3 finding people you can work with

ACTING INVOLVES the study of human behavior, so I have learned much about people through my dramatic pursuits. For starters, watch the feet! That is a euphemism for the idea that behavior is a more important indicator than words when it comes to understanding another person. Words are more often than not used to disguise people’s true feelings. For example, if a person has just arrived in town and you see him with his head down and his shoulders slumped, and he tells you it is a long way from where he came, he is probably not referring to distance. What he is really saying is that he is tired and annoyed.

It is in the nature of Homo sapiens to judge their fellow man. When you first see someone, you might interpret his or her actions as either friendly or possibly aggressive, and your psyche takes this into account. You subconsciously make a judgment about the person’s behavior. When you are negotiating with someone, watching the person’s behavior and not being influenced by mere words can be a great help. If you have a sense of this, you can hone it through experience.

If reading people is important, understanding them and relating to them is even more important. In business, it can be the difference between success and failure. You need to be able to pick partners and associates you trust and have them trust you. Both of those processes will almost certainly affect the outcome of what you are doing.

Relationships are essential. In his book Black Swan, Nassim Talib says that you should never miss the opportunity to meet with somebody who has a position of significance. How often do you hear that it’s not what you know but whom you know?

Many times we cannot choose the people with whom we do business. Certainly, if you work for someone else, you have very little choice unless you are the one doing the hiring. There is an ancient Greek proverb tossed around in business: “The fish stinks from the head.” Loosely translated, it means that the business reflects the personality of the individual who runs it. If the top person is a devious weasel, then some of the people down through the ranks will likely be disingenuous cheats. The converse is also true: Integrity and character at the top create a culture of honesty and rectitude. Make sure you do not end up partners with people who soil your reputation.

Partners often criticize your ideas. They give you a different perspective. They bring different skill sets and attitudes. I often finance investments in owner-operated businesses, where the operator is my partner. What should you look for in an operator? Knowledge of the business, yes, but, more important is how he or she deals with people. The operator’s ability to bring out the best in people is often more important than raw knowledge of the business.

Consider the legendary football coach Vince Lombardi. He coached the Green Bay Packers to five championships in nine years, including victories in the first two Super Bowls. But if you ask his players, like Bart Starr, Jerry Kramer, and Zeke Brakowski, about Lom bardi, they’ll tell you that his greatest attribute was not drawing up complicated plays but rather instilling in his players an attitude to win. Somebody once asked Lombardi, “What is it that you know about the game that nobody else knows?” He replied, “Nothing. Football is only two things—blocking and tackling.” In his own words, “Coaches who can outline plays on a blackboard are a dime a dozen. The ones who win get inside their player and motivate.”

As useful as partners can be, they can also be disagreeable, difficult, confrontational, and irritating. It is much like a marriage, so pick your partners carefully. Often, my partners teach me something I do not know and make me better at what I do. I can honestly say that the most satisfying aspect of my business experiences is the people with whom I have worked.

a remarkable man

One of the most amazing human beings I have ever met is also one of the most unusual businessmen I know. His name is Felix Zandman, and he is the CEO of Vishay Intertechnology. Felix founded Vishay in 1962 with the support of his friend Alfred P. Slaner. They named the company after the village in Lithuania where relatives of both men perished during the Holocaust. I serve on the company’s board of directors as chairman of the Strategic Affairs Committee and chairman of the Compensation Committee, not because it heightens my profile but because Felix asked me to serve, an invitation I consider a responsibility and an honor.

Felix, who’s now in his eighties, is remarkable for many reasons, one of which is how he has found an intersection between his life and his work. He has made the personal professional, if you will. There is nothing I would not do for him. I would take a bullet for him. I really mean that. Felix is that kind of person. He also happens to be one of the most courageous people I have ever known.

Felix’s story, which was chronicled in the book Never the Last Journey (written with David Chanoff), is one of the most harrowing I have ever heard. He grew up in Poland and was taught by his grandmother that the only way to measure true wealth is by totaling what you give away. He was fifteen years old when the Nazis destroyed the Jewish ghetto where he and his family lived and worked. Felix’s family became separated, and he and his uncle, along with three others, sought refuge at the house of a Polish farmer who was Catholic and who had worked for Felix’s family. Felix’s family had once saved the life of the farmer’s wife.

The farmer dug a pit beneath the floorboards of his house and hid Felix and the four others there. For a year and a half, they lived in the cramped, insect-infested hole. On two occasions, the Nazis came with dogs, but the farmer’s wife had sprinkled pepper all over the floor so that the dogs could not pick up the scent. In that dark, cramped space, Felix’s uncle taught him advanced mathematics to keep them from going insane.

By the grace of God, Felix and his uncle survived. But they soon discovered that his parents and sister had been found in a different hiding place and taken to the death camps. After Felix escaped to France, he ended up attending the Sorbonne and earning a doctorate in physics. He then came to the United States, where he first worked on nuclear submarines and later invented an ultraprecise resistor that helped launch Vishay. To this day, everybody who is a descendant of his and of the family in Poland that hid him has a job with him for life.

I met Felix through my wife, Amy, who grew up in Philadelphia. I had known Felix for several years before he asked me to join the board of directors of Vishay. I knew nothing about the business—the manufacturing and distribution of analog switches, capacitors, diodes, inductors, power ICs, LEDs, power MOSFETs, resistors, and thermistors. In fact, I did not even know what all of those were. I also did not have the time to commit. In the litigious world of today, a board commitment to a public company is a serious involvement. But I said yes. Why? Because of who he is. Because of his integrity, his amazing courage, and his intelligence.

Before I met Felix, I had found many Holocaust survivors to be bitter and suspicious. Rightfully so. How could anyone live through that and not be? If that kind of experience didn’t change you, you wouldn’t be human. There is a different way of thinking ingrained in people who have suffered so horribly. I detected none of these traits in Felix. But Felix is exceptional. Even though he employs many Israelis, his CEO is German—a remarkable anomaly.

One day, when I was in Felix’s office, I was thinking about his past, and my curiosity got the best of me, as it often does. “Why aren’t you bitter against the Germans over what happened to your family?” I asked him.

Felix smiled and led me over to a wall in his office. “Let me show you something,” he said. “Look at this picture. That is a photograph of our factory in Germany.”

“Yes?” I said

“That is my revenge,” he answered.

“What do you mean?” I asked.

“Look closer at the picture,” he said.

Flying on top of the factory was the Israeli flag.

Later, when we were discussing this incident, I brought up the fact that a German was the CEO of Vishay.

“Yes,” said Felix, “he is the best man for the job. Whether he’s German or not is immaterial.”

That tells you everything you need to know about Felix Zandman and how he conducts his business. That is why you want to be associated with people of honor and integrity. It makes you a better person and a better businessman.

whom do you trust?

Trusting people in business can be difficult. You are investing part of yourself in them. Picking whom to trust depends on a combination of skills. It is based on using your instinct, observing people’s behavior, and judging the consequences of their actions. I have a friend named Louis Marx Jr., with whom I have invested and worked on several transactions. He has a unique way of choosing people that on the surface appears to be somewhat implausible.

Louis and I met at Princeton. He had an interesting background. His father, Louis Marx Sr., was a legendary figure in the toy business. When Louis was a junior in college, his father gave each of his kids $1 million. Louis invested his million in a gas well.

One night, I was at a party that Louis was supposed to attend but didn’t. The phone rang, and one of our friends answered. The caller was looking for Louis. He explained that a drilling company financed by Louis had just hit the biggest gas well in the history of Kansas. That was the beginning of Marline Oil, where Louis made his first big score. Needless to say, we all thought he was genius.

Louis seemed to know everyone, and he always had a gift for sniffing out opportunity where it did not seem to exist. He has done a lot of successful venture deals over the years, in some of which I have been involved. But I am most impressed with his approach to people. He made a lot of money by financing the ideas of his trusted friends, regardless of their expertise—odd as that might sound.

There is something very simplistic about Louis’s approach. The basic element of his business strategy is people, regardless of the business. He backs people he believes in, even if others think they are losers, and he has the ability to see something in people that nobody else sees. Nearly every time, they become winners.

There was an individual in our Princeton class named George Fox Steadman Hinckley, affectionately known as “Steady.” A couple years out of school, Steady approached Louis with a bizarre idea. He wanted to start an overseas charter airline because the major airlines did not have the right to operate charters on transatlantic routes. The plan was to book church groups on these flights for far less than they would pay on a commercial airline. Steady was a nice guy and an amateur pilot, but he knew nothing about the airline business. Louis believed in him, however, so he put up the money out of his oil profits and made Steady the president. They bought two planes and named the company Overseas National Airways.

What do you know—it worked. Because only two other smaller carriers ran overseas charter rights, the business took off. The stock of Overseas National Airways rocketed from $3 a share to $90 a share. Louis sold slowly on the way up and made some $20 million. Unfortunately, the major airlines eventually secured overseas charter rights, causing the stock of Overseas National Airways to ultimately collapse to one dollar a share. Rather than file for bankruptcy, Steady went back to Louis and asked him to bail the company out and expand it! Louis reinvested $3 million of his profits, and the company ordered three discounted DC-10s. The price of each plane was reduced by $7 million because the discounted planes took two years to be delivered.

While the three DC-10s were on order, one of the company’s existing two planes crashed. The pilot ran into a flock of birds (similar to what happened to the US Airways flight piloted by Sully Sullenberger in 2009, forcing him to land in the Hudson River off New York City). Only the crew was aboard, and no one was injured. However, the plane was totaled. Disaster, right? Wrong. It turned out that the plane was insured for $8 million more than it was worth. The company was now down to one plane, with three on order. Louis had suddenly made $8 million in profit on Steady’s reinvestment request.

Amazingly, the lone remaining plane then crashed! Everyone evacuated the plane and then stood on the tarmac and watched it explode. Luckily, again no one was hurt. And you guessed it—that plane was also insured for $8 million more than it was worth. Overseas National Airways was left with no planes, only an order slip for three planes that had not been built yet.

Louis, who had now made $16 million, give or take, on his reinvestment, decided that he was done. “We’re living a charmed life to get out of this one,” he told Steady. Louis called up the major airlines and asked if they wanted to buy the three planes he had on order. You bet they did. It turned out that because the planes were discounted and nearly ready to be shipped, Louis made another $20 million on the sale of the undelivered planes! Charmed life, indeed.

Louis also backed an idea from another friend named Mike Weatherly. Mike, who had gone to Harvard Business School, was an avid tennis player, as was Louis. They both belonged to the Rockaway Hunt Club in Cedarhurst, Long Island. Mike and Louis teamed up in a doubles tournament and met the man who owned the Swiss Army Brands company and wanted to sell it. The man was asking $80,000. Mike volunteered to run the company and asked Louis to put up the purchase price, as well as some additional capital to operate the business. Mike was in the advertising business, so he didn’t know much about running a knife company or any other company, for that matter. Nevertheless, Louis gathered a group of investors, closed the deal, and put Mike in charge of the business.

When Louis asked me to invest in Swiss Army Brands, I was skeptical because the company would be run by someone with no experience running an operating business, but I admired Louis’s track record of choosing people in these situations. I suggested to Louis that the real money would be in expanding the Swiss Army brand to other products, and that was the strategy the company adopted. Soon, Swiss Army Brands was selling everything from watches to sunglasses, and its brand eventually became one of the most respected in the world. Louis and the investors made upward of $20 million over time.

Louis is one of the luckiest guys I know. The cliché is that it is better to be lucky than good, but I am not so sure about that. You cannot rely on being lucky all the time, and Louis certainly did not. He relied heavily on his primary partner, Stan Rawn, who was an outstanding individual, with the difference that Stan was a smart and experienced businessman, not just a buddy from Princeton. Stan was first in his class at Cal Tech and served as a trustee of the school. Together Stan and Louis built several companies, notably Pan Ocean Oil, which they eventually sold to Marathon. They had put $20 million into the company and sold it for $270 million—in 1976—and this became the basis of Louis’s substantial fortune.

By picking the right people, Louis made his own luck. For my part, I was lucky to know Louis, because I was an investor in both Swiss Army Brands and Marline Oil.

choosing partners is serious business

As you journey in business, pick your traveling companions well. In the minds of others, they become inseparable from you. You will likely be spending a lot of time with them, sometimes more than you spend with your significant other. It is always harder and it always takes longer than you think to make any business work, so make sure you choose someone who makes a net contribution to what you are doing.

In my younger years, I became friends with a man named Lew Wolff, who would become my partner in many ventures. At the time, I was starring in the television series M*A*S*H. Created by Larry Gelbart, M*A*S*H follows a team of quirky doctors and their staff stationed at the 4077th Mobile Army Surgical Hospital in Uijeongbu, South Korea, during the Korean War. The show was filmed on the 20th Century Fox back lot in west Los Angeles. Such is the magic of television, even then.

At the time, Fox was in big trouble. The legendary mogul Daryl F. Zanuck, who had founded Fox, had been forced out in 1971 after a string of expensive flops. The board had recruited Dennis Stanfill from the Times-Mirror newspaper company to turn the studio around, but his plans had not yet taken shape. In 1972, when M*A*S*H began filming there, you could shoot a cannon through the studio without hitting anyone. We were the only show using the studio’s facilities. The lot was so deserted that sometimes my children would come to work with me in the morning, and while I was shooting the show, they would ride their bikes around and play fantasy games in the old abandoned sets.

Fox owned a disparate group of assets, and Stanfill hired Lew Wolff to run the real estate arm. Lew’s job was to try to figure out how to turn the real estate assets into something that made sense. He had both his Fox staff and his development company staff at the studio, one of the more creative situations in the movie industry. His office was only two buildings from Stage Number 9, where we shot M*A*S*H. A friend who knew I was interested in real estate told me about Lew and said that I should meet him. I walked down to Lew’s office and introduced myself. We hit it off right away.

M*A*S*H rehearsed Monday through Thursday and shot on Friday. Even though I was one of the leads, I could usually memorize whatever I needed in a few hours, which left me a lot of time to pester Lew about business. It turned out that in the late 1960s Lew, who was actually a consultant at Fox at the time, had decided to redevelop downtown San Jose. Sometimes we talked for so long I would get a call from the set telling me they were waiting for me, and I’d end up racing back to shoot my scenes.

One day, Lew told me that his work at Fox was taking up an inordinate amount of his time and that he was going to leave. He was working on other projects, and they were getting short shrift. He did not need the Fox job, having worked three years to repurchase the land under the studio from Alcoa, land that had originally been sold to finance Cleopatra. He was at Fox as something of a favor for Dennis, and he wanted to return to his real estate business full time.

He told me a story that illustrated his frustration. Dennis had sent Lew to the house of one of the studio’s producers. The guy had started screaming at Lew, saying that Fox’s ancillary business wasn’t turning enough profit for him to make more big movies. He then gave Lew a lengthy lecture on real estate. Lew said that he did not need to be abused by some Hollywood producer.

I told Lew that I was having a beef with the studio and that I was thinking of leaving M*A*S*H. The show was going into the third season, and I still did not have a signed contract. Among other problems, Fox had refused to remove the morals clause it had added after we made the initial deal, so I decided to spend more time expanding my business interests. As Samuel Goldwyn said, “A verbal contract is not worth the paper it is written on.”

I remember Lew asking me what I made per episode. I told him this was not about money. He asked me if I was truly willing to walk away, since we both had growing families to support. I told him I couldn’t base my decisions solely on money. I didn’t do it then; I haven’t done it since. Lew has lived his life the same way.

So Lew and I both left our Fox bungalows behind. M*A*S*H, of course, became a huge hit, running for eleven seasons. People always ask if I regret leaving. The answer is no. No, because I made my decision based on the circumstances at the time. Coincidentally, there have been residual rewards, the best being that I became lifelong friends with my co-star, Alan Alda, and with Lew Wolff.

Lew and I went into business together almost immediately after I left the show. We bought an office building in Burbank that was very profitable. He was smart and honest, someone I grew to trust implicitly.

Asked what his influence on my business career has been, Lew said recently, “He’d be nothing without me. Is that not clear?” A sense of humor is important, too. Then he added, “We’d trade kidneys if we had to.” Absolutely.

opposites should not attract

One critical factor in picking partners is finding people with a mindset similar to yours. I have found that it is always easier for me to understand someone who operates outside the mainstream and who looks at things differently from others in his field.

In 2005, Lew came to me with an investment opportunity: the Oakland Athletics. Lew knew his way around professional sports, and he was something of an expert in professional sports team valuation and operation and in arena and stadium feasibility analysis. He had bought a large stake in the St. Louis Blues hockey team in 1986 that was sold for a profit in 1990. In addition, he and a group of partners bought the NBA’s Golden State Warriors in 1986 for $18 million and then sold the team for $126 million in 1994—not too shabby a return.

Lew Wolff in an A’s uniform hitting one out of the park.

As a kid growing up in St. Louis, Lew used to take the streetcar to Sportsman’s Park to watch the Cardinals play. Later, while attending the University of Wisconsin, Lew was a fraternity brother of Bud Selig, the future commissioner of Major League Baseball. Selig asked Lew if he would try to buy out one of the two owners of the A’s. In the end, both owners wanted to sell.

Lew assembled a group of investors to buy the A’s, including his longtime business partner John Fisher, whose family owns the Gap, who agreed to purchase 75 percent of the team, provided that Lew (and other investors he recruited, such as me) bought the other 25 percent and agreed to run the team as managing partner. The group purchased the A’s for $180 million in 2005, as reported in Forbes. This was a very good deal. The following year, the Washington Nationals (which had been the Montreal Expos) were sold for $450 million. By 2009, Forbes valued the A’s at $319 million, a price spread that defines a financial home run.

There was an added reason to buy this particular franchise. The general manager of the A’s is Billy Beane, who is one of the most unconventional executives in baseball. Talk about making your own rules—Billy studied the statistical percentages of areas previously ignored and found creative ways to do more with less. He went after affordable young players and aging veterans, pitchers who forced batters to ground out, and hitters with high on-base percentages rather than big home-run stats. His strategy defied the traditional winning formula and created a winning team on a shoestring budget. Conveniently for us baseball novices, Billy’s strategy was the subject of the terrific 2003 bestseller Money Ball: The Art of Winning an Unfair Game, by Michael Lewis.

I don’t know anything about baseball, but I understood this kind of thinking. How does the team work? I have no idea. I had never dreamed of investing in a baseball team or in any sports team. Being involved in the A’s was actually just another way of approaching something differently.

The bottom line was that I knew that Lew had always viewed professional sports teams as a business opportunity, not as an expensive hobby. While it is nice to have a winning team, Lew is not the kind of guy who will throw money into a team just to try to win a silver-plated trophy for his office.

I invested for what I consider the right reasons. One, the price was right; the team was an undervalued asset. Two, I trusted my partner and his and Billy Beane’s ability to manage the team implicitly. I certainly did not invest so that I could have box seats. As enjoyable as they are, I have been to only a few games since becoming a part owner. My feeling is that if the team wins, it wins; we bought it as a business that is supposed to make money and increase in value. For Vince Lombardi, winning was the only thing; for us, winning is great, but profit is even better!

One of the reasons the A’s do make money is Billy Beane and his iconoclastic methods. Here is a game that has been played the same way forever. Every GM in baseball has the same statistics available, but Billy looked at them differently. He thinks outside the box. His rationale was this: I don’t care what the guy’s batting average is. How many times does he get on base? There are all kinds of ways to get on base—you get hit by the ball, you walk, a fielder makes an error. It doesn’t matter how you reach first, just as long as you do. Not only that, but the guy who walks more than other players must have a great eye for the strike zone, and that will eventually produce hits. Lew is the first owner in the history of Major League Baseball to give the general manager, Billy Beane, and the president, Mike Crowley, an ownership stake in the team. This decision on Lew’s part is a great example of picking the right partners. As Lew often says, having Billy and Mike as partners has been his best “Major League” decision.

High player payrolls greatly diminish profits in every sport. Billy keeps the A’s payroll within the budget established by Lew, Billy, and Mike. The team has a lot of young players. According to Forbes, the A’s operating income in 2009 was $26 million, seventh in the league. So, by having a general manager who does not always think or function like the competition, the A’s are not like the competition, and they certainly are not following the competition’s practices. That makes sense for any business.

no skin, no deal

Picking partners on the basis of the experience of a long-term personal relationship can be the ideal business combination. Many times, you do not have that luxury, so you must rely on alternatives to reach the same conclusions.

One way to protect an investment is to make sure that everybody has something to lose. If someone is in on a free ride, you may not have his full attention. Assuming that everybody is presumptively honest, you can almost always trust people’s selfish motivation. Reliance on the profit motive is a positive element in the capitalist system. People are rarely going to do something that is against their own interests. That being a given, you have to be sure everybody has some skin in the game. If you are the deep pocket, you do not want to be the only person signing the loan. If you do, you had better own everything and be in total control.

I am a hands-on person. Most of the times I have lost money is when I have been in somebody else’s deal and either that person wasn’t paying attention or we disagreed about how the business was being run. In other words, it was when I chose the wrong partner.

During this most recent real estate bubble, I was involved in an investment in Florida with three other people. We bought a piece of land and sold half of it for half of what we paid for the whole thing. One of the partners wanted to immediately parlay that money into other investments. I did not agree. I felt we should take our initial investment out, but, because of the way the transaction was structured, I could not block the partner’s decision. Eventually, I was able to extract our money from those investments, but the time and aggravation made it very difficult.

I have usually been very careful about picking my partners. My feeling is that being a partner does not mean just investing time and energy relative to your stake. It means always paying attention to the entire project. Whether I own 1 percent of a business or 80 percent, I treat those businesses alike because I have the same obligations to all my partners regardless of the size of their investment. I put the same amount of energy, enthusiasm, and concern into everything I do, regardless of my ownership stake. At times, my priorities shift, but I will not hesitate to take time away from something where I have a bigger interest if I feel the smaller venture needs the time.

I’m sure that a lot of “business analysts” could write a position paper on why that strategy is wrong. They would say that it makes no sense to devote the same amount of time to something where I have $10,000 on the line that I would to something where I have $100,000 at risk. Intellectually, they may be right. But it’s the only way I know to treat my partners, and I believe this attitude is important to anyone who is investing with me—or me when I’m partnering with other people. Lew is a great example of what I mean, and it’s why we mesh so well.

I have been brought many attractive deals over the years where the originator wanted to run the investment even though he was putting nothing into it. These investments are often local, and the guy usually has a connection or some special expertise in the area. I do not mind rewarding someone on the back end, but I do not become involved in things where my partner has nothing at stake and runs the deal. That is a “no-no.”

good partners come in all kinds of packages

I have owned a home on the Florida panhandle in the Destin area for several years. Traveling to and from the area, I often fly in and out of the Panama City–Bay County airport. The airport has two runways and a terminal building with six gates. Since the early 1980s, the airport has looked for ways to upgrade its runways and expand its gates, but it is located on St. Andrews Bay near federally protected land and bordered by a residential area. The county finally decided that a new airport would have to be built on a different piece of land; the work would be funded partly by the proceeds from the sale of the existing airport.

It was rumored that the city was going to undertake this new airport project. I have some friends who are close to city politicians, and they all told me that this was going to happen sooner rather than later. I have other residential projects in the area, including the Willow Creek Plantation in Okaloosa County and another in Wal ton County, so the prospect of acquiring seven hundred acres of land with waterfront exposure was very appealing, if for no other reason than all the existing shoreline on the Emerald Coast is taken.

Even though the bidding process would be very formal and totally out in the open, I had a little bit of a head start because I knew the area and the people in the area knew me. However, the $50 million price tag was more than I could afford for one deal. I needed a partner, and an honorable one at that.

I called a friend of mine who is the chairman of the board of Leucadia, a public company that invests in mining, telecommunications, health care services, banking, real estate, and wineries. The company is known as a “mini–Berkshire Hathaway” for its diverse portfolio and consistently high rate of return. Another advantage was that the company had also developed the nearby communities of Rosemary Beach and Draper Lake on the Emerald Coast.

Leucadia is a major institutional investor, a public company with diverse interests and shareholders to whom management is responsible. At the same time, this company is operated by Ian Cumming and Joe Steinberg, two highly skilled individuals who run the company as if all the money were their own. In fact, they do own a very large block of the stock, but their management style is personal. They are intimately involved in the analysis of their holdings and always try to retain the best people as operators. It is this personal interest that differentiates Leucadia from the great majority of companies of comparable size. The common denominator in this diverse group of holdings is finance. The owners understand the fundamental nature of acquiring undervalued assets and building a strong balance sheet. Their compound annual growth rate since 1979 is approximately 20 percent. There are few, if any, other companies that have such a record.

More important, Ian and Joe are two men of great integrity whose protocol of honesty in their business dealings is reflected in the personal way they interact with various assets. That is to say, they are driven more by assets than by earnings. Once again, the key to a successful deal is the rule of good partners.

However, a good partner does not have to be wealthy or even well educated. One of the most unusual partners I have ever had is a guy named Peanut Hollinger, a lifelong barge operator on the Mississippi River.

Peanut is a legendary figure on the river who left home at age thirteen and got into the barge business. He reminds me of what Max McGee, the iconoclastic Green Bay Packers receiver, once said: “When it is third and ten, you can take the milk drinkers, and I’ll take the whiskey drinkers every time.” One of Peanut’s sources for beginning deckhands was the prison system. Peanut had done a little time for forgetting to pay some income tax, so he had gotten to know the warden at the Mississippi State Prison. When we started our barge company, Peanut went to the warden as usual and asked if he had any inmates who wanted to turn their lives around. The warden would send a parolee to interview with Peanut for a job on the river.

Peanut always started the interview by taking a gun out of his belt and placing it on the table. He would then launch into his pitch. “The warden tells me you want to turn your life around,” he would say. “Okay, you can come to work for me and start as a deckhand. After three or four years, you can move up to be a mate. After three or four more years if you do your homework and do a good job, you might get to be a captain and run a boat on the river. That is a lifetime job, and you can make a good living at it. So, if you come to work for me, I will train you to do all that.” Invariably, the prisoner would ask what the gun was for. Peanut’s answer was quick: “That’s in case you mess up.”

Unusual but unusually good partners—Captain Peanut Hollinger (R) and John Nichols (L).

Because of his background, Peanut commanded respect from these ex-inmates. They knew he meant business, and he never had a problem with any of them. It always helps to have a partner who speaks the same language as the people who work for you. As Peanut himself put it, “I’d tell them how the cow ate the cabbage and that the only bad guy in the organization was me, and I’d tell them we all make mistakes, and, as long as you do not continue to make them, you’re welcome to work here.”

to thine own self be known

In addition to having some insight into others, having people skills also means that you have a sense of yourself and your own limitations. You need the ability to make judgments about yourself in relation to others. In other words, you need to know both yourself and the person across the net.

In keeping with the tennis metaphor, here’s an illustrative story. I was once at a corporate tennis outing run by Dennis Ralston, an NCAA singles champion and Wimbledon singles finalist. I was hitting with the great Australian player Ken Rosewall, who won eight Grand Slam singles titles in his career. I knew Kenny through a series of exhibitions I had played with him and his fellow Australians to raise money for charity. Kenny was quiet, humble, and overly deferential. Ralston came over to our court and asked if we would play a set of doubles with two of the executives from the host company. Kenny took one guy as his partner, and I teamed up with the other.

My partner took himself a little too seriously and did not have a sense of his place in this foursome. When the score reached 2–2, this guy passed Kenny down the line. He pumped his fist, turned to me, and gloated, “I passed Rosewall!” He said this as though he really believed, in that moment, that his game was superior to Rosewall’s.

I shook my head and pulled the guy aside. “Let me explain something to you,” I said. “Don’t fool yourself. He let you pass him down the line. If we wrote random numbers on our side of the court, he could erase them in sequence hitting balls from the baseline on the other side. He is making this look good so that it’s fun for everyone. The only reason the score is 2–2 is because he wants it to be 2–2. I’m not trying to deflate your ego, but do you realize who we are playing?”

Truthfully, I am not sure the guy understood me or the situation. He believed that Kenny was actually playing tennis against him, as opposed to just keeping the ball in play and making the game entertaining. He lost sight of the fact that Kenny was one of the greatest players in the history of the game.

In business, as in tennis, you have to know yourself and your opponent. Tennis is not a game of racquets and balls played by people on a court; it’s a game of people played with a racquet and a ball. In a free-market economy, business is a dynamic of competitive people exchanging goods and services satisfying the needs of society on a level playing field for the purposes of producing a profit. It pays to know your competition. It pays even more to know yourself.