#AskGaryVee Episode 89: Jack & Suzy Welch Talk About Efficiency, Creativity, & Failure

“How important is failure? “You hear a bunch of people saying “how important it is to fail. “But is it really?” – Youssef, great question. You know, look, I think
failure has to be quantified. If you fail but you never
can get up from it again, you know, that’s not a good failure. I think failure and adversity are the two things I think about. For me, as an entrepreneur,
and very entrepreneurial, and always in my own
stuff, all the failures along the way, even going
back to the baseball card show when I was thirteen, that I
paid 400 dollars for a table and nobody showed up to
that baseball card show. That was a learning lesson. Those microfailures were
super, super important. I think, you know, it depends
on your stomach, right? Like, if you really fail,
like go out of business, I think people take
one of two ways, right? They’re like, just finished,
and they’re never able to get off the mat, and they
go in a different direction, so to me, I think quantifying
the failure’s important to me. Jack, Suzy? – Well, I’ll give you
one, I blew up a factory the second year I was in business. Sky high, my boss all of
a sudden didn’t know me, I went down to see his boss in New York, which he pointed me to,
and the guy asked me a thousand questions,
using the Socratic method. And instead of me getting fired, which I thought was a high probability, I learned something from it. So, in every one of these
events, you gotta get yourself back on the horse, and how
well you get back on the horse and how well you ride after
getting knocked on your butt is a very big deal. – We tell our kids,
“Fail early and often.” Fail, because then what
happens is, when you do fail, you realize it doesn’t kill you. You go on living, and you realize, “Okay, you know, I can pick myself up, “here’s how I’m gonna reinvent myself, “here’s how I’m gonna talk about it, “I’m gonna own it, I’m
gonna say I got fired “from the Harvard Business Review.” I tell people I got fired from
the Harvard Business Review, and here’s the thing. It gives you heart for people
who have also fallen down, and you actually sort of have a – Empathy. – A totally different
understanding for people who have fallen down. You’ve been there, and you can, it just makes you a better person. You don’t wanna keep failing constantly, but to be scared– – That’s a very bad idea. – No, you don’t wanna fail all the time, but you can’t be too scared of it, because it stops you
from doing big things. – Yeah, you know, it’s funny,
I was just having a meeting with a lot of senior
executives here at VaynerMedia, and I said, “Look, guys. “I don’t need peacetime generals,” right? I need wartime generals,
meaning I need executives, like of course I know
this brand’s going well and this brand’s going well
and this brand’s going well. What are you doing about the client that’s not happy right now? Right? And I think failure
makes people better at that, and so that’s another kind
of thing that I look for in this subject matter. Alright, let’s move on. – [Voiceover] Chris asks,
“Is terminating the bottom

“10 percent still a good idea? “Even on a team of all-stars,
someone has to be last.” – Why don’t you set this
up, because obviously, what was the name of that person? – [India] Chris. – Chris knows about your thesis, I mean, this is a very legendary
POV in corporate America, entrepreneur land, like this
is one of the iconic things you put into the business world. Really quick, faster than
normal, tell everybody what that is so everybody knows, and then answer the current version. Actually, why don’t
you come out with that, and give it a little
life, and then tell me what the 2015 version of it. – If you believe that the best team wins and that business is a game, you’ve gotta field the best players. So in order to field the best players, you look at, any one point in time, who are your top 20,
who are your middle 70, and who are your bottom 10? And you wanna take that top 20 and you wanna make ’em feel six foot four and made for power. – What if they’re six five to begin with? – Go to six eight. (they laugh) And what you wanna do though, desperately, is make them know they’re that good. You want ’em to be excited,
you want ’em turned on, you want ’em passionate. The middle 70, you want ’em
striving to be in that top 20, and the bottom 10, you tell
’em what’s wrong with ’em, what they’re not doing
right, you give ’em a chance, if they don’t make it, you let ’em go. But when you let ’em go, you
love ’em as much on the way out as you loved ’em on the way in. – I’m a big believer in that part. – And that’s a big, important thing. – I agree. Do you feel, now you played at a GE, how many employees under
your wing on average? – 400,000. – Okay, 400,000 employees
that you were in charge of during that run as CEO of GE. Do you think that thesis holds true to VaynerMedia, 500 people? – More important. The fewer you have. – I’m gonna go a little quicker. How about, there’s a lot
of five people teams here. Five to seven people watching, listening– – And it makes it harder for some, because you’re looking straight at the five people who got you started. And it’s so tough. I was talking to somebody last night at a conference who said he had to let go his former junior partner,
and it was killing him. But he had to do it,
she wasn’t delivering. And I said, “Look, as long
as you take care of her “and you’re fair, and
you’ve explained to her “for the last year what
she wasn’t doing right, “you gotta do it.” – Do you think– – The thing that gets me
about this question is, the thing we hear again and again, we hear in this question
is, even if everybody, even if it’s an all-star team. – No such thing. – And there’s no such thing. You’ve gotta look at your team and say, “Who is the weakest player, can I upgrade, “can I upgrade?” – It’s never existed. – It’s very, very, I mean,
you can’t fall in love with your team and say, “Now
I have the perfect team.” But the next manager comes in and says, “What was that person thinking?” – Yeah, I mean– – I have another take on this, too. Why do we always focus on the bottom 10 in this 20-70-10? Why aren’t we saying,
“How exciting the top 20!” – 100 percent. – Why aren’t we talking about the winners? – Because it’s rubbernecking. It’s the same reason
that we sit in traffic all the time, Jack. Alright, let’s move on. – [Voiceover] Jeremy
asks, “As businesses grow, “what is the best solution for
documenting policy, procedure

“what is the best solution for
documenting policy, procedure “and process so all are on the same page?” – Jeremy, I hate this question
for a couple of reasons. You know, it’s interesting. I’m gonna piggy-back off
the last statement here, which is, to me, this is
a defense question, right? This is a bottom 10 percent question. – Yeah. – There is no business on earth that won because they had a tight
handbook situation, right? So, for me, I mean, unless
you’re talking about liabilities on a legal level, you know. GE should worry about that to some degree because of the level of lawsuits. and by the way, they
have 400,000 employees, and there’s probably 8,000
lawyers, there’s people to do it, but a company of 500 people. India, they’re not gonna hear
this, but you prepped them, like how we have a handbook here and nobody really knows about it. I mean, this is a 500 person,
and it’s still a baby, like that is something
that I think you need to be worrying about at your– – Yeah, forget documentation,
have a culture. Over here has a culture. And as soon as you’re documenting things, you’re wasting everyone’s
time, it becomes a bureaucracy, all that matters are your
values and your culture. Make sure they’re being lived, and you don’t have to document anything. – But everybody has to
know where you’re going, why you’re going there, and
how you’re gonna get there. – Well, that’s leadership, right? – And that is the job that– – That’s my job. – That’s yours, and the
people that work for you, and cascading down. But everybody’s gotta know the mission, they gotta know how they’re
gonna do it with behaviors, and then they’ve gotta be, and what are the consequences of getting there? – There’s another thing that I think people need to understand. And by the way, this is
gonna get very Vaynerized, and India, you’ll enjoy this. And everybody here. As I started bringing
in more senior people, they wanted to bring in
more of these things. And I made them understand, I’m like, “Look, you don’t understand. “We’re still this entrepreneurial engine.” And if somebody comes into this company and they’re so worried about the handbook, and so worried about
reviews, and so worried about all these things, I
don’t want them here now. Not that they’re bad, but they’re not the right players at this time. I was the best player on my
fourth-grade baseball team. There’s not a single
baseball team in America in Major League baseball
that needs me on their team. So, I was the right player for that time, but then as everybody
got much bigger than me, I became not so much. And so we now need different people that maybe care about some of those things as we continue to grow,
but not at that time. So the other thing here
is, the right employee at the right time, at the
right age of the company.

“to scale a business with an
inherently low profit margin?” – So, Jared’s got a low
profit margin issue. He’s asking the best way to scale it. Jack? – New products, new innovation, new angle. If you’ve got, the last thing
you wanna be thinking about is making large something
that’s small margins. You wanna find ways to
take the assets you have and transform it into a
high-growth, exciting player in maybe adjacent fields. But take the asset you
have and deploy them to grow the business, but not maybe the existing business completely. – Get away from the low-margin businesses. Create services, right? I mean, isn’t that what you did at GE? Took all the stuff that was low-margin, and you added on high-margin services. You don’t wanna be in
a low-margin business. You’ve gotta do everything
with your innovation and creativity to get away from it. – I’m gonna go with an
interesting, different angle from my own life experience. When I got into my dad’s business, it did three million dollars in revenue and ran on 10 percent gross
profit before expenses. It was a family business, right? – Right, right. – That’s low margin. The liquor business is bad,
cause there’s a middle, wholesale part that takes 25 percent of the 50 percent that a
retailer normally takes. Extremely low margin. What I did was actually
went the other way. Meaning, I took the low margin items that were driving the store’s business, and I actually bet on them. What I did was, I took all the
items like Santa Margherita, Kendall-Jackson, the liquor
items that were low margin, at cost, by the way, and
I used them to market, to drive people into
the store as the honey, and then I merchandized the store and built the brand that they
came in for, Kendall-Jackson, but I sold them a different
Chardonnay with margin. And so, both these things
are, of course, right, I’m curious, and we don’t know, where you are in your life cycle. What I’ve watched a lot
of people do is try to go, you know, bandaid off from low margin to some new innovation that
maybe the market doesn’t want. I think the hedge there, that’s
interesting to understand, I really felt the effects of
this, is use it as an offense. Right now, we’re testing Facebook ads for my wine business, and
everything we’re using are these low-margin
items, because they have the brand equity to drive in,
and then we’ll take care of it from there, so you may be far enough along in your business where, the first answers here
were 100 percent right. You need to get into a
place where the margins are gonna get right,
but I worry, depending on your sophistication as an operator, that you go complete cold turkey. There’s a way to use the
low-margin items as an asset. – That’s a very good idea, but I would use the low-margin items and the margin from those low-margin items
to invest in other areas. – 100 percent. That’s what I did, right? The pennies we made turned
into the advertising, that drove people in, then I
grabbed them, and so, da-da-da. India.

“How can efficiency and
creativity better work together?” – They will be inefficient into the time and space you give them, to be honest. I mean, I was a creative a long time, and then I became the
boss of the creatives, and I knew how much fat was
built into their writer’s block and their, you know, thinking
and everything, and– – The zen room they needed. – And I had to come out
of the associate press, where you had to turn out
seven, eight stories a day. I knew that the creativity
expanded into that space. And of course, you gotta be creative, and creatives need some time
to decompress and so forth, but we give them a little bit too much, or maybe not we in general, but it is easy to listen to them moan and
groan about needing more, and so creatives can be efficient. – To get efficiency,
you gotta be creative, and you gotta have creative people. And efficiency doesn’t
mean some guy or woman in a hole, driving every day. It means that people
are thinking of new ways to do things, coming up with
incremental improvements, making things better every day. Finding a better way every
day takes a thinking head set, and you want that
mentality in your company. You want the whole company
to be thinking about, every day, what is a better way
of doing what I’m doing now? – I’m a big fan of
betting on your strengths, and also really
recognizing putting players in the best position to succeed. And we have nothing but creatives here, of the 500 employees, 200 of them, and if I’ve deemed, if we’ve deemed, if Tina, who runs our
Creative Department deems that this person is bringing us quality, I think one thing that a
lot of people try to do is mold them into being more efficient. I’ve done that plenty
of times in my career. One of the things I’ve
decided now is to look at it more as a net-net game, right? You know, I may not like
that they need to be in a zen room with unicorns in it, I may not, but if I’m
okay with the output. If I’m okay, net-net, 365 day year output, I’ll take it, right? You could have the most
prima donna creative, but if they do that one
thing that you decide drives the ROI, on the flip
side, you could have somebody who’s the most efficient
but lacks the magic. What you have to really do is, it’s wide receivers in football. Listen, they’re at the
mercy of the quarterback getting them the ball, that’s why, they don’t get to touch the ball. The quarterback touches the ball, the running back touches the
ball when the call’s played, the receivers don’t, so many variables, and I’m very intrigued by that psychology. That being said, you know, I value speed and execution over everything. And so, I definitely sit
on that Mendoza line, if there’s a coin toss. If I’m even debating it, if
I’m even debating your value as a creative over the
efficiency and the output, you’re in trouble. – That’s sensational, one of the things. No it is!
– Thank you, Jack. – One of the things that
really can kill a company is the innovators sit over here in a box, and they are Thomas Edison,
and they are Steve Jobs, – The ninjas. – And they’re these people. And then, everybody
else, keep your head down and be a grunt. You lose the minds of these people. You want everybody to be an innovator! – Right.
– 100 percent. And it’s interesting, here at Vayner, we’re a classic agency,
we want more practicality from our creatives, and we
want our account strategists being creative, and that’s
been a big benefit for us. And, you know what else it
does, it creates mutual respect. Because when the innovators are over here, they sit on a higher ground,
and it deflates the momentum and the equity. – Right, any time you get prima
donnas in an organization, it enervates everyone around. – So, let’s wrap up with this, we don’t do a wrap-up session, but we’re
gonna make a unique thing.

a wrap-up session, but we’re
gonna make a unique thing. Why this book, and more importantly, you have such a mix of people that listen and watch my show, right? You’ve got a ton of people in startup, entrepreneurial culture,
you know, obviously cause of the agency,
there’s a plenty amount of executives in Fortune
500s, bloggers, media types. When you look at this book, and you guys put your
self-awareness against this book, who benefits the most? Of course, that’s like wanting
the book to be successful. We want everybody, and I’d
like, it would mean a lot to me to support these guys, I want you on it, but going down the pecking order, who do you think, or how
do the individual segments that could read this book, what
do you see them benefitting from what angles? – I mean, what we wanted to
do, we wanted to create an MBA in a book, because you
can start off in business, and you can get very good at one thing, and there’s something in your
head that’s saying to you, I wish I had the 360 mindset, you know, that’s sort of what an MBA,
I’ve got one, what it gives you. It sort of gives you the CEO’s mindset, you sort of see all
the different functions working together, and we looked around, and that book didn’t exist. It’s for people who didn’t have an MBA who just wanted one but
didn’t wanna give up two years of their life to go get one. – Or the gadrillion dollars, or the debt. – Right, the flexibility, everything. – Well, I mean, anybody
who’s managing anyone, a small team of five
people or a team of 500, can use the tools that are in here to build a team.
– So, management. – No, no, no, that’s one level. – I know, but that, but
it’s an interesting insight that that’s where you went
first, but I’m intrigued by it. – Well, I– – He always goes there first (laughs)
because he– – I believe in it so
much, so I’m into it too. – But I’m talking about
managing small groups as well. – I get it. – And what we wanted to
do is create an atmosphere in a company that’s got some
of the buzz you’ve got here, across every company. So, building a wow team,
and having employees know how to play on a wow team is
a critical part of this story. – One last thing is that there’s
a whole section of the book on your career, and it’s about, you know, what should I do with my life, how do I get out of a career stall, and how do you become an entrepreneur, what does it really take? There’s all, a lot of the book is about winning strategically,
smiting your competition, building a great team, but look frankly, people spend a lot of brain time thinking about their own careers and how they get to be where – Stuck. – Where they’re really
fulfilled and they’re doing what they wanna do, so the whole, there’s a chunk of the book about that. – Do you believe, on a real
quick question, do you believe, by the way, you guys
look great in this photo. Do you believe, how many photos, how long did this photo shoot take? – Long time for me, not for her.
– Longer than we’d have liked. – To get me on there to look
like that was real work. – I can imagine. (they laugh) Do you believe that a top 25, 50 business school MBA in April 2015, is as
valuable in the marketplace as it was, five, 10, and 25 years ago. – Go back to top 10. – Okay, top 10, yes. – Absolutely. – How about 11 to 25? – It starts to slide pretty quickly. At the top 10, the line is out the door with McKinsey, with
Booz, with everybody else lined up, waiting to get in. So at a top 10 school, you’re making a huge 300,000 dollar investment, but the return is pretty good. – It pays off. – It pays off. – What about, so many of those kids, cause now I’m spending a
lot of time with those kids. So many of those kids want to
become startup entrepreneurs. – Right. – Do you believe that the
ROI is equally as good at that 300,000 dollar investment if they wanna go down that path versus going to Bain and McKinsey, who start paying them
tremendously strong salaries and bonuses that can drive down that debt. – Depends on the quality of their idea. Let’s face it. – What’s your intuition tell you– – We are running all the time into people that wanna be, quote, entrepreneurs. It’s not a profession. It is the output of a great idea. – Yep. – It’s not like being
a lawyer or a doctor. What is your idea, what
is the value proposition, and can you win with it? – Yeah. – So, I always end the
show where I ask a question