In a new book, the former Google chairman pays tribute to his late Silicon Valley mentor
Pinned in the doorway of Eric Schmidt’s snug corner office in Mountain View, Calif., is a comic strip that neatly sums up what the longtime Google chief executive wants you to know about himself and the company.
The cartoon, custom-created for Mr. Schmidt, shows Google’s technology rivals making supposed apologies. There’s Facebook ’s Mark Zuckerberg saying, “Sorry…but we’re still right.” Then there’s Apple Inc.’s Tim Cook saying, “You’re holding it wrong.” Finally, there’s Mr. Schmidt, who says, “We screwed up. Sorry.”
This is the Google way, perfected under Mr. Schmidt: high-minded, self-assured and a little smug.
Mr. Schmidt says that his approach is derived from the many lessons he learned from his late mentor, the Silicon Valley management guru Bill Campbell: “If you make a mistake, admit it, and do it right now. And if you didn’t make a mistake, don’t admit it.”
.. While it is now de rigueur for startup founders to take on formal mentors, Mr. Campbell was the beta version of the trend, personally counseling Mr. Schmidt, Steve Jobs, Facebook’s Sheryl Sandberg and many other Silicon Valley stars. A former Columbia University football coach who became a wealthy tech executive and adviser, Mr. Campbell was known for getting through to type-A people who might otherwise struggle to think of themselves as part of a team.
Mr. Schmidt credits Mr. Campbell for talking him off the cliff when he threatened to quit Google early on after being asked to relinquish his title of chairman. “Your pride is getting in the way,” Mr. Campbell told him, Mr. Schmidt recalls.
Later, Mr. Campbell helped to soften Mr. Schmidt’s edges as a boss. “Like, for you, I’d say: ‘You’re the best writer I’ve met in your generation,’ ” Mr. Schmidt says, with considerable overstatement. “Then I’d read something and say, ‘Well, you missed something, you could do better.’ Notice how because I’ve praised you, now you want to be a better person.”
.. When asked about Apple founder Steve Jobs, with whom Mr. Schmidt had a public falling-out over Google’s development of rival mobile software, Mr. Schmidt diplomatically observes, “When Steve was upset, he was loud.” He hastens to add: “Steve was a good friend, and I miss him terribly.”
Mr. Schmidt’s arrival on the self-help circuit comes amid a tide of leadership missives from wealthy entrepreneurs. The hedge-fund billionaire Ray Dalio has spent more than a year evangelizing his book of “Principles,” which tells employees to argue with one another and rank each others’ performance in real time. Mr. Schmidt, who says he knows Mr. Dalio well, calls that approach “sort of the extreme.” He prefers to deliver hard feedback behind closed doors. He says that he steered clear of Wall Street early in his career because “it wasn’t forgiving…it wasn’t tolerant.”
Dalio Says U.S. Two Years From Downturn as Tax Cut Benefit Fades
A Hedge-Fund Titan Puts Away the Punch Bowl
Ray Dalio of Bridgewater sees Americans’ debt as a coming drag on growth and markets
.. While he doesn’t see another crisis in the offing, he does see the same underlying stresses at work: Americans have accumulated far more debt than they have assets and income to support.
.. Not only will this drag on growth and markets, it will leave the economy acutely vulnerable to higher interest rates. The relevant parallel, he says, is not the early 1930s, when the economy imploded, but the late 1930s when the Federal Reserve tightened monetary policy and inadvertently extended the Great Depression. Today, the central bank must balance the short-term need for higher interest rates to contain inflation against the long-term need for low rates to work off the debt overhang and sustain high asset prices.
.. “It may not be a problem in the next year or two, but the risk of not getting it right increases with time.”
.. “We ‘finance people’ see the world very differently from the way economists do,”
.. The views of finance people tend to be shaped more by trading experience than by formal economics. They assign much more weight to financial factors such as debt, asset prices and cash flow than do economists who emphasize “real economy” factors such as employment and investment
.. Finance people are wary of how macroeconomic data obscures crucial details of individual companies and households. Some economists do think like finance people, such as former Fed Chairman Alan Greenspan, but they are in the minority.
.. since the 1970s, inflation-adjusted interest rates have steadily declined while investors have accepted ever lower compensation for risks such as bankruptcy, recession and volatility (i.e. the “risk premium” has declined). This directly raises asset values and indirectly lifts growth by spurring borrowing.
.. His team estimates this has contributed three percentage points a year to stock returns since the 1970s while boosting private and government debt to 325% of gross domestic product.
.. In 2007, Mr. Dalio’s team concluded that the cost of servicing Americans’ debts was growing faster than their cash flows, creating the conditions for a crisis.
.. By slashing short-term interest rates to zero and buying bonds to push down long-term rates, it engineered the right combination of economic growth, debt write-offs and low interest rates necessary to start the painful process of “deleveraging,” or working off all that debt.
.. it can’t raise them much either, or debt servicingwould swamp cash flow and asset prices would sink. Thus Mr. Dalio foresees years of low interest rates, and while he thinks stocks are appropriately valued, he thinks returns to a typical stock-bond portfolio over the next decade will be around zero after inflation and taxes.
.. his biggest worry is that lower corporate taxes and higher stock prices do nothing for the bottom 60% of households who own almost no assets and whose stagnant wages are the mirror image of expanding profit margins, feeding resentment and political polarization. Says Mr. Dalio: “If we do have an economic downturn, I worry we will be at each other’s throats.”
Two Different Perspectives About Bridgewater from The New York Times
For over 40 years, we have pursued meaningful work and meaningful relationships through radical truth and radical transparency. This unique way of operating has obviously worked extremely well. I think it is very important to note that our culture has been conveyed in two notably different ways by The New York Times’ writers and editors. There is a significant discrepancy in the way they portray our culture in their distorted and sensationalized print stories versus the more thoughtful and accurate discussion I had today at their New Work Summit, which focused on celebrating innovative and successful workplace cultures.
.. radical transparency is coming at you. link