The Harvard Business School presents Seth Klarman, founder and president of the Baupost Group
Major take-aways from the interview:
- I don’t think a lot about being a leader; our goal is to be “excellent” and to be proud of what we do
- Main principle for leadership or management-style: “Do unto others…”
- Big believer in leading by example; you can’t expect other people to do things you’re incapable of or unwilling to do yourself
- Sometimes organizations are stuck, people want to do more but they haven’t been asked the right way; don’t overlook the power of re-anchoring via leading by example
- Leadership stems from credibility — credibility stems from being “right” over time and from having knowledge — and from moral values
- Two important moral values for leaders:
- Football field test; play the game from the center of the field, not near the sidelines, where it is easy to go out of bounds without intending to do so
- WSJ test; live your life in a way that you would not be embarrassed to have it reported on the front page of the WSJ
- Every quarter, I sit down with the non-investment team members of the firm and explain the current investment strategy; the idea is to help the rest of the firm understand why the firm is doing well or poorly; this creates a culture where everyone is on the same page
- You want to create a culture where everyone is willing to stay late to finish a job if they have to, where people will spend time double-checking for mistakes; people paying attention to detail at every level of the firm is important
- Leaders don’t take credit, they give credit; be quick to give everyone around you credit, it is empowering to those people
- Turnover is a hidden cost of business; it can take so long to get someone up to speed, train them properly, get them to the point that they can contribute; treating employees properly and caring for them is a smart business decision
- If you have someone who is not getting the job done, other people are probably carrying their weight and working extra hard for them, and this isn’t fair; good leaders need to be fair
- Get a good mentor; find a place to work where they care about you, that will nurture you and be interested in your development; if you can find one it sets you on the road to success
- An experience SK feels good about as a leader: the time the leaders of the firm decided to buy the entire firm playoff tickets for the Red Sox game that ended up being a historic game– an order of magnitude different from handing over a $1000 bonus
- A mistake SK made as a leader: tolerating a “difficult person” for far too long, because they were a talented individual; it poisoned the well, tarnished the moral character of the firm, led to some financial losses; focused too much on the short-term pain rather than the long-term benefit of that decision
- A leader is not afraid to fail, is not afraid to be wrong or to lose money in the short-term; a leader always adheres to their principles and standards
- JP Morgan: “I can do the work of a year in 9 months, but not in 12”; it’s important to set time aside to refresh, relax, reflect
- Marathon, not a sprint; don’t focus on the short-term because it causes anxiety and makes you hyperactive in an effort to compensate for short-term poor performance
- You can’t be a leader if you burn out; find balance, seek a variety of interests
- Working a couple years at an intense pace (80hrs+/week) is okay if it’s for a specific purpose; ideally, if you are going to work that hard, do something entrepreneurial, then you’re doing it for yourself and the benefits, if any, accrue to you
- Understand that if you plan to compete by being willing to work 100 hours a week, you’ll be beat by people willing to work 110 hours
A House Rises 