What I Learned About Entrepreneurs from the Founder of Monster.com
LESSONS FROM A DECADE OF ONE-ON-ONE WITH
AN ENTREPRENEURIAL PARADIGM...
My work in the large-yacht construction sector has, over the years, brought me into contact with numerous very successful entrepreneurs, who have been my clients, customers, and prospects.
For the most part, that contact has occurred in a relaxed venue which encouraged openness. Consequently, I've been able to gain some insight into the personalities and general outlooks of the entrepreneurs with whom I've dealt, and to form some conclusions concerning key characteristics common to them.
Of the contact I've had with entrepreneurs in the course of my work, one relationship in particular stands out...
That relationship spanned somewhat more than ten years, and it is from that longer-term interaction that I learned the most about entrepreneurial spirit and approach to business and life. It is the lessons I garnered about entreprenurial spirit from that relationship which I propose to share with you here.
Over the course of a decade, I was afforded an unusual and truly fascinating glimpse into the private personality of a quintessential entrepreneur...
Andrew J. McKelvey, founding chairman and CEO of Monster.com, had already been my client for about three years, when his advertising firm, TMP Worldwide, took Monster public in 1996. Not that I had anything to do with the Monster IPO, or even directly with TMP. No, McKelvey was my client because I managed his yacht, Volando, whose home dock was in the Fort Lauderdale area.
During the span of those and several subsequent years, I had the opportunity to interface frequently with him on a one-to-one basis, as I moved from managing his yacht to supervising the build of his new, fast 120-footer, Mostro, and eventually to being president and CEO of Palmer Johnson Yachts under his Chairmanship, when he acquired ownership of the custom luxury ship builder in early 2000. Thus, over the course of a decade, I was afforded an unusual and truly fascinating glimpse into the private personality of a quintessential entrepreneur.
Brilliant sunsets and stopped up toilets...
As I said, McKelvey kept his yacht in Fort Lauderdale. However, he really liked to spend time on the vessel in the Bahamas, and he took her over whenever he had the time. Besides being a high powered businessman, he was a long-time, dyed-in-the-wool yachtsman. Frequently, he'd ask to have the yacht delivered by her captain to a a port or an anchorage in the Bahamas, and left there for him and his party to use in privacy, with the captain flying back for the interim to Florida.
One long weekend, in just these circumstances, the onboard toilet system became stopped up. (A pretty common occurrence on yachts, whose toilets do not tolerate foreign objects and other kinds of abuse commonly perpetrated on shoreside plumbing with impunity.) In this case, it became a pretty significant problem which, without a captain or paid crew onboard, McKelvey ended up handling by himself.
When Andy returned to NY after the weekend, I was talking to him by telephone. He asked me to have the captain look over the toilet system and have any indicated repair or maintenance performed as soon as practical. I was chagrined that he had dealt with such an unpleasant problem on his own, and I said to him, "Andy, why didn't you call me. Cap'n Rick was on call all weekend, and I could have had him fly out and be onboard in a matter of a few hours. You didn't have to mess with this yourself."
To which he replied, "Phil, that's what yachting is all about, self-reliance. You get the marvelous sunsets and sunrises out there on the ocean...and sometimes you get the stopped up toilets. But it's all part of the package."
Entrepreneurial spirit is bound up with dogged self-reliance...
One of my favorite stories about Andy McKelvey has to do with the time we sent his yacht over to the Lyford Cay Yacht Club in the Bahamas, where many of the Bahamian elite, including several top Bahamas government officials, docked their boats. Andy was flying in to meet Mostro and spend a week or so aboard. Cap'n Rick and crew had arrived with the yacht at the intended rendezvous a couple of days early, in order to have enough time to clean and provision her.
McKelvey's ETA was, as usual, somewhat amorphous, so when Andy arrived at the airport in his G5, Cap'n Rick and crew were away from the yacht, running errands. Andy simply hopped into a taxi and headed from the airport to the yacht club. The problem was, however, in his inimitable fashion when yachting, he was dressed in cut-offs and a T-shirt. And he had left his ID in the plane.
When he arrived looking pretty much like what we in yachting call a typical "boat bum", the guards at Lyford Cay Club wouldn't let him through the security gate. Not without Cap'n Rick's say so. And it took us about an hour to locate Rick by cellphone (service was not, at that time, all that reliable in the Bahamas), and another half hour or so for him to make his way back to the club — all while McKelvey cooled his heels in a bar. We were all nonplussed, and I was cursing like a sailor. But Andy was serene, actually thought it all somewhat funny, and spent some time making friends with the Lyford Club guards.
Entrepreneurial spirit embodies a high level of social self-confidence, and a total absence of any need to impress on the basis of outward appearances...
I also very clearly remember the time I was discussing with McKelvey and his younger adult son the design and construction of Mostro, a fast, raised pilothouse 120-footer. Andy had a number of favorite anchorages in the Bahamas, and one of them was semi-obstructed by a sand bar that reduce water depth at mean low tide to slightly under six feet. The new yacht was going to draw (sit in the water to a depth of) about 5' 9", half loaded with fuel, water, and stores. So we all had some concern about her being able to enter that particular anchorage at times.
Andy asked if I thought we could take measures during construction to reduce the yachts draft by, say, six or so inches. However, my take on it was that such was not really practical, given where we were at in the build process at the time. I told McKelvey that my considered opinion was it was going to be okay as is, because it was unlikely that the new yacht would be entering that particular anchorage at low tide, and even then, if necessary, the yacht could anchor out for a couple of hours until the tide came up a bit.
Then I said, partly in fun, "But you know Andy, if the tide should be low and you don't want to wait, when this hull is running fast, she should be lifting up in the water sufficiently to reduce her draft by 3 to 6 inches. So, if someone had the cajones to run her in over the sand bar at, say, 28 or so knots, she'd likely pass into the anchorage without hitting the sand bar." At which point, Andy's son said, "Phil, you know, of course, that you've now absolutely guaranteed Dad will run the new yacht into that anchorage at a minimum 28 knots." To which McKelvey broke out in a grin and nodded affirmatively in admission, while we all shared a laugh at how true those words were.
Entrepreneurs possess an incredibly high tolerance for risk — of all kinds and at all times...
Okay. I know you're probably saying to yourself that everything I've been talking about so far has to do with yachts and yachting, personal stuff, and not business. But it is in respect of entrepreneurship in business that you're interested in, and why you're reading this article.
Well, I'm not sure you're right about entrepreneurship and business, because what I learned from a decade of dealing with Andy McKelvey is that entrepreneurial spirit is a holistic thing. For those who truly have it, it is pervasive and operative in every aspect of their lives. Nevertheless, without breaching any canons of confidentiality, I can talk a bit about McKelvey's approach to business, at least about those of his business ventures with which I was involved.
Honey, I bought the shipyard...
Andy was aboard his new yacht, the recently completed Mostro,for her maiden voyage. He was headed through the Great Lakes and out the St. Lawrence Seaway to the Atlantic Ocean, when he called me from Chicago.
"Phil," he said, "can you think of three good reasons I would want to own a boatyard?"
My answer was an immediate and unhesitating, "No!" Then, following a brief silence, I explained, "I might want to own a boatyard, because I design and build boats. And that is what I want to do. But for you, yachting has always been a recreation and a relaxation. Make yacht building your business, and aggravation will replace recreation and relaxation. And anyway, you can make a much higher rate of return by buying buildings and leasing them to the government for post offices. So no, I can't think of three good reasons, actually not even one reason that you would want to own a boatyard."
"Well," he said, "I've owned yachts for a long time, and you know, I've always thought it would be fun to own a boatyard. The fact is PJ has hit some difficult times, and they're asking if I might be interested in buying the company. And I'm thinking they have a great brand, and maybe I should. Are you available to spend a few days with my chief acquisitions exec looking over their operation and financials?" So I did. And we did.
Then four days later, Andy called me. "So, what do you think?", he asked. I said, "I think we know pretty much where the problems are and what caused them. I think we have a pretty good idea of what the hard assets are and what they're worth. And I think we have a pretty good handle on the actual and contingent liabilities, with one exception. They have several projects under firm-fixed-price contracts that are just starting up, and we have no real idea of how much underwater these contracts could finish up. We just haven't had enough time to analyze the cost to build these yachts against the pricing agreed to in the contracts. After all, we know that in recent months they've been low-balling prices in order to keep the cash flow spigot open."
Now, Andrew J. McKelvey, paradigm entrepreneur, was not to be denied when he wanted to acquire a company. In fact, he had chided me the day before, when I suggested that he might want to have a team from a major accounting firm look over the books and records, in case his acquisition exec and I had missed something. In reply to my suggestion, he said, "If I had listened to everything that my accountants and lawyers tell me, I'd never have bought 90% of the 125 companies we've acquired over the past 5 years. The mode of operation for accountants and lawyers is always to cover their asses by doing what's safest, which in effect is not to do anything. I understand you're concerned about potential losses built into the existing (custom yacht construction) contracts, but how far underwater could these contracts be? Ten million? Twenty million?"
I said that, under the circumstances, if I had to guestimate, I'd say by as much as $25 million. To which McKelvey replied, "Look Phil, that only about doubles what I have to invest to buy out the company debt. The brand is a great brand, known worldwide. And if we're successful, three to five years from now, that additional contingent buyout cost won't matter." Two days later, McKelvey flew into Sturgeon Bay, WI to do the deal.
Now, admittedly with Monster Worldwide churning along, and McKelvey owning some 26 million shares, he was conservatively estimated at the time to be worth somewhere around 1.8 billion dollars. So, in that context, an "additional" 25 million investment didn't seem like that much — at least not to Andy it didn't. For him, it was all about what you had to do in order to achieve what you wanted to achieve. And in the case at hand, he wanted not only to own a shipyard, but to own a world-class yacht brand, and to rescue a 50-year old U.S. company with a long tradition of superb craftsmanship — not to mention preserving about 300 jobs of people who had worked on average more than 12 years at the company which just built him a magnificent yacht.
Entrepreneurs focus entirely on the goal, and consider the means (and the costs) involved in reaching that goal incidental...
Of course, one has to be careful here to not misunderstand. What McKelvey said to me about the acquisition of PJ, and what he decided ultimately to do, were in no way arrogant or reckless. They were part of a measured decision, albeit one that didn't place bean-counter concerns as high on the list of priorities as certain other of his goals.
Talk to me...globally...
Consider, if you will, another incident in my decade-long interaction with Andy McKelvey. While we were in the early stages of building Mostro,the Iridium Satellite Telecommunications System was announced. Unlike existing SatCom systems, it utilized a portable global "telephone" handset which had its own antenna.
McKelvey thought it would be great for global communications while travelling on his new yacht, instead of existing SatCom with its large fixed antenna and less than portable configuration.
Me, I wasn't so sure. Despite all the representations that the system would be up and running in a couple of years (at around the same time McKelvey's new yacht would be launched), I had my doubts.
As I remember, the system was to utilize some 10 satellites, which were to be sent into orbit by the Chinese. But only one or two satellites had, as at that date, been successfully launched. And my motto is that if sh#t can happen, it will.
Consequently, on repeated occasions, I argued with Andy over the advisability of going with the Iridium system for Mostro's global telecommunications. The problem was that the best and most cost-efficient time to install large telecommunications systems is while a yacht is being built. Once she's complete, and "buttoned up", it becomes a major operation to retrofit the cables and the wiring for such a system. I repeatedly tried to get McKelvey to look at what problems might arise, if he went with the selection of Iridium...and the global system did not go operative as promised by the date promised by some Iridium VP of marketing.
At one construction meeting up in Sturgeon Bay with McKelvey and a couple of friends he had brought with him, I made a last ditch effort. And I managed to really irk him with my persistence. He turned to his friends and said, only half jokingly, "Phil is really starting to get on my nerves about this, and if he keeps it up, I think I'm going to have to find another consultant."
Nevertheless, I took a chance and suggested a compromise...
As I said earlier, the most expensive and time-consuming part of retrofitting a SatCom system is running the heavy antenna cables through the yacht to the control console. So I promised Andy that I would shut up about the whole thing, if he would agree, at least, to allow me to lay in all the necessary cables while the yacht was still under construction. We didn't have to purchase the SatCom system, just the antenna cabling for now.
If the Iridium system was delayed, then we could simply install the SatCom antenna and control console at either end of the cable. And even if Iridium got up and running, and we never actually used the cable, it's purchase and installation would still be cheap insurance, by anyone's standards. McKelvey grudgingly agreed, and we did not talk about the matter for almost two years. Until one day in 1999, after about two-thirds of the Iridium satellites that had been launched by the Chinese remained dark, I took a telephone call from Andy.
"Phil," he said, "I really, really hate doing this, but..."
"But what," I thought, and waited for the other shoe to drop.
Then Andy said, "I have to say that you were right about Iridium, they declared Chapter 11 bankruptcy this morning. Let's put in the SatCom system, and... thanks for being so damned stubborn."
Entrepreneurs never contemplate potential failure, not in themselves, nor in others on whom they rely...
But while entrepreneurs do not contemplate the possibility of failure, they also do not shrink from facing and acknowledging failure. Indeed, I've found it to be a prime characteristic of entrepreneurs whom I've known that they recognize and accept failure, and move on decisively and quickly to another project.
Mirror, mirror on the wall, who's the smartest of them all?
One of McKelvey's favorite questions to a prospective management hire was, "Have you ever hired someone who was smarter than you?" And if you were destined to become part of his management team, your sincere answer had to be, "Yes, all the time." Or something similar.
The point was not to establish that you were sufficiently modest; modesty as a managerial trait was not in itself valued. The point was to gauge if you had the ability to suppress a superficial ego in order to get the job done. And to see if you were of the sort to concentrate on getting the job done, without being diverted by issues of perceived job security and intra-company jockeying for prestige. The ability to recognize and use the finely developed skills and expertise of others is central to the truly entrepreneurial approach to building and managing a business venture.
Entrepreneurs are maestros: they lead and orchestrate the efforts of individual virtuosos, thereby creating genuine synergy...
I do not pretend to be a social scientist. Not even someone who has studied seriously the lives and actions of entrepreneurs. Nor do I pretend that what I have presented to you here represents anything other than anecdotal inference.
Certainly, nothing I've outlined here is rigorous or exhaustive. But, in this day of almost cultish fascination with entrepreneurs and entrepreneurial spirit, there are several, possibly unpopular, points I feel compelled to make:
1) Not every wealthy person is an entrepreneur. Actually, relatively few are.
2) Not every CEO of a large company is an entrepreneur. In fact, very few are.
3) Not every owner of a business, small or big, is an entrepreneur. Indeed, only a few are.
4) Not everyone who starts his or her own business is an entrepreneur. Very few are.
5) Not everyone who works for him- or herself is an entrepreneur. Only a relatively few truly are.
That said, my one-on-one contact with paradigm entrepreneur Andy McKelvey led me to identify the key characteristics of entrepreneurs which I've detailed here. To be sure, these probably aren't all of the relevant characteristics. However, I submit that those listed here capture pretty well much of that which makes true entrepreneurs tick.
To my mind, and in my experience, entrepreneurs are a breed apart. Entrepreneurs approach business (and life) from a very different perspective than most of the rest of us. Granted some of us might exhibit a couple of what I've identified here as key entrepreneurial characteristics — but only true entrepreneurs exhibit all of them. — Phil Friedman
This piece is written and published in memory of Andy McKelvey, entrepreneur, philanthropist, yachtsman, and an all-around good guy, who touched many lives, my own included, for the better. -- PLF
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About me, Phil Friedman: With 30 some years background in the marine industry, I've worn numerous hats as a yacht designer, boat builder, marine operations and business manager, marine industry consultant, marine marketing and communications specialist, yachting magazine writer and editor, yacht surveyor, and marine industry educator. I am also trained and experienced in interest-based negotiation and mediation. In a previous life, I taught logic and philosophy at university.
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