary? Ray Zinn discusses what a CIO does, and why your company may not need a CIO.
Rob Artigo: Thank you for listening to Tough Things First. I’m Rob Artigo. I’m a writer and business owner in California. Hello, Mr. Zinn. Ready for another topic?
Ray Zinn: We are ready. So good to be with you today, Rob.
Rob Artigo: Thanks, Ray. Let’s talk about the role of the CIO. Let’s start simple. What’s the role of the CIO, or the chief information officer? What is it that the CIO should be doing at your company?
Ray Zinn: Based upon the nature of your business, if as a CEO or the leader, and you have a good ability to communicate, or a good communicator as you would, you don’t need a CIO. A CIO is generally, there for business leaders that don’t have that ability to communicate. The story is told of Moses, when God said, “I want you to lead the children of Israel out of Egypt,” Moses said, “Well, I’m not good at speech. I’m not a good communicator.” He said, “Okay, I’m gonna give you a CFO,” and He gave him Aaron.
So, Aaron’s gonna be your CIO. Because, you’ll tell Aaron what you want to be conveyed and then Aaron will go out and do that. And that’s the way it was in leading the children of Israel out of Egypt, was that Moses was the CEO and Aaron was the CIO. So, if you’re good at communicating, and this is a skill that has to be developed, you really don’t need a CIO.
Rob Artigo: There is the other side of that, though. There is the CIO who has a technical obligation with the company. For example, information security.
Ray Zinn: You mean, as a function?
Rob Artigo: As a function, yeah. A function of their job, right?
Ray Zinn: Yeah, it depends again, the kind of company you run. I’m speaking globally, now.
Rob Artigo: Sure.
Ray Zinn: So, I’m not making it so company-specific that saying okay, they’re responsible for the security, things that, protecting the information of the company. Yes, that’s true they do have that. But, that’s specific to those organizations that have that sort of, need for maintaining security on their information.
Rob Artigo: I was reading about this writer was, I think it was Wall Street Journal or Forbes, one of the two, but they were talking about the role of the CIO and that a lot of companies that are startups, when they get large enough and they think they’re gonna go ahead and IPO, that, that’s when they hire a CIO to come in. And when I first read CIO, I always think chief investment officer, but having to re-scramble my brains and figure out, oh, they meant chief information officer. But, his argument was that you needed one and that you should bring this person in early on in the process, not right before you IPO, because then it takes them a lot to get up to speed. Is there a time when you feel a CIO is going to be appropriate for your organization?
Ray Zinn: If you’re a very publicly traded company, and there is a lot of calls that come through, just random calls, and it’s going to suck up your day so that you can’t get anything else done, sure. I mean, if you have somebody who can take those phone calls and take that off your plate, then certainly, that person can perform that function. But, I never liked to talk to a CIO. I want to talk to the CEO. So, whenever you’re stuck with the CIO, you know you’re just gonna get the standard pat answer, whatever is in his purview, he reads from the standard verbiage that he’s allowed to tell you. You’re not gonna learn a lot. I mean, I very seldom learn much from a CIO because they’re just giving you what they’re told to say.
Rob Artigo: Right, the pat answer, whatever the, and some people would call it spin, or the soundbite that they want to get out there, the messaging. You’ve probably seen this. I’ll put my reporter hat on, too, is if you’re watching a news program, and so, you watch a live press conference and you see an information officer for somebody, and they’re asked a question, they might dance around in the first few words, but they’ll bring it back to the messaging of the subject they want to talk about.
So, instead of answering the question from the reporter, they change it up and start speaking about the thing that they want to message. And then, they’re asked a follow-up question by somebody else, and they’ll do the same sort of, square dance with them in the first few words, and then go back to saying that line again that they want to get out there, so that they’re always saying the same thing over and over again.
Ray Zinn: Well, you may know, at press conferences with the President, he has his press secretary go out and communicate to the news media, because the news media is going to dig, dig, dig, dig, dig. And so, he’s got to be very fast on his feet and have the ability to really communicate with the press corps without being offensive. And he has to dance around a lot, as we’ve seen recently, because the questions are very negative and very pointed. And so, he has to almost practice answering negative questions. So, if I’m investigating your company or, as a potential investor, I want to talk to the CEO, not the CIO. But, the CEO tends to hide behind the CIO, so that he doesn’t have to have those difficult questions to answer.
Rob Artigo: Along those lines, let’s say that you’re the business owner and you’ve decided that, I can handle the information. I want some screening. You have several layers of people that something has to go through to get to you so you’re not bothered by calls all day long, but you will take the important ones, and you will address things that are gonna be publicly printed or recorded or whatnot. You leave the CIO out of it, but how do you make sure that you are sticking within the framework of what’s responsible for your company when dealing with public speaking? When you have so many things going on, it’s kind of easy to get distracted and you might get tripped up?
Ray Zinn: Well, I mean, that goes to how good of a communicator you are as a CEO. At Micrel, I ran for 37 years, we never had a CIO. So, if it was just a random investor question, I’d let my CFO answer it, or take the call. So, my CFO, effectively, was like a CIO even though he didn’t function. But, any of the tough questions, the CFO would say, “Well, let me see if I can get Ray on the phone and we can talk about that.” So, he would then pass it over to me. So, we never dodged an investor, but if we could answer it without having to get me involved, then my CFO would take care of it. So, in 37 years, I never had an official CIO.
Rob Artigo: And that would be exactly the opposite of what this writer was saying. He was saying, you’ve got to have a CIO and you’ve got to have the CIO early on in the process, like, one of your first hires. So, your argument is that it all depends on whether or not you or the people you already have working with you can fill that role, as to whether or not you’ll need it.
Because, I’ve seen some people out there who are, unfortunately, just because they haven’t been around a long time and they don’t have media savvy, perhaps, they are let’s say the tech world, I’m gonna go to the cliché side of the tech world, it was a garage startup, 22-year-old CEO, and awkward, let’s say it’s a person who is just somebody who is really proficient and really driven and a fantastic operator of a business, but is just, socially awkward and has a hard time doing anything in the media, that person right there might go, “I need to have somebody who can be maybe, the voice and face of the company.”
Ray Zinn: My feeling is, is that, when a company has a CIO, and this is my feelings, this is my views, this is not necessarily held by you or some of the others, but my view is, if you have to have a CIO, that tells me that number one, you must not be a very good communicator. Number two, is that you’re afraid to address the questions. You’re not very transparent. So, the more you turn it over to an information officer, the more likely you are of being viewed as being nontransparent.
Rob Artigo: And you did the disclosure there, at the beginning. This is just your opinion, and it’s obviously, gonna apply to every company out there with that going on. But, you, as an entrepreneur, as an investor, as a man in the industry out there engaged in business daily, it’s natural for you to have that thought come into your mind when you meet somebody who’s spending the money to have a CIO early on in a smaller company. Logical questions, though. They’re logical questions. You always have to explore little bit more to find out if it’s truly the case. But, that’s a real reaction that you can have, and that’s something that people should think about.
Ray Zinn: Well, my company, Micrel, was known for its transparency. And I never dodged an investor. I was at all the investor conferences. I had no problem taking the calls, these random calls. I actually, liked interfacing with the public regarding the company, because we were transparent. We didn’t have anything to hide. And it was an easy job for me. Maybe they didn’t get the answer they wanted, but they got the answer that I felt they should have. So, I like to be able to communicate, because I’m the one that’s running the company.
Rob Artigo: And, as a reporter, when I’m out there covering, when I was a reporter, when I was out there covering stories or calling organizations, when I dealt with Google, Facebook, and major companies, Tesla, and I remember one of the most available people was from Tesla, Elon Musk. Whenever they were doing something, they had Elon talking. They didn’t, that’s not necessarily the case with a lot of organizations.
And I think you can tell the difference in the way the media cover something, when they’re hearing from the principal, and that’s what we would call it in the business. So, the principal person would be, it’s not the spokesman for Senator Dianne Feinstein, it’s time Senator Dianne Feinstein. Or, it’s not the spokesman for the President, it’s the President who’s doing the talking. You’re liable to take more credibility from that person’s comments and words, and give more short shrift to when it’s somebody’s spokesman.
Ray Zinn: Well, jumping back to this political environment, I would rather, as an individual, I would rather hear 10 minutes from the President of the United States than a half an hour or an hour from his press secretary. So that’s my view. I mean, I know I’m getting hosed when I listen to the press secretary. But, if I hear it from the President, and maybe he spends only five or 10 minutes, I’d rather have that, than a half an hour or an hour with the press secretary.
Rob Artigo: Well, that’s one of the reasons why this is such a wealth of information. Your Tough Things First podcasts are enlightening in so many ways. And obviously, “Tough Things First”, the book, which you can get out there at Amazon and other major retailers, is a great source of information, because you’re doing the talking. And you’re not mincing the words. And because they’re getting the straight dope from you, the reader or listener knows they’re not getting hosed. And that’s one of the reasons why I like doing the podcasts with you, and quizzing you on all kinds of subjects, because getting the straight information is very helpful.
Ray Zinn: Well, thank you. I think that hopefully, our audience is feeling the same way. I’ve had a lot more experience than even our current President has, maybe not in running the country, but in running a company. I’ve done it a lot longer than the current President. So, experience has helped me, and that’s why I’m sharing this information at my sunset years of my life, is that I think that my experience helps in communicating some of these important issues.
Rob Artigo: Thank you again, Ray. I appreciate you being back.
Ray Zinn: Well, thank you, Rob. Appreciate having you.
Good ListenersRead more
Great entrepreneurs are good listeners, while some entrepreneurs just think they are good listeners. In this Tough Things First podcast, Ray Zinn discusses the components of good listening and explores the advantages of putting your mouth in neutral.
Rob Artigo: Welcome back to another Tough Things First. I’m Rob Artigo, writer and business owner in northern California. Thanks for having me back, Ray.
Ray Zinn: Hey, it’s good to be with you again, Rob.
Rob Artigo: Ray, I recently read an opinion piece where the writer made the case that most successful entrepreneurs have one major trait in common. I think you could actually go through the vast list of great entrepreneurs and look at them and say, “They have a lot of different things in common,” but this writer thinks there’s one particular trait in common that most successful entrepreneurs have. It’s being a good listener. They use a quote from Richard Branson who wrote this apparently in a famous LinkedIn post. If this sounds familiar to some people, it’s because apparently it’d been widely circulated.
He says, “Nobody learned anything by hearing themselves talk, or speak,” and he goes on to say, “The ability to lock in and listen is a skill that has served me well in life,” says Branson, “Although, it seems to be a dying art, I believe that listening is one of the most important skills for any teacher, parent, leader, entrepreneur, or just about anyone who has a pulse.” Branson, as we know, is one of the world’s great entrepreneurs and most widely understood or listened to guy on the subject being a businessman. Most people, Ray, who have worked with you and know you well, know that you’re up there on the list of good listeners. Let’s talk a little bit about that. Have you ever met anyone who sells themselves as … Or him or herself as a good listener, but won’t stay silent long enough to hear what somebody has to say?
Ray Zinn: Yeah, absolutely. I mean, as Judge Judy says, “You got two ears and one mouth for a reason. Use them proportionately.”
Rob Artigo: Right.
Ray Zinn: You can’t listen while you’re talking and some people just love to hear themselves talk. If you’re talking, you absolutely cannot listen. I break it down into two components of listening. One, is called a willing listener and the other component’s called, willing to listen. Willing listener is someone like a doctor who shows empathy and sympathy toward his patient and listens without talking, he just listens to the patient talk about their issues. That’s being a willing listener. Most entrepreneurs, or most good leaders, are willing listeners. Willing to listen is like a student. If you’re willing to learn, then you should be willing to listen. That’s what is referred to as a willing listener. It has to start … I mean, willing to listen.
That has to start there, so you have to first of all be a good student. Good students have a willingness to listen. Then if you have that ability to want to learn and understand, then you ultimately will become a willing listener. I know that sounds like double talk, but it’s really not because there are two different phases. In one case, you’re showing interest because you’re trying to accept and understand that idea or their concerns. The other is that you’re studying, you’re pondering, you’re wanting to hear the information and that’s willing to listen. We need to kind of put our mouth in neutral and get both those ears functioning properly so that we do honestly spend more time listening than we do talking.
Rob Artigo: I was recently at a promotion ceremony for a military officer, friend of mine, and he was promoted from Lieutenant colonel to colonel. That’s the military speak, that’s the bird, and it’s the bird that goes right before the star, so before … His next promotion, if he were to ever get it, would be a general. It’s a big step in the military. I went to lunch after the promotion ceremony with the guy who got promoted and another colonel in the Army, and I remember this very specifically, the colonel … I’ve known both of them a very long time and both guys have been in the military for 30 years. They’ve been around a long time and I guess being in for a long time is one of the things that lends itself to promotion, so that’s good news on their part.
The colonel that had been promoted some year or two before the other colonel said to him, he goes, “The one piece of advice I would give you is this. Say a lot less at meetings. Just say less. Speak less and speak at the end, mostly.” What he was advising him was essentially that, listen, be a good listener. You’re talking about a guy who could … If you’re a colonel, everybody’s going to shut up when you start talking. If you’re in charge of a meeting and all you do is talk, you’re never going to get the information from the people around you. We, in the business sector, we have situations like that. We’re in a meeting, people respect your position of authority, say if you’re CEO, as you were at Micrel, you can be in a meeting with all your section heads and the important people who run operations in various branches, but then if you sat there and talked the whole time, you wouldn’t get anything from them.
Ray Zinn: I agree. The key here is … At Micrel, for example, I used to ask people, “What can I do to help you, or how can I help?” That now then turns the time over to them to say, “Here’s what I need,” and I’m listening then. If I say, “What can I do to help,” and then all of sudden I’m telling them what to do without listening, then maybe you’re giving the wrong instructions or I’m not showing my willingness to help them. If you say, “How can I help, or what can I do to help you?” Then shut up and listen. If you’re a salesperson and you’re going in and presenting your product to a customer, introduce yourself and shut up. Let the procurement officer or the procurement person tell you what they need or let them speak. You listen. They’re going to appreciate that more than if you’re sitting there just giving them a sale’s pitch. I mean, we kind of laugh at what we call the used car salesman, because we know we’re getting gypped.
We know that they’re out there just selling us a bill of goods, a piece of junk, that isn’t worth half the price that they’re charging for it and so we hate the used car salesman pitch because all they do is talk, talk, talk, talk, because they don’t want you to ask any questions. If you’re a good salesperson, you want that … You have a good product, you want that procurement person to ask you questions. Be a listener. Listen to what their requirements and needs are. If you’re a manager, then when you visit with your people, listen to them. Don’t just start talking, “Oh hey, what a wonderful organization. Oh, you guys are doing a great job.” Praising is fine, but shut up and listen and see what they have to say, because you’ll learn now what you need to do to improve your operation. Again, as Judge Judy says, “You have two ears and one mouth for a reason. Use them proportionally.”
Rob Artigo: Now, I had to … In that course of that conversation, that very same conversation, we happened to bring up the fact that, well they’ve worked with politicians before, say the governor of California, for example. I’ve worked with, as a reporter, been in rooms with governors and other major politicians, senators, and presidents, and that sort of thing. One thing I’ve noticed often times is that people will be called to an event and these guys, these military officers said basically the same thing. In the course of the conversation centered on this, which was, you get dressed up, you’re going to go to an important meeting.
Say the governor’s there and you’re going to sit down with the governor and you’re going to be able to say … Say you’re a police chief, for example, and you’re sitting down in front of the governor and you say … You want to be able to say, “These are the things that our city deals with and these are the funding issues that we have and some things that you perhaps can do to help as a governor.” If the governor comes in and sits down and just says, “You guys are … We love you guys here at state government and you guys are awesome, we love you. Come over and take a picture with us,” and then everybody gets together and gets a picture, and then he leaves. He doesn’t actually listen to anything that’s going on. Don’t you also run into a problem, not just a nonproductive meeting, but you leave the people in the room with the impression that you wasted their time.
Ray Zinn: Yeah, absolutely, because again, we’re there to learn and being a person willing to listen is the key to being a good student. If all you want to do is tell them, they’re only going to remember about 10% of what you said anyway, so there’s no need of going on, and on, and on, because they’re going to turn you off anyway after a minute or so of listening to you. Keep your dialog short. Keep it to the point. Use soundbites. Soundbites are something that stick with us. If you’re going to say something, say it in very short soundbites.
Rob Artigo: Probably helps to do it when you’ve listened completely through to their thoughts as well and perhaps incorporated a little bit of what they said and talk it back to them.
Ray Zinn: Yeah. You might repeat back what they said, so it sounds like you were listening. That’s another good key is to good listening is to repeat back what the person saying, “Oh, so what you’re telling me is this,” and then you go on and say what it is you thought he said, or she said, and then they’ll respond back, “Yes, that’s exactly right.” They now know you’re listening and you understood what they were saying.
Rob Artigo: Great, Ray. Appreciate it.
Ray Zinn: You’re welcome.
Selling a new product in a crowded field. In this addition of Tough Things First, Ray Zinn gives advice about how to crack the toughest nut in business; getting in the door when your product is great, but you’re new to the market place. Ray considers the question from the seller and buyer points of view.
Rob Artigo: I’m Rob Artigo, guest host for this edition of Tough Things First. I’m a screenwriter and I’m an entrepreneur in California. Happy to be back again, Ray.
Ray Zinn: Well, thanks Rob. It’s so good to be with you this day also.
Rob Artigo: Sure. Consider a business where the product is great. We’ll set that aside. The product is a good product, but the field that the product is being introduced into is crowded. Often times the sale’s pitch can be met with, “I already have a guy who does that,” or, “I already have somebody who provides those machines and I have a relationship with that person.” Help us understand some strategies and I know that you’ve had experience doing this in the sale’s world, is having to go into a market where you’re presenting a product to somebody who already has that product being provided to them, but your product is different, sure. Your product may even be better, but you’ve got a situation where you have to get yourself in the door and convince somebody to try something new. How can we do that in the business world?
Ray Zinn: Well, that’s a challenge because this is not something new, this is not something that’s happened in the last few years. People, again, resist change. When you go to your customer, he’s going to resist change. He’s not going to want to try something new because there’s risk involved in anything new. What you have to do when you go in and visit with him, is not to say, “Hey, I got this new thing.” What you want to do is go in and say, “Here’s how I can save you money. Here’s how I can reduce the cost of your operation.” Don’t try to go in and say, “Hey, I got this new thing. It’s revolutionary.” That’s going to turn them off. The best way is to say, “Hey, I can cut your cost by 20%, or 15, or 30, or whatever,” because it’s got to be something north of 15 or he won’t even look at it. You say, “Okay. Here’s how I’m going to reduce your cost, or here’s how I’m going to get you … Improve your use of time.” It’s got to be significant, well north of 15% either in cost savings, or time savings, or something like that. That’s the way you really open the door.
Rob Artigo: I think of the movie quote, “Show me the money.” Often times, that’s what will cap someone’s attention. As a screenwriter, when I’m out pitching a screenplay or introducing a screenplay to somebody, often times the most interesting thing to them is if they hear in the pitch the very brief, say, two, three sentences of what the story’s about, do they see money coming at them? Do they see money? Do they see finances? What you’re saying is, “Show me the money. When you walk in there, a penny saved is a penny earned.” You’re saying, “Hey look, I can present to you a 15% increase in your revenue from this.”
Ray Zinn: Or a reduction in cost.
Rob Artigo: Yeah, reduction in cost.
Ray Zinn: Somewhere that he’s got to see the value in the proposition. Avoid saying, “Hey, I got the best this and that,” or, “I got the newest, and the latest, and the greatest.” That’s not going to entice them to listen. What you want to tell them is, “This is going to save you a ton of money,” or, “This is going to improve your revenue, or improve your efficiency, or your effectiveness,” and just really keep it sharp and crisp. Do soundbites. Today we’re not interested in long pitches. We like short crisp pitches.
Rob Artigo: What about walking in there and saying … Let’s say you go overboard a little bit, and you’re over zealous, and you decide that you’re going to say, “Hey look, everybody else is charging $100 for this thing.” I’m going to go in there and I’m going to say, “I’m going to charge,” because I want to get in the door of this big client, “I’m going to charge him 50.” Then, do you think as the buyer you’re going to go, “Uh-oh, there’s got to be something wrong with this?”
Ray Zinn: It could. I mean, you don’t get something for nothing, so everything has a penalty to pay. I remember getting this Whiz-Bang software package that was supposed to help reduce costs once it was implemented, but the cost of the implementation was really high. What I learned was, is that it took a lot longer and a lot more time and effort than actually the savings was worth. For everything that we implement is a cost, so you’ve got to make sure that the implementation is straightforward and achievable in a reasonable period of time, at a reasonable cost, because it’ll eat up the cost savings just in trying to implement the change.
Rob Artigo: If you’re the buyer, what kind of questions are you going to be asking when somebody walks in? Let’s say they are offering you a promise of a 15% savings on costs, or reduction in work time, and so that turns into real money at the end. What are you asking them to make sure that you are … That they’re providing you what you want?
Ray Zinn: What are the net savings? In other words, there’s a cost associated with putting your system in place, or your idea incorporated into the organization. What does it cost me to implement it, and so what is my net savings going to be once I implement this project?
Rob Artigo: I think of automatically, suddenly I just came to this picture of a solar panel commercial on television. They say, “This is how much it’ll save you from your electric bill.” You go, “Oh, that sounds really great.” Then you find out that really the savings will only kick in after about five years because of the amount of cost that you’re putting in up front. That’s the kind of thing you want to know, is-
Ray Zinn: That’s the exact example of what I’m talking about. They want to make it sound like it’s nothing. I mean, they’ll … “Oh you’re going to save us. You’re just going to get all these savings.” What they don’t tell you is that you’ve got put a new roof on your house, and you’ve got to make some structural changes to beef up the weight of that … Putting the solar panels on. I mean, there are some costs to implementation. I learned that when we changed our driveway from a concrete driveway to a paver that it was not that simple. I mean, they had to tear … Go all the way down a couple of feet and put in a different kind of base system because on a concrete driveway the water just runs off, but in a paver, the water actually goes down through the pavers and so you have to have a way to carry the water off. There was a cost associated with that, that they didn’t tell me about.
Rob Artigo: I call that, mission creep. I had that experience at a major home organization, a big box store, and I went in there and got some help getting an island built for my kitchen. I was doing half the kitchen rebuild one day and hopefully later on down the road I would do the other half. I started with the island, which has a cooktop on it, and has drawers, and storage space, and a nice marble top. What happened was, I got an estimate on how much that would cost and as the time went by, there was like, “Oh yeah, and then you need to get these things that go in here like this and that’s going to cost you a certain amount of money.” “Oh, okay. That’s interesting.” “Then they got to ship it from Florida, so that’s going to cost you another $300.” Then as you go along, you go, “Why didn’t just … This stuff is not a mystery. It should be in the original estimate. You know what I mean? [crosstalk 00:08:39] It’s not something … They didn’t have to invent it. It had to go there in the first place, you just didn’t tell me about it.”
Ray Zinn: I know, they intentionally didn’t want you to know that because that would discourage you, so they’re not going to tell you those hidden costs, as they say. With any implementation, there’s a hidden cost. For example, when we put this new software system in at Micrel the employees were having a difficult time accepting it, because they had to learn something new and that was a challenge for them. Hey, if it ain’t broke, don’t fix it. They just rock along with what they had, and so when we tried to implement it, they were complaining, “This is … Oh, I don’t like the way this interface is, I want … This is taking me away from the way I used to interact with my customers.” They just complain, complain, complain. You got to take that into consideration too, that any time you implement something new there’s going to be some resistance by the employees.
Rob Artigo: Thank you, Ray. Very interesting subject.
Ray Zinn: You’re welcome. Thank you for taking the time with me today, Rob.