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Tough Things First
14 minutes | Jul 28, 2021
When should businesses borrow? That question is prime in their era of very cheap money. Ray Zinn, Silicon Valley’s longest serving CEO, knows and tells you now. Guy Smith: Hello again, and welcome to another episode of the Tough Things First Podcast. I’m your guest host for today, Guy Smith. And as always, we’re picking the brain, the wisdom, the experience of Silicon Valley’s longest serving CEO, Mr. Ray Zinn. Today, we’re going to be talking about cheap money and borrowing. Every business has a temptation to borrow money. I think every human being in a capitalist society has a temptation to borrow money. We are, at least as of the date of this recording, still in a period of exceedingly low interest rate, cheap money. This brings forward the questions that I think our audience is interested in. When is debt the right thing to do? When do you know that the cheap rates are as good as they’re going to get? How should you balance your borrowing against your cashflow, et cetera, et cetera. So with that, Ray, hello. Good to talk to you again. Ray Zinn: Well thanks, Guy. Good to be with you this morning. Guy Smith: Always a joy to be with you. Now, we have cheap, cheap, cheap, cheap money. I get to say that because I just closed a refinancing of my house yesterday and I’m just still stunned at how little I’m paying for cash right now. Ray Zinn: You mean for interest, the interest rate? Guy Smith: Yeah. Ray Zinn: Okay, cash. Right. Guy Smith: When it comes to business, there’s always a temptation to borrow money. I think some companies borrow money because they’re not frugal internally, and they think they have to get excess capital from the outside. Let’s first start off by talking about when do you think it’s right to borrow. What are the key elements that say borrowing is really the only thing that we should consider for this particular situation in our business? Ray Zinn: Well as you pointed out, money’s really cheap now. I’ve never seen it any cheaper than it is right now. It is about as cheap as it’s going to get. Any of you who have your money in money market or in treasuries, you’re getting less than a percent back on your money. Obviously, if you’ve got cash, you’re not going to benefit from that by borrowing because if you put your cash to work, you’re not going to get much for it. You might as well use your cash, unless of course you don’t have the cash. And then, of course you don’t have much of an option other than to go out and borrow. But you’re not going to find, over the next couple of years, you’re not going to find money any cheaper than it is right now. If you have your ability to refinance your business, refinance your building, refinance your home, whatever it is you can to refinance to get that lower interest rate, you ought to do it because I don’t see interest rates going up at least for the next couple of years. Now’s the time, if you are in need of money and you have the ability to go out and borrow, now’s the time to do it. They’re almost giving it away. In fact, I would say they are giving it away. Guy Smith: I’ve got to believe that this applies to so many businesses out there that may already have a debt load, and have an opportunity to transfer that debt to a new lender and shave several interest points off of what they’re currently giving to the bank. Ray Zinn: Absolutely. What I did actually is I took some of what I was going to pay for taxes and I invested that in the market. And then, I took my line of credit and I borrowed on my line of credit to pay my taxes. Because I was gaining about four-and-a-half to five percent using my money to invest in bonds and some stocks, and paying only a couple of percent on my borrowing on my line of credit. So I’m picking up two, or three or four percent by using the bank’s money that I borrowed rather than my money, because I can’t use my line of credit to invest with. So I take that I money that I earn and dump it into the market and then use my line of credit to pay my taxes. I’ve got to be careful because someday I’m going to have to pay that back. But right now, it’s cheaper for me to borrow the money to pay my taxes than it is to actually use the money that I would have used for taxes and put that back in the market. Guy Smith: That is a clever little do-si-do. I wish I had a tax problem big enough for me to justify doing that, but maybe down the road I will. Well, let’s get back to the business side because businesses occasionally are just way too tempted to borrow. What are the legitimate triggers for borrowing, regardless of what the interest rates? And, how would a lower interest rate change that equation? Ray Zinn: Well, if you have the ability to borrow, depending on what you have to collateralize the loan with, you can use it for buying property, investing in your building. Maybe you’re renting instead of owning, you might consider buying your building, therefore you would eliminate that monthly rental or lease payment that you have to make. Those are the kinds of things you can do. If you need new equipment, if getting new equipment will help your efficiency and make your business run more efficiently, then you could use it for that. Don’t borrow money for things that have no physical value. Borrowing money, for example, to go on vacation or to eat out. I would say just going on vacation, then those are the things you want to avoid. Borrow money for tangible things, things that you can collateralize, that have value, long-lasting value not just to, as you say, a vacation. Guy Smith: Well, to my mind, one of the great things that cheap money facilitates is the ability to move forward on strategic things that may not have been possible in the past. Your semi-conductor industry, we know that building a fabrication facility is way, way expensive. But, I’ve got to imagine that there are situations where, when money is really, really cheap, a company can then take the risk and say, “Okay, we’re going to bet bigger than we could have last week to do something, to buy something, to make a strategic change that’s going to put us one step ahead of the competition.” Ray Zinn: As long as it’s collateralize-able. In other words, if it’s physical, even inventory, if it’s something that’s physical, then yes. But not on intangible vacations, or just things that don’t have lasting value. Whenever you think about borrowing, make sure it’s got a physical relationship, in other words that you can actually collateralize it. That’s the key because at some point, that interest rate’s going to go back up again and you might have to dispose of that asset to pay off that debt. Guy Smith: Yeah. Now, is there any category of spending that you’ve seen other companies borrow against which you figured was foolish? Is there something that some business leader is really tempted to go to the bank and borrow on and they really, really should not? Ray Zinn: Well, things that depreciate fast like cars, and boats, and airplanes and stuff like that. You want to avoid that, okay. Another example, even though this is one of the hot topics that we’re discussing now, is your educational borrowing. In other words, people who are borrowing money to get an education. That is an intangible, meaning it’s not something you can collateralize. Now, you can gain something from it when you put that education to work. But a lot of people are just running a big, massive educational debt, student loans, and now they can’t collateralize that so that’s something that’s going to be hanging over their head for some time to come. I think those interest rates are pretty fixed too, on student loans. If you can figure some other way to borrow, but not against the intangible, but not against these things that don’t have tangible value that you can collateralize. Avoid anything that’s not tangible. That’s what you want to do is just make sure that whatever you are purchasing is tangible and has lasting value, something that’s going to have at least a five year lifespan. Guy Smith: Even if it’s intangible, a little bit of careful thinking about what to do. I was having a conversation the other day with an air conditioning repair guy. This was a guy who, right out of high school, decided to go to trade school because it was cheaper, he could see what the rate of income for somebody who repaired air conditioners were, et cetera, et cetera. He was cursing up a blue streak because some politicians want to cancel student debts for guys who went off and studied Russian literature. Ray Zinn: Yeah. Guy Smith: He felt really cheated that he spent money out of his own pocket to go to trade school and he was now being asked to give tax money to finance other people’s education that lacked any real economic value. Ray Zinn: Yeah. Well, that’s going to happen. With this spreading of the wealth as they say, or reallocation of wealth, you’re going to have that happen. Life is not totally fair. There are going to be things that are going to work for you and work against you. Even when Donald Trump lowered the taxes, it actually went up for me because I had two pieces of property and I could only write off the taxes of one of them and actually, my taxes went up. But, other people’s taxes went down. It depends, again, where you are when things change. It may be that you’ll end up paying off your student loan and then somebody else gets it for free, but that’s just the way it is. That’s why we live in a democratic society. Not everything goes in your direction. Sometimes it will, sometimes it won’t. Guy Smith: That’s very true. One of my favorite writers, P.J. O’Rourke, his teenage daughter once shouted, “Well, that’s not fair!” He said, “You’d better hope it doesn’t get fair. You’re a white female in America, things get a whole heck of a lot worse than that.” Ray Zinn: That’s true. Guy Smith: Well, thanks again, Ray. For the audience, if you find this podcast compelling then you’ve seen nothing yet. You need to go get a copy of Ray’s book, Tough Things First. In the annals of business and leadership books, Tough Things First is arguably the best one that’s out there. Not only is it a top-to-bottom study about entrepreneurship, leadership, management, executive thinking, but a whole bunch of wisdom into how all of this ties together. And also, as part of a humanistic organization. By all means, it’s got to be on your must reading list. In know for a fact it’s required reading at at least a couple of business schools in America. If you have not bought it and read it, do so before the day is over. Ray has two other books out there. Zen of Zinn, Z-E-N of Z-I-N-N, and Zen of Zinn Two. These are small, little, bize-sized nuggets of wisdom covering everything from management, to humanity, to leadership, to life as we know it, the nature of honesty in relationships. And, if you’re looking for holistic thinking about life in general and how it intersects with business, you’re going to be hard-pressed to find better material than these three books. Ray, again, thank you very much. Always a joy to share some time with you and look forward to doing it again. Ray Zinn: Well, thanks, Guy. And again, those two new books, the Zen of Zinn One and Zen of Zinn Two, are golden nuggets. In other words, if you like mining gold, you’ll love these two books. Thanks, Guy, for this podcast.
20 minutes | Jul 14, 2021
Disaster Planning for Business
Ray Zinn, the longest serving CEO in Silicon Valley has seen business disasters come and go, and dodged many of them. In this episode of the Tough Things First podcast, Ray discusses how to plan for unplannable disasters, and even the common ones. Guy Smith: Hello again, and welcome to another episode of the Tough Things First Podcast. I’m your host for today, Guy Smith, and as always, I’m really excited to have a chat with Ray Zinn about a topic which I think is on everyone’s mind. 2020 has been a heck of a year with the pandemic. Businesses have had to react to a disaster which is normally not on their books, normally not in their planning. Ray has been through many up and down cycles, many disasters in business, and we’re going to have a chat with Ray, the longest serving CEO in Silicon Valley, about how somebody in business, how a business leader can plan for disasters in general, but also for these whopper disasters that come around maybe once in a lifetime. So hello, Ray. Great to be with you again. Ray Zinn: Well, thanks, Guy. Yes, it’s great to have you on the podcast with us. Guy Smith: Always enjoy doing it. It’s exciting, it’s intellectually stimulating, and I learn more about practical business working on this podcast than anything else I get to do during the week. So let’s dive right into it. 2020 has been a disaster. Pandemic has really racked a lot of businesses, from the small to the large, so why don’t you give us first your perspective about what is the difference between a normal disaster, a run of the mill business disaster, and something exceptional about an event like a pandemic, and why this changes the way the business leader might do their disaster planning? Ray Zinn: Well, Guy, I like to think of, all disasters are disasters. I mean, there’s no good disaster. And you could say that depending upon the kind of business you run, one kind of a disaster could impact you more than another kind of a disaster. So for example, if your company was a clothing company and you could switch to making face masks and other protective clothing, this disaster is actually a boom or an advantage. A disaster for one person can be a boon for another. For example, when you get a cavity or you break a tooth, that may be a disaster for you but it was a great thing for your dentist. Or if your heart goes bad, that’s a disaster for you but it’s a great thing for the heart surgeon. So there’s always a… For every dark cloud, there’s a silver lining for someone else. So again, depending upon the kind of business you’re in, one disaster could be a boon for another business. But not withstanding that, trying to plan for something that will impact your company, presuming your company is not going to benefit from the disaster, is what we’re really talking about today, and that is to be prepared. As I say, plan for the worst but hope for the best. And so make sure you have sufficient cash reserves to hold you through the disaster. I like to think that three to six months is a minimum. This particular one, the pandemic that we’re currently facing, has gone nine months so that’s a little extraordinary, because generally, these disasters tend to start slowing down in about a year, year and a half, something like that, so that they kind of recover in about that time period. This one may recover in about that time period too based on what we’re seeing. But if you can have at least three to six months worth of working capital and reserves, that’ll definitely a way to stave off the effects of it. The other thing is of course to have a good relationship with your employees. Your employees can withstand a disaster if they know that you’re in there with them, if you’re actually feeling the pain just as much as they are. And when I was running Micrel, the thing I like to think of is treat my employees like family, and families stick together. And my employees were willing to do whatever it took to keep the company going because we had a good relationship with our people. Guy Smith: All great points, and in terms of businesses that actually benefit from disasters, that’s not really all that educational for the audience today but it is fascinating to watch. I have a friend who owns a factory and they make valves, and about three months into the pandemic, I was wondering how his business was doing. And he very sheepishly said, “Guy, I hate to say it but business has never been better.” And the reason was that a lot of the valves that they make go into medical equipment, and the demand for that medical equipment had just spiked through the ceiling. So yeah, some people do definitely walk away from disaster better off. But on the flip side, let’s take something like your local mom and pop restaurant. The pandemic and lockdown really started back in March. Given the timing of when the vaccine will be available, it’s probably not going to be until February or March before they can be fully back open again, and that may even be optimistic, so we’re looking at a year of a severe shutdown. So for the average startup, let’s talk about startups for a second. What did you see that they did well or did wrong, aside from not having enough cash in the bank, in reaction to the pandemic? What were some of the things that were obvious and smart survival tactics? Ray Zinn: For those who can pivot, that’s the key, and if you’re a startup and depending upon what kind of a startup you are, being able to pivot to keep yourself alive is key. So one of my grandsons, he’s graduated already but he lost his job during the pandemic, and so he was struggling to keep his family going, and so he started doing YouTube videos and selling those. And I thought that was kind of a cute thing to do, so he pivoted. In other words, he just said, well, rather than just stay home and do nothing, I’m going to see if I can make lemonade out of these lemons. That’s the kind of thing that you need to do if you’re a startup, is you have to pivot if you want to stay in business, so you’ve got to find ways to earn money. Another one that comes to mind is this person was running this pet salon where they do shampooing and combing out the pet’s hair and nail clipping and so forth, and so because of the pandemic, they had to shut down their store. But they went and got a couple of vans and then they went mobile. And even though they did social distancing, they were able to go to the client’s home, and there, they were able to service those clients by actually going to their location to take care of their pets. So again, pivoting, that’s the key. These mom and pop restaurants, as you’re talking about, rather than sit down dinners or meals, you could pick them up. They actually had ways for people to drive to the curb and then the employees would come out, actually deliver the meal to the customer. So again, pivoting is the key. Just because you’re down, you don’t have to be out. Guy Smith: And that relates to the barbecue restaurant right down the street from me. Being a Southern boy, going without barbecue is considered a cardinal sin, and when the pandemic came in, they pivoted hard, hard, hard to the takeout and delivery motif, even incorporating it into their loyalty advertising to people like me, doing very cute things like saying, life without barbecue is meaningless. Let us add meaning to your life. We will deliver your barbecue on an emergency basis to your house. And they found a way of keeping the customer base and even possibly expanding it during the pandemic. And let’s touch on that for a second because customer loyalty I think is one thing that’ll get a company through hard times better than just about anything else. Talk a little bit about what you’ve seen during the pandemic in terms of companies that have great customer loyalty, or maybe marginal customer loyalty, and what that’s done in the way that they can get through. Ray Zinn: Well, as an example, during the pandemic, my wife had a difficult time getting her hair done. So she tried to get ahold of the owner, the salon owner, but wasn’t able to. And so she just said, okay, so much for that hairdresser. She went out and found someone else to do her hair who was more flexible and more willing to take some chances, I guess is a better way to say it, and she was able to keep having her hair taken care of. So again, loyalty is extremely important, no matter what business you’re in because your customers will stick with you if you have the right attitude toward client service. Especially during a difficult time like a pandemic, you want to be on the phone, texting and emails with your clients regularly, even more so than during regular times or non disaster times. Guy Smith: I think I’ve seen a lot of that from small to large businesses, the ramp up in terms of any outboard communication seemed to increase. I’m willing to just ballpark this at about 25%. Everyone seemed to believe that staying in touch with the customer was not harmful and probably necessary in terms of staying top of mind during the pandemic, but also after the pandemic resolves itself. Did you see any large companies who did not do well in response to the pandemic? And how did they stub their toes? Ray Zinn: Some of these airlines that were not flexible, they were still charging you for changing your reservations. I think they suffered. Now, many of them did get off of that kick and didn’t charge for changing your reservations. During this pandemic, I mean, everybody is going to suffer, and the last ones you want to suffer are your customers. And so you want to make it as convenient and as good an experience as you can for your customers. Some of these computer companies didn’t do a very good job either because they kept complaining that they had a hard time getting parts. In other words, that parts suppliers were the reason for their not being responsive and taking care of their customers. And so that was another large industry that I don’t think did particularly well during the pandemic, especially with people having to stay at home and run their business or run their employment from their home. They need to have access to their computers and to their network. Some companies did well in taking care of their customers, others did not do so well. Companies like Zoom I think did a pretty good job. They jumped in and actually made it convenient for their customers to use their product, but also some of these other, WebEx and so forth didn’t do so well. So depending upon the kind of services you wanted to provide, don’t blame your demise on someone else. Just accept the responsibility to satisfy your customers and not let them suffer because you’re having to suffer as you would. Guy Smith: Very good advice on that one. So planning for a normal downturn, a normal disaster, you’ve said anywhere from three to six months of cash in the bank, being close to your employees, but how should a business leader incorporate mass scale disasters into their forward planning? It’s maybe a once in a lifetime event, but should a business leader be incorporating that? And if so, what precautions should they have in place in order to deal with something this big? Ray Zinn: Well, as you know, all these emergency companies, emergency governments have had their disaster preparedness, and they go through drills and they go through all kinds of rigmorole to practice for a disaster. So the fact that you may not be having a disaster doesn’t mean you don’t want to plan for it. So depending upon the kinds of potential disasters you’ll have in your area, whether it be fires or floods or hurricanes or whatever, preparing for it, even though it hasn’t happened yet, is key. And I think the people in California saw that with the problems they were experiencing with these fires. They harangue the public utility company that supplies power to the point where at the drop of a hat, they would shut off power for fear of getting lawsuits and other problems. So preparing for a disaster is necessary. As I said, plan for the worst but hope for the best. So I’ve been involved as a ham operator in a number of disaster planning times. We just recently did one here for earthquakes, so even though we weren’t having an earthquake, we all checked in at a certain hour, at a certain time, just to make sure all of our gear was working and that we could communicate in the event of a disaster. So plan for the worst but hope for the best, that’s the key. Guy Smith: And before we wrap this up, let’s talk a little bit about the interaction with employees during the disaster. Now, one part of that is of course the normal leadership practices, stay calm, keep on course, blah, blah, blah. But a lot of companies had to make some harsh trade-offs in terms of furloughs, layoffs, outright terminations, rescinding of Christmas bonuses, et cetera. Let’s coach a couple of startups here, what the wiser trade-offs that a company can make when they have to go to their employees and say, this is a long-term problem and we have to make some changes. Ray Zinn: Well, we think we talked about that earlier, and that is as long as you’re willing to suffer more than they are, for example, when I ran Micrel, we had a number of disasters. I always made sure that if there was time off, I took twice as much time off as employees did. If there was a pay cut, I made sure my pay cut was two to three times more pay cut than they had to suffer, and so I just want them to know that I was in it all the way. As they say, are you in it all the way? They didn’t have the feeling that I was taking advantage of the situation. Guy Smith: Wow, and I think that’s good advice for anyone, shared suffering or at least a commitment to your employees through demonstrated self-sacrifice is one of the things that keeps employees motivated, keeps them believing in the mission and the vision and the company, and staying on board. Because during a disaster, sometimes employees leave if they think their future prospects are not going to be all that great. Thank you, again. This has been enlightening and informative, as it always is. For your audience, if you need a massive dose of leadership, management and executive thinking thought, by all means, get Ray’s book, Tough Things First. I’ve read a lot of management books in my day and this is the number one as far as I’m concerned, because it’s comprehensive and it leads the new startup CEO basically through all the rigors that they need to understand in order to run a successful business. Ray’s second book, Zen Of Zinn is also out. More philosophical, but what I like about that book is it kind of ties together the philosophies of humanism, of being part of society, about being part of an organization, so that you can see how the human aspects affect a business and how business affects humanity. In this age of conscious capitalism, Ray shows that this is not a new thing. He’s been doing it for a long, long time. And just to tease the audience, there will be a Zen Of Zinn Two I hear, sometime in the spring most likely, so keep your radars tuned in for that. So thanks again, Ray. I appreciate it. I look forward to talking to you again. Ray Zinn: Well, thanks, Guy. I enjoyed having this podcast with you.
29 minutes | Jun 30, 2021
Sales and Expansion
Sales drives revenue. But selling has changed when the internet and technology made mass marketing available to everyone. In this Tough Things First podcast episode, Ray Zinn is in conversation with Aleks Gollu, CEO of 11Sight, to discuss sales effectiveness in the 21st century. Ray Zinn: Hello, everyone. Welcome to another fantastic Tough Things First podcast, it’s great to be here with you today. And I have a very special guest that I’d like to introduce and let you know a little more about him. This is a friend of mine, Aleks Gollu, I’m so delighted Alex to have you on the program with me today. So let’s hear a little bit about yourself please. Aleks Gollu: Thanks Ray, and it’s definitely an honor to be here with you talking. My career has evolved as that of a serial entrepreneur. I did my undergrad at MIT, then I did a PhD at UC Berkeley. Those were all in electrical engineering, computer science. And back at the university, we were working on automated cars, automated highways, this is late ’90s. But one of the other PhD students, Farokh Eskafi and I, we were more entrepreneurially oriented than just academically. So we had it in our head that we wanted to do a startup, and this was like the dot-com era just about to begin. So right after the PhD, [inaudible 00:01:49] and I did a startup, this is a time where Motorola StarTAC is the most advanced form, Netscape is new. So we told people, “Hey, come to our website, tell us what you’re interested in, and we’ll send you SMS messages with your stock prices, your sports results and so forth.” So that company we sold to a competitor, then both Farokh and I, we saw RFID emerging. He being more technical, he built in a new RFID chip that did location tracking, and he ultimately sold that company to Maxim Integrated. And I used RFID readers off the shelf to build a yard management solution that made transportation aspect of supply chain more efficient. In today’s language, we were an IOT company in the Cloud. Back then, we were a SaaS based yard management company that combined RFID and user input to improve trailer life cycles in yards. Now, after that, we both saw video as a communication means of the future. And that brought us, Farokh and me back doing a new company which is 11Sight. And what we do at the 11Sight is we bring businesses and customers closer together. We provide the fastest way to connect, the simplest way to engage. And the net result is increased revenues and improve customer satisfaction. So that’s basically me in a nutshell from ’83 arriving in US, to sitting in north of Berkeley in El Cerrito today talking to you. Ray Zinn: Thank you. It’s so good to hear that background too, because it’ll give our audience a little insight as to who 11Sight is, and as well as who you are Aleks. Now let’s talk about the subject that you want to discuss today. So why don’t you take it off in there, tell us what we’re going to talk about, and then let’s just launch right into it. Go ahead. Aleks Gollu: Yeah. So as we focused on video, we said, okay, videos communication means of the future. We all know Zoom, the meeting problem online, meeting problem is solved. We all know about the WhatsApp, Skype or FaceTime. So two friends talking, that’s taken care off. We wanted to see what else video can do for people? And what we noticed is that there is this increased friction in the way businesses interact with customers. And as we dug deeper into it, what we realized was that this is a friction that us technology companies and Silicon Valley have created. We have introduced AI chatbots, we have introduced forms. And when a customer wants to talk to a business, it takes two to five days to get that first face-to-face meeting. Maybe you schedule something with Calendly. And that basically is the problem we wanted to focus on and better understand, is why is it that businesses are not ready to just simply pick up the phone, and here I say, “phone,” than a potential prospect and customer calls? Because back in the ’80s, as a sales guy, when your landline rang, you were more than happy to pick it up, and you had a personal conversation. Today, the opportunity exists to be able to do that on any device and people can call in also on any device. We have the technology to connect with video, with audio, anytime we want. And yet there is this reluctance of, “Well, let’s not talk real time. Let’s schedule a meeting, I’m going to go do some research about you, and then we’ll talk.” Ray Zinn: That’s a problem that we’ve been facing since day one. With the Zoom meetings as you would, or the new technology being able to connect with audio, with good audio and good video does change things. I have a saying, “Out of sight, out of mind.” So with just a phone call, as “Your phone call,” there’s no sight. So when we say, “Out of sight, out of mind,” we like that face-to-face, and if we can improve, as you would, the connectivity between the customer and the salesperson, I think we have a winner. We learnt that through this pandemic, everybody was on this audiovisual method of communicating. So I think this is really the wave of the future. It not only saves money and time, it’s more convenient to set up these meetings. Aleks Gollu: I definitely agree. It used to be that I would have to get up, drive to South Bay, have a meeting, maybe have a coffee, have another meeting, drive back, and that would be the day with all the bay area traffic. I now have the ability to do that in the first two hours of the day, and there is equal amount of connection in those meetings that I do online. Okay, so it’s not the same as breaking bread with somebody, but if you can see each other, the facial expression to just the gestures, that does build a relationship between you and the other party, and it also engenders trust. And trust is a very important aspect of sales or building your relationship between a business and their customers. Ray Zinn: It reminds me, back in 1974, yeah ’74, I was working for a company called Electromask. And I was their Sales Manager, National Sales Manager, and one of my customers was TEI. And so, I would take an airplane from San Jose to Dallas, and I’d go into the lobby and I’d say I want to talk to so-and-so. And next thing I knew, I had two guards rushing me out of the building. And so I said, “What’s going on here?” And they said, “We were just told to usher you out of the building.” So I hopped back on an airplane and flew back and told my boss. I said, “Well, that didn’t go over very well.” He said, “What do you mean?” I said, “Well, I went there, took that three and a half hour flight, and all I got was they just threw me out of the building.” He said, “Well, did you make contact with your customer?” “Well, I couldn’t, because they wouldn’t let me.” And so he said, “Well, get back on the airplane and this time be more sincere.” And I said, “What? Okay.” So I sent a letter, because back in those days, we didn’t have this technology we have today. Aleks Gollu: Mm-hmm (affirmative). Ray Zinn: I sent a letter to my customer saying I was going to be there on a certain day, and I would like to set up this meeting. And he never responded, but I dutifully got back on the airplane, flew back to Dallas, three and a half hours. And same thing. There, here come two guards, lifted me up, and literally tossed me out, tore my pants, and I ended up flying back again, no contact. So my third time… This is in my book by the way, I think anyway, Tough Things First. So my third trip, I didn’t want to go, but my boss said, “You must go, and you must make contact.” So what I did, went back again dutifully, two and a half hours. And this time, I’m sitting in the lobby, thanks coming, “okay. How am I going to get this guy to come down and see me?” So the receptionist said, “Well, who may I say is calling?” I said, “Tell him his brother is calling.” And so, pretty soon, down comes this fellow, my customer that I wanted to meet with, and he’s looking around, looking around, and then he goes over to the receptionist. I could hear him kind of say, “Well, where’s my brother?” And she pointed over to me and I had this Cheshire grin on my face, and he came over and he said… His hand was on his hip. He was red in the face, “How dare you still tell them that you’re my brother?” I said, “Aren’t we all brothers and sisters under God?” And he started laughing so hard. He took me upstairs and we started talking about this product that I wanted to sell them. And it really began the biggest order the industry had ever had by first equipment, semiconductor equipment ever had. And that’s when I launched the Wafer Stepper, was there at that meeting with TEI. But that’s what it took. It must have been 12 or 14 hours back and forth of flying just to set up this meeting. So hey, I had this technology, been available to me back in 1974. I could have saved myself, lots and lots of time. Aleks Gollu: That’s a good story. It’s amazing that back then, people were willing to work so hard for a face-to-face meeting and take all those flights. And today, you can do that even from the comfort of your home, and people are just now being hesitant of just answering an incoming call. So that’s basically, I think what’s going to happen in this post-pandemic era, now that we have gotten used to meeting people online. A lot of this interaction that used to necessitate travel or scheduling meetings and so forth, are just going to be at the end of a single click. Ray Zinn: Aleks, well, let’s look at this one though. How was I going to make contact with my customer using this technology when he wouldn’t take my call? See, what I did is I had to come up with the story to get him to do it, but see, when you have the technology, he can just ignore me. He can just disconnect, or he can just not take the call, he won’t join the meeting. So tell us, how would I be able to pull that one off using this technology? Aleks Gollu: That’s exactly where the marketing or understanding your customer and your customer’s needs come into play. You basically said, “Hey, we are all brothers on the God,” and you basically said his brother is here. So if you can find something that’s relevant to your customer, that’s value to your customer, you can easily send an email or send out some information that will resonate with the customer’s problem. So the goal here is not just to sell, but to create value, to solve a problem of your customer. So if you have the right audience and if you are providing the right value proposition, the customer will be more than willing to call you. It’s also true that in this day and age, that everybody is reaching out to everybody on LinkedIn and on emails and Facebook ads, and so forth. And yet, in all of that noise, some messages, some outreach actually stands up. It comes to being able to be relevant, to add value to your customers, and let them come to you. And things have also changed the way people do shopping because people do their homework first by themselves, and typically down select to a couple of vendors or a couple products that they are going to choose from. And when a customer is in that mindset, this could be a business customer, this could be a consumer, that’s when they switch to the buying mode. And at that time, the customer is willing to reach out and place a video call because this is when they would step into a store or they would actually call it business and say, “Hey, we are interested.” Ray Zinn: Yeah, but the Aleks, the problem I think is with the reluctant customer. My son-in-law works for Dell and he’s the Sales Manager for Dell in Montana. And he’s having difficulty. He has the technology that we’re talking about. I don’t know which one he uses but go to web, I see web. I don’t know, anyway, he has one that he uses. Aleks Gollu: Mm-hmm (affirmative). Ray Zinn: And still, the customer can just still shut him off. He can just not be willing to accept the link, click on the link. Somebody’s going to click on that [inaudible 00:14:50] link. So what he’s having to do and difficult customers, he’s still having to go down to the lobby and try to figure out some way to make face-to-face contact with this guy, taking him to lunch or dinner or whatever, because having to click on a link is… The customer has got to accept that. And not all of them are willing to accept it. I’ve heard his stories, he’s having difficulty just doing nothing, but these linked meetings. Aleks Gollu: It is true, there are multiple ways you can go and you can look for your prospect, right? If you’re selling to a very large enterprise, you have a dozen potential prospects and a dozen decision makers you need to connect with. And in those cases, I definitely agree with you, is you have to go park yourself in their lobby, figure out at which conference they are giving a talk… Ray Zinn: Mm-hmm (affirmative). Aleks Gollu: And you just go and attend their talk and catch them after the talk. Those are the standard tools that I have used. I’ve made contact with Kraft Foods, VP of Supply Chain at the time, when he was giving a talk. But then if you actually have possibly thousands or tens of thousands of users, or customers for your product, you cannot go to 10,000 different conferences so that you can make contact. At that point, you do have to play a little bit more statistically or strategically. You do an outreach to all those 10,000 and maybe a 1,000 are interested. Ray Zinn: Mm-hmm (affirmative). Aleks Gollu: You go to those 10,000 with the right message, with the right value proposition, that they will then self-select and say, “Okay, what this guy’s telling me in this email, or in this YouTube video, or in this Facebook ad, is relevant to me. Let me reach out to them.” So in those cases where you have tens of thousands of customers, and you want the customers to come to you in that inbound sales, and I think that’s where these online interactions come into play. Whereas if you are doing outbound sales targeted to very few people, you have no choice. You have to get on the road and you have to catch them somewhere in person. Ray Zinn: So what percentage of the time do you think we can contact them, vis-a-vis these online methods versus the face-to-face? You have any thoughts on that? Aleks Gollu: The way I would say is that there is nothing that replaces breaking bread or being in touch with the person directly. But the metaphor I use is that if you have a product and you are going to market, what is the market size, or what are the number of customers you are targeting? In my first company, we were selling to telcos. In US, there were five of them. Once we talked to them, that was it. We didn’t really need to do much of a marketing outreach because we knew the five customers that we needed to talk to. At Pink, which was my supply chain company, there probably are 500 companies with enough traffic in distribution center manufacturing plant yards, that we could initially down select to 15-20 of them and do whatever is possible to actually get in front of them. So in those cases, you definitely need to do outbound sales in the sense that you go to the customer, you catch your customer. But then there are a lot of solutions today, like our solution applies to any business 25 people and up, that has a VP of Marketing and has an inbound sales, strategic approach, because they do all these campaigns. They have a 100,000 different people, a 100,000 different businesses who could use their solution. In those cases, you can’t just go to all 100,000 to the office, you have to let them come to you. So that then becomes inbound sales. I guess the long story short is if you are doing inbound sales because you have a very large number of customers, you are serving online interaction is ideal. If you are doing outbound sales and you have some named customers, you need to get in front of, the old fashioned way is the best. Do whatever you can do to meet the decision-maker in person. Ray Zinn: Is there any way to do better marketing using your kind of tool or using some other go to meeting tool? Is there some way we can market better that way, as opposed just to sales? Aleks Gollu: I think that’s a very good point, is that there is sales, but you are not just selling, you are adding value to the customer. So the need of understanding your customer, understanding their problem, how you can create value to them, that hasn’t changed. Technology may change, but the way we conduct business, the way we interact doesn’t change. So you need to understand your customer, their problems, how you can create value to them. And your marketing needs to gear towards that. As you introduce your company, your company culture, how you work with your customers, that’s a good way of building trust in general. And then as you do your outreach to broader number of businesses for them to contact you, then they are going to be more willing to reach out to you because they’ve heard of you. Ray Zinn: I have this program I call ZinnStarter that I have at various universities, and I’ve been using this training method of trying to get these students to get their message across in a very short period of time. Customers, just like any of the rest of us, have short memories and they don’t want to sit around for an hour presentation. So what we need to do is come up with ways to get our message across in less than five minutes. I did that with you the other day, and I remember it was kind of funny. You went for 15 instead of five, and I said, “Aleks, we said five minutes. It took you 15 minutes.” We got to figure out customer… In fact, a good marketing tool, and I don’t know how we do it yet, I still haven’t figured it out, but we have to be able to get that message out in less than five minutes. That’s the way that you’re going to reach your customer. If they’ve got to sit through a 15 to 20 minute conversation, they’re going to click off. And so we’ve got to come up with getting people to understand that to get your foot in the door, you’ve got to have a very snappy, short presentation. Aleks Gollu: That absolutely true, and that’s the other thing with these scheduled meetings, is that there is this expectation that you’re going to spend half an hour, an hour to talk. And I interact with… I have customers who call us sometimes like at Sunday night at six o’clock, that did happen. It just happened that they were following up on their LinkedIn messages and they clicked on. So you definitely are correct that we need to have that skill of when my ear line rings when I pick it up, I need to make that connection in the next three, four minutes… Ray Zinn: Exactly. Aleks Gollu: And see if there is value that I can add to that customer, and if this is a proper prospect. And the nice thing about that incoming line is that you are no longer bound to this half an hour that has been allocated. It protects you, it protects the customer that [crosstalk 00:23:02] you make a connection, it’s great. Then you can stay as long as you want. Ray Zinn: Exactly. So the key, I think to get your message out there, it’s got to be short and snappy… Aleks Gollu: Mm-hmm (affirmative). Ray Zinn: Five minutes or less, five minutes or less max. So we’ve got to figure out, the customer has to… Or the salesperson, sales and marketing have to figure out how they’re going to get that customer to click on that link, to have a longer face-to-face meeting? And to do that, you’ve got to do it short, snappy, and it’s just… As I said, you and I have played that little game. I said, “Okay, Aleks, give it to me in five minutes or less,” and you went 15. And you tried your best, and it was not easy, was it Alex? Aleks Gollu: It definitely is not easy, especially in that case, I was doing the company presentation. There is a three minute version of it, like on Friday, I’m going to do a six minute version of it. And you can definitely… And if you are presenting to the VCs, there is a 60-minute version of it. But if you are engaging with your customer, that call can come in at any time. And if you know your product, and if you know your value proposition, you can engage that customer right there and then, understand their problem, how your company can add value, and then sort of move that relationship along. And there are actually tools that we provide in our solution that if a particular prospect calls you and they enter their email address before they call you, we can actually show you some information about that caller’s company, their business, and maybe even a couple of value proposition that you can mention. Ray Zinn: What we need to do, Aleks, is we need to come up with a way, and I don’t know if this is another business that could be looked at or how it can be done, but getting your message out in less than five minutes, that ought to be a business. That’s somebody that wants to be an entrepreneur and say, “Here’s how to get your message out in five minutes or less.” That would just ring with everybody, customers and marketing, sales, everyone would want that. I know as a customer, that I am not willing to listen to more than five minutes. So I think this is a key, this is another way that I think we need to think about reaching these customers and whatever method that is, whether that’s in-person or using these online tools, is to get that message out in five minutes or less. And that’s my goal. I’m trying to come up with, how do I convince these students that I teach to get that done in five minutes or less? Some of them, I’d say probably out of the 60 or 70 that I had this contest with, I think maybe 20% of them got their message out in less than five minutes, but that’s still not very good. We need to get higher percentage net to get that message out. So anyway, what do you think? Aleks Gollu: I definitely agree because a good sales guy should also be articulate, understand the value that their business generates for their customers. And when a call comes in, you should be able to just provide the value, understand your customer, where they’re coming from and move things along. Ray Zinn: The two most important things customers want is service and quality. Aleks Gollu: Yeah. Ray Zinn: That’s the two things they look at the most. So you’ve you got to show you’ve got the service and that their product has its quality. So that’s the key. Well, anyway, Aleks, thank you for taking the time today to speak with us and talk about your product, and kind of your thoughts about sales and marketing going forward with all the new technologies that are available. So if somebody’s trying to reach you, would like to learn a little bit more about you and 11Sight, how can they get hold of you Aleks? Aleks Gollu: So my ear line is vcall.link/aleksgollu, A-L-E-K-S, G-O-L-L-U. So type that into the URL of any browser, you will be calling me directly, or you can come to our company website, 11Sight.com. You can actually spell it out as 11sight.com or 11site.com. In the lower right corner, there is going to be a button, click that, click the sales department. You will either get to me or another team member. They have the ability to transfer the call directly to me. So [crosstalk 00:27:51] We are ready and available to talk to anybody whom we can add value, and in five minutes or less, we’ll see what we can do for you. Ray Zinn: That’s good. Well, thanks Aleks. Aleks Gollu: So it’s vcall.link/aleksgollu, and given where I come from, Alex is spelled with K-S, A-L-E-K-S, G-O-L-L-U. Ray Zinn: Well, thank you. This has been great. I really appreciate you taking your time to visit with us today and cover this important subject. So again, thanks for joining us today, everyone. We hope that you will come and listen to our podcasts going forward. We’re in the top 10 in Silicon Valley, you can look at our… Go to our website, toughthingsfirst.com, to learn a little bit more about us, and what we’re up to. My new book is out, Zenn of Zinn II is now out for all of you to go get at Amazon, or any other nice book retailer. And we just really invite you to join us every week as we present these podcasts. So again, thanks everybody for being with us today, and we certainly have enjoyed this visit with Aleks. Aleks Gollu: Thanks Ray.
13 minutes | Jun 16, 2021
Board Members come and go, but navigating a working relationship with board members good and bad is a constant. In this Tough Things First Podcast, Ray Zinn, who has experienced everything when it comes to boards, provides some profitable insights. Rob Artigo: Rob Artigo here, your guest host for another edition of the Tough Things First podcast with Ray Zinn. I’m a writer and entrepreneur in California being invited back. Always a pleasure, Ray. How are you? Ray Zinn: Doing great, Rob, good to be with you again. Rob Artigo: I think I have a good subject here, something that you are definitely familiar with, and that is a board of directors that you might have for your corporation, your company. In business, we have these board members that tend to come and go. I mean, they don’t stick around forever. If you’re fortunate enough to be like you, running Micrel and being around almost four decades… And so you have a board that, I’m assuming, was fluid. It changed over that time, because that’s just the nature of these boards. But sometimes you have people who leave, and you don’t really necessarily want them to leave, because you appreciate their input, advice, and their professionalism on the board. But then they go on and do something else, and they’ve got another board they join, or they just get tired, or they retire, because it’s just that time. They just leave the board. Sometimes, you have other board members who are a thorn in your side. I’m assuming you’ve had that experience, where you’ve had board members who you kind of wish they weren’t around the board anymore, but yet they never go away. Give me some thoughts to start off here about your experience with boards, whether you’re sitting on a board or whether you’re dealing with it as a CEO of a company. Dealing with board members, because not all personalities are going to gel well together. And some people, they find out that they’re maybe not meant to be a board member in the first place. Ray Zinn: Well, there are boards, and there are boards. I mean, a rose by any other name is still a rose. It depends upon how your board is formed. If you’re a private company and you have control of the company because of your shareholder capability or majority, you can get rid of a board member very easily. You just fire them, because you’re a majority shareholder. If however you’re a minority shareholder, whether you’re public or private, then you have to get the agreement of the majority shareholders to dispose of a board member. Now, in the case of a public company, there are elections that are done periodically, depending upon the bylaws of the company, and you get to put your slate of shareholders up for vote. And so if you have a shareholder that is not performing well, you can only do it at a specific time when that election takes place, but you can change your board of directors base. And so it’s not a forever thing, but during that period when they were elected, you did hire them, then they can be a pain in the neck. But it’s like hiring good employees. You want to make sure you hire good board members. If you inherited a particular board, then of course you have to do the weeding out process and get rid of the board members that don’t get along with each other, or don’t get along with management. So you can tell if you have a good board by how well they work together and how involved they are in the success of the company. It’s difficult, especially if you’re a public company and you only elect boards every year or two. Then you’re kind of stuck with those guys until the next election comes up. Rob Artigo: Tell us a little bit about what you expect board members to do. What should I expect as an entrepreneur from those board members, and what should I expect them to do? And what makes a good board member? Ray Zinn: That’s a good point, and a very good question. The board needs to be supportive, and that includes… The management needs to be supportive of the board. And so if you look at the responsibilities, if they’re well-defined… In other words, if you have a board and everybody has a well-defined responsibility, then you can measure them against what they were responsible to do. And in a public company, you divide up the responsibility, corporate governance, accounting, financials, organization, reorganization, hiring CEOs. So the board is usually divided up to responsibilities, usually have a committee that you form to take care of these different aspects. And then you look for the experience that the particular board member has in those particular areas, so that you get the best results. Most boards are not that involved. I mean, all they do is they come to the board meeting and agree or disagree on certain aspects of what the board has to do as part of their board responsibilities. Very seldom do they do anything outside of that, other than monthly or quarterly board meetings, or annual board meetings, depending upon what the bylaws of the company require. But boards are like employees. They are often paid, they do get stock, and so they are to be treated like people who have to perform their particular function. And if they’re not performing their function, you get the rest of the board to agree to dismiss them, because a board can, at appropriate election time, dismiss that particular board member, depending upon whether you’re private or public or whatever. Oftentimes, if the board is not liking the way management’s running the company, they’ll actually bring in another board member who maybe has some expertise in that area. They’ll be sitting right on the head of the management, micromanaging the company. So boards can be either very helpful or very deleterious. I very seldom see them… They’re either very helpful, or they’re deleterious. It’s like progressing or retrogressing. You’re either moving forward, or you’re moving backward. You’re not just standing still. So if the board is a do-nothing board, that’s deleterious. Even though maybe they’re not causing any waves, they’re still not… They’re getting paid and getting stock, and they’re not really doing anything, so that’s deleterious. And then there of course activist boards, maybe if you’re a public company, and the shareholders bring in an activist to be on your board. They can be a real pain in the neck. As I said, there are only two kinds of boards. Those are the ones that are very helpful, and those who are not helpful. What you want is you want a board that’s helpful. Rob Artigo: If you have the ability, I suppose, to maintain a majority shareholder status, then you’re in a position of strength in terms of your ability to work with the board and exercise some influence, but as that erodes, you end up losing some of that power and the ability to deal with the board. Is that accurate? Ray Zinn: That’s good news, bad news. That’s true. So if you got a management that has control of the board, but they’re not very good management, then of course the board will support the bad management and you don’t have any successful outcome. On the other hand, if the board is not working well with management, it could be that they change management or they can make some modifications to the structure of the company. So boards can be under the thumb as you would of management, which is not a good thing, because then if the management is not doing that good a job, then the board who represent the stakeholders or shareholders is not being… They’re not serving well to the shareholders of the company. It all depends upon on how well a company is doing. If the company is doing extremely well, the board has little impact or little effect. If the company’s not doing well, the board can have a big impact. Rob Artigo: If you have the deleterious board, is this where you get into situations of hostile takeovers, or is that just strictly a stock thing? I mean, I really don’t know, and that’s why I’m asking. Ray Zinn: Well, it depends. I mean, a hostile takeover can happen if you have a great board, even. So the hostile takeover occurs when they get the shareholders to all agree to sell the company or dispose of the company. The board doesn’t necessarily do that. The board can force a hostile by virtue of just going out and soliciting… Shouldn’t say soliciting, but trying to get companies to come in and buy the company. So hostile is really where the company is being attacked as you would… Or to be acquired, even if the board supports management. So hostile just means where you don’t have agreement with the board to sell the company. Rob Artigo: Yeah. It’s the outside source coming in and saying maybe there’s an offer on the table that is something friendly, but then they decide to decline the sale, and somebody goes, “Well, then we’re going to take the company anyway,” type of scenario. Yeah. All right, well, I learned a lot about boards and board members in this podcast. And as usual, Ray, wealth of information, and I appreciate it. Join the conversation at toughthingsfirst.com Questions, comments are always welcome. You can go there. You can ask Ray directly. He’ll answer your questions. You can also follow Ray at Twitter, Facebook, and LinkedIn. And don’t forget, wherever books are sold, you can get the Zen of Zinn, and of course Tough Things First, two books with much more knowledge that can help expand your horizons each day. So get those books if you can. Thanks again, Ray. Ray Zinn: Thanks, Rob, appreciate you being here.
15 minutes | Jun 2, 2021
Consultants can be helpful experts, but sometimes they show up to fill a need for which there’s purpose. In this Tough Things First Podcast, Ray Zinn discusses when consultants make sense and how to decide when the time is right. Rob Artigo: Rob Artigo here once again, your guest host for this edition of the Tough Things First podcast. I’m a writer and investigator in California. Big back is always a pleasure Ray, how you doing? Ray Zinn: We’re doing just fine. Thanks, Rob. Good to have you back on the program. Rob Artigo: I’m sure this is a subject you can identify with and probably you’ve heard plenty of stories and experienced it yourself is, the tech industry… And I think I relate this to Hollywood, as there’s always this bubble around… I don’t even know if it’s a bubble, but sort of this fog, this cloud around the tech industry, because there’s money there and in Hollywood, the same thing. There’s always people on the periphery trying to separate ambitious people from their money. And I mean that in ways like, they’ll say, “Hey, you come to me, I will build out your business plan. Or I will help you create this or I’ll design something for you. Or I’ll do an advertising campaign for you all. I’ll show you how to do this on the internet, or use Yelp to get some business.” And it turns out really all they’re doing is, doing something for you, you could have Googled or watched a YouTube video and figured it out for yourself and only takes five seconds. Right? And you end up paying them thousands of dollars and the return is nothing. So let’s get to the point here is that, there are people in Silicon Valley, there are people in industries where there’s money that are just waiting to take maybe a naive younger person or a new entrepreneur and extract some money from their wallets. That doesn’t mean that there aren’t legitimate consultants out there or people that can really help you. So that’s what I want to talk about here. Would you agree with my intro there? That I’m correct in saying that there are people out there waiting to take money away from people, for projects they don’t necessarily need to be paying for? Ray Zinn: Well, I’m sure there are some. I don’t know that they’re prolific. They’re- Rob Artigo: Vultures, not like vultures? Ray Zinn: Well, you know how they vote. So I think there are people who are opportunistic. My dad used to say that a consultant is somebody who doesn’t have a job. So I got to be careful about when we refer to about a consultant. A medical doctor is a consultant, if you want to look at it that way. A teacher, a professional, either a high school or college or whatever teacher, they’re consultants. And so, the term consultant… A good father or a good mother is a consultant. And my parents were good consultants for me. It depends upon where you need help. I believe in going to the doctor to get physical checkups and to have them consult with me on what I need to do, whether to lose weight or whether to change my eating habits or sleep habits, or whether exercise. A physical trainer, a person who works with you in an exercise program, they’re a consultant. There are consultants and then there are people who are just trying to separate you, as you said, from your money. I don’t think there are that many, at least in my experience that are not good. Another one is a CPA firm, they’re consultants. Tax preparers are consultants. There may be a few consultants that are not really worthwhile, for carrying their weight, worth their pay as you would. A consultant is anybody that you would go to, to get help that you can’t handle yourself. So, if you can handle yourself, there’s no need of a consultant. I know people that do their own barbering, and sometimes it looks like it. Or I know people who go to the restaurant because they don’t like to cook. It just depends upon what your needs are. Rob Artigo: Yeah. I think for the purposes of this podcast, I’m thinking… And I appreciate the fact that you wanted to separate the difference between, what I’m referring to as one of these people that are trying to separate ambitious persons from their money versus a consultant that is valuable. So there are plenty of valuable consultants out there. And I guess what I’m getting at is, what we want to be able to do as entrepreneurs in our businesses, I’ll give you one example. I came from a radio background, 20 years in radio, and a couple of times they would bring in… The company that I was working for, the radio station I was working for, decided to bring in a consultant. And the consultant spent a week looking at how operations worked in the newsroom and with the FM radio stations and the AM stations. And looked at how we approached imaging and different things, and then came up with ideas for how to brand the company better and how to make it more consistent and a more concise messaging. And I never found anything of any value, at least as an employee on, ranking file type in the newsroom where I felt like they were giving us anything that we didn’t already know needed to be done. But the company ended up paying for it anyway. And I suppose they got some value out of it, but when I’m a leader of a business and I sit down and go, “Hey, we need to bring somebody in.” How do I know that it’s something that I do need to get somebody from the outside to come in and take a look and help us out? And then how do I know if that person is going to be the right person, that’s going to give us quality for our investment? Ray Zinn: Well, it’s like, let’s say you have a heart problem and your physician is suggesting that you have a quadruple bypass or something. You might want to get a second opinion. And so a second opinion is necessary whenever there’s something really serious with the company that would require a second opinion. So I look at a consultant as somebody who’s going to offer a second opinion. You may have a health issue and you’ll get online and you’ll look up some resources to help you understand your medical problem. But then you’ll go to the doctor and say, “Here’s what I read online. What do you think?” So generally, a consultant is brought in many times because something really serious is wrong. And maybe it’s the board of directors is demanding that you get a second opinion. Maybe they’re not happy with the way the current management is solving the problem or dealing with the problem. They want a second opinion. So they’ll hire a consultant to come in and look at the situation. Maybe it’s also, maybe the leadership of the company brings out a second opinion just to bolster what they’re doing is correct. That they’re on the right path because, it’s called drinking your own Kool-Aid if you don’t get somebody from the outside to come in and do a deep dive into what you’re doing. Consultants again, all depends upon how serious the situation is and whether or not you need a second opinion. So I refer to a consultant as somebody who really is there to offer a second opinion, or to be able to do something that you cannot do, because you lack that skillset yourself. For example, like a tax preparer or a CPA or something like that. Rob Artigo: Right. And you have to have somebody doing your payroll. I don’t care how small your business is, you should have somebody doing your payroll because that can become a problem with the IRS really quick. And you just need those… You need experts helping you out if you really want to be a success and streamline things. Here we are as business leaders that we have to make a decision as to who to hire, so we look at who’s out there and maybe we ask for recommendations, it’s like hiring an employee, you have to do your due diligence. Did you have experiences with Micrel, where you had to bring somebody in to take a look at what was going on so that you could get that… Like you said, that other perspective, an outside dispassionate perspective? Ray Zinn: Well, only to the extent we talked about like a CPA or a… Oh gosh, let’s say, a board member might come in and help us take a look at a particular operation that they got that knowledge and skillset. But we didn’t use a lot of consultants in a situation where you’re just looking for somebody to come in and give a second opinion of what you’re already doing. I’d say that 99.9% of the time, the consultants that we use, we did not have the resources or the ability to really look at that particular problem. And so we hired somebody with that expertise. I can’t think of hardly a time that we brought in a paid consultant to look at something that we could do ourselves, but we wanted a third opinion or a second opinion. Rob Artigo: Okay. I can’t help but think of Marcus Lemonis said, the profit on CNBC that he goes around and invest in companies. And he literally is that outside guy who comes in… Well, he usually brings in money and investment and then becomes a stakeholder in the company. But he is the ultimate consultant when it comes to many of these businesses, because he’s got an expertise in the way big picture runs that these other people don’t. And when you are running a business, I think that perhaps if you find that you’re running a foul or your business is not doing well, you find that you aren’t really handling the business operations well, that if you find somebody who can help you with those situations, who could say, “This is what you’re doing wrong, and this is what you need to do.” That’s the kind of consultant that could help small businesses that are just getting started that have found that they are struggling for the first couple of years, bring somebody in and go, “All right, here’s what you need to do to fix your major problems.” That’s different than going to a company like Micrel, that is running well, that is profitable, 99% of the time, it’s just one year where it wasn’t. You didn’t need that because you were running the company right. Many of the entrepreneurs who are perhaps listening to the podcast are listening to it and going, “All right. Well, I’ve got a smallish business. I’m struggling a little bit, and I’m not sure what I’m doing wrong.” This is where you get into a situation where I opened talking about, somebody’s paying for something they don’t need versus something they do need. And you mentioned the do need part. What would you say to those entrepreneurs who find themselves struggling and want to potentially reach out to somebody who could come in and look at the way they were operating everything and say, “This is the way you need to do. This is what you need to fix. You need an accountant. If you don’t have an accountant, you need to have one?” Ray Zinn: I’ve just recently heard of a franchise that provides training for customers. You can join this group of outside members that will be part of a board of directors group, as you would… An informal board of directors where, you pay X number of dollars a month and you meet once a month and you have experts there or even each other, where you could help consult with each other and help solve problems. And so there’s a number of those kinds of franchises available. So I would recommend that if you’re a small company that you look at possibly joining one of these franchise groups that does have these informal meetings, where you bring your problems to them, and then they talk about it as a group and they offer suggestions. It’s pretty interesting. I thought it was a pretty neat way of helping small companies who don’t have the resources to hire good complex boards, that they can at least talk among themselves as a kind of a talk group and they take time to help solve each other’s problems. Rob Artigo: Around here, if you’re looking for office space, you can get a desk and an area to meet every once in a while. And those kinds of benefits for a small company where you’re not having to take on a lease, long-term obligations or having to hire a bunch of people. You can join one of these groups and you can get some good information. So technology can really help us out if we stay within our means while we build it into a profitable company, which is obviously the goal. Thank you, Ray. Really appreciate it. You can join the conversation at toughthingsfirst.com. Your questions and comments are always welcome there. Follow Ray Zinn on Twitter, Facebook and LinkedIn. And of course you can get the texts, Ray books, Tough Things First, and The Zen of Zinn. Thank you again, Ray. Ray Zinn: Thanks, Rob. Appreciate it.
13 minutes | May 19, 2021
Stakeholders and Priorities
The stakeholders in business aren’t just in boardrooms or corner offices, they are in every room in your business and well beyond the walls. Who are these people, should any one stakeholder come first? Ray Zinn answer that complicated question in this latest edition of the Tough Things First podcast. Rob Artigo: I’m Rob Artigo. I’m your guest host for this edition of the Tough Things First Podcast. Hi Ray. It’s good to be back with you. Ray Zinn: Hey, it’s so good to have you, Rob. It’s always fun to be with you and having these interesting topics. Rob Artigo: Well, I caught a part of a Forbes article the other day that posed the question, “Who comes first, your team members, your customers, or your stakeholders?” So let’s define each one of them briefly if we can here for this podcast and try to answer the question “Which comes first?” So team members obviously are employees, but would you expand the term team members to include people who are not employees, like contractors and other people? Ray Zinn: They could be, certainly. A team member could be a vendor, a supplier. And so you got to look at it… In fact, a customer could be a team member, or even a shareholder, or a member of the board. So a team is really what it takes to accomplish a task. That’s whether it be basketball, football, baseball, or whatever kind of team you’re setting up, they are a group of people that work together to accomplish a common task. Rob Artigo: This might be a thing where we have team members and customers and stakeholders in general, sort of overlapping in some situations. Now let’s talk about customers real quick, define that. Are there different levels of customers? And are those customers always the ones directly buying from you, or does that include people who are indirect buyers like the customers of customers? Ray Zinn: Well, it could be the customer of customers, depending upon how many tiers you have in your distribution chain, or whether you’re a service company, like if you’re a hairdresser or you have a beauty salon or a restaurant. It depends upon what kind of business you’re running, would define who your customers are. The customers or whoever is in that chain… For example, I refer to some of my employees as customers. And so, I know that one of my marketing people who has to work with the product groups, they refer to them as their customers. A customer is anybody who’s receiving your service. That’s basically what a customer is. Rob Artigo: All right. So let’s talk about stakeholders. And I think that, again, this is another one of those terms. It could cross the customer and a team member boundaries. The stakeholders, how would you define a “stakeholder”? Ray Zinn: Somebody who has a stake in the company. For example, an employee could be a stakeholder because maybe they own stock, or maybe they’re just putting all that time and effort into it. They’re putting a lot of blood, sweat, and tears. They become a stakeholder. A customer could be a stakeholder because they’ve got either some commitment, loyalty, maybe they’ve got your product designed into their product. And so, they become a stakeholder. And so, a stakeholder is really anyone who has a vested interest in the company. Rob Artigo: Okay. So then, going back to the original question from this Forbes article, which was, “Which comes first, team members, customers, or stakeholders?” In the way that we’ve defined these here, and this is what caught my attention, and you clearly pointed out here in your definitions of each one of these categories is, you cannot really answer the question of which comes first, when you’re talking about a group of people who essentially cross over, depending on the circumstances. And would you be able to, and I’ll just pose the question to you, can you answer that question? Which comes first, the team member, the customer, or the stakeholders? Ray Zinn: I know the trap you are getting me into on this. So I was ready for it. They’re really partners. Okay. So if you look at those team members, the customers and the stakeholders, they’re all partners. They’re partners in your venture. And if you look at them that way, then you’re not trying to differentiate, “Okay, well, you’re just a team, you’re an employee, or you’re a contractor, or you’re a customer, or you’re a shareholder, or you’re a board member.” We’re all partners in the success of the venture. And so that’s how it should be looked at as opposed to, “who comes first?” Back to the chicken or the egg thing, who comes first? Because without your customers, your team members, aren’t going to have anything to do. And without your stakeholders, they’re not going to be supporting the company. So you get back to this chicken and egg thing about who is the most important. And if you look at them as they’re all important equally, then I think you’ll have a better chance of treating them all equally, successfully. I’ve heard people within my company actually say, “Oh, employees come first because without the employees, then you don’t have the products, you don’t have that quality, that reliability, and so, the employees come first. A happy employee means you’ll have a happy customer, and you’ll have a happy shareholder or stakeholder.” But I like to think of them all as kind of being a triangle. They’re all equally… A triangle where they’re all equally-sided. And so you’re not trying to partition out in saying, “Oh, the customer is more important” or I’ve heard them say, “customers are number one.” Well, they’re number one in some respects. And your shareholders are number one in some respects, and of course, your employees are number one in some respects. So they’re all equally important, like an isosceles triangle. And so, if you start trying to differentiate and separate them, then you’re going to bifurcate that triangle, and it won’t be a triangle anymore. It’ll be this mess. Rob Artigo: And that’s a well-rounded way of looking at everybody. A well-rounded way, we’re talking about a triangle here. It’s a kind of a mixed metaphor I think I just walked into. But it is a symbiotic relationship in the sense that you have these different categories, but like you said, they’re all equally important. When you’re dealing with them as a leader of a company, each one of these different categories, tell us a little bit about your approach to making sure that they understand that they are important. I’ve heard this saying, and you’ve probably heard before, “the customer is always right.” And you treat the customer in a certain way to at least let them think that they’re always right. But you know that when you’re dealing with people, particularly when it comes to technology, the customer doesn’t necessarily know what it is that you’re doing and your business in the integrated circuits. Silicon chips are so complex that if somebody can say, “hey, look, I need something to do this”, you can understand what they want, but they can’t tell you how to get it done when they have no idea how a Silicon chip works. Ray Zinn: Well, if look at the word employed, E-M-P-L-O-Y-E-D, employed means to be engaged. And so if you look at it in that respect, your customers are engaged, your shareholders are engaged, your employees are engaged. And so they’re all employed in the endeavor of that company. It’s just a matter of who’s focused on what. Your sales department’s going to be more focused on the customer. Your human resources department is going to be more focused on the employees. Your shareholders are going to be more focused on the CEO and the CFO of the company, and vice versa, because they’re the ones that are in contact with the various organizations. And so, I just tell my people that you have to look at every person as important, and not that one’s more important than another. And so, that’s the way I’ve treated this problem of “Which comes first, the employee, the customer, or the stakeholder?” Because in many respects, we’re all basically the same. And because we’re all employed in the success of the company. Rob Artigo: Well, like I said, the term, “the customer’s always right” gets bantered around a lot. The team members do want to feel like they’re important. The team members, the employees, let’s say employees. Employees do want to feel like they’re important because you want them to stick around. You want the customers to stick around. I guess the stakeholders, depending on how intertwined they are with the organization, that you would want many of those to stick around, and maybe some of them you’d probably prefer if they didn’t stick around. But you have to address each one of them. That’s what I hear you saying, address each group, according to what their focus is. Ray Zinn: I think that in the article, the Forbes article, I think they chose the word stakeholder specifically, as opposed to shareholder. So a stakeholder could be a customer, or an employee, as opposed to being a… The shareholder would not necessarily be a customer or an employee. And so, they were very careful in choosing that word “stakeholder”. Because a stakeholder could be a shareholder, but it could also be a customer, also could be an employee. So because they all have a stake in the success of the company. Rob Artigo: It’s been great talking to you again, Ray. You can reach out to Ray Zinn with your questions at toughthingfirst.com. Really, send your questions in. Ray reads them. He will answer those questions. So you’ll also find more podcasts there, blogs and links to information about the books, Tough Things First, and the Zen of Zinn. Also, please go to your favorite podcast source. It’s probably the one you’re listening to now. Give your rating to help us spread the word about Tough Things First, The Podcast. It’s one of the top rated podcasts in all of Silicon Valley. And if you’re listening to it, you know it. So we look forward to having you back to listen to another edition of Tough Things First. Thanks again, Ray.
17 minutes | May 5, 2021
Hungry and inspired. It’s a good way to start an ambitious task, but whether you’re launching a start-up or trying to impress the boss, stretching yourself beyond your physical and mental means could have diminishing returns. In his episode of the Tough Thing First podcast, Ray Zinn explores the signs of burnout. Rob Artigo: Welcome to this 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. It’s so good to have you back on with me. Rob Artigo: It’s good to be here, too, and we love these podcasts, and it’s always good to spend a few minutes with you, just chatting through some of these important issues involving entrepreneurs and entrepreneurship in our company. So one of the famous quotes that we include at the intro of this show … The listeners just heard it, and you remember this: “If you think you have to work 80 hours a week to be a success, you’re dead wrong.” You recall that quote? Ray Zinn: Yeah, yes, yes. Rob Artigo: In Silicon valley and the tech industry culture as a whole, it seems like that challenges the statement. Sort of the general idea that you get on the job and you go, go, go, go, go, and you’ve got to work harder than everybody else. You’ve got to work all the time. You got to show that you’re doing all this hard work and you’re just working 24 hours a day, more than 80 hours a week, or whatever the case may be. But unfortunately, oftentimes, that works fine at the beginning, but then eventually, you run into burnout. You have employees, or even yourself. You hit a wall, and you end up collapsing, and you end up being less effective, not more effective, by behaving that way. So let’s talk a little bit about that. First, recognizing the employee who is headed for burnout, and then what we, as entrepreneurs, need to do to recognize if we’re doing it ourselves and headed towards a burnout. So first, what are some of the experiences you’ve had with employees in these circumstances? And what are some of the signs that they’re going in a direction that is counterproductive? Ray Zinn: Well, let’s first define the word burnout. So what, in your mind, is burnout, Rob? Rob Artigo: I think it’s when physically, emotionally, and mentally, you hit a wall. Kind of like the marathon situation, where runners, marathoners, are trained to hit that wall and then continue past it. But workers … And if you have a work cycle where you are working constantly, 24 hours a day, it seems like, and you’re not getting enough sleep, you’re not getting exercise, you’re not eating right, you’re not taking in the proper amount of fluids. All because you’re focused on essentially, obsessively, on a particular task or something, in order to prove your value, to prove your worth, or otherwise, just trying to be productive, to show that you’re better than everybody else. I don’t know. A goal. But then you end up hitting that wall, and you can’t get past the wall, and you end up failing. That’s what I think of burnout. Ray Zinn: Okay, well, let’s look at what can cause burnout. Burnout can be caused by many things other than employment. Burnout can be caused … It’s an emotional problem that can be caused by a problem in the family, health. It could be environmental. There’s a number of things that can relate to burnout. For example, if your company’s not doing well. So burnout is more of an attribute of a bad situation, whether it’s home or whether it’s health or whether it’s any other type of external problem, other than just your personal work environment. I’ve experienced this, when I lost my eyesight, back in ’94. In 1994, I experienced burnout, but it wasn’t burnout because I was working too long. It was burnout because I lost hope. I just was saying, “Hey, I’m done for.” Or it could be your spouse just handed you a divorce notice. Or it could be you just learned that one of your children had a significant health problem, or maybe a death in the family. So burnout is more than just a work-related problem. So since you’re talking about work-related, it’s hard to bifurcate that, because depending upon how solid your personal environment is, will also determine your level of burnout. Now, and what I like to think of is controlling your work environment, so that it doesn’t cause problems at home or your health or other factors. And so if you’re highly successful, if you really love and enjoy what you’re doing, that can cause family problems. We know that divorce rate among CEOs or high-level executives is much higher than it is with the working class, or the people who are not as high up in the organization. And a reason is because the CEO or the high-level executive is spending way too much time at work. He loves it. Maybe he’s got some pressure from the board, or maybe he’s got another person at work that he likes to be around. And so he just spends a lot of time doing non-productive things, as you would at work. So if you look at that, there’s three things that a CEO must do. Okay, so let’s talk about … Or high-level executive. Number one, you must have a good culture, which means the proper environment at the company. And we know at Micrel, my cultures were honesty, integrity, respect, and dignity for every individual. And then doing whatever it takes, no excuses. So you have to have a good culture. The second thing is you must hire good people. And if you hire the wrong people, of course, you’re going to end up with a separate kind of problem. And the third thing is that you must take ownership for the company’s operations and its success. So those are the three things. All the rest of them are superfluous, as a high-level executive or a CEO. So let’s not blame everything on just, “Somebody’s working 24/7.” We’ve got to find out: Why is that person working 24/7? I’ve had employees say because they just didn’t want to go home. They enjoyed being at work more than they liked being at home. And they had another reason for staying at work, which is not good, which is they found somebody at work that they liked to be around. And so when you dig in to find out why is that person spending so much time at work, you’re finding out that it’s really not because it’s work-related. It’s because there are other factors. So I’d say that probably less than 10% of the time, when I’ve looked into people who are working excessive hours, that it was really blamed on work itself. Or on the demands of work, I should say. So I have many, many examples, Rob, of people who are spending a lot of time at work, but they are not doing work. In other words, it’s not work-related. Now, that’s not to mean that there aren’t some. I mean, as I said, 10% of them are work-related, and I’ve had to caution them about, “Hey, you need to spend more time with your family. You need to take care of your health. You can’t be working 24/7.” And so sometimes, it has happened where an employee, because of a deadline, for a few days, or maybe even a week, will be putting in excess time. But then after that, I tell them, “Hey, you got to take some time off. You got to stay home.” Or I try to encourage them to try to decompress, as you would. People call it recharging their battery. That’s another one that I’ve heard. “Oh, I got to go recharge my batteries.” But that even includes people who are not putting a lot of time in at work. They just want to get away from work. They just need to decompress or recharge. So there’s no panacea. There’s no one single thing that you can put your finger on and say, “Oh, yeah, this is the reason why this person’s had burnout.” As we’ve talked about at the beginning of our podcast, burnout can be caused just because you got something stressful in your life, whether it be a health issue, whether it be a family issue. It could be just that you’re not having success in your job. Can cause burnout. I noticed that sometimes, when employees don’t come into work on time, don’t come in at normal time, or when they leave early, that’s a form of burnout. They just don’t like their job, or maybe they’re looking for another job. Rob Artigo: Yeah, I keep going back to thinking about this quote: “If you think you have to work 80 hours a week to be a success, you’re dead wrong.” And when I think of that, I think of obviously, the people who are spending all their time at work and neglecting every other aspect of their lives. And they think that’s the key to success. And I think that what you’re saying is that it can be important to success to pour yourself into something for a short period of time, in a short burst period. But over time, if you were to do that, if you were to try to do that, and you’re not some kind of special savant-type person, the Elon Musks of the world, these guys who just seem like they’re always on the job, no matter what it is that they’re doing. Those kinds of people, those are rare types of people. You have the other kinds of people who probably need to take a break after putting in 80 hours a week. You need to start to recharge your batteries, because that is an important term, because it’s accurate. Ray Zinn: Well, it’s the ego. You’re in love with your job, not in love with your family. And so those who are in love with their family will spend more time with their family. Being in love with your job is okay, but not at deference with your family. It’s not a matter of how long you work; it’s how well you work. I have a little company that I’m head of. I’m an investor, and a major investor. And culturally, they think, because they’re in Silicon valley and they’re high-level executives, that they need to work around the clock, just to show their family that they’re working their tail off, and that they’re really trying to make the company a success. Now, in this case, the company’s not doing all that well, and so they feel they have to keep working harder and harder and harder to make it successful. And if you have to work that hard to make your company a success, there’s something else wrong. And you need to find out what is wrong, fundamentally, with the company, such that you’re having to work all those hours, in your mind, anyway, to make it successful. Rob Artigo: Is that when you take a step back and sit down and get up in the morning, take a couple of hours just to have a cup of coffee or a cup of tea or something? And do a top-down evaluation or a bottom-up evaluation? In your mind, just sort of sit there and think through the scenarios that you’re dealing with and figure out? Because if I’m working a business and I want it to be a success, and many people who have successful businesses worked really hard to make it happen. But if I’m working really, really hard, and I feel like I’m getting ready for a nosedive, physically and mentally. And the burnout point comes up when we’re dealing with business leadership. If I’m facing that kind of situation, I need to look at these things and figure out, “Is there something I need to change? Or do I just need to hand it off to somebody else and go on and do something else?” Ray Zinn: Well, again, it depends upon how successful you are in your company. If your company’s not doing well, or if you’re a startup, you tend to think you got to work all those hours. But let me tell you that that’s not true. You should be able to run a successful company or bring your company to a successful point without having to work 80 hours a week. And because I proved that. I ran my Micrel for 37 years, and we were profitable every single year, except for one year out of 37. So you can do it, but you have to have that mindset to say that, “If I can’t run this company successfully within let’s say 40 hours or maybe 50 hours, at the most, a week, then there’s something fundamentally wrong with the mission of the company.” Rob Artigo: Well, there you go. The bottom line is, you have to be acutely aware of what’s going on with you at home, at work, physically and mentally, so that you can figure out if you’re facing one of these scenarios that could lead, potentially, to burnout and ultimately, to failure. You want to be a success. You want to do it and be happy about it. You want to do it and be comfortable at work. It’s an important … It’s a holistic approach to making sure that you’re healthy and the company is healthy, at the same time. And that’s kind of the key to success. Ray Zinn: Usually, when a company is not healthy, the employees are not healthy, or at least the leadership is not healthy. So that’s a clue. If you’re not healthy, look at your company. Probably, you’re not running a very healthy company. Rob Artigo: Well, as always, you can reach out to Ray Zinn with your questions at toughthingsfirst.com. Continue your education and the conversation, like the one we’re having here, with all the podcasts, blogs, and links to information about Ray’s books: Tough Things First and The Zen of Zinn. The Zen of Zinn, by the way, is a collection of writings on interrelated topics of entrepreneurship, leadership, management, discipline, determination, society, people, and life, which is something we also cover here, as well as being entrepreneurs on the Tough Things First podcast. So that book is the Zen of Zinn. Go out and pick it up wherever books are sold. Thanks again, Ray. Ray Zinn: Hey, thanks, Rob. Good podcast.
16 minutes | Apr 21, 2021
Exporting Silicon Valley Culture
There are good aspects to Silicon Valley culture. Ray Zinn, the longest serving CEO in Silicon Valley knows what they are and tells how to bring them into your community. Guy Smith: Hello again, and welcome to another and a very exciting episode of the Tough Things First Podcast. I’m your guest host today, Guy Smith. As always, we’re sucking all of the wisdom and knowledge out of the brain of Silicon Valley’s longest serving CEO, Mr. Ray Zinn. And today, we’re going to be talking about something that’s near and dear to my heart, which is how do we create Silicon Valley in your region. Your little neck of America should be like Silicon Valley, at least in all the positive aspects. It should have an entrepreneurship culture, it should have all the facilities needed so that anyone who wants to be a businessperson can be a businessperson. And so, we’re going to talk to who I think is a global champion of the entrepreneurship mindset, and see how we can do that to export it to the rest of America. So hello, Ray. Great to be with you, as always. Ray Zinn: Yeah, Guy. Yeah, this is an interesting podcast that you want to do, which is how do we create Silicon Valley in other regions, so let’s dive right into it. Guy Smith: Well, one of the things I know is that you’ve got a passion for this. You have this side project known as Zinn Starter, you’re giving money to a number of colleges around the country to help seed finance student teams who have a neat business idea and need to get past that initial little leg up. Why don’t you talk about Zinn Starter, for just a second? Then, we’ll dive into Silicon Valley culture and exporting parts of it. Ray Zinn: Zinn Starter came about because entrepreneurship is such a hot topic in universities. I don’t know of a single university or college around the country that doesn’t have some form of an entrepreneur program. So, we decided to get involved. We had, of course, Tough Things First, it was our main book that talks about how to run a company. So we thought we’d take that book as an entrée, and then encourage university students to come up with ideas. Not that they to be Earth shattering, ground breaking idea, but that they’d learn how to start a company and how to run it. So, we created a fund called Zinn Starter, which the students compete for at their university. If they’re selected, if their project is selected, then we help fund it to get it started. It’s just they need mentors, people who are willing to work with them to help them through the process of learning entrepreneurship before they actually get out in the real world and have to actually run a real company. Again, it’s a university training program to help the students get the practice of actually starting and running a company. Guy Smith: And, I’m enamored with the program because I’ve seen bits and pieces of it in operation, I’ve seen how the students react. I’ve seen how the schools react. And, there are people who may, in the past, not have had a lot of faith in themselves or their idea, but the moment that they get a little bit of mentoring, a little bit of money and a little bit of encouragement, boy it’s like a kid on Christmas. They light up, and they believe in themselves, and they really start punching about their weight and going onto the business world and making a go of it. I’m really happy with the Zinn Starter program. But, let’s talk about Silicon Valley. I like to think of myself as a veteran because I was out there for 22 years, but you were out there pretty much from the start. You were out there in the days of Fairchild, and the Fairchildren, and I think it was the eight traitors, or the Traitorous Eight, I forget what it was. But, the people who went out and formed their own businesses after working for the market leaders at the time. So, what are the positive aspects about Silicon Valley? And, what should a region do if they want to build a Silicon Valley like culture? What is the first steps that they need to do in order to make that happen where they are? Ray Zinn: Well, that’s a good point, Guy. What do they need to do? That is they have to have an atmosphere of can do. In other words, that’s the thing about Silicon Valley, if anybody has researched or looked into it all, know that Silicon Valley is a very can do attitude. They think nothing’s impossible, that the concepts that you come up with are limitless. And, that all you need to do is just apply some ingenuity and some elbow grease, and you can make it happen. It’s a very, very can do attitude that permeates Silicon Valley. And it also encouraged these financial organizations to come in and help fund these companies, because they felt the excitement, too. The thing that I’ve noticed, having been in Silicon Valley for over 60 years, most significant is just how much excitement and can do-ism that exists in Silicon Valley. And, that goes back to the Zinn Starter program. Once you see these kids excited, you give them a little money and you get them a little mentoring, and they get excited and then, pretty much, the other students get excited and they want to do it. And, they want to get involved. So success breeds success, and just tends to build on itself. Guy Smith: And, I agree with that because I’ve seen what’s happened at San Jose State University, with the Zinn Starter program. The first year that Zinn Starter was in effect, you had a few student teams who were definitely lit up, but they passed the torch. There’s a revolving cycle of leadership with inside of the Zinn Starter program there, so that excitement that they generate gets passed on, and passed on, and passed on. Each new generation out there tends to be lit up like a candle the moment that they step into the program and they see, “Oh yeah, other students did it. I can do it, too.” Now, in terms of other regions trying to start that can do mentality, where do you think the seed of that passion can come from? My perspective is that local business leaders probably need to be more involved in spreading the entrepreneurial spirit. But, there are a lot of things that can influence the next generation. Who do you think should be taking leadership roles in any given region, to turn it into a Silicon Valley? Ray Zinn: Well, I think the local educational facilities, whether it be a high school, or junior colleges. I think having an entrepreneur program in your particular region is crucial. And then, having business people who are willing to do like we do at Zinn Starter, willing to cough up a little bit of funding and help those schools in their entrepreneur program, is key to getting this excitement going. It’s just like Disneyland, what makes Disneyland Disneyland is its excitement. It’s that thrill. So, you need to create that thrill in your local areas. I know that in West Virginia, at West Virginia University, which we’re also involved with Zinn Starter, that’s what they’re doing. They’re going all out to really promote entrepreneurism in West Virginia, because West Virginia is not known for it’s high tech. It’s more of a mining, gas and oil type environment. They want to change that, they want to develop a more entrepreneurial, more electronics and other medical type device environment for their state. A way of really promoting Silicon Valley mentality is to get local educational facilities, like I said earlier, high school, junior colleges to start talking about putting entrepreneur programs in your high school and junior college areas. And then, of course, it spreads out to the universities themselves. It’s amazing how much excitement that I’ve seen, as I went around the country visiting these universities, we’re in about six or seven of them with Zinn Starter, how much this has really excited these kids. Listening to them talk about their various projects, they may not be the most exciting type programs that you would want, but you promote it. You encourage them. Let them know that you’re there to support them. I think that’s what made Silicon Valley Silicon Valley, is that it just fed on itself. They could see, “Look what we did at this company, I could do it at another company.” And, it just bred. That’s the key to getting your region having its own excitement, is that you create that excitement through your schools and through other community activities. Guy Smith: How do you see the local business community fitting in there? You’ve mentioned a lot about schools taking a leadership role and getting the excitement going. But, we’ve got local businesses, we’ve got local government as well. How do they fit in? And, who really should be carrying the mantle, taking the lead? Ray Zinn: Anyone. I mean, it should be limited just to the government. Just someone whose excited about getting entrepreneurism going in their local community can take a lead on it. You can get a hold of us, we can talk about Zinn Starter in your community. You can just encourage local businesses to cough up a few dollars, just to kick it off and get it going. You don’t even have to wait for these kids to go through university or through college, you could do it with people in the trade environment, to just encourage people to start their businesses and to build a successful community. Guy Smith: Well, let’s talk about Silicon Valley culture, and exporting parts of that to other regions. You already mentioned the can do attitude is one of the pillars underneath Silicon Valley and what makes it successful. Let’s toss, I don’t know, let’s say two more cultural pillars that have helped Silicon Valley be as successful as it is. Give me two more that any region should add to the list of cultural elements, in order to turn themselves into a miniature Silicon Valley. Ray Zinn: Well, of course can do, have that I can do it, that’s the culture that is most prevalent that I’ve seen. As an example, in Silicon Valley the way it got its name is because the material that is used to make a semiconductor is silicon. And at one time, in the very early days of Silicon Valley back in the ’60s, almost 80 or 90 percent of the semiconductor companies were right in Silicon Valley, and so they had a monopoly. The other way, of course, is to find something that’s unique to your particular local area, that you have some unique talent, educational talent, or some other area that you’re really good at. Whether you’re a paper mill making paper products, or whether you’re petroleum or whatever, find something that you have a monopoly on, or at least an edge on, and build upon it. It doesn’t have to be just an electronic. It can be in chemistry, it can be in automobiles, or automotive type products. Just find something that is going, that has some excitement to it, and build on that. Obviously, stay away from buggy whip type projects, but garner the talent that your community has, whatever that might be, and build upon it. Monopolize on that resource or talent that’s available in your community. Guy Smith: All great advice. But, I’m going to circle back a little bit to the can do, because I want to brag about your book Tough Things First. To the audience members who have not read this book, first, why haven’t you? It is arguably one of the best management tomes that’s ever been written. And, it’s called Tough Things First for a reason, because that’s part of the can do attitude, being able to look at a problem, tackle the tough things, get that out of the way because then that sets the foundation and the momentum for your company to go forward. So as you’re listening to this podcast, travel over to Amazon, find the book Tough Things First by Ray Zinn, by a copy of it right now. Because I guarantee you, you’re going to be infinitely more likely to be successful in business once you’ve read this book. And, if you have other reading needs, grab a copy of Ray Zinn’s Zen of Zinn. That’s Z-E-N of Z-I-N-N. It’s more of a philosophical book, but ties together all the elements about business, people, employees, culture, your local community, your belief systems. And, it helped me make sense of the humanistic aspects of management and leadership. Definitely, a solid read for the softer side of leading people and managing a company. Ray Zinn: It’s called the Tips and Tricks of Becoming a Successful Person. That’s what Zen of Zinn, is the tips and tricks to become more successful as an individual. Guy Smith: And you know, we call could use a little polish. People like me maybe need a little bit more, but that’s okay. This book definitely will shave a few rough edges off of the way that you perceive your place in the world, and your ability to lead and encourage other people. So thanks again, Ray. Enlightening as always. Let’s move out, and turn all of America, every corner of it, into the Silicon Valley we can do it attitude. Ray Zinn: Thanks, Guy.
20 minutes | Apr 14, 2021
Silicon Valley History – Part XII
Ray Zinn, the longest serving CEO in Silicon Valley, discusses the history of silicon as only he can, having watched it from Shockley to Facebook. In Part XII, Ray, Goldman Sachs analyst Peter Marchetti, and Silicon Valley vet Guy Smith, close this series by exploring the current state of Silicon Valley and where semiconductor and all high tech may be heading. Peter Marchetti has spent the past 20 years as an advisor to some of the most significant families and foundations in the country. He joined the Goldman Sachs team in 2000 after receiving his MBA from the Haas School of Business at the University of California, Berkeley. Ray Zinn: Well, hello, everyone. Welcome back to another in our series of Silicon Valley History, we’re delighted to be with you today. My name is Ray Zinn. I’m the longest serving CEO in Silicon Valley. And with me, I have Peter Marchetti who is a financial advisor and a friend of mine, as well as that Guy Smith, who is my director of marketing for Tough Things First. Welcome back, you two. Guy Smith: Always great to be here. Peter Marchetti: Likewise, Ray. Ray Zinn: Thanks again for being with us and doing this, I think very exciting series on Silicon Valley. So where we left off, you had a question, Pete, why don’t you go ahead. Peter Marchetti: This has been in my mind since our last podcast, Ray. But you had mentioned that when you were a young guy, your father had kind of a prototype of a cell phone way back with a knife with an antenna. And you’d said that he didn’t really generally want you to use it that much, but you did here and there. And it was mainly to impress the ladies. And I guess what I’ve been wondering about is, is that actually how you were able to impress DeLona. [crosstalk 00:02:03]. Ray Zinn: No, I didn’t need to have that to impress her. What I meant was it was very expensive to use. And back in the fifties, it was a very expensive way to communicate. And my father, I don’t know why he bought it. I mean, again, I didn’t see him use it that much. Maybe because it was so expensive. But it was huge. I mean, the transmitter and the whole electronic equipment was a size of a small suitcase and it fit in the back of your car. And then you had this gigantic antenna, like nine feet long. You’d look like a highway patrolman back in those days. And of course, I had a hand set up front there in the console and it was interesting. I did use it a few times. It just had a way of connecting up with the telephone company. And then you would switch it. It would switch over to, in fact a woman would come on and let you know that you were mobile and you would give her the number that you wanted to call. And she’d call that number. And then you would have your discussion and you would hang up. So it was kind of archaic by today’s terms, but it did work. And we thought it was exciting because it was electronics. And you could communicate anywhere all over the world with this mobile device. Peter Marchetti: Even though it was impressive back then, you were able to use other things that were more impressive to make the positive impression on DeLona. Not that you’re in any short supply of things that are impressive, Ray. Just wanted to figure out where the cell phone ranked in relation to those other things. That sounds like it was further down the list, which I’m glad to hear. Ray Zinn: Well, yeah. I mean, I got married in 1961. So I didn’t even have one of those fancy phones in those days. We had CB radios that we used. Peter Marchetti: I guess you wouldn’t have been married for 60 years if it was all based on that cell phone, especially with how it ended up getting obsolete, probably pretty quickly. Ray Zinn: Exactly, exactly. Well, anyway. Peter Marchetti: I did have another question that’s a little bit more contemporary as it relates to our last discussion and you were talking about … we talked about the iPhone and kind of the personal computing in your pocket, if you will. And we talked about sensors and where they were going. And I guess if you could maybe spend a few minutes just to talk about some of the companies that really benefited from these evolutions or revolutions in some ways that were happening within the need for semi’s to give us a sense of like who the winners were. And then also, who were the losers? Who were the folks that weren’t keeping pace and suffered because of these? Ray Zinn: Well, a lot of the … there used to be a Commodore computer. They’re gone. There used to be Atari with their palm game, they’re gone. You know, Osborne Computer, they’re gone. You know, many, many companies that were the hot companies in those days are no longer around. They just, you know, [inaudible 00:05:24] something like that. Peter Marchetti: Or how about if we focus … just to refine my question a little bit more, Ray, how about if we focus just on the semi company? So I know you and I have looked at the list of top semiconductor companies in the world and how it’s evolved over time. And thinking about the mid-2000s into the 2010s and the 2020s now, how is that making that list shift considerably? Ray Zinn: Well, it’s been in a very short period of time. In the early eighties, there were no foreign companies of any magnitude that comprised of the semiconductor industry. But now, with the advent of the cell phone, Samsung has become probably the largest. One time, Atari was the biggest user of semiconductors because they had all this RAM based cartridges you’d plug into your game console. And now they’re gone. So probably the largest user of semi-conductors today is Apple. You know, IBM used to be the biggest semiconductor company in the world by far. I mean, they were huge. And of course now you don’t even hear about IBM semi-conductor capability. Intel used to be a huge, dominant player. AMD is now catching up. And in fact, Intel is having an identity crisis. You know, a lot of companies that were … like Xilinx is being gobbled up. My company Micrel got gobbled up in 2015. Linear technology was gobbled up by ADI. Maxim Integrated Circuits by ADI. And so many of these companies that were the well-known … Fairchild was gobbled up by ON Semi. And so many of these large, big players now don’t even exist. National Semiconductors gone. You know, and they were huge. They were top three or four in the world. And these companies are no more. You know, [inaudible 00:07:47] used to be a big one back years and years ago, back in the sixties. And Westinghouse was huge and they’re gone. These were all semiconductor companies that no longer exist. And so it’s just interesting. The Valley has changed dramatically. There’s hardly any semiconductor companies that even manufacture their wafers in Silicon Valley. I’m hard pressed to think of more than one or two when there used to be, you know, 30 or 40 of us in the Valley that produced our own own wafers. And so the Valley has changed tremendously. It’s now more the software based companies, all these applications now that we can do on computers have formed all these software companies. Silicon Valley is really more like software Valley. I mean, it’s Facebook and Google and Twitter. These are the big unicorns now that have become what comprises the Silicon Valley. Peter Marchetti: Does that make you worry at all about kind of like the future deep technology that exists here in the US and the development of it without as many semiconductors being as prominent as they used to be? That that might hurt future? Ray Zinn: Well, I still see that as an issue for sure. You know, both China and Korea, who are large … South Korea, who are large companies and large countries have said they’re going to produce all their own semiconductors within their country. And of course, that does concern me because if you add China and Korea together, they’re probably two-thirds of all semiconductors used. Japan used to be the big guru. They used to be a big gorilla, I should say. It used to be the largest producers of electronics was in Japan. And now I hardly hear of anything out of Japan anymore from an electronics point of view. India is moving forward. They’re still behind, but they’re moving forward. So almost every country now has semiconductor capability, at least access to semiconductor technology. And so I am very concerned about the future of semiconductor technology within the United States. Because it’s been proliferated throughout the world. And as I’ve said before, so goes semiconductors, so goes electronics. So goes electronics, so goes the world and at least on discretionary income. And electronics is a huge part of our lives. Refrigerators, dryers, washers, our security to run our home. Just every aspect of our life now, our cars, is associated with semiconductors. I’m hard pressed to find anything that doesn’t have a semiconductor in it except maybe our food. So it’s so pervasive that we can’t just throw up our hands and say, oh, well, we give up. If we want to protect the growth of this nation, if we want to protect the security and technology that we have worked so hard to have in this country, we need to take this seriously. Guy Smith: And that kind of dovetails into a question which I’ve been having, which is what is going to be next, especially vis-a-vis semi-conductors and various growth industries. We see some of the fabs pushing now down to three nanometers. We see chips becoming absolutely intrinsic to the operation of AI because they need it, that kind of horsepower to grind these massive data collections that we now have. And we see some guys off on the side tinkering with quantum computers and who knows, maybe we can get those to room temperature, solid state devices some days. So I’m kind of wondering whether Silicon Valley has the right combination of talent right now to find that what I perceive is going to be a massive intersection of AI, quantum, and mass density on chips going into the future. Ray Zinn: Well, the technology for semiconductors is not just the wafer itself, it’s the processing equipment. It’s companies like KLA and all these large equipment manufacturers are the key to what’s going to happen to the technology. Because they’re the ones developing the ability for us to process down to seven by seven nanometers. And so it will continue. I mean, there’s no doubt in my mind that we may not be using silica. Maybe we’re using some other type of media to create these devices. We still have within this country, we still have the process technology, the ability to do these super tiny devices within the country. I don’t know of very few processed equipment companies outside the US. We still have that ability to hang on to the technology if we so desire. Okay. So just to recap. The industry started in 1957, at least the semiconductor industry in Silicon Valley began in 1957 with Fairchild semiconductor. And then it blossomed, began to grow rapidly in the sixties. And the industry just flourished. And mainly because of the military. The military was the primary driver of semi-conductors back in the early sixties. But as the technology became more ubiquitous, as we were able to find more applications that weren’t military type specific, the industry began to really flourish in consumer type products with the coming about of the personal computer, which happened in the eighties, and then moving into the cell phones in the nineties, and then moving into the late nineties, going into 2000, we had the internet come in, blooming, blossoming with the internet of things, IOT. And everything is just … you know, automotive, which was nothing by the way in the eighties as far as electronics, is now totally dependent on electronics. Ford nearly had to shut down its production line because of the lack of semiconductors because of the COVID-19 pandemic. I mean, they don’t have electronic parts to finish out their vehicle. And so here we have automotive now is, I would say, totally dependent on electronics. You’re not going to operate the car without electronics. And it’s become part and parcel of the functioning of the automobile. You know, back in the day, we only had radios. Your car could run fine without a radio. But now your car can’t run without electronics. I mean, it physically cannot function. You know, all the fuel control, the starting capability and monitoring, the mapping of the engine and so forth is all done electronically. And none of us anymore open up the hood of a car and work on it because it’s all done so technologically. And so as we now proceed into the 21st century, we’re seeing more and more software involvement is driving electronics. You know, software is even involved in the basic semiconductor. And so here we are, we’re now in 2021, been a very interesting year with the pandemic that we’ve had to face. Peter Marchetti: On that point, Ray, we haven’t even talked about what the pandemic has done in terms of the proliferation or the added need for electronics, right? And more emphasis being on online stuff. Ray Zinn: Yeah. That’s driven a whole different industry with that. Doing online learning, online teaching, you know, just communicating we’re doing this online right now. And yeah, absolutely. It’s going to spur it’s own industry. So as my dad used to say, necessity is the mother of invention. And so if we find a need, we’ll fill it. This has been a great series. This is kind of a recap of the history of Silicon Valley. We have almost no semiconductor companies anymore in Silicon Valley. Silicon is just a name. It’s not really a function anymore as far as the Valley is concerned, because you have all these software companies that are, like we mentioned, Google, Facebook, and Apple and so forth, which are not … we don’t refer to as semiconductor companies, but are very dominant electronically in the Valley. Hewlett Packard has now left and gone to Austin, Texas. And so a lot of the big electronic firms that we loved and admired here in the Valley have moved on. And the face of Silicon Valley is changing. Anyway, thank you both for being part of this podcast series. I’ve enjoyed doing it. It’s brought back a lot of memories. And I hope to be around to be able to talk about what happened, you know, 30 years from now, what happened to Silicon Valley. Peter Marchetti: I’ve learned a time from this series and like listening to you recount history and your experiences. And I just want to say thank you. It’s been a great learning experience. I’ve really enjoyed it. And hopefully I’m a little better versed in Silicon Valley’s history than I was going into it. Ray Zinn: Well, thanks, Peter. Appreciate you being able to join us. All right, everyone. Appreciate you being with us again today. Our podcast, Tough Things First, you can find it on our website, toughthingsfirst.com. You can find my book, Tough Things First still available at your local book retailer. Amazon still carries it. And look forward to my new book. I have my second book, Zen of Zinns coming out. And that’s going to be an exciting book. You’ll be able to find it and read it. It’s a good philosophical book. It’ll tell you how to run your life and run your company.
17 minutes | Apr 7, 2021
Silicon Valley History – Part XI
Ray Zinn, the longest serving CEO in Silicon Valley, discusses the history of silicon as only he can, having watched it from Shockley to Facebook. In Part XI, Ray, Goldman Sachs analyst Peter Marchetti, and Silicon Valley vet Guy Smith, cover the how integration of gadgets, internet and wireless put Silicon valley on a new path. Peter Marchetti has spent the past 20 years as an advisor to some of the most significant families and foundations in the country. He joined the Goldman Sachs team in 2000 after receiving his MBA from the Haas School of Business at the University of California, Berkeley. Ray Zinn: Hello, everyone. Welcome back to another in our series of podcasts regarding the history of Silicon Valley. This has been an exciting set of podcasts that we’ve done, because I’ve been able to sit here and reminisce all about the history of the industry, or the Valley, starting all the way back to 1957. So, here we are. We’re in the two thousands, in the 21st century. And with me today, I have Peter Marchetti, who’s a financial advisor and a good friend of mine, as well as Guy Smith, who’s my director of marketing at Tough Things First. So, hello to both of you. Guy Smith: Hidey, ho. Peter Marchetti: Hey, Ray, good morning. Ray Zinn: Well guys, here we are. We’re really into the 21st century. I think last time we talked about kind of where was the industry headed or where is Silicon Valley headed and just give kind of an idea of the landscape. We’d just exited the 20th century. We had the Y2K issue. We had the .com implosion where all these companies that were heavily funded finally had run out of money and closed up shop and weren’t able to pivot very well. Where’s the next 20 or 30 years going to take the industry? Peter Marchetti: Well, I think one thing we talked about in the last call, Ray, you started getting into the cell phone market and how that was pushing things forward in a lot of other technologies. And come around the middle of the two thousands, we had the introduction of the iPhone, which took the cell phone market in a completely different direction, with the smartphone introduction to everyday life. And I guess I’m wondering, how did you see that changing the semi space and pushing technologies forward? And what companies can kind of directly benefited from that? Ray Zinn: Well, we had really… There’s three parts to what we call the smartphone. There’s the cell phone portion, which is something that came in, back when I was a kid, actually. My father had a telephone that had like a nine or 10 foot antenna on it and had a telephone handset and we could make mobile calls. And of course, it was very expensive and he didn’t want me using it very much. I just used it to impress the girls usually. But it was quite an interesting device that took up half the trunk space of the car. This was back in the fifties. But then it’s kind of migrated now. The cell phone became smaller and smaller and smaller. And then they came out with a PDA, which is the personal assistant and that kind of took on a life of its own. And a lot of people had their cell phone. They had their PDA and they also had a separate device called a camera. And of course, cameras have been around forever, for a couple of 100 years, maybe. So, Apple decided they’re going to combine it all. They’re going to combine the cell phone, the mobile phone, as you would, with the PDA and with a camera. And I thought that was a dumb idea, because when I use a phone, I just want to call somebody. But they said, “Well, look it, people like personal digital assistants. And they also would like to be able to take a picture whenever they want. None of us really carry our camera with us.” And so they said, “Well, it’d be nice to be able to take these snapshots of things and if you had a camera built in to your phone, that’d be really cool.” So, it’s interesting how one thing leads to another thing leads to another thing. And so, the PDA kind of led into the combining it with the cell phone and then the camera being integrated into the cell phone. Honestly, because I’m not a big picture taker, I thought it was a pretty dumb idea. But well, look, what’s happened now. The camera in the phone has become very, very good. And it has allowed us to take pictures at will. And then basically, the camera business… The people who make cameras are basically having to pivot to something else. Guy Smith: What’s interesting was Apple, took it one step further. You had the basic PDA functions, which kind of made it a very, very low powered computing [inaudible 00:05:32] app for them. And they said, “Why not think of the cell phone as the new really, truly personal computer?” And they had to think of new human interface aspects to it, but when you get right down to it, what we carry in our pockets today are very, very powerful computers, compared to the original personal computers of the 1980 era. Ray Zinn: Absolutely. I mean, we’ve got these watches now, these smart watches, that are as powerful as a big mainframe computer back in the sixties. And it’s just amazing because of the way the technology has advanced, to allow us to do so much more with technology than any of us could ever have perceived of, in the beginning. I remember as a kid, we had this cartoon called Dick Tracy. Every Sunday you used to get your cartoons that you could watch. And Dick Tracy had this watch that he talked into, and it had this long antenna wire that would go up his sleeve. And I thought, “Well, that’s just way out there. I mean, that’s out in the [inaudible 00:06:48] as you would. But here we are. And we have that capability now, virtually. We have a speaking watch, because you can now take phone calls and messages on your wrist. Guy Smith: I think this is really an intrinsic part to your semiconductor industry, because if it wasn’t constantly pushing the boundaries, we could never achieve things like watches that we talk into. Couple of years back, I had to give a talk to some gear heads. And since I started my career at Kennedy Space Center… They launched the fourth space shuttle, the first day I was on the job there… I compared the onboard flight computers that were on the shuttle with the cell phone in my pocket as a graphic demonstration of just how insanely more powerful computing platforms are. And I think, because Silicon Valley and the chip industry is constantly pushing these boundaries, we’re able to do more things in less real estate than ever before. And people have to keep becoming incredibly inventive to find new ways of exploiting all that power. Peter Marchetti: Isn’t that also kind of like why the Apple’s iPhone was so incredible? Because like the camera had been… I mean, I remember having a Samsung flip phone back in 2000 that took pictures. The pictures looked like something that my six year old would have drawn. They weren’t very clear. They weren’t very useful. And I was kind of like you Ray, where I was like, “Why even have this thing on here?” But then, the iPhone came out with all those capabilities and the quality was just so far better from what I remember anything else being. And it really pushed everybody else to have to step up their game. And do a much better job and deliver a much better product. Ray Zinn: We talk about this technology, that we refer to as the internet of things, because the internet has really opened up Pandora’s box, allowing us to do so much more electronically. The digital home. Being able to turn your refrigerator on or off, your lights on and off or being able to have an electronic doorbell to let you know, even if you’re not at home, that somebody is approaching your door. These security cameras. I remember back in the day, a security camera would cost you five or $10,000. Now, you can get a security camera for less than $200. And I mean, we’re doing so much more because of the power of semiconductors than were ever thought possible. We refer to generically, artificial intelligence, AI. It’s because of the smartness and the power now, that we have in our semiconductor technology that has really allowed electronic vehicles to come into being. The charging and just the storage capability of these batteries. Lithium ion batteries and then even some of the newer batteries that are coming out, allowing us to store tremendous amounts of energy in a very small footprint. And the same thing with semiconductors. They’ll be able to have so much computing power in such a tiny, tiny footprint. So, you’re just seeing the tip of the iceberg. I mean, we’ve only begun to scratch the surface of what semiconductor technology is going to allow us to do. And I’m excited about it, because you can have your medical capability right on your wrist or around your body somehow, to measure your blood pressure, your heartbeat, your oxygen content. I mean, we’re going to get to the point where we’re going to be able to monitor many of our body functions on a real-time basis and it’ll make decisions very practical. Know when to call your doctor, when not to call your doctor. I mean, I know of a company that started up where you don’t have to go see the doctor anymore. You just go into a drug store and sit down on some equipment. Of course, I can see that progressing and you don’t even have to go to the drug store anymore. You just do it at home. But they have the equipment there to do all the diagnostics that you would have when you normally go to the doctor. For example, when you go to the doctor the first 10 or 15 minutes, other than waiting for a doctor to show up, is they’re taking all these measurements. Well, I mean, we’re going to be able to take these real time and there won’t be any need to sit in a doctor’s office. It’ll be just telecommuted to his office and then he’ll have all the information and you won’t even have to go see your doctor physically, unless there’s something urgent that he needs to have you there, so he can take some other type of measurement. Guy Smith: You’re right. We’re right around the corner from having a Star Trek tri quarter, where they just scan it past your body and they know everything about your medical condition and history. Ray Zinn: And also, I just think this is the tip of the iceberg. I mean, granted, we’ve come a long way. When I was a kid from Dick Tracy’s watch that he wore, talked into, to where we are today, where we all have that capability and not just Dick Tracy. So, these are exciting times. Guy Smith: You bumped up to the topic of sensors. And I’d like to dive into that because we’re seeing something very visible. I mean, you talked about the internet of things, but a lot of the sensors that are on inanimate objects around us are not very visible to the average person. But then you have autonomous vehicles which are loaded with sensors, from stem to stern. So, I don’t know enough about the sensor part of the semiconductor market to know where they’re exploring the new frontiers and how much of an opportunity that is for people, both investing and also looking for new careers. Ray Zinn: Well, when you think of the person driving a car, he is in effect, the sensor. His eyes, his ears, his feel and all of the senses that we have, feeling, smell, hearing, optical. All those go into driving our vehicles. If you smell like something’s burning or like oil or something’s leaking or rubber burning or something, you smell it, you say, “Oh, I got to pull over.” Or you hear something, you hear a noise in a transmission or hear the engine knocking or something, and you can pull over. Or if you see something, smoke coming up from the hood of your car or whatever, you can see that. Or, as you drive down the road, you see the landscape. “I got to turn here or stop here.” But all that now can be incorporated and integrated into a smart device. And that’s why cars now are becoming predominantly electronic. There’s really no need for human intervention except to get in the car and it knows you’re there. And then you either speak to it or it even maybe would know where you want to go. I mean, you could have it pre-programmed like, again is something that I think is out there in the future, but it can literally… You just get in something and it immediately senses you’re there and it just knows because it’s pre-programmed. It knows what you want to do and it just takes off. And then it goes to where you want to be and you get out and then do whatever you’re going to do and then hop back in. And it knows exactly what it wants to do. We have that with airplanes today. We can program airplanes to go from point A to point B without any intervention with the pilot whatsoever. And so, some of these airplane crashes that we’ve had, resulted from malfunctions in the electronics. So, we’re so dependent now on electronics, to the point where we’re just going to be a passenger as you would, in a vehicle, whether it be boat, plane, car, or whatever. So, we’re just seeing the tip of the iceberg. Well, that’s a good place to end this podcast. And it’s been a fun discussion. What we’ll do is we’ll conclude. We’ll say goodbye to everyone until next time. This is Ray Zinn and I’m the head of Tough Things First. I have a new book coming out called Zen and Zinn. And you can get my first book, Tough Things First, still. You can acquire it on Amazon or any of your retail bookstores. So, thanks again, Guy and Pete for being with me today. And we’re looking forward to talking with you folks next time.
17 minutes | Jun 10, 2020
Corporate Culture, Part 1 – in conversation with Professor Jennifer Chatman
Part one for three in a series where Silicon Valley’s longest serving CEO chats with Professor Jennifer Chatman, a Distinguished Professor of Management and the Associate Dean for Learning Strategies at the Haas School of Business at UC Berkeley. Professor Chatman is also the Director of the Berkeley Culture Initiative, a program with the goal of identifying the most promising opportunities and challenges facing leaders who harness organizational culture as a strategic resource. Guy Smith: Hello again, and welcome to another episode of the Tough Things First podcast and this is the first of a very, very special three-part series of Tough Things First where with the help of a particular expert and the experience of Silicon Valley’s longest serving CEO, we’re going to explore the topic of corporate culture; what it is, how you shape it, how it facilitates innovation performance, and quite a bit more. For this three-part series, we’re joined by professor Jennifer Chapman, distinguished professor of management and the associate dean for learning strategies at the Haas School of Business at UC Berkeley in California. Professor Chapman is also the director of the Berkeley Culture Initiative, sorry about that, a program that has the distinct goal of identifying the most promising opportunities and the biggest challenges facing leaders who harness organizational culture as a strategic resource. Now, Professor Chapman’s CV goes on for quite literally 27 pages. Just her list of publications alone, take up five pages, so rather than recite more of that, let’s instead get started with today’s podcast. First off, welcome, Professor Chapman. Thank you so much for being here today. Professor Chatman: Thanks, Guy. Nice to be here. Guy Smith: Of course, on the other side, we have Silicon Valley’s longest serving CEO, a man who is no stranger to shaping positive corporate cultures himself, Mr. Ray Zinn. Hello again, Ray. Ray Zinn: Hello, Guy and hello, Jenny. So happy to be with both of you. Guy Smith: I think this is going to be an exceptional three-part series of podcast. I’m going to step back and let the big brains have a discussion about today’s topic, but to go ahead and get started, we’re going to put the question on the table, the question we’re exploring today. Professor, let’s start off with you. How can leaders create a strategically aligned, execution-based culture in their teams or perhaps in their entire organizations? Professor Chatman: Well, that’s a great question, Guy. Let me start by putting together an argument for why it’s so important to pay attention to culture and then we can talk about to do it. The basic idea here is that no matter what you do or don’t do as a leader, a culture will form. That’s not the question. The question is whether the culture that forms is one that helps you execute on your strategic objectives or worst case scenario, a culture that actually precludes you from achieving your strategic objectives. It’s really not a question of how to create a culture. It’s really a question of how to shape the culture that has developed in your organization and how to ensure that that culture is actually aligned with your strategic priorities. That’s the first piece. Let’s talk a little bit about what that means. Throughout my career, I’ve conducted research and consulted with organizations, taught courses about how to cultivate an effective culture. We’ve identified three specific criteria for using culture as a leadership tool. The first criterion is that a culture must be strategically relevant. What we mean by that is that the behaviors and decisions and priorities of your members half match with your strategic priorities. For example, if you’re competing based on customer service like an organization such as Southwest Airlines, customer service, and low price, then employee behaviors have to prioritize everything having to do with customer service and everything having to do with keeping cost low so that you can deliver on that strategic promise. In other words, the culture alignment can be seen throughout the organization in terms of consistently prioritizing the things that matter for strategic success. This sounds easy and straightforward, but think of all the times you’ve encountered competing priorities. One question is, do you serve customers even if it gets really expensive to do so? Or do you lower cost even if, at some point, you’re going to lose money on some routes if you’re Southwest Airlines? These conflicting priorities are what makes it very, very hard for most organizations to consistently focus on the behaviors, allow them to fully deliver on their strategic promise. That’s the first criterion. The second one is to ask the question of whether your culture is strong. What we mean by strong culture is two distinct factors. One, people agree about what’s important. Could you ask five people in the organization and would they say the same thing about what’s important within the culture? The second to mention is intensity around those cultural priorities. I’m a professor. We delve in the world of two by two contingency tables. You can imagine in your head the two by two that you’d set up for culture agreement and culture intensity, right? It’s easy think about the high, high and low, low quadrants, right? You have a high intensity, high agreement is what we call a strong culture. Low on both of those would be a weak culture, but then we have interesting combinations. So some organizations have high agreement with low intensity, what we call a vacuous culture. Some organizations have high-intensity but low agreement on culture, and we call that bring factions. One thing that leaders can do is scan their organization to see these quadrants they fall into. What we know from our research is that the most prevalent of those four possibilities is vacuous beliefs. We have high levels of agreement, but no real intensity behind upholding those norms. It makes sense because often what we’re asking people to agree about is pretty good stuff, right? “Hey, we want to be the best in quality”, right? And employees are going to say, “sure, we love quality. We agree with that. That’s a great thing to emphasize.” But there’s no real intensity behind it. And that means that you’re not going to deliver on your strategic promise systematically. What we know about strong cultural organizations is that they upgrade in terms of delivering on their strategic promise. Ray Zinn: So let me jump in here, Jenny, because you hit a key note for me because having run my company, a semiconductor company in the Silicon Valley for 37 years, culture was extremely important. So the name of my company was MICREL, M-I-C-R-E-L, which stands for microservice at a reliable. If you look at, then that we’re talking about quality again, that became our brand. Whereas we didn’t necessarily promote low price, that wasn’t our brand. Our brand was high quality, high reliability. I had to set up a culture that would support that sort of a thinking. So going along with what you’re saying, if I just waved arms at it and just let it happen, it wouldn’t be structured. So we had to have a structured culture. I think going along just to give you an example of the culture we had at MICREL, the quality and reliability goes along with honesty and integrity. We really promoted heavily being honest and having high integrity. We set up a plan to do that. So that the company, the employees fully understood what those terms mean. Honesty means you’re truthful. Integrity means you do what’s right when no one’s watching, which goes into building in the quality, rather than testing in the quality, you have to build it in. And then of course dignity and respect for every individual, which means we didn’t allow any swearing or vulgarity at the company. The last was doing whatever it takes, no excuses, meaning you’re going to put forth your best effort, making it no harm, no foul to the company, even if you make a mistake. So that’s how we inbred the brand of making semiconductors that were, were high quality and high reliability. So I just wanted to kind of interject that, Jenny, as we talk about the importance of having a strategic culture that you can actually execute. Professor Chatman: Great illustrations, Ray, of these two criteria for having a strong culture. People can see that there’s a clear strategic alignment between what you’re emphasizing in your culture and how you’re differentiating the company strategically, this notion of reliability and quality. So that’s a great illustration of the connection between strategy and culture. Second thing you illustrate was the kind of level of consistency and intensity throughout the culture. It sounds like people didn’t just agree, but that there was enough consistency and comprehensiveness in the practices that there was an intensity behind what you were prioritizing in an organization. Most organizations who are deliberately focused on leveraging their culture like you were, and I would say that given when you started your company, you were way ahead of your time because culture is something that organizations have really just started to take seriously, I would say, within the last 10 or 15 years, and as your company predates that faddish orientation by some number of years, so that’s really incredible. But many organizations you can actually look within the organization, even within my business school. I’m a professor at the Haas School of Business at UC Berkeley, and we’ve embarked on a cultural emphasis. In fact, we’re known as the t
15 minutes | Jun 3, 2020
Make Points, Not Enemies
Unskilled communicators can create a breakdown in conversation at every turn, sometimes making enemies in the process. In this Tough Things First Podcast, Ray Zinn explains how to avoid pitfalls we often create for ourselves using the wealth of knowledge he learned over decades at the highest levels of the tech industry. Rob Artigo: Rob Artigo here once again, your guest host for this edition of The Tough Things First Podcast. I’m a writer and an investigator in California. Being invited back, always a pleasure, Ray, how you doing? Ray Zinn: I’m doing great, Rob. So good to be back with you again. Rob Artigo: Well, it’s happened to most of us at one time or another. It can be at a board meeting. It could be in a design strategy session. It can be just a discussion in passing about where to put cubicles in an office building. That conversation turns into controversy simply because a point we’re trying to get across feels like, to the other person, at least, that it’s a personal attack and maybe you could even make an enemy out of that person. We know that communication is a two-way street, but how do we make a point with someone large or small in the course of the conversation without putting somebody on such a defense that we end up making an enemy out of that person and they shut us off and they don’t want to listen to what we have to say? Ray Zinn: That’s a challenge of making your point without making an enemy. It depends upon how we sharpen our point. If you sit there, making this as an example, you’re whittling on a stick and you keep sharpening that point and you keep pointing at somebody, they’re going to think they’re your enemy or they’re become your enemy. So, don’t keep sharpening your point. That’s one of the things that you need to do when you’re making your point so that you don’t create an enemy is don’t sharpen it. Don’t make it personal. Don’t make it emphatic. Don’t make it so that it comes across as being you’re harming them because then they will become your enemy. So the challenge is to how to make your point without sharpening it. Rob Artigo: Yeah. I mean, can we employ techniques that will maybe draw out the point so that the other person feels like they’re contributing to your point so that it doesn’t sound like you’re telling them something but that they’re… In other words, I mean, can we ask questions instead of making a point or making a direct point? You know what I mean, make an end-around to our point in order to not directly come at somebody with that, like you said, pointed stick? Ray Zinn: That’s the key. In other words, keep them involved. Keep asking them, “How do you feel about this?” Or, “What’s your feeling on that subject? Do you understand what I’m saying? How can we work together on this?” And making it sound like it’s a two-way or that we’re a team as opposed to being, “You’re the enemy. You’re the one that’s going to get defeated in this.” So we don’t want to bark our point. We want to, in more of a loving, in a more kind way, we want to develop that point so that they don’t feel the sharpness of it. Rob Artigo: Have you seen in business situations, and maybe in your many years at Micrel but just simply being in the business sector for as long as you have, seen situations where business relationships have been ruined by one or the other party coming at a situation maybe with more than one pointed stick, just on a few basic business points that shouldn’t have been so difficult to get through? Ray Zinn: Yeah. For example, in the beginning starting my Micrel, we were talking about, “How should we dress?” In other words, “What should be the standard of dress?” With me, I wanted to be more formal. In other words, I wanted everybody to come in a suit, and tie, and a nice shirt, and nice, pressed slacks, and so forth, and polished shoes as you would because that was the image I wanted to project for the company. But not all the employees saw it that way. They didn’t see the way I did about neatly-combed hair, and neatly-shaved face, and then neatly dressed and groomed was the way that they wanted to be part of a company that projected that image. So I had to soften that a little bit. I had to blunt the stick, but I kept coming dressed that way. I kept being neatly groomed, and clothed, and fresh shirt every day, and shoes were polished. I did it by example. I actually got them to see what that looked like or what the company wanted to look like, and they wanted then to become more like me. I guess it came in a more slow way. I mean, I was quite young. I was less than 40 and in my 30s when I started the company, and so I was a little bit more aggressive and so. But I wanted them to feel part of the decision. So I just set the example, and it worked because ultimately, the employees did finally adopt the image that I wanted to project for the company. Those didn’t see it that way, probably ultimately left. But I didn’t sharpen the point, I just kept making the point. Does that make it clearer? Rob Artigo: Sure. When we’re communicating, sometimes and in particularly, if you’re inexperienced communicator, this idea of backing up a little bit and letting time and circumstances illustrate for your audience, so to speak, whether it’s one person or a bunch of people, to illustrate your point rather than continuing to hammer away at something, it seems to me that looking at the situation and saying, “Does this conversation need to happen like this right now?” Ray Zinn: Well, I have an example, it’s in my book. One of my execs had a terrible swearing problem. It just flowed off his tongue. It was a habit he had, and it was just terrible. But I loved the man. I loved him like a brother. So I kept saying to him, “Bob, we don’t use vulgar language here at the company. It’s not proper.” He just couldn’t break the habit, so I said, “Hey, wouldn’t you like not to use such condescending vulgar language?” He said, “Yeah, but it’s really hard and blah, blah, blah.” And I said, “Okay, tell you what? Let’s come up with a deal here. How about every time you swear that you put a dollar in employee jar here to do an employee activity?” Pretty soon, I had over $300 in that employee kitty jar because he kept putting… Pretty soon, he got to the point where it wasn’t so much the money, it was so difficult for him to walk in and have to put money in the jar that he finally just slowly improved and he stopped swearing. His wife actually told me here not too long ago that one of the best things that’s really happened in their marriage and their family is that their father and husband quit swearing. This really works. So rather than sharpening the point and trying to jab him with it and using difficult language with him, I just said, “Okay, how about come up with a plan? Every time you swear, you’re going to get to pay for your indulgence here. If you want to swear, fine. Just put some money in the jar.” So he did that for a while and then finally, he just couldn’t stand to do that anymore so he stopped swearing. Rob Artigo: That’s funny. What do you do in a situation where you’ve recognized that a point that you made, regardless of the situation, had turned this other person into enemy of sort? I mean, we’re not talking about somebody who’s suddenly dawning a pith [inaudible 00:09:00] helmet and coming at you with a bayonet out or something, but somebody who then feels like they’re an adversary, or they’ve been put down, or they’re now on the defensive. If you figure it out, if you were sensitive enough to realize what has occurred in the conversation or at the end of the conversation, how do you then try to reverse it and get that person back on your team? Ray Zinn: Well, the first thing you have to do is recognize that you’ve done that. You might say, “Wow, I didn’t realize I had done that or said that, gee whiz.” A situation that actually happened to me at Micrel, where I’m in a conversation with a young marketing engineer, a female, actually, she thought that I was using language condescending, meaning that some or other, I was talking down to her because she was a female and so forth. I didn’t realize I was doing that. For some reason or other, just in the comments I made and so forth, made her feel uncomfortable and not even realizing it until she let me know that I was offending her. So I had to catch myself from knowing that certain things that I say and how I say them was affecting her. I’m not going to say she was defensive, but maybe she was little more so than other people because certain words and certain circumstances just made her feel uncomfortable. I had to watch what I said and how I said it. I was just more careful in the way I approached her. Things worked out wonderfully. But in the beginning, you got to watch what you say and how you saw it because not everybody’s going to take what you say in the same vein. What’s maybe amenable to one person could be not to another, depending upon where they’re coming from and how they have viewed themselves. This particular female had a difficult time at home with her parents because she wanted to be an engineer. She didn’t want to be a nurse, as you would. So her becoming an engineer was a real goal and achieved by her. I didn’t know her background, didn’t know that that was a sensitive area. So I had to [inaudible 00:11:34] treat her more, as I said, more professionally, as y
14 minutes | May 20, 2020
Setting Business Goals
If Tough Things First stands for one thing, it’s setting and achieving goals even when they are difficult. In this edition of the Tough Things First Podcast, Ray Zinn talks about setting priorities to meet those goals. 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 with you. Ray Zinn: Rob, it’s so good to hear your voice again. Thank you. Rob Artigo: And it seems like it’s been a long time, but time marches on and here we are doing another podcast and I’m grateful for that. Now, whether they plan to, or not, like me, most people set some kind of goals every single day. Now that could be something easy, like going to the store, just doing the dishes, maybe doing the dishes isn’t always that easy for everyone, but they’re goals nonetheless. And we got to think of things in terms of this podcast for entrepreneurs and business operators, entrepreneurs do the same kind of goal setting, those small tasks that they have to do every day, because they’re just things that everybody has to do. But they also have to keep the future in mind, their business, where they are, where they’re going, and what’s next. So, let’s talk about setting goals first, and then we’ll talk a little bit about some of the strategies for making sure that those goals come to fruition. So for you, it’s always been important to set goals when operating your business. Ray Zinn: Well, even running your life. I mean, it doesn’t have to be running a business. I mean, setting goals is really avoiding procrastination and that’s the title of my first book, Tough Things First. We tend to not want to set goals, for one thing, because it’s a lot of work and because we’re not really willing to do the tough things first. And so, when I wrote the book and we hadn’t yet come up with a title for it, I had my staff together and we were talking about what should we title this book? Vona my VP, she just said, Tough Things First. Do the tough things first. And so, the only reason we have a goal is to get us to look up, to aim higher, to reach out and to lengthen our stride to be more purposeful in what we’re doing. We don’t have to set goals for things that are almost secondary, like eat once or twice a day or three times a day, or whatever, or go and get the mail. I mean, setting goals is really trying to reach up. In other words, trying to get us to go above and beyond where we are, not just to repeat something we did the prior day to better ourselves. And so, that’s a whole concept of setting goals. Now, how do you set goals? You look at really, I would say, once you listen to this podcast, write down three things that you really don’t like doing, and that should be a goal or those three goals are the ones you should set for yourself that you want to accomplish over the next period of time. Habitus is easy to start and hard to break, but a good habit is hard to start and easy to break. So you want to set good goals, good habits. And so, write down three things that you don’t want to do. And I’m sure we all have those. I can think about 10 more right now as I’m talking on this podcast of things I don’t like to do. And those are the things that I’ve got to focus my mind on. Because once I learned to do the tough things first, once I learned to set goals for which I don’t want to achieve or I’m reluctant to do, then setting goals becomes easier. Rob Artigo: One of the goal setting principles that I have is that if I’m facing something that is an extraordinarily daunting task, and I’ll give you one sort of, this is a smaller task in the scheme of things because it’s just a project around my house, but I have an area that for a long time on my property had been overgrown since I had moved in. And I’d slowly been trimming back things and breaking it down. And I’ve got all these root balls from these hedges, they’re ancient. I mean, they’d been growing there for a long time. There’s big roots and root balls and there’s this… What I decided to do in terms of my goals was to take it and establish what it is that I want to achieve, but take manageable pieces away from it and set a goal to achieve that one little piece. Because it’s like, I can’t do this whole yard myself, but I can do this one little piece and it won’t be that difficult. So part of my goal setting tends to be prioritizing the piece of the bigger project that I have to get done, because that one piece that I have to get done is manageable and I can get it done right now. And then over time, what I’ll find is that the whole project will eventually get finished. Ray Zinn: Well, you’re jumping into how to achieve a goal. Okay? So we went from setting goals to achieving goals. Rob Artigo: Yeah. Well, and that would have been my follow up question is all right, let’s talk about making sure that we see those goals through fruition. Ray Zinn: Well, it’s like the old saying goes, how do you eat an elephant one bite at a time? And so, as you said, you go, “How are you going to clean up your yard one root ball at a time?” And so rather than just dive in and try to get it all done to the point of exhaustion, do it in bits and pieces. Don’t discourage yourself, because as humans, we can get easily discouraged. So rather than try to hack the whole problem out in one day, try to do it a piece at a time until the goal is achieved. I can remember years ago when I had my first home, we were repainting the home. We’re using a sprayer, but at nighttime, I didn’t want to disturb the neighbors with the compressor going. And so I got the roller out and I had my car parked up on the curb with the headlight shining on it. And I continued painting. I finished it at two o’clock in the morning. But I felt so good. I mean, I know in that case, I just continued because I felt that… Well, my thinking was that it’s going to look kind of dumb to have part of my house painted when I woke up in the morning. So I painted my entire house in one day, finishing at two o’clock in the morning. So in that case, I really ate the whole elephant in one day, one bite at a time. But if I was bonded, determined I was going to finish that house, but that’s kind of who I am. I just go at a task until it’s done. But still, one bite at a time, I don’t try to use a 10-foot roller to paint the house. I’m still using a nine, 10-inch roller, but I’m going at it until I’m done, because I know if I stop, I won’t start again. How do you start a marathon? By knowing you’re going to finish it. That’s how you do it. You don’t start a marathon by just taking the first step. You have to say, “I’m going to finish it.” And so, you’re going to make that as your goal, that I’m going to run this distance and finish that task. But it will be one step at a time as you get to the end of that race. Rob Artigo: Well, and you’re talking about the project of painting the house was a time when you were in the zone, right? It’s just like the running of the marathon. There’s that time where you get into this zone, where you’re just one with the run, so to speak, and you’re running along your route and you’re achieving your goal. You’re in the zone. But there are times when we have goals that we’ve set, and this happens a lot, is you hit that trudge mode where it becomes a longer slog of trying to get the project done. And how do we make sure that we’re achieving our goals when the times aren’t so easy and we’re not on autopilot and we have to make something happen? Ray Zinn: Well, that’s the hard part, is how do you keep up the pace? So rather than outpace yourself, you keep pacing yourself until you finish it. As you pointed out earlier, how do you clean up your yard? One root ball at a time. But if you just say, “Okay, I’ll get back to that later,” then you’re back to procrastinating. And that’s one thing that will kill a goal faster than anything else is that procrastinating. You got to be willing to stick to the task until it sticks to you. That’s what 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 easier. So you got to stick to the task until it sticks to you. We, humans, tend to run really fast and then… As the story between the tortoise and the hare, if you remember that story, where the race was between the tortoise that plods along versus that hare that just can run like a screaming demon. And of course we knew who won the race was the tourist, because he kept it up, he didn’t slow down. The hare ran out of gas and he’d go over and sleep for a while and then rest. And then the tortoise just kept plugging along. So don’t run faster than you can run. Pace yourself, keep your goal in mind. If you decide you’re going to run a marathon, make sure you have that in mind as you start the race, don’t just say, “Well, I’m going to run so many miles,” okay? Because that’s not a marathon. A marathon is a specific distance. And so you got to say, “Okay, that’s going to be the goal, not just run for a while until I get tired and do like the hare does and pull over and take a nap.” Rob Artigo: Do these goal setting and goal achieving ideas work with just about any kind of goal that you can set for yourself? And I think at the beginning, we were talking about something small, like making sure that y
15 minutes | May 6, 2020
In business and in life there are conflicts. Some of those are internal but threaten the external when we lose control. In this Tough Things First podcast, Ray Zinn explores how entrepreneurs can find a path to being open minded with conflicting with our core principals. 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: Hi, Rob. So good to be with you again. It’s been a while. Rob Artigo: Good to be back, of course. Core principles define us and we don’t typically, like we’re doing a podcast here, we don’t just broadcast our core principles to everyone, but if they’re really true principles, at least in my eyes, they’ll manifest themselves in many ways that other people, that everyone will see. I mean, even if we’re not telling them what our core principles are, people will notice what they are even if they can’t define them right away. Ray Zinn: Exactly. Rob Artigo: But we’re also asked to be open-minded. Ray, in your experience, are there times when being open-minded is actually challenged by conflicts with our core principles? Ray Zinn: Well, certainly. If you have a principle that you hold dear to your heart, then someone wants to bring a counter to that or maybe argue with you about that, debate you on that subject, you can get your, as they say your dander up, your hackles up, and then of course as soon as you do that, you shut your ears off. You no longer are going to be listening because you’re in a defend mode. The key is how do you maintain these very solid core principles, and even when they know that you have these core principles, and yet they’re going to want to argue and put you in a defensive mode. There’s a saying that goes, the best defense is a good offense. What you want to do of course is to make sure you don’t get into a defensive mode, because as sure as you do, you’re going to shut your mind off. Rob Artigo: Well, if we have these kinds of things come up, it’s one of those things where we want to be tolerant with the people we’re dealing with. I mean, if we come from different cultural backgrounds for example. I mean, in some cases some of these differences can be pretty vast. There’s a lot of territory to cover, but you want to be open-minded and understanding with people. But if somebody else’s core principles or their attitudes about the world come direct conflict with you, it just seems to me the question is, how can we truly be open-minded in various scenarios, whether it be business or personal scenarios when the issue at hand actually goes against a core principle and we don’t want to get bothered? Like you said, you could get your dander up. We don’t want to get our dander up, but at the same time, we don’t want to compromise who we are, right? Ray Zinn: Yeah, but the big debate right now is what is free speech? And I’m sure you’ve been following the news and you can see that there’s a belief that people are trying to shut off free speech. There’s no longer what we refer to as the ability to speak your mind, because they want to shut you down, and a lot of universities, especially ones that tend to be more liberal, are actually trying to prohibit conservative speakers from coming on campus to express their views, because the campus or the, as you would, the group being the majority apparently have decided that we’re going to be closed-minded. In other words, we don’t want to hear it. We don’t want you to threaten our views, and so therefore we’re just going to stop you from coming on and speaking your mind or giving your views. So I think it’s a very good podcast, because the thing I think that’s really threatened now is our inability to get along with each other, to be able to have open debate and without having to get to threaten either physical or emotional violence. And so I think, Rob, this is really a good podcast for us to talk about it. Rob Artigo: And it’s timely in an election year of course, and we’ve seen it in a variety of ways. It manifests itself, where there are, you mentioned campus, a college campus and where speakers have been shouted down or told they don’t have a voice. It seems the problem is that in those cons… I’m one of those people. I’ll just admit that I’m one of the people who when I’m being attacked and somebody wants to silence my speech, I tend to go, like I don’t want to have the conflict and I’ll just go away. But that doesn’t really solve the problem. You don’t want to have the conflict, but at the same time you don’t want to compromise your core principles and just cower in the corner and say, “Okay, you’re going to take away my voice? I’ll let you take away my voice.” Ray Zinn: Well, I know, Rob, and that’s the challenge. I mean, there’s a whole host of Antifa, people like that, that are going to try to intimidate you and bully you. We don’t want to be bullied either, and so the challenge is how do we not be threatening to them? In other words, how do we not fight fire with fire? Obviously if it gets dangerous or if it gets threatening, you best remove yourself from the situation. It’s not that you’re cowering, is that you don’t want to escalate it. But not all debates have to be where there’s what we call closed-mindedness. It doesn’t have to be in a campus environment or political stage. It can be with our neighbors. It can be with our own family members. It could be between a husband and a wife or children. The key here, what we want to talk about, is how do we not become closed-minded ourself? In other words, this is not so much how do we react in a threatening condition like on a campus or in a other more public debate, as you would, but even one-on-one employee to employee, boss to subordinate or subordinate to boss, or husband or wife or parents to children. This is a subject that I think we should talk about in general as opposed to just talking about Antifa kind of violence or the threatening of free speech. In my mind, the way you become open-minded is to show love. In other words, love is compassion for another individual, and so if they feel your love, in other words if you don’t act or sound threatening, even though you have a very core principle. It might be one where one of your children has decided to experiment with some drugs, and of course now this goes against your core value as a parent or maybe as a supervisor. If you get angry and if you get threatening, they’re going to close their mind. They’re not going to listen. I’ve had four children, and typical kids, they grow up with their different personalities and issues, and I have found over the years that my family responds better, or my employees in this case as the CEO of Micrel, they respond better when they know that you love them and you have their best interests at heart. So the whole concept of this podcast is to get people to understand that you’re going to attract more bees with honey than you will with vinegar. And so the best way to be open-minded, meaning that you’re willing to listen and being more harmonious, as you would, it’s just to show your love for them as a person. Respect them as an individual. That’s being open-minded. It doesn’t mean that you have to change views, but yet you don’t come across as being dogmatic or as being a demagogue. That you’re showing compassion, you’re showing empathy, you let them know that you understand their situation and their particular emotions that they’re facing. Rob Artigo: You mentioned counter, let’s put it this way, countering that negativity or that close-mindedness coming at you by being an example of something else. And it takes us back to the beginning of the conversation when I was talking about how our core principles may not be something that we are articulating to people, but an example of how we are living, and therefore it says more than perhaps what our words could say, correct? Ray Zinn: Exactly. Well, your example sets who you are. Whether you’re going to be a good example or a bad example, your example sets the stage. If part of your example you’re setting is one of a caring, loving, compassionate person, you’re less likely to get into these harsh debates, because people will say, “Well, he’s humble, he’s a good man or a good woman,” and they’re less likely to want to denigrate your personal beliefs or your particular core principles. It’s really the way you come across. It’s that Cocker Spaniel look versus that Doberman Pinscher. If you come across as a Cocker Spaniel then you come across more loving and so forth. As a Doberman people are more fearful. You have a choice. You can come across more as a Cocker Spaniel or you can come across as a Doberman Pinscher or a German Shepherd. It’s just in the way you project yourself, as you mentioned. Rob Artigo: As we close this podcast out, just a thought in terms of what can we learn about discourse just by being observers of these more vitriolic reactions that happen from one side versus the other, and shouting the other side down or attacking and that sort of thing? What is it that we can learn in our lives, in our family lives, in our business lives that we can take away from what we’re seeing rather than participating in it? Ray Zinn: If it’s a strong core principle that you have, or if you’re trying to set the stage for something, you’re less likely to be less vitriolic. In other words, the more you hold to those p
13 minutes | Apr 22, 2020
Bad Decisions, Good Outcomes
Entrepreneurs are bound to make bad decisions, but it’s how they handle them that is the difference between success and failure. Ray Zinn has seen it all and in this Tough Things First podcast he explains how successful business operators process bad decisions differently. Rob Artigo: I’m Rob Artigo, your guest host for this edition of the Tough Things First podcast. Hi Ray, it’s going to be back with you. Ray Zinn: Well, thanks Rob. I appreciate you joining us again today. Rob Artigo: I’ve got another question about decisions. We talk about decisions on the show frequently and I want to talk about bad decisions. Entrepreneurs make decisions all the time. They make decisions daily and they’re big, sometimes very easy decisions. And sometimes they’re small, very hard decisions. And some are just based on analysis and projections or educated guesses. So no matter how much though that goes into it, some decisions are not going to turn out the way you expect. How does a successful entrepreneur deal with bad decisions? Ray Zinn: Okay, well let’s first of all talk about a bad decision. They’re always going to be with us. We’re not perfect as human beings. We don’t have privy information. Decisions we make, if the statistics bear out correctly, they’re only good 50% of the time. It’s like flipping a coin. So what is different about a bad decision is that it’s a decision that’s not corrected. So, that’s the bad decision. And so, I want to make sure the listeners understand what a bad decision is. It’s an uncorrected decision is a bad decision. I make mistakes every day, and so you could say, well that was a bad decision, but then I correct it. And so, a bad decision is not bad if you correct it. As they say, no harm, no foul. So if you make a wrong decision and you immediately correct it or to the extent you can immediately correct it, then it’s not really a bad decision. Does that make sense? Rob Artigo: Yeah, it does. And as an entrepreneur, you have a high profile position, you’re a CEO of a company, and you make a bad decision, sometimes you’re in the spotlight on it. You can get ridiculed for it. Acquisitions comes to mind because sometimes people end up acquiring a company that just ends up being an absolute dud. They did not realize that just soon down the road that particular whole arm of the company would be obsolete. And so you see this and you think, wow, that was a really bad decision. But like you said, it’s how you make the lemonade out of the lemons. Right? Ray Zinn: Exactly. There is no such thing as a good acquisition, they’re just acquisitions that are controlled. So acquisitions by definition are difficult, and if you are not prepared for it or if you don’t already have it factored in, then it becomes a bad acquisition. So, just assume that no matter what, whether you’re hiring a person or whether you’re pivoting on a particular product or product line, these are all fraught with problems. And so just realize that being an entrepreneur or being in business for yourself is fraught with problems. The difference between a successful entrepreneur and an unsuccessful entrepreneur is their inability to turn, as you said, lemons into lemonade. It just like you’re going down a freeway and you take your hands off the wheel, you know what’s going to happen. You’re going to end up in a bad accident. Ray Zinn: So you got to keep your hands on the wheel, you’ve got to keep attentive, you got to keep looking around, you got to understand what’s going on. You know, it could be snowing, it could be raining, you could get a lot of traffic, you could have other forms of chaos. And so, the good driver will be able to manage his way through whatever disaster is thrown in front of him. And so, that’s what an entrepreneur is, is that disasters are around the corner and he’s dealing with them. So running a business is like that. It’s controlled chaos is what it is. Rob Artigo: Are there times when, in hindsight, you look at the situation, you’re saying, “Oh man, that was a bad decision.” But you look back in hindsight you go, “Well, I think that the decision was still the best decision that we could possibly have taken, that the outcome wasn’t what we wanted, but the decision was the right one because anything else would have been potentially disastrous.” You know what I’m saying? Ray Zinn: Yeah. And marriage is that way. So you could say, “Wow, that was a bad marriage or that was a bad decision marrying that person.” But that’s not a bad decision if you start out looking at the little minor changes that are taking place in your marriage and correct them as you go. Then they don’t become big disasters. I think that probably half or more of the divorces could have been prevented had one of the other members of the marriage partners took action quickly and early, so before it became a disaster. You don’t paint yourself into a corner. You realize you’re about to paint yourself into a corner and you move so that you’re not ended up being in the corner. And that’s the way you run a business. Same way. What are they, nine out of 10 businesses fail after three years, or startups fail after three years. I mean after three years. And the reason is because they paint themselves into a corner. They don’t realize that they’ve caused their disaster or their own problem, whether it be a marriage or whether it be starting a business, because they don’t correct things quick enough. They let them become big problems and maybe at that point you can’t correct them. So whether it be as a parent with a problem child or whether it be a marriage or whether it be a business or whether you’re a school teacher or whether you’re a salesman, whatever situation you’re in, don’t let problems become big problems. Solve them early when they’re small. Rob Artigo: And I suppose also you want to make sure that it’s a learning experience so that you don’t make the same mistake again. But at the same time, what about the approach of letting it vanish in the past and say, “Look, I’m not going to dwell on it.” The way a golfer maybe makes a bad shot and he’s taken his next swing down the, hopefully it’s not too far off the fairway, but let’s say he’s in the rough and he knows he made a mistake in the last swing. I’ve heard that professional golfers will put out of their mind the mistake from before and say, “All right, this is a new moment. This is a new decision.” They set themselves free from the, I guess, frustration of making a bad decision. Ray Zinn: Well, that’s what causes people to stop even in moving into a dark room is because they dwell on it. In other words, they can’t move forward. And so if you’re dwelling on the mistake you made, then you can’t move forward. It’s hard to be thinking about more than one thing at a time. And so if you’re thinking about the mistake you made or about the problem you caused, then you’re not going to find a solution. You’re just going keep dwelling on the mistake. And that’s what we talked about earlier is that you don’t wait until it’s a big mistake. You correct it when it’s a small mistake. It’s almost like correcting your swing in golf as you’re swinging as opposed to hitting the ball poorly and then having to correct for it. So, the good golfer can actually correct his swing as he’s swinging. Or we’re playing tennis or whatever else you do, you correct it as it’s happening rather than let it cause the problem and then have to correct it. Rob Artigo: Is this something that a young entrepreneur or a new entrepreneur can learn? Is this something that they have to learn to expect? Ray Zinn: Well again, that’s professionalism. You can’t learn to correct your swing before you learned. It takes practice makes perfect. It takes time to develop those skills to do anything. Whether it be football, any other sport, whether it be a parent or whether it be a spouse, you learn. And if you stop learning, then of course you stop growing, you stop progressing. Rob Artigo: And if you’re very young, you’re a college person and you’re maybe participating in the Zen Starter program, have you run into people in the program that have seemed a little downtrodden or they feel like they made some kind of huge mistake and they’re very disappointed in themselves or in something that they did that they seem like they just need to get over it and move on? Ray Zinn: I’ve seen all kinds. I’ve seen them where they think they know what they’re doing, then they don’t. And you can see that, that they don’t know. But they pretend like they know what they’re doing. And that’s the dangerous one. The most dangerous ones are the ones that pretend they know because they stop listening. They keep moving forward, going through the mistake because they don’t want to show they don’t know. And so they pretend like they know. And so you can tell that aren’t right off the bat is that that person obviously doesn’t know what they’re doing. And that’s again, the most dangerous one is those who do pretend like they know what to do when they don’t. Rob Artigo: Yeah. I think that one of the experiences I’ve had in business and in the military for example, is people who feign some competency or that they’ve got a good handle on something, and you can almost see in the way that they’re dealing with it, they just are afraid to or donR
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