Life on Mars - A podcast from MarsBased
Welcome to Life on Mars! A podcast about technology, entrepreneurship and innovation from MarsBased. You will listen to stories of the best founders, investors, experts and celebrities from all around the galaxy every two weeks.
Life on Mars - A podcast from MarsBased
Silicon Valley’s longest-standing CEO: 37 Years leading Micrel
In the volatile world of Silicon Valley, where the average CEO tenure is often less than five years and startups burn out as quickly as they rise, Ray Zinn stands as a monumental exception. For 37 years, Zinn served as the CEO of Micrel, the semiconductor company he founded in 1978, holding the record as the longest-serving CEO of a publicly traded company in the Valley. His tenure wasn't just about longevity; it was a masterclass in disciplined consistency. Under his leadership, Micrel achieved a staggering record of being profitable for 36 out of those 37 years, a feat almost unheard of in the tech industry.
This video dives deep into the story of the man they call the "Iron Man" of the semiconductor industry. We explore how Zinn famously rejected the standard Venture Capital model, choosing instead to bootstrap Micrel using his own savings and bank loans to maintain total control over the company's culture and destiny. You will learn about his unique management philosophy, "Tough Things First," which prioritized discipline and employee well-being over short-term stock manipulation.
Beyond the business metrics, we also uncover the incredible personal resilience of Ray Zinn. Later in his career, he went legally blind, yet continued to run the company effectively, relying on his vivid memory and the deep trust he had built with his team. From the early days of 1978 to the final acquisition by Microchip Technology in 2015, this is the definitive story of an outlier who proved that slow, steady, and disciplined leadership can outlast the hype of Silicon Valley.
🎬 You can watch the video of this episode on the Life on Mars podcast website: https://podcast.marsbased.com/
Welcome to the show, Ray. How are you doing? Good morning over there. Doing wonderful. It's snowing here in Montana. So uh that's winter winter is coming. Exactly.
SPEAKER_01:One of the things that really that really um strike me when when I hear your story is you've been very vocal. You've been an evangelist for bootstrap companies every day. I guess bootstrapping a company back then, it's not the same as bootstrapping it nowadays, right? If you had to start a company nowadays, how would you do it? Would you do it any any different?
SPEAKER_00:Well, it depends upon what kind of company you're starting. Um when I started my Krell back in 1978, um it was mainly done with venture capital. They usually raise about$50 million and they start a semiconductor company. Um so when I started my company, uh you know, it if you didn't have venture capital, you you really couldn't do it. And so I didn't want to be a venture capital started, uh uh funded, so I had to go to the banks. And the banks didn't want to fund a startup. Uh and uh so then I said, well, now what do I do? Uh and so you know I had to be willing to agree to a lot of really ridiculous onerous covenants to be able to uh get the company started. So today I think it's a little more friendly uh for banking. Uh not sure about I haven't started a company for for 40 or something years, and so um, you know, it's it's it's times have changed and and I'm not sure uh uh if you can do it with or without uh venture capital. So I'm I'm not too uh up on on what how how you would bootstrap it uh now, except maybe go through angel um uh funding. Uh I think you said you were an angel funder, uh Alex, and and I am also, I'm an angel funder. Um and so you know maybe that's a way that you can do it is uh through angel uh funding because they're they're less onerous than than the true venture capital guys.
SPEAKER_01:Uh uh it's funny you mentioned that you didn't want to go the VC route, but uh nowadays this option is quite viable, but in the 70s, like was that a contrarian take, or why didn't you want to take Vitzi money?
SPEAKER_00:Well, uh the problem is with with uh if you're venture capital funded, they're they're micromanaging you. They're they're they're sitting right on top of you, demanding that you take the company public, you know, in five to seven years after you start the company. Uh and and that's not a problem. I wasn't concerned about that, but I just didn't want them telling me how to run the company because then I didn't feel like I had control. Um and I was having uh some anxiety about that, and I wanted to own the company. I didn't want them to own it, and that was the other issue. So we just agreed to to go with with the bank debt rather than with uh venture funding. Uh if I had to do it over again back in the 70s, I would still do it the way I did it. Um and I think we could we would still have been just as successful as successful. So there's many ways you can start companies. It's not something that's uh one just one way or the highway. Uh and so uh, you know, you have to look at what your strategy is, what your goal is, what your objective is, and then you can uh uh decide then how you want to fund it.
SPEAKER_01:In fact, when you when you mentioned that you're also a uh business angel, I as a business angel myself, I see too many companies nowadays trying to raise VC funds when their business model cannot really sustain that kind of growth or deliver the kind of returns a VC would expect, right? And I'm talking sometimes it's like a retail company. It can be a restaurant chain, it can be like uh like some brand producing some kind of shoes, and that might be a relatively good investment for a business angel, but not a VC. So it's funny that you mention it nowadays. I guess that there were fewer options back then. The other thing that I really as a business that it's bootstrap, like ours, like Mars-based, we are perceived oftentimes as not ambitious, right? Bootstrap businesses are not ambitious because according to VCs, you will not have the capital to deploy like sufficient scale, or you will not be able to run faster than the competition and all of that. That is nowadays, but was this perception already around in the 70s that bootstrap companies were not as ambitious as BCVACT once?
SPEAKER_00:Well, you know, that's true. Uh uh they told me uh, you know, I was just a uh a few miles from from Sand Hill Road where all the VCs are, and you know, I've they all said, well, you you can't you can't grow the company fast enough uh and and well enough uh you know unless you're you're VC funded. So that's it's true. So it took me uh about let's see, so twenty years it it took me to no say twenty not twenty, fifteen years. It took me yeah, fifteen or sixteen, it took me sixteen years to be able to take the company public. Um and uh uh and so if you were venture funded, you could do it in say five to ten years, depending upon your model. Uh so it took me a little longer, maybe fifty, fifty percent longer. Uh, but I was that's okay. I was willing to to to to go a little longer. As Orson Wells says, no wine before it's time. Uh and so, you know, you do it when you can do it, you know, when you when you're when you have that scale and that ability to take your company public. Um and so yes, I think uh and back in my time, back in the 70s, or actually when I went public in the 90s, let's say, uh the uh banks uh were reluctant to even take me public because I I didn't have the the venture backing. The venture guys take take priority. Um and and so that that did worry me. Um and and I was concerned that I might not be able to take the company public uh because I didn't have any backing. Uh and so there are some there are some restrictions. You know, you know, you're you're gonna you're gonna uh pay the price, depending upon you know what what your goal is. So, you know, if you're venture funded, you'll have them pushing to to take you public. Um so uh if you're doing it on your own, then then you have to fight your way in as you would.
SPEAKER_01:Actually, one one of the things that have really changed the technology or the startup landscape is whereas before a company would go public, and I'm talking about like the 90s and stuff like that, um before the 10th year of the company. Now companies take way longer to go to pursue an IPO, right? Um I don't know if the role, the the maybe the increasing appearance and presence of VC, Saf accelerated this road to IPO. And before that, before the 90s, where BC money was not so prominent, maybe you didn't have that urge to go public, right? And companies would IPO with I'm maybe I'm saying something stupid. I don't remember the exact numbers because I was like three years old in 1990, right? But uh I think companies would IPO with 10 or 20 million in revenue, whereas nowadays they at least they wait until hundreds of millions in annual revenue, right? Uh what has changed, you know, in just barely these 20 odd years?
SPEAKER_00:Well, the IPO market has not been that great, um, at least over the last uh five or six years. Uh so I I've invested in I would say roughly 20 IPOs in the last uh year, uh and and I've lost money. Um and so uh you know the because you you know the bank get you know that that green shoe, the bank is able to uh allocate uh some money to to people who want to invest in the IPO. Uh and and so I did. I was with Goldman Sachs, and and um I I was able to invest in lots of IPOs, but I've lost money. So what's happening is is that the the demand by the by the VCs is that they want they want you to go at a higher price. Uh and so they argue on price. Uh or uh and that's in today's market. When I did it, you know, uh I I was able to, because I want everybody to make money, I was able to to to to go in at a lower price. In other words, make sure there's a premium on the stock before I took it public. Does that make sense? So uh but today uh the the IPOs are way overpriced. I'd say they're they're probably you know uh 10 to 25 percent overpriced what when when they go public. Um and and no one's making money. I told told Goldman that I'm I'm not gonna invest in any more IPOs, I'm done, because all I do is lose money.
SPEAKER_01:When you mentioned that the the IPO was at risk because they were hesitant that a bootstrap company wouldn't be a great fit for an IPO. Was it because having a VC funding doesn't only provide certain economic comfort and cushion, but also you are way more audited, you have been more audited throughout every round than being a bootstrap company where you don't have to give explanations to anybody else, maybe. I don't know if that that's the rationale as well.
SPEAKER_00:Well, you certainly uh the auditing function uh it was important because if you're not gonna go public, you don't have to have all that auditing cost. But if you have if your plan is to go public, then you're gonna have to do it e even if it takes you 50 years, you know. I mean, because you got to have that, you have to have that uh discipline and that comport to to do it. And and that's what we did. We we made sure that we were audited every single year, uh, even though we weren't public. Uh so that was 16 years that I was auditing and paying all that money. Um but if I didn't do it, then then I had very little chance of be able to take the company public.
SPEAKER_01:Well, exactly. You've been super meticulous and rigorous about your financials. I have been reading, and I think you only allowed yourself to be uh one quarter per year not profitable, and because you were a bootstrap company, you had to be profitable, profitable all the time. And I I off the top of my head, I remember there was only one year where you ran the company at a loss, if I remember correctly. So does that rigidness and that like uh being so strict on financials, maybe that was part of the success to becoming a company that IPO'd in the end?
SPEAKER_00:That's well, I wanted to be profitable. I I didn't want to lose money. Uh and that was my goal, my mission. Uh that maybe not the mission of other other uh um startups. Because it's your money, right? It's your money, exactly. Yeah. That's like it's like wait when you get a rental car, you know, do you treat it better or the same as you do your own car? I I doubt it, you know. Uh or you know, or if you're or if you're in an Airbnb, you know, you don't treat it the same way you do your own home. Uh and so uh if you're uh um a venture-funded company, you you tend to it's not your company really, because you you're owned by a whole bunch of other people uh before you even take the company public. And so you're you're less you you you're less scrupulous in in the way you you manage your funds. Uh for example, the venture guys, they want to go through you know five or six rounds, and and so they want you to spend money. They they want you down to to where you own nothing. So when I went public and I owned over uh uh 30% of the company uh when when we took it public, uh maybe maybe it was higher than that, maybe close to 40%. Uh and and so uh you know the return is higher uh once you go public. You might not be as big as as one that's that was a venture capital funded company, but you own more of it. And and it and you have that that that feeling of ownership. You know, it's like owning your own home versus renting a home. Uh and so uh you know the the non-venture funded companies, uh as you say, the bootstrapped guys, they feel like they own it and they take care of it better um as opposed to the VC funded ones, which they don't. They say, well, you know, I only own you know 15, 20% of the company and blah, blah, blah. And so they don't they don't put the time and effort in to running it um as well as you would if you were bootstrapped or run it running it as you funding it yourself.
SPEAKER_01:Exactly. Uh well look, I am very vocal for bootstrap companies. And I think on this podcast, in five years of episodes, we have already said everything that is good about bootstrap businesses. But, you know, like you said in your book, right? Uh Tough Things First, at a certain time, like there are certain situations in our company that being bootstrap has held us back, right? Precisely, not having maybe a large amount of money in the bank, or maybe because it's your own money, you treat it differently, you're more scrupulous, and therefore you don't overspend in certain experiments that probably you would have done with VC-backed money, and they can be, you know, a turning point to the company. And because you don't want to risk that much because you're bootstrapped and you you feel like you're losing your money, not somebody else's, maybe that's that that held you know that held us back many times in the in the company. What in which situations being bootstrapped has been like something contrary to your success or something that held your back?
SPEAKER_00:Uh you mean because I'm bootstrapped? Is that what you said?
SPEAKER_01:Yeah, because you were bootstrapped, yeah.
SPEAKER_00:Uh well, uh so when we started the company, we had to be profitable every year, uh with because the bank covenants required us to do that. So I had to change the strategy of the company, uh, and we couldn't develop our own products uh until 1985, which is uh uh you know seven years after we started the company before I could even develop my own products. And that's what held me back going public was I didn't have my own products. I was doing services. I I was running a basically a service business because it it paid every 30 days. Um and and when you're you're developing your own products, you're talking three to seven years to develop your own products. Um and uh and so that's that that's a that difference that I said earlier between the companies that were venture venture funded, they went out you know uh five to six years before I did, uh uh because you know they had already started right off developing their products, whereas I couldn't. I had to have enough money and resources to do that, and that took me seven years to to be able to start developing my own products. But that's a choice I made. If you're young, you know, in your in your twenties or thirties, you know, you still got time. If you're in your 50s and you're trying to start a company, you're you're you're done. Yeah, you're not gonna you're not gonna be able to do it. So uh I I'd say if you're a bootstrap company, I wouldn't even attempt it and and unless you're in your in your 30s or your early 40s at the most. You're I'd say very latest, your early 40s. Um and and then um if you're uh in your 50s and 60s, you know, you're you're you're kind of done anyway. So uh I don't know very many 50 or 60 year olds that are starting companies that that uh are are are gonna be able to take it public. Now you don't have to take a company public. You can you can merge it or sell it. Uh you know, you're not limited to to just uh you know the IPO market.
SPEAKER_01:Yeah, exactly. And M ⁇ A is another thing that, you know, not having VC Money behind you um might be a constraint, right? But you might be restricted to buying really small companies or not being able to afford the cash up front to merge with other companies, right? You would say you want to buy a competition or a team whose technology is adjacent to yours and it could complement with VC Money, maybe you could, you know, you could effectively deploy this money to make that operation. Whereas being bootstrapped, you're a little bit more tight with the money, right? Um I don't know if you did any MA. Um I haven't been able to research that, but um did you did you have like some complexities regarding money uh when it comes to MA or how did you approach it?
SPEAKER_00:Well, uh we didn't do MA at that early. Well, see, take that back. Um uh we did. We we did acquire uh a company uh before we went public. Um I think that was in um 91 or the late 80s or or early 90s, I did acquire a company. Uh and so you can do that um uh you know before you go public. Uh and and was that a smart choice? The answer is uh depends. Depends upon you know what what your objective is. Um but you certainly can can can acquire other companies uh and you can acquire companies with products. Uh and that that'll bootstrap you. That'll that'll get you going you quicker also. Uh but again, uh you know, if you're gonna buy a company, uh you know, you're still gonna need money to do that. Uh and uh or or if you merged, you're gonna give up some of the uh of your ownership. Um in our case, we actually bought the company with with debt. Uh and uh but um could I have m uh merged and yeah, there was an opportunity for us to to acquire a company through a merger, uh, but then I would I was I would be diluted uh quite a bit to to do that. So, you know, there there's no magic answer. Uh it's it's just what's what suits your uh goal and objective? You know, if you're if you're in your 50s and 60s, you're gonna you're you're gonna want to bail pretty early. Uh if you're in your 20s, you know, you you can hang in there for for 15, 20 years um to to make it happen. So, you know, I think it's age-dependent, um, Alex.
SPEAKER_01:Well, uh and that brings me to something that is also really interesting, that is the having had the longest tenure of a CEO in Silicon Valley um means like has got a lot a lot of you know a lot of implications. One of them being usually founders might not be the the CEO to take the company past certain stages, right? There are certain founders that fire starters, so from zero to one, they're really good. But once they're past 50 people, 100 people, then they just quit or they self promote themselves. They bring a professional CEO. Moreover, there are other founders that can be can go longer than that, but they will not take the company public. You've done the entire trajectory, right? How have you trained yourself mentally to overcome the obstacles? I don't know if you had imposter syndrome. Like, there's not a lot of people like you. You're a Rad Aves.
SPEAKER_00:Oh. Well, you know, the statistics are that nine out of comp ten nine out of ten companies fail within the first three years. So you have to be unusual. You got to be in the top ten, as they say, uh to survive. Uh uh I wouldn't say I was lucky because I went through eight downturns. Uh and I in 2002 I lost half my customers with that dot-com implosion. Uh and and so, you know, you have to be resilient. You gotta be as tough as nails. You know, you you can't uh if you're wishy-washy, uh if you're not confident in what you're doing, um, you see, I I have no fear. I I I have absolutely zero fear. Uh and and so fear is is is the biggest inhibitor of of growth. If you're afraid, don't do it. Uh, and so I had no fear. Uh, and and so that was really a uh a mainstay to my ability to be CE uh Silicon Valley's longest-serving CEO was I just was I was resilient. Um and and you know, you couldn't you couldn't take me down. Uh, you know, if you if you look at all the the you know the the good athletes, you can't take them down. You know, the only athletes you can take down are the ones that that aren't don't have that passion, don't have that drive, don't have that enthusiasm. Uh it takes a lot of self-discipline, doing what you don't like doing and doing it well. You know, as I say in my book, I learned to love the things I hate. And and if you can't do that, if you can't love the things you hate, you know, you're done. You know, you you you gotta be able to get knocked down and get right back up again. Get knocked down, get right back up again. You know, as they if you get bucked off the horse, get right back on it. If you say, hey, I don't want to do that again, you're done. You know, that's why nine out of ten companies fail within the first three years is because they can't get back up. They get knocked down and they stay down. So you gotta be resilient, Alex.
SPEAKER_01:Um, resilience is certainly one of the one of the traits, or the mental fortitude is another one. But having read a lot of biographies of great CEOs and like famous athletes, they also have got great coaches. So who was your support? Have you had like a board, maybe like co-founders, advisors, like family, you know, some people you admired that they were supporting you in the toughest of the times?
SPEAKER_00:Yes, at that having a good mentor is extremely important. Uh and I did have a good team. Uh, they weren't external, they were internal. Uh so I had uh when I was down, my partner was up. When I he we he was down, I was up. You know, we we just we were supporting, it's like a good marriage, okay? In a good marriage, there's no divorce. You don't even think about divorce. And so if you have the right team, the right mentors, whether it be on your board, whether it be your family, whether it be your uh neighbors or or other cohorts in the in in your industry, you you have to have a good mentor because you because you know you you have to have somebody helping you stay afloat, as you would. Help you somebody's gotta help you bail a boat, as they say. And so, you know, you you do have to have a good a good uh team and a good mentor uh relationship with your with your team.
SPEAKER_01:What if uh you you you mentioned a couple of situations that look pretty rough. And um, but I don't know if they were like the worst days at the office. We always like asking about the worst days at the office precisely because we want to help to democratize it and to open it up to the rest of the audience. Because usually when you hear podcasts, when you listen to podcasts, people are like, yeah, my company is the best, we got the best team, uh, we were so awesome, we're just making millions, and our product is unbeatable. And the reality is every company suffers, right? We all have got highs and lows, and um, I think we would profit, all of us would profit if we made it more accessible to the rest of the world what what our worst days at the office have been.
SPEAKER_00:Yeah, well, so um I had to learn to love my competition. Okay? Uh and so you have to if you if you hate your competition, you're already got one strike against you. Uh it's just like in a in a football game. If you didn't have an opponent uh to play against, you you're not gonna make it. You gotta love your opponent. I know that sounds strange because we think about you know trash talking our opponent and so forth, but that's all um bravado, you know, trash talking. Uh and and but I mean you you got it if you admire and love your competition, you're gonna grow. Um, you know, I I I tell you, you know, the the worst thing that can happen to you if you if you're if you get so down on your competition that it it detracts what you're doing, uh then then you lose. Uh so um, you know, I I remember when I when I was in debate, you know, I the way I won a debate was to get my opponent mad at me. Uh and because then they all they could think about was was was something to come back on. You can see it in politics a lot. You know, there's a lot of trash talking in politics. Uh and and so uh, you know, you you you gotta love your competition, uh, you gotta admire them, and and and you gotta fight them. Uh, you know, it's it's you know, if you're in a football game, you know, your your opponent's trying to try trying to kill you. I mean, he's trying to he's trying to take you out. Uh, you know, he'll do anything to take you out. Sometimes it's honest, sometimes it's dishonest. But, you know, you you gotta you gotta you gotta be ready for your competition. Uh and and you gotta and you gotta love them, meaning you have to admire them. Uh and and and that way you grow and learn. Uh, you know, if all you're gonna do is bad mouth and trash talk, but you don't do anything about it, you're gonna lose. So, you know, every day can be the worst day at the office. Uh and and and that's the same thing. You know, you you can't go into a football game or or or a soccer game and and and think that the competition is not gonna try to do you in. Uh if if you think that that you're always gonna come out on top, you're gonna lose. You know, and and so you got that's why I said you've got to learn to love the things you hate. That includes your competition. You've got to love your competition. And you learn to love them by admiring what they got, their skills, and so forth, and you try to to improve what you can do uh uh uh so that you can become uh you know the top of the competition, as you would.
SPEAKER_01:The speech is truly something leader material, right? Is that something that probably you would you would use in your company to rally the troops? And one one of the things that also being like having had your trajectory is you have you probably have seen the change of leadership roles, right? I don't think being a leader in is the same in the 70s, was the same in the 70s as in the 90s, or right now, right? For what I've seen in the last 20 years that I've been involved in business is right now, it's okay to be vulnerable. It's okay to show some fragility to the team, to lead with empathy, to lead with another with another set of traits that perhaps 25 years ago they were perceived as weak, right? Um I don't know if you have trained yourself to overcome all of these changes in the market, and how have you adopted the sensibility of saying, oh, this is not right anymore. It was right 20 years ago. Now I have to lead with this other approach.
SPEAKER_00:Well, that's that Who Moved the Cheese book. I don't know if you ever heard of that book. Yeah, it's a great book. I love it. Yeah, yeah. So who moved the cheese? If you don't move with the times, you're gonna lose. Okay, it's called the buggy whip um syndrome. Uh, you know, yeah. You know, if you're if you're afraid to use AI, if you're afraid to use new technology, new ways, you're gonna lose. You gotta move with the times. You know, you've got to follow the cheese. You just can't go the same way all the time. Um and and and the because technology changes. If you're not willing to adapt the new technology, you're you're you're you're you're gone.
SPEAKER_01:What inspired you to write The Essential Leader? Now going into book material, because uh like we we could we could have talked more about Tough Things First, but it's a book that's already 10 years old. You have already discussed it publicly many, many times. And I wanted to focus more on your current book. And you probably have seen some things like watching from the sidelines or not being as actively involved anymore that made you reflect upon the role of a leader. What is the essential leader about and what is how can we construct this role?
SPEAKER_00:We've been talking about that this whole time. Yeah, this whole this whole discussion that we've had, Alex, is is is what's basically in my book, The Essential Leader. Um, you know, being able to have passion, have a mission, you know, be uh be a servant leader, uh, you know, you know, a shepherd, the sheep follow the shepherd because the shepherd loves them. Okay, the sheep don't follow the shepherd because he he uh he hates them. They follow the the the the shepherd because the the shepherd takes care of them. And I always did that with my people. I took care of my people. I cover all that in my book, uh Essential Leader. I could there's ten ways that I I break it down into how you become an effective uh and essential leader. And and this whole discussion, Alex, which you've done, you've done beautifully, by the way, thank you, is you've covered my book by virtue of asking me all these questions and and how I did it. Um that's what's in essentially. You can learn so much from that book as to how to be uh uh a good leader in good times and bad. Uh in fact, the the best leaders are the ones that go through unbelievable tragedy and and adversity. Those become the best leaders. You know, if you if you haven't been knocked down, you don't know what it feels like. You know, so you gotta be you gotta be able to get knocked down and get right back up again. And and so the essential leader is one who's durable, who's compassionate, who is sensitive, who's willing to love things he hates. You know, that's a key. Loving what you hate is is very key. And and I can tell you right now, Alex, there's nothing that I hate because I I I will I will keep at it, as Waldo Emerson said, that which you persist in doing becomes easier. Not that the nature of the task changes, but your ability to perform becomes easier. So you got to keep at the stuff that you hate. You know, if you if you just procrastinate things you hate, you're not gonna get ahead. You know, you you you know, yesterday is history, tomorrow's a mystery, today's a present, that's why they call it a gift. You know, you can only act today. You can't act tomorrow or yesterday. You know, you gotta act today. And that's what I talk about in the book is don't procrastinate. Do what you don't like doing, doing what you don't like doing and doing it well. That's the key to discipline. You know, and and the best athletes are the ones that that don't just um practice uh during practice time, they practice after practice time. So, you know, uh when I when I'm driving to work or when I'm going home or when I'm eating lunch, I'm still practicing. I I don't just go out and and take it easy, you know. I I I'm constantly reviewing, analyzing where I've been, what I've done, you know, what can I do better, you know, where where's the cheese, you know, you know, I'm I'm constantly trying to figure out what I can do to to to to improve. And so that's that you know, constant self-improvement that that helps us become better. And we don't just quit because I retired. I retired in 2015, but I'm not done. I'm still writing books. You know, I'm on my seventh book. Uh and um and it's hard, it's not easy to do. But uh, you know, I love it. I I if it's not hard to do, I don't want to do it. I want to do what I I I really don't like doing, and and then I become better at doing what I don't like doing.
SPEAKER_01:Okay, I after having built that massive company and uh having IPO'd it, I think that writing a book should be a walk in the park. But uh uh maybe maybe I am mistaken. I've only written a book and I said, I'm not gonna do this again in 10 years, not because it was hard. It was precisely because I found it very easy, but because it's in me. I always I love writing, right? But other people might find it difficult because you have got so many more ideas that you wanted to condense in a book, and therefore it was so difficult perhaps to do it under 500 pages, right? And I didn't have enough material. So for me, it was like, yeah, fine, it will only be 150 pages. Um no, jokes aside, the other the other thing is uh the other the other um essential trait of a leader is being able to choose who accompanies him, right? And um you probably have undergone several changes, hopefully not a lot, of the leadership team in the company, board level, C level, VP level, and of the how consistent have these teams been? And how do you approach a change in these critical teams, like when you have to fire somebody at like a C level or they leave? How do you structure yourself mentally to face that challenge?
SPEAKER_00:Well, you know, is it as you indicated earlier, changes with us. I mean, you know, ch change is like who moved the cheese, changes with us all the time. Uh and where you get you get board member changes. I remember when when uh the activists came in and tried to change our strategy of the company, um, I had to hire new board members, but the board members had to be approved by the activists. And of course, they're more activist-type board members. That was a challenge. Trying to deal with a with a board that you didn't select or didn't necessarily want the the board member you that you would like to choose, that that becomes a real challenge. Uh and so uh uh I ended up with a less than than amicable board. Uh and and so uh I had to deal with that. I had to deal with a with a with a difficult board. And that that was a good challenge for me. Again, that was loving the things I hated. I had I didn't particularly care for my board, um, but I had to work with them and I had to deal with that. And you're gonna have employees the same way. You're gonna have employees that you need, but not necessarily that you love. And so you've got to learn to love them, and and and that helps you grow from that experience. And so uh, I mean, after you know, running this company for 37 years, uh, and as you mentioned, I only lost money one one year, and that was in 2002. I tried my best not to lose money. I I I had a lot of sleepless nights trying to be able to salvage that record, that perfect record uh of no losses. Uh and uh, you know, so so it wasn't that I just let it said, ho hum, let it happen. I worked at it. I struggled with it. You know, and and you know, even though I lost money in 2002, uh I only lost$50,000. I say only, I mean, f it was a small amount. I thought, can't I find it hurt your pride, right?
SPEAKER_01:Because it broke the chain.
SPEAKER_00:Right. You know, so it but I at the end I we just couldn't we couldn't make it happen without being dishonest. And so um I had to I had to go in and accept that loss. It was very painful. I don't think I slept for three nights, and that's just because I hated losing money so bad. See, I hate to lose more than I than I like to win. So, you know, again, you know, I just hate losing, you know, and and so winning is not as important as staying, not losing.
SPEAKER_01:So But you but you said you learn to love the things you hate. You hate losing, so you learn to love how to hate losing. That is very complicated. That is very complicated.
SPEAKER_00:Exactly. Look, you you learn to you learn to love losing, but it's hard. Exactly. Okay, exactly. But you you know you you have to accept it. And and and uh and so you know, you know, some things sound really difficult to if you have a board that you don't care for, or if you have employees you don't care for, you gotta find out a way to love them. Uh otherwise you're gonna lose. That's why I said you you you you gotta hate to lose more than you want to win. And and so you just gotta learn to deal with it and overcome it. Everyone's gonna face challenges. I don't I don't care you know how Steve Jobs or Jack uh Gifford or whoever, you know, you you just can't, you you you have to you have to learn to to deal with adversity. And you've got to learn to love adversity. Remember, I said earlier, you've got to learn to love your competition. Uh and because you'll deal with them better if you do. Or or a customer, maybe you have a difficult customer. You gotta learn to love a customer that you hate, okay? And and who is not treating you properly. So the key the the book, uh Essential Leader, covers everything that you and I have been talking about today only in more detail, um, Alex.
SPEAKER_01:It seems to me like this this story about not uh losing the money, but hating losing the money, is of uh like a good example of how ego can be turned into superpower, right? You probably your ego that you didn't want to lose money made you like go for an extra effort, and uh you were almost able to avoid losing money, but you didn't in the end, right? But probably other years they were tough, you were about to lose money, your ego gave you that boost, and you avoided this situation completely. But ego is a double-edged sword. Is uh there have been certainly certain situations where your ego has drawn you back, like uh where you probably didn't play like the right card or where you felt like your ego betrayed you as a CEO.
SPEAKER_00:Well, you know, your your culture, uh, if you say, you know, you have the right kind of culture, then you don't your ego follows that culture. Uh and so the culture that I talk about in the book is honesty, integrity, dignity of every individual, and then doing what takes no excuses. Uh and and so that becomes your ego. Okay, if your ego is, you know, losing money, uh, you know, you don't care, you don't you don't care for your employees. If you I'm greater and better than them, you know, if that becomes your ego, then it's it's the wrong kind of ego-driven um uh company. Uh so you want your ego to match good things, good characteristics like honesty, integrity, respecting everyone, and doing whatever it takes. No excuses. I call an excuse a reason wrapped in a bag of poop. And and and so, you know, that you don't want excuses. You never want to have an excuse.
unknown:Uh
SPEAKER_00:And you avoid excuses by correcting your mistakes immediately. And that's what I did. Is that if I if I made a mistake, I corrected it instantly. I didn't procrastinate it. And I worked on it. I said, okay, why did we lose money? What was our problem? What what could I have done different? You know, you know, the worst day in your office is you would. And so you you you don't have a bad ego, have a good ego. So let's let's refer to to an ego that that that I promote, which is having a good ego, which is being kind to people, being ethical, you know, be being you know conscious of other people and their their issues and problems. Um, you know, um, if I had an employee with a with a with a difficult situation, I I would I would take extra time to try to understand and and try to be a mentor toward them, helping them work through that problem but difficult that they're that they're facing, whether it be a loss of a loved one, whether it be an illness that they're facing, whether it be a problem with the product that they're working on, whatever their problem is, I was there for them. That's that shepherd who is loved by his sheep because the shepherd loves his sheep. And I love my employees. I love them.
SPEAKER_01:The problem with a lot of um CEOs nowadays is they're wolves in sheepskin. And so they look like shepherds, but they they they rule with fear, right? And especially in downturns, I think it's relatively easy in war times to become that sort of authoritarian leader, um, being a CEO. Uh, not that I condone it, obviously, but uh like uh we've seen plenty of these uh of these examples. Look, one of the things I wanted to ask you, because we don't we don't often have uh CEOs who have IPO'd their company, and I think there's a there's an important part of personal growth in all your journey, which is scale. And more specifically, personal, scaling yourself as a person, as a leader, as a CEO. It's very difficult to scale a company with the business, with the technology, the the people, and also the decision making. What where is the area in which you found it more difficult to scale yourself in this four divisions that I mentioned?
SPEAKER_00:Well, it if if you uh listen to my board, it's because I I was afraid not to lose money. Uh and and uh and so uh they thought that was restricting our growth because I I didn't want to lose money. But you know, if you're giving up, if if you if you uh violate your own morals, your own standards, no matter how much your board pushes you or others, you know, you you're not gonna win. I think the reason we won was because we didn't let our our uh ego or our board or others uh push us in the wrong direction. Um so uh my goal was to be profitable. That that was my goal, uh my vision. And so I had to run the company with that bottom line view. Um and and and I'd had others like I'd had and especially these these had um these antagonistic investors, uh that adversarial investors or you know, or or my board, or they they said, you know, why are you so focused on on making money? Because I said profitable companies don't go out of money, it's prop it's unprofitable companies that go out of money. Uh that means they go out of business. So uh but I had I had I I had to stick by my guns uh when I said that I that I was gonna focus on making money rather than just growing the top line. Uh so growing the top line uh seems to be what the venture capital want. That's what the IPO people want, you know, the banks. They they want to see your top line. Um but I'm not gonna grow my top line at the expense of my bottom line. So they have to be together. You can't, you know, my employees, I think, admired the the fact that we were profitable. They felt more comfortable that we were profitable. Um and and so my my goal was don't grow the top line at the expense of the bottom line. Does that answer that question, Alex?
SPEAKER_01:It does. And I actually wanted to give a shout out to all the bootstrap companies because I think like uh there are very few bootstrap companies that make it that big. And I think that's something very remarkable. And we should give voice precisely to companies like yours and leaders like you who have been advocating for bootstrapping for being profitable, because a lot of I think a lot of startups, especially nowadays, they have the head in the clouds and they don't worry about making money. They just worry about like, oh, maybe my product, my competition. They worry about this, all of this mental wunkery. But um companies die most of the time because they don't know how to make money, right? And so I think we should be spreading the love of bootstrapping more and more often. And I think your vision and your insights contribute to that. What is the legacy that you want to pass on in terms of business? Like uh obviously you've built your books, your career, your values, and all of these, uh the the moral compass that you have been guiding your employees with. Uh, but it what what do you want to pass on as a legacy to the business world?
SPEAKER_00:Don't uh put top line more important than the bottom line, uh, and being loved by your employees. We have the lowest tornover in the entire industry. Um so uh my legacy is that you know uh employees that want to stay with you, that want to support you, and that uh they're there for you in good times and bad, you know, it's like a marriage, okay? You until death do you part, okay? Uh and so uh, you know, to me, uh uh, you know, my employees admiring our vision, our our you know, the the moral character of the company was more important than becoming wealthy. I told my my my people when I hire them, an employee, I said, I'm not gonna make you rich, that's your job. Your job is to make yourself rich. But what I will help you do is become a better person. So my legacy is, like in what my goal is today, is to help Alex Rodriguez be a better podcast. My goal is to help you. I could I'm not worrying about me. You know, I'm worrying about how can I help you have a better podcast today? That that was my goal before I uh logged on to talk to you, is is what can I do to help you become a better podcaster? That that was my goal.
SPEAKER_01:And I think you already did it because uh not a lot of people go out of the way like you've done for doing like a preparation chat and like sending interesting stuff and uh uh for me to prep. Um, a couple of quick questions before we go because uh we're running out of time and I want to be very conscious of your time. You probably have got other commitments. So one of them is you mentioned, you had very low employee attrition. And in the industry, that is very rare. We at Marspace, the company is barely it's almost 12 years old. A couple of employees are 10 years into the company, one is 11 uh years into the company. Most of them are seven, seven, eight, nine. This is very rare in a technological company. So what what have you done differently? What was your secret sauce to having employees stick around for so long?
SPEAKER_00:It's uh uh the the I think the the um culture of the company is what did it, having that that good culture. Um, you know, I I had a uh a company picnic one time, uh and uh uh and uh you know husband husband and wife came. The wife worked for us, but the husband did not. Um and he said, Can I talk to you? And I said, sure. Uh and we went over to a grove of trees, and and he says, I I want to know what's so unique about your company because my wife and I had sealed filed for a divorce, and when she joins your company, everything changed. She she became a much different person. She she she we we we went to we went to counseling, we we dropped the divorce, and he says, and you had tears in his eyes. He says, Thank you for saving our marriage. So it wasn't I wasn't just paying her to work, I was helping her marriage. Okay. And so that what people want to stay. You know, half of the company, half the employees that left our company came back. Half. 50% boomerang. They came back. Why? Because they they said it's it's not good to work for a company that you don't feel honored and loved and respected. And so they came back. And and and so we welcome we welcomed them back. So so that's that's that's the key, is to retain people, you you have to provide an environment where they want to stay.
SPEAKER_01:But if they leave, they want to come back to that, right? Uh that is unheard of, right? The closest I can tell you is like we got the same with clients. Sometimes we'll they leave the company and they go for something else. They try to internalize the development and they come back to us, they're like, uh, we couldn't do it better, right? So uh we haven't had any employee coming back yet, but uh also not many have left in these 12 years. Last question, right? And uh um this is a quite this is a signature question of the podcast, and I have I feel compelled to ask it, even though you know you probably will not be able to summarize this in just one answer, but uh everybody fucks up, and we like asking everybody, all of our guests, to share what has been their biggest fuck up in the company and how much money did it cost.
SPEAKER_00:How much money did it what cost, uh Alex?
SPEAKER_01:A mess up, like something that you that you messed up as a as a CEO.
SPEAKER_00:Okay, so because of the fact that I corrected my mistakes immediately, there's no cost. In other words, no harm, no foul. So uh I I I there's no big mistake and if you f if you fix it. So I can't think I have no regrets, Alex, none. Uh and so you know, I I as you know, I focus on the bottom line, and so you know, mistakes cost the bottom line. And and so if you're gonna minimize the the the impact of the bottom line, you've got to correct the mistake immediately. Not in a day or two. I mean immediately you have to correct it. Uh and so that's what we did is we corrected our mistakes immediately. And and so the so I I can't think of anything was a most harmful mistake I ever made. Uh uh, you know that that that does it kind of goes against the culture that I tried to develop in the company. Is that's why I said doing whatever it takes, no excuses. Remember, I said that was that was one of the cultures of the company? So that's what you do. If you correct a mistake, then there's there's no harm. Um and so that that's we all make mistakes. I made mistakes every day, but I fixed them. So then there's no harm. If you fix a mistake, there's no harm. So the cost of a mistake is is really your effort to repair it. That's the cost of a mistake. So, you know, and you try to avoid that because there's cost to you to do it, but I don't cost the company. I I I told my tell my employees, you fix a mistake, don't make it make the company pay for that. And so same with me as a CEO. I said, if I make a mistake, I'm gonna fix it on my own. Uh I'm not gonna make the company pay for it.
SPEAKER_01:Right. Last question before I leave you go. I'm rolling out the red carpet for you. We got this community of thousands of people who listen to Life on Mars, our podcast. How can they help you? We want to help you back to repay the favor.
SPEAKER_00:Well, um, by making this podcast that you and I are doing, making it extremely successful, by promoting it, getting it out there to more people, if you can find a way to get this podcast, the number one podcast that you have, that will help me.
SPEAKER_01:That's fantastic. Thank you very much for your I th I think it I think we can do it in a collective effort of all the Mars-based life on Mars community, we'll make it happen. So thank you very much for your generosity and for your insights. And I could be talking to you for four more hours because I got tons of questions, but I guess we'll have to save that for a second edition uh someday in the future. So thank you very much.
SPEAKER_00:Well, if you want, if you want to do another podcast, just get a hold of of Julie and and schedule it. And I'm more than happy to spend whatever time it takes to help you become successful. Thank you very much.