Unknown Unknowns — No Time For Bad Times
— DRAFT —
This is a draft chapter of a book to be published this fall 2021 entitled Be Somebody — Extraordinary Lives. It will discuss the nature and cause of eminent and successful lives with some contrasting material on failure and disappointment. Please note, some chapters are in final form while others are in such a rough state they are better unread. Changes will occur frequently. If you have comments, please note them on the Medium page. The full list of chapters can be found here:
You Have No Time For Bad Times
- Margarete Steiff — Fearless Girl
- Mother Teresa: It Takes a Saint To Save a Village
- Steve Jobs: Adios The Critics
- John McCain: Rule Number One Is Never Give Up
- Mikhail Khodorkovsky: They Have Your Body, Not Your Mind
The phrase is one heard often but I came across it from my friend who lives in Central Park in New York city named Armondo. If you happen to be walking through the area known as the “ramble,” the same general area where “central park Karen” had her issue, you may come across a Yoda-looking sage who spends his day feeding birds and smiling. He lives in the park without any care and manages his life and the weather by wearing proper clothing (“no bad weather, just bad clothes”) and lecturing those who may be interested in the state of grace that life can be. Some would call him homeless. He would say the world is his home. His park bench where he hangs out is called “the happy belly because the birds and squirrels are indeed happy, as are the dogs who stop by. Occasionally, a dog owner will say her dog is vegan, and you can be sure Armonda has vegan treats for them. Armondo has no time for bad times.
What about the rest of us who pay bills, take care of sick children, work, try to improve our lives by making more money or working harder, paying down the mortgage? Can we achieve this kind of happiness? It seems the answer is yes. But we need to begin practicing some of Armondo’s ways, beginning with not allowing any time for bad times — or for that matter — bad people.
When I speak to people in my classes or my coaching sessions, they maddeningly argue for specific things that have to happen in order to be happy. But this is mostly situational. In all cases, habits can be inferred from their stories quite evidently, plain to see, and often obvious.
The accumulation of the success habits is not accidental. They are often learned from mentor models like parents, a teacher here and there, a leader in their congregation, and found a rung on which to place a young hand and began to climb. The habits kept them going and pointed out the next rung. They are the basis on which I make the claim that extraordinary people are such due to the nine success habits, and by extension, propose that anyone can pivot from an ‘ordinary to extraordinary’ life, what I call O2E, by taking these methods into their life.
The nine aren’t a ‘swag,’ investment banker lingo for some wild ass guess. They are based on findings from practical observations of a forty-year career interacting as a colleague mostly of the high and mighty, rich and famous, the “doers” in Shaw’s phrase that sorely irritates 5th-grade teachers, “those who can’t do, teach,” from ‘Man and Superman’. To those who aspire to be somebody, no habit pays a higher dividend or separates you from the pack than this one: the deliberate passage of time.
This was what the great American-English poet, T.S. Eliot, was thinking about in The Lovesong of J. Alfred Prufrock: “Time for you and time for me, And time yet for a hundred indecisions, And for a hundred visions and revisions, Before the taking of a toast and tea.” A more stunning insight from a 22-year-old is hard to imagine, and young Eliot was onto something. We are good at planning our lives, but lousy at living our plan. The visions, revisions, and indecision add up to zero if we are not careful. Of course, we still make time to brew the tea.
What the general meant was that making plans improves our ability to plan on the run, i.e. planning. In war as in life, it is everything. Jeff Bezos of Amazon feels the same way. He is always planning for “Day One.” The term (which happens to be the name of the building he works in, see mantras below), means a business (or a person’s life) that avoids painful decline by loss of direction or excitement. He would advocate, stop packing your parachute, take flying lessons instead (how often are you going to jump out of a plane anyway?).
Life purpose is discovered by accident, in other words, by constant, reiterative planning. The first step is to calendarize our plans. Bill Gates devotes one week each quarter to “think week” where he reads and studies the latest developments. Warren Buffett reads for up to five hours each day. So calendarize before strategizing.
“I owe much. I possess nothing. I leave the rest to the poor.” — Rabelais
Mother Teresa: It Takes a Saint To Save a Village
“It takes a village to raise a child.” — Old African Proverb
The old-fashioned term was ‘sinner.” That was an era that made things nice and neat. you were or you weren’t. Then there was the third way. You were blamed.
The concept of blame and shame has taken on monumental proportions in an era when fame is a currency. For many, fame is only achievable through the blaming and shaming of others. It has led to cancel culture, outing, deplatforming, and accusations or unspeakable horrors against people who might otherwise be fairly ordinary. What explains this turn of affairs?
The concept of sin is an oldie but goodie, or should we say badie? It began in pre-Christian times (they aren’t mentioned in the Bible), and then as now, they give rise to many derivative bad behaviors or other immoralities.
The seven big ones are pride, greed, wrath, envy, lust, gluttony, and sloth, and they contrast to the seven heavenly virtues which Pope Gregory thoughtfully gave us (he was the big man in sinning as well) in AD 590, chastity, temperance, charity, diligence, patience, kindness, and humility. Practicing them diligently, he believed, led to the avoidance of temptation from the seven deadly sins. What is useful about the classical definition of sinning is it was believed they were the result of excesses of our natural instincts turned them into obsessions. It was not a moral verdict, but a quantitative lesson.
Like Dante and Chaucer, my old editor at Forbes, Jim Michaels, whom Warren Buffett said was th best editor of any business magazine, once said the things we like to write about re the seven deadly sins.
Douglas Robertson of the Independent wrote, “Mother Teresa wasn’t saintly — she was a shrewd operator with unpalatable views….” The only rational response to this insignificant mite of a journalist is “I’m shocked, shocked,” as Captain Renault said in Casablanca, to find there was an organizational genius in her establishment.
When Saint Mother Teresa first started the Missionaries of Charity she recruited 13 members. By the time she finished, the numbers were over 4,000 members around the world whose efforts help people in great suffering and distress. An old African proverb says it takes a village, but it also takes a shrewd operator.
The world picks people to execute duties that appear to them in the best way they know. Sometimes we attribute the outcome to morality if someone fails, or take a pot shot if the result is flattering, as the ignorant journalist demonstrates. Success and failure are more complicated than heavenly retribution or reward.
What isn’t a mystery is that people may not be all the different from each other although their outcomes may contrast sharply. Take, for example, Mother Teresa and Al Capone, and look at their stories as an experiment that reveals the formula behind success or failure. We begin with the hypothesis that something happened to turn one into a Saint and the other a sinner. Can we deduce how that came about?
“Some call it bootlegging. Some call it racketeering. I call it a business.
— Al Capone
While you could argue Capone and Teresa’ are unlikely bedfellows, their stories are not black and white. We know that Capone ran soup kitchens during the Great Depression to help the unemployed, while history makes it clear Teresa cared for the poor.
Some journalists deprecated Teresa so malignantly they appeared before the Pope at her beatification hearing at the Vatican to deny her Sainthood. Christoper Hitchens, Teresa’s most dogged naysayer with a soft spot for virtue bragging, opposed her canonization at the Vatican, playing the technical role of “devil’s advocate.” He testified that “Mother Teresa was not a friend of the poor. She felt suffering was a gift from God. She said, “‘I’m not a social worker. I do it for the church.”’ Is that so dastardly one should fly to Rome to challenge her beatification? What can one say other than ungenerous? Does Hitchens buy bile by the barrel? And you thought you had enemies? Wait until you do something that qualifies you for sainthood.
Now, if there had been a vote on Al Capone’s elevation to sainthood, a battalion of journalists would be on hand to testify. Like Saint Teresa, Capone was a devout Catholic and an organizational genius who shaped a vast ecosystem based on his vision. But he would be eliminated from the shortlist long before the voting began. A life sentence for tax evasion does not quite capture the fear and terror of 400 murders he committed or caused. At the same time, while most of his victims may have been gangland leaders, including a few corrupt prosecutors, more than a few innocents got caught in the crossfire. The movie, The Untouchables, in which Robert De Niro plays Al Capone taking a baseball bat to the head of one of his men at a dinner party, was based on an actual incident that took place on May 7, 1929. So not much chance of Saint Al’s Day any time soon.
So, now that you have the evidence, ladies and gentlemen of the jury, were Al Capone and Mother Teresa similar souls caught in a different circumstance? Were they driven to achieve under different regimes or governed by uniquely different qualities whose resemblance is unfounded? Was the final result due to genetics or environment?
More to the point, would Alphonse Gabriel Capone have been a humanitarian if he spent his life in Calcutta? Would Mother Mary Teresa Bojaxhiu have become a gangster if she had grown up in Brooklyn, the daughter of Italian immigrants, and felt pressured to join New Yorks’ Five Points Gang (although it is quite unlikely she would have agreed to be a bouncer at a brothel).
As we all know, Capone was imprisoned by age 33, and Mother Teresa was beatified in 2003 for curing a woman’s tumor, which of course, the woman’s husband denied (as you’ll discover, life doesn’t get easier because you are saintly).
History’s judgment is clear, and there is no debate who the victor was. Mother Teresa wins hands down. But what is under scrutiny is that both performed a role according to the dictates of their time, status, and inclination and rose to unimaginable heights. In contrast, both possessed extraordinary skills and vision while one flew high and the other crashed. We need to ask, ‘wad up wid dat?”
The question is worth pondering not just because we all face a quandary at points in our journey, the kind that can take our life into the stratosphere or an illusion that brings us to a hard landing. I have studied men and women who had it all and appeared to throw it away in one careless toss of the dice, land in prison or lose their livelihoods because of a fatal mistake. Why does this happen to people who should know better? Many will blame this on moral character, but as we have seen, there was nothing clear about Capone’s immorality and Teresa did not always act out of pure moral certainty. In any kind of final analysis, however simple it may sound, our fate hangs on having the tools and experience to make the right choices at the right time.
Bringing a divorce lawyer to a marital dispute is like inviting an arsonist to a gas station.
The Steeper The Hill, The Stronger You Become
Margarete Steiff — Fearless Girl
A crippling disease was cured by a remarkable antidote
On July 24, 1847, in a small Bavarian village, eighteen-month-old Margarete Steiff woke up with a high fever. She told her father, “I can’t move my legs.” It was the first symptom of poliomyelitis. Unlike Covid-19, polio primarily strikes children under five, leading to irreversible paralysis and often death. But very much like Covid-19. the virus enters the system when an infected person coughs or sneezes or due to waste contamination. According to a national public poll from the 1950s, Americans feared polio second only to the atomic bomb.
The diagnosis meant Margarete Steiff would walk on crutches from age two until she could ride in a wheelchair, bedridden and immobile for the rest of her days. There was no cure, and as Dr. Jonas Salk would not discover the vaccine until one hundred years later in 1952, Steiff was doomed to a life of misery.
The problem was that no one asked Margarete.
Steiff had a child’s habit of fearlessness. It is why they run on the ice to the consternation of worried parents or pick up candy from the ground. When Margarete’s siblings went off to school, she didn’t realize there was no way she could be with them. They pulled her in a hay cart. Once she arrived, a neighbor picked her up and climbed the stairs to the second floor. After graduating, Steiff enrolled in sewing school at age 17, the equivalent of taking a computer class today, working with the latest technology. In time, she became one of the most talented seamstresses in the village, and it became a mark of distinction to wear a dress by Margarete Steiff.
Habit: Fearlessness
In 1874, her dressmaking business took off. Her father built a small studio, and she bought her own sewing machine. Ordinarily, the machine’s flywheel is placed on the right, but Margarete was paralyzed on that side, so she reversed it and put it on the left. Her cousin’s husband, Adolf Glatz, admired her work and suggested she should start a company. In a short time, she had 15 employees.
On December 8, 1879, while reading a craft magazine, Modenwelt or Fashion World in German, she saw a pattern for a stuffed animal, a small baby elephant, and made it into a pincushion (Steiff still sells them). Sales took off. Only she later found buyers were using them as pet toys for their children.
By 1880, Margarete sold 5,000 stuffed elephants. She designed other animals. Monkeys, donkeys, horses, camels, mice, dogs, cats, hares, and giraffes became part of her collection. In her catalog, Margarete gave the company its motto:
“For children…only the best is good enough!”
Among the employees was Steiff’s nephew, Richard, who attended art school in Stuttgart and taken design courses in England. His fine animal sketches were the basis of many Steiff toys. Then, in 1902, he used mohair for the covering, making the first children’s toy that could be called ‘cuddly.’
The problem, it was a bear, which in Germany were not considered warm and fuzzy. However, Steiff allowed him to present his bears at the Leipzig toy fair. An American buyer recognized their popularity for children. In 1906, he bought 3,000 Steiff bears and marketed them in the United States as a Teddy Bear, named after Theodore Roosevelt*.
According to Steiff.com, “Morris Michtom a Russian-born businessman and inventor saw the drawing of Roosevelt and came up with a “Teddy” bear to go along with the story and the cartoon. This became an immediate success and Michtom founded the Ideal Novelty and Toy Co and started to produce the teddy bear on a larger scale.
At roughly the same time in Germany, the Steiff firm, unaware of Michtom’s teddy bear, produced a stuffed bear from Richard Steiff’s designs. While attending the School of Arts and Crafts in Stuttgart, Richard Steiff would regularly visit the nearby Nill’scher Zoo. He spent most of his time sketching inhabitants of the bear enclosure and in the summer of 1902, after one of his visits to the Zoo, a prototype teddy bear called, Steiff Bär was produced.
The Steiff bear was born.”
Takeaways
By 1907, Steiff produced a million Teddy Bears.
The Steiff company still produces the Teddy Bear and about 20,000 other animal designs. You can read more about the company on the Steiff website.
The Teddy Bear
The famed children’s toy named after U.S. President Theodore Roosevelt (who loathed being called “Teddy”) comes from a story about the president on a hunting trip. In 1902, he was in Mississippi on a bear hunt when hunting partners tied one to a tree and suggested Roosevelt shoot it. Roosevelt refused. He said it was unsportsmanlike. When the story broke, political cartoonists had a field day poking fun at Roosevelt — giving him the nickname Teddy Bear.
Steve Jobs: Adios The Critics
The Apple founder warned, “don’t bring in the critics too early; they can be idea killers.”
“One of my heroes, Edwin Land of Polaroid, talked about the importance of people who could stand at the intersection of humanities and science, and I decided that’s what I wanted to do.” — Steve Jobs
For someone with lousy people skills, Steve Jobs knew how to bring out the best in us. If you were especially creative, he gave you a ‘safe space’ where you did the unthinkable, you were allowed to make mistakes. And he would let you keep on making them until you got it right. The results speak for themselves.
While he was alive, he had a secret that teaches us how to turn a small, secondary computer company into a global powerhouse. The way he came by this historic standard of success was that he was not only a brilliant entrepreneur, but a creative one, as well. It may be the most powerful, and often overlooked, pairing of skills for any future startup founder or business legend. So what was his secret?
His instruction was a simple algorithm anyone can follow: “there are three types of people any time you are working as a team. Start by recognizing that one or two are designers, a few are problem solvers, and the rest are critics.
Time after time, he confounded his competitors with products that set the customer’s imagination on fire. But if you recall the early days of the iPhone? Critics bombarded it with a hundred different reasons why it would fail. And it nearly did, but that was in the lab where it didn’t count. He knew when the time was right, the critics would have their way, but until then it was still time to be creating.
Here are the rules Jobs lived by as he figured out how to blend technology and design in ways no one had imagined.
1) Nurture the creatives
Jobs had locks put on the doors at Jony Ive’s Apple design studios and neither he nor Tim Cook had a doorpass.
Carefully guard those few people in the organization who possess unerring creative skill. Then nurture them and their ideas. Don’t expose an early stage product to critics too early or they’ll kill it with safe sounding but boring modifications, which later in the cycle might be useful.
There is also a suits vs. artists paradigm that can destroy a company’s spirit. They both deserve a place in the decision making process, but far away from each other.
2) Bring in the problem solvers
When a product is in development, hide it. When it’s ready for testing, only let solvers kick the tires.
People who love to solve problems are a rare species. They are a special breed and earn value far beyond their compensation. Their first love is figuring out how to take a good product and make it great. They are the equivalent of product therapists, the kind who have insight into design and process, and possess a keen understanding of what the market wants. They also know how to talk to creatives, who trust them instinctively.
3) Throw it to the critics
Once the problems are solved, let the rest of of the world in.
Most people think highly of their own critical skills, and are only too happy to share their opinion. They mirror how the market will react. If you bring them in at the end, they will do everything in their power to break things apart and will exhaust themselves trying. The good news is a product gets even better because it was exposed at the right time. Once the testing is done, critics usually go on to be the biggest fans.
Adios the suits
The key to driving corporate creativity is to make sure the process flows in that order — creative, problem solvers, critics. Jobs warned that critics are nice people, but they can be idea killers
True to the mantra, adios the critics, Steve Jobs famously said that the product he was most proud of was his product teams: “I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1. Given that, you’re well advised to go after the cream of the cream.”
Senator John McCain: Rule Number One Is Never Give Up
Sen. John McCain (R-Ariz) shared his thoughts on the current election, ISIS, China and veterans to a crowd at the Walter Cronkite School of Journalism Friday afternoon.
John McCain
Political memoirs often begin with words very much like, “When I was young and poor, my ma and pa plowed corn while sis hung the wash. I busy saving a young heifer who had fallen into the crik. We named him after my great great grandfather, Abe.
John McCain memoirs began, “I have spent much of my life choosing my own attitude, often carelessly, often for no better reason than to indulge a conceit. In those instances, my acts of self-determination were mistakes, of which some did no lasting harm, and serve now only to embarrass, and occasionally amuse, the old man who recalls them. Others I deeply regret.”“(He) began his distinguished journey at a naval base in the Panama Canal. From there he moved to an appointment in the Naval Academy, and then from there he spent five and a half years in a P.O.W. prison, and from that strange place in time to nearly six terms in the U.S. Senate,” Cunningham said.
Then McCain took the floor and began his discussion with the current election.
McCain first addressed why he believes millennials are attracted to Vermont Democrat Sen. Bernie Sanders and his idea of free education.
“I’m sure people in this room are carrying this burden of student loans,” McCain said. “There’s so many young Americans that particularly could go into professions like medicine and others, but they’re carrying hundreds of thousands of dollars of student loans.”
However, McCain said the most important issue that the current candidates should focus on is that of the economy.
“I think it’s the economy and, for the first time since 1980, national security, terrorism and foreign policy,” McCain said.
The discussion of foreign policy then moved on to the relations between China and North Korea specifically.
“[Kim Jong-un] is a very dangerous person. This latest missile launch of theirs is very dangerous,” McCain said. “They’re one step away, maybe not one step, but getting near to the capability of launching an intercontinental ballistic missile that would hit the United States of America.”
McCain went on to say how in his estimation the Chinese government could shut down the North Korean economy in a week owing to how dependent North Korea is on China.
He said the Chinese government choose to continue to support the North Korean regime because they don’t want a united Korea on their doorstep.
The foreign relations discussions then shifted to ISIS as the next point of conversation.
“The scholars that I know of the Muslim faith reject totally the ISIS approach to their interpretation of the Quran. Having said that, we need a lot more of our leaders in the Muslim community to stand up and condemn ISIS,” McCain said.
The senator then shared his views about the strength of women in the military.
“Women are qualified to engage in combat if that is their desire to do so. We have all volunteer force. Women have already proven their mettle in various aspects of combat,” McCain said.
Audience member Mary Winters said she found McCain’s talk refreshingly positive.
“There’s been a negative connotation behind the presidential election, so it was kind of nice to hear his side of things,” Winters said.
Contact the reporter at Holly.Bernstein@asu.edu.
Mikhail Khodorkovsky: They Have Your Body, Not Your Mind
Mikhail Khodorkovsky — Russian Oligarch and Putin’s Enemy #1
Mikhail Khodorkovsky is the former CEO of Russian oil company Yukos, a company that was seriously in debt when he took over 1997. He transformed Yukos into the country’s second-largest oil producer, and by 2003 he was the richest man in the country. Later that year he was jailed by the Russian government after publicly criticizing endemic corruption in the country.
Released from prison in 2013, Khodorkovsky is now pushing for a different vision for Russia: to create a strong and just state that is committed to observing human rights, free and fair elections, and the rule of law.
I interviewed Khodorkovsky recently, and had a chance to ask him about embracing capitalism after being raised in communist Russia, building Yukos into one of Russia’s largest oil companies and the difference in managing a workforce in Russia and in the U.S.
This article previously appeared in Chief Executive magazine.
Jeff Cunningham: As a young boy, you were a leader in the Communist Youth League. How did you become a great capitalist?
Mikhail Khodorkovsky: You need to understand the times we were in. When I was growing up in the Soviet Union, the Communist Youth League was an ordinary part of everyday life. For example, in the U.S. right now, some children are homeschooled.
This might seem a bit extravagant to some but it’s done. In the same way, in the Soviet days, if you didn’t send your kids to the Communist Youth League, that was viewed as an extravagant gesture. Unlike North Korea or East Germany, everybody was less serious about ideology, so metaphorically, we had to dress alike, but what we were actually thinking didn’t concern people all that much. That said, I was absolutely convinced at the time the proper path was socialist communism. In today’s America, a significant part of the population seems to think the same, and in Europe, the majority feels this way.
“AFTER I’D MADE THE ACQUAINTANCE OF MOST OF THE WORKERS, I WENT THROUGH THE WHOLE OIL PRODUCTION CHAIN AND ACTUALLY WORKED FOR A WEEK OR A WEEK AND A HALF AT EVERY JOB.” — MIKHAIL KHODORKOVSKY
JC: Was there a tipping point?
MK: Change came to the Soviet Union in the early 90’s. That was when we got to see an entirely new world we hadn’t known existed.
For example, my dream since childhood was to be a plant manufacturing director, but I knew it could only be accomplished at a relatively later stage of life. Now, all of a sudden, I got this unexpected opportunity to head an operation that depends exclusively on me.
JC: You became an advisor to Russian president Boris Yeltsin, and the CEO of Yukos. What led you to rise so quickly?
MK: It seems I was destined in some way. In nursery school, they asked me, “What do you want to be when you grow up?” I didn’t say airplane pilot, I said plant director. I had another, perhaps sentimental reason. One of the walls of the daycare center was next door to the wall of the plant. My parents worked at that plant and the plant director was the most important person there. So I literally had in me from the earliest childhood this idea to become a leader.
JC: You turned a collection of failed assets into Yukos, the second largest oil company in Russia. How challenging was that?
MK: Technically, this was the fourth large business that I developed up until that time in my life. I made four companies that subsequently were worth over a billion. All my life I worked in companies engaged in chemistry, which I studied in college. At the time, Yukos had about 120,000 employees. But just as importantly, it was six months in arrears on paying wages, and $3 billion in tax arrears.
The first thing I did was to ask the former CEO of the company to fly with me to areas where we were producing oil and to introduce me to the workforce. Unfortunately, he neglected to inform me in advance the employees had not been paid wages for six months.
JC: The employees must not have been very happy to meet you?
MK: When I first met with the workers, they let me know not only did I owe them back salary, but they expected a raise, too. I said to them there is an easy way we can solve this problem. Since I don’t have any money to pay back wages, all I can do would be to fire you and hire new people to replace you.
But I said I had a better idea.
Here is where the idea of becoming what you might call a business leader started to take hold. First, I said to them, let’s get this business back on its feet. Then I can pay you back wages. This took some risk as you will see. Because in Russia at the time, the big question was, would they believe me?
JC: How is managing a workforce in Russia different than US?
MK: In the U.S., it is more nuanced, as unions might be involved. But in Russia, things are simpler, as these workers could simply beat me up and take me out. On the other hand, we don’t have unions. On the other hand, they didn’t beat me up, so, as you say, there are pluses and minuses. By 1998, we were able to lift the company back on its feet.
JC: You turned it around. That must have felt great?
MK: Only just as soon as the company was doing okay again, we had paid back the wage arrears and the crisis had been avoided, the bottom fell out of the market.
Oil was $12.00 a barrel. Getting the oil to market cost $4.00 a barrel, taxes, another $4.00. That leaves you $4.00 gross profit, but my lifting cost is $12.00, so I had to do come up with another turnaround plan. I gathered the workers together, 700 of them who represented the 60,000 people in that region alone. I say “Guys, here’s the new deal.
The first thing that has to happen is you’ve got to agree to a 30 percent wage reduction. You’re going to have to vote in favor of that.” Again, it was a stark choice. Either they agree or they can take me out. Instead, they asked, “When will you return our money?” I said, “In a year.” They agreed.
JC: What did you do to convince them to hang in there?
MK: It wasn’t just what I said but what I said to them personally.
I traveled to all the regions across our giant country, and spoke to the workforce about their doubts and slowly was able to convince them. But I also warned, it’s not going to be easy. After that, I had to take severe action and reduce the workforce two times in the following year. I just simply had no other choice. But finally, our productivity began to pay off. I knew it was the beginning of the end of the trouble when our lifting cost came down from $12 to $1.50. This wasn’t just due to staff reductions, of course. We also changed our technologies. But in order to change the technologies, we had to change the culture and to do that, we needed to show that the situation was really, really dire.
JC: What was wrong with the work culture?
MK: I’ll give an example. In the oil business, you have to lay pipes into a trench. They are wrapped in insulation. If this insulation gets damaged in any way, the pipes will have a useful life of 2 to 3 years instead of 15. That’s why they lay these pipes on a bed of soft fabric and sand while you’re watching. But the moment you turn your eyes away, they pull out a bulldozer and toss the pipe into the trench.
JC: How did you earn your employees trust?
MK: After I’d made the acquaintance of most of the workers, I went through the whole oil production chain and actually worked for a week or a week and a half at every job.
I’ve got a dozen specializations. For instance, when the workers are way out in the field, they spend two weeks living in trailers. I went into the field and lived in a trailer for weeks. I still remember this. The other thing that brought us closer together, I wasn’t judgmental about them in any way. I thought of our relationship as coworkers.
For the complete interview with Mikhail Khodorkovsky, click here.The Man Who Stood Up To Putin: Mikhail Khodorkovsky
The former Russian oligarch talks openly about Vladimir Putin, the election hacking, and the country Churchill referred to as a “riddle wrapped in a mystery inside an enigma.”
Mikhail Khodorkovsky is the former CEO of Russian oil company Yukos, a company that was seriously in debt when he took over in 1997. He transformed Yukos into the country’s second-largest oil producer, and by 2003 he was the richest man in the country.
Later that year he was jailed by the Russian government and imprisoned for 10 years after publicly criticizing endemic corruption. He was confined to a Russian labor camp until German president Angela Merkel intervened with Russian president Vladimir Putin.
Putin gambled that in releasing Khodorkovsky, the former oil oligarch would disappear quietly.
It didn’t quite turn out that way.
I. Communist
Jeff Cunningham: As a young boy, you were a leader in the Communist Youth League. How did you become a capitalist?
Mikhail Khodorkovsky: You need to understand the times we were in. When I was growing up in the Soviet Union, the Communist Youth League was an ordinary part of everyday life.
For example, in the U.S. right now, some children are homeschooled. This might seem a bit eccentric to some but it’s done. In the same way, in the Soviet days, if you didn’t send your kids to the Communist Youth League, that was viewed as an eccentric gesture.
Unlike North Korea or East Germany, everybody was less serious about ideology, so metaphorically, we had to dress alike, but what we were actually thinking didn’t concern people all that much. That said, I was absolutely convinced at the time the proper path was Communism. In today’s America, a significant part of the population seems to think the same, and in Europe, the majority feels this way.
JC: Was there a tipping point?
MK: Change came to the Soviet Union in the early 90’s. That was when we got to see an entirely new world we hadn’t known existed.
For example, my dream since childhood was to be a plant manufacturing director, but I knew it could only be accomplished only late in life. Now, all of a sudden, I got this unexpected opportunity to head an operation.
“Do you want to follow a serious life path or do you want to play these silly perestroika games?”
JC: In your circle, how did people react to your change of heart?
MK: Older people were deeply skeptical. They said, “What do you to do with your life? Do you want to follow a serious life path or do you want to play these silly perestroika games?” In those days, this was the name they gave to business startups, perestroika games.
You need to understand in the Soviet Union, one document said you could start a business, but another document, and one that had not been repealed, called starting a business a crime. So with an understandable tremor in my voice, I told my older colleagues, “I think I want to engage in these perestroika games.” They looked at me like I was an idiot.
At that point, what had been my normal life trajectory ceased forever.
JC: You once said, if the old Mikhail met the new one, he would shoot him. I notice you’re still alive?
MK: I started engaging in entrepreneurial activity by the end of ’86. But it took time, about five years before I was able to make a total shift of consciousness. We’re talking about the period between 23 years old and 28, so I was quite young still.
JC: You became an advisor to Russian president Boris Yeltsin and the CEO of Yukos. What led you to rise so quickly?
MK: It seems I was destined in some way. In nursery school, when they asked me, “What do you want to be when you grow up.” I didn’t say cosmonaut or airplane pilot, I said plant director. I had another, perhaps sentimental reason. One of the walls of my nursery school was right up against the wall of an industrial plant. My parents worked at that plant and the plant director was the most important person there. So I literally had in me from the earliest childhood this idea to become the head of an industrial operation.
II. Oligarch
JC: You turned a collection of failed assets into the second largest oil company in Russia. How challenging was that?
MK: Technically, this was the fourth large business that I had developed up at that point in my life. I made four companies that subsequently were worth over a billion. All my life I worked in companies engaged in chemistry, which I studied in college. At the time, Yukos had about 120,000 employees. But just as importantly, it was six months in arrears on paying wages and had $3 billion in tax arrears.
The first thing I did was to ask the former CEO of the company to fly with me to areas where we were producing oil and to introduce me to the workforce. But he didn’t dare go, because he neglected to inform me in advance the employees had not been paid wages for six months, and that’s a big deal.
JC: The employees must not have been very happy?
MK: When I first met with the workers, they let me know not only did I owe them back salary, but they expected a raise, too. I said to them “There is an easy way we can solve this problem: since I don’t have any money to pay back wages, all I can do is fire you and hire new people to replace you.”
But I said I had a better idea.
Here is where the idea of becoming what you might call a business leader started to take hold. First, I said to them, “Let’s get this business back on its feet. Then I can pay you your back wages.” The big question was, would they believe me?
“….in Russia, things are simpler, as these workers could simply beat me up and take me out.”
JC: How is managing in Russia different than in the U.S.?
MK: In the U.S., it is more subtle, as unions would have gotten involved. But in Russia, things are simpler, as these workers could simply beat me up and take me out. On the one hand, we don’t have unions. On the other hand, they didn’t beat me up, so, as they say, there are pluses and minuses. By 1998, we were able to lift the company back on its feet.
JC: You turned it around. How did that make you feel?
MK: Only just as soon as the company was doing okay again, and we had paid back the wage arrears and the crisis had been avoided, the bottom fell out of the oil market.
Oil was $12.00 a barrel. Getting the oil to market cost $4.00 a barrel, taxes, another $4.00. That leaves you with $4.00 gross profit, but my cost of lifting alone was $12.00, so I had to do come up with another turnaround plan. I gathered the workers together, 700 of them who represented the 60,000 people in that one region. I say “Guys, here’s the situation: we’ve got to do something, and the first thing that has to happen is you’ve got to agree to a 30 percent wage reduction. You’re going to have to vote in favor of that.” Again, it was a stark choice. Either they agree or they can take me out. Instead, they asked, “When will you return our money?” I said, “In a year.” They agreed.
JC: What did you do to convince them to hang in there?
MK: I traveled to all the regions where the company had operations across our giant country, and spoke to the workforce about their doubts and slowly was able to convince them. But I also warned, it’s not going to be easy. After that, I had to take drastic measures and reduce the workforce two times in the following year. I just simply had no other choice. But finally, our productivity began to pay off. I knew it was the beginning of the end of the trouble when our lifting cost came down from $12.00 to $1.50. This wasn’t just due to staff reductions, of course. We also changed our technologies.
But in order to change the technologies, we had to change the culture and to do that, we needed to show that the situation was really, really dire.
JC: What was wrong with the work culture?
MK: I’ll give an example. In the oil business, you have to lay pipes into a trench. They are wrapped in insulation. If this insulation gets damaged in any way, the pipes will have a useful life of 2–3 years instead of 15. That’s why they lay these pipes on a bed of soft fabric and sand while you’re watching. But the moment you turn your eyes away, they pull out a bulldozer and toss the pipe into the trench.
JC: Were social issues a problem?
MK: Drunkenness at work is another example. The first time I came to the company, the head of one the units that numbered several tens of thousands of people was lying in the gutter drunk. This wasn’t an isolated case, it was the norm. Two years later, there were almost no cases of people coming to work drunk. The few cases that did occur, I reviewed those myself, personally.
Until you deal with all that, you can bring in new technologies, but you can’t get anything to work right until you’ve convinced people they need to change. You see, running a business in Russia, you don’t have the power to make workers do anything. There’s no police. There’s no authority. There is only you and your relationship with the workers.
JC: How did you earn your employees trust?
MK: After I’d made the acquaintance of most of the workers, I went through the whole oil production chain and actually worked for a week or a week and a half at every job.
I’ve got a dozen specializations. For instance, when the workers are way out in the field, they rotate every two weeks, living in trailers. I went into the field and lived in a trailer for weeks. I still remember this. The other thing that brought us closer together, I wasn’t judgmental about them in any way.
JC: What were your relations with the workers like?
MK: There is a really amusing situation that happened there. There were about 150 guys that got together to chat with me. At one point, I asked, “Raise your hands. How many of you have done time in prison?” All hands went up. Then I said, “Okay, who has been in jail twice or more?” A third of them raised their hands.
Yet all during that time, I felt perfectly comfortable with them. I was never scared that they might attack me or anything. Frankly, it was the same situation when I myself was in prison, too
JC: If you Google your name, you were the richest Oligarch in Russia, worth $15 billion dollars. True or false?
MK: First of all, let’s understand what 15 billion dollars means here. This is the value of the shares I held as long as I was at the helm. The largest shareholders owned 60% of the shares and I held half of their total.
When I resigned, my partners bought out most of my shares, so 15 billion is a paper number. I always had a very calm attitude about this number. In our line of work, unlike Silicon Valley, if your company doesn’t have much revenue, its shares aren’t worth much either. Had I known that there was a sector like technology where you could make losses and still be worth billions, I might’ve gone into that sector. But, I didn’t know that then.
JC: Should people resent your wealth?
MK: When people ask, I tell them, “I got three percent of the incremental growth in the company during my tenure.” I think that’s fair.
JC: Were there any regrets from this period?
MK: I do feel uncomfortable about some mistakes. Actually, I’m not sure how well an American audience will be able to understand this. As the head of the company, my focus was 100% on the company. People ask, “Why didn’t you also work at fixing social problems back then?
I respond, “In those days, it didn’t even occur to me.” I was a young person who had become the head of a big company. I, honestly, felt that what I should be doing is focusing on the company and matters of state should be handled by others.
As I look back, the problem was there were no “others.” Once I realized it, I did start to face those issues and created two organizations called Young Civilization and Federation for Internet Education that focused on those issues. I admit I should have seen this earlier and done something sooner. I do feel bad that I didn’t realize the biggest problems were not about running the company.
“I felt I was responsible for the company. I had to deal with it.”
JC: Was it lonely at the top?
MK: In my life, I had roughly six business partners and I could call on them for general advice at any time. But it was always a given that I am the one that bears the responsibility for making the final decision. That was, by the way, one of the reasons I returned to Russia after the attacks on the company began. You see, I felt I was responsible for the company. I had to deal with it.
III. Prisoner
JC: Take us back to the morning of October 2003 when Secret police commandos stormed your plane. Yet, you said you felt total relaxation?
MK: Over a span of several months, there was the expectation that this arrest was about to happen.
I was resisting the political drift of my country at that time. I wasn’t the only one, but I was the focus of the attack. It was clear which way things were going: they had arrested an employee of my company and then a friend. It was obvious they were preparing to arrest me. They allowed me to leave the country hoped that I would stay away. But I felt I had to return, and once I did, the countdown started. So, yes, you could say a certain weight lifted off my shoulders when I was finally arrested.
JC: You left Russia and then returned. Did you have any idea how tough it was going to be?
MK: I talked with friends before I returned. We were guessing that I would spend from two to four years in jail. It’s not that I was looking forward to it, but I was ready to do that. When it turned out to be 10 years, I would say that was a bit excessive.
JC: How did the ten years in prison change you?
MK: It’s very hard for me to distinguish between how I changed from being in prison and how I changed simply because I got ten years older.
In jail, I also met people who never want to leave jail. Some people in Russian jails tattoo prison cell bars across their face, as a sign that they refuse liberation, refuse to be free. But the overwhelming majority of the people I saw in Russian prisons are very young. These are people that need to be worked with because the prison system de-socializes them as people.
JC: What is the biggest problem facing former prisoners?
MK: The biggest problem they face is that after prison, they’ve been out of the workforce for several years, and it’s hard to get back.
But really the most important thing is that these are young people and what is being beaten into the heads in prison is “You don’t need to think. Do not think.” The authorities do all your thinking for you. Now, this person gets released. The military won’t take him even though the military’s a place where ‘Don’t think” might actually be a useful skill. Nobody’s going to hire them for any decent job because everybody needs independent thinkers.
“Don’t you realize you’ve created a factory for producing gangsters?”
JC: Where can they go?
MK: The only place is to go is into crime, where they play the role of foot soldiers. You go to work for a criminal organization. There, “Don’t think, just do” is exactly what is required. Some guy tells you, “Go and beat that person up.” You don’t think. You just go and beat that person up. I spoke with the prison authorities on many occasions. I asked them, “What are you doing? Don’t you realize you’ve created a factory for producing gangsters?”
Their answer, “What can we do? These are our instructions.” I think this is something that absolutely has to be changed.
JC: When you were released from prison, you said, “It was all like autumn rain, an unpleasant phenomenon, nothing more.” What did you mean?
MK: This is just how I perceive things. But I am not so calm about everything. There are people for whom I have strong negative feelings. One of these, Igor Sechin, I would call my bitter enemy. If I can do something to ensure that he ends his life in jail, I’m going to do that. Why? Because he crossed the line and made it personal.
JC: How did he cross the line?
MK: A young lawyer who worked for my company died because of him. It wasn’t just by accident. This was intentional murder. It was a horrible death. In one year in jail, this person went from stage one AIDS to stage four because they refused to let him have medicine. The reason they weren’t letting him have the medicine was that they wanted him to give certain testimony against me. That’s personal.
JC: While you were in prison, your mother, Marina, said, “It is hard to stay strong, but people should tell the truth and should not be afraid.” Did those words inspire you?
MK: For myself, what my parents think of me is important.
There is time back when I was working in the Young Communist League and my mother said to me that she’s ashamed that her son is working in the Young Communist League. I didn’t understand it then, but it certainly had an impact on me. When my mother told me “you have to remain strong and I’m proud of you,” that really had an impact on me.
IV. Putin
Jeff Cunningham: Do you agree with Garry Kasparov, the chess Grand Master, who said, “The Russian word for fake news is news.”
Mikhail Khodorkovsky: Well, I know why he said what he said. The actual situation is more subtle than that. If you talk to Russian people, you’ll find they know what’s going on. The news is not hidden. Sometimes news is distorted or the order in which stories are presented isn’t necessarily in the order of importance.
But what Putin’s propaganda machine is doing is to make people believe in presumptions. For example, you and I can see this brick wall here. We may have our own impressions about whether this is a pretty wall or not, but if I take ten people, and I say, “Look at how ugly this wall is,” eight of those people are going to be under the presumption that the wall is ugly. This is what Putin’s propaganda does. This is what we’re trying to fight.
JC: American media points to Russia’s 120 Facebook accounts (of a total of 2 billion) as a sign Russia tried to hack our election. Is this true or false, and what was the strategy?
MK: There was no strategy and the American reaction may be overstated, but I understand why they are in a huff. If I intentionally step on your toes, it’s not all that relevant whether your toe got hurt or not. You will still be angry at me.
“I assure you, the Russians aren’t even thinking about the American elections.”
JC: Do you believe Vladimir Putin was behind this?
MK: There are two very important points that need to be understood on this subject. When you hear a phrase like, “Russia wants to influence the American elections,” I assure you, the Russians aren’t even thinking about the American elections.
It’s a small, tiny group of random people, some of them sitting in the Kremlin, who for some reason have set themselves this task. The second point, and one which still surprises me that Americans do not understand, is that Putin doesn’t run all of Russia.
He doesn’t even run his inner circle, entirely. Generally speaking, he’s someone who doesn’t like to spend too much time working, and neither is he a great organizer. What he wants to be is someone who can make everything look like it’s humming along nicely without him having to work at it.
“Putin is someone who doesn’t like to spend too much time working, and neither is he a great organizer.”
JC: To Americans, Russia seems very determined to do things detrimental to us?
MK: What America sometimes sees as a straight policy line is very often just ordinary chaos. Yes, somebody there may have actually wanted to influence the American elections. What country doesn’t?
But the main reason for Putin’s interest in the U.S. election, in my opinion, has nothing to do with America. What Putin wanted to show the Russian people is that American elections are corrupt. So the attempts were not to hack the election but mainly to make it look back home like the votes were being falsified in Clinton’s favor.
JC: So what was the real motive?
MK: Putin needed to evoke outrage from Trump supporters to support this thesis. Not to accomplish any objective in America, but rather to show Russia, “See, there are no honest elections anywhere in the world.” The point Putin was making was subliminal: “When I falsify elections in Russia, that’s perfectly normal. Everybody does it.” I personally see this as Putin’s main objective vis-à-vis the American election.
“Putin mirrors you, so you see in him what you want to see in him.”
JC: What is Putin like?
MK: When there was a plan to appoint Putin president of Russia, I did not support him, but I didn’t state that publicly. The reason I didn’t is because I felt that’s none of my business. I felt that Boris Yeltsin, a man I greatly respected, knows better than I do. If he thinks that Putin’s the right guy, well, that’s his business.
Then, for a while, I actually thought that Putin may have been a good choice. Putin’s a very talented person in establishing communications. He mirrors you, so you see in him what you want to see in him. Then, the situation changed. They started doing things that very obviously went totally against the grain of what I believed in.
JC: How did that change your thinking?
MK: I took a step back and tried to minimize any interaction with him entirely. I worked with the chairman of the government, and for those occasions when you had to show up someplace personally with Putin (in fact, at that period, there were lots of occasions like that), I had my colleagues go to those events.
At one point, I realized there were two choices being made about the direction that the country would be taking. The first is an open type of economy, transparent and slowly being built along western standards. The second model is our traditional corrupt system.
At this point, I already understood that if that path is chosen, a lot of doors get closed for us. I didn’t want that and many of my colleagues didn’t want that either. That’s why I went on the attack and put Putin in the position where he had to make a choice between the two directions. What I didn’t know at the time, he had already made his choice.
JC: In Russia, the Beslan school terror attack in Chechnya, in which hundreds of schoolchildren were killed, is thought of as 9/11 in the United States. Did this turn Putin into an authoritarian?
MK: To be blunt, no. In fact, Putin cynically used that attack as an excuse to take away the regions’ right to choose their own governors. That had nothing to do with the attack. I should mention that I am not an expert on counterterrorism operations, so I do not know if there would’ve been more or fewer losses of life with another rescue scenario. But it’s absolutely clear that the decisions that were made with respect to Beslan were, first of all, a decision to lie about the number of hostages, to lie about the situation in general, and secondly, I think the decision to attack was cynically made by Putin because he did not want to give his opponents an opportunity to get there first and play the role of peacemakers.
JC: You were in prison during the attack. How did you know what was happening?
MK: You are right, I was in jail at the time. We had a very restricted ability to make phone calls to relatives. My parents told me that a large number of the school children after the attack were now in a hospital in Moscow. My parents said “We want to help these children once they get out of the hospital to find them places to live because many of these children had lost their entire families” They were all alone now.
“This man, Putin, does not have a heart. He may have something else there, but it’s not a heart.”
JC: What did you tell your parents?
MK: I told my parents that that would never happen because these kids are now in the spotlight and the government’s going to be right there to make sure that it’s the one that gets the credit for helping them.
In the end, though, a few of those children, if my parents hadn’t gone to their aid, would’ve had nobody there to meet them when they were released from the hospital. I just can’t believe it.
When you’re the head of the country, and a tragedy has taken place and a month later, you’ve forgotten about these kids that are being released from the hospital, something is very wrong.
You asked for my opinion of Putin? This man, Putin, does not have a heart. He may have something else there, but it’s not a heart.
V. America
JC: 55 percent of the Russians expect Putin to return Russia to the status of a great and respected country. Tell us why?
MK: For the older generation, the memories of the old Soviet Union’s place in the world are very important. What’s interesting is that the younger generation has divided into two parts. One half wants to be part of the new global world. The other half wants to be in a Russia that the world respects and fears. By the way, for many Russians, “respects” and “fears” actually mean one and the same thing.
JC: Do you find interesting parallels between Russia and America?
MK: In general, I think Russia and America are very similar. Both Russia and America are big, inward-looking countries. The overwhelming majority of Russians have never been outside the country. The majority of Americans have never been outside the country either, except maybe a quick trip down to Mexico or across the border to Canada. From this point of view, neither Russians or Americans are all that interested in what’s going on in the rest of the world.
Yes, we are similar.
JC: Are Russians still believers in Communism?
MK: In the economic sphere, Americans, much more than Russians, think their personal, economic future depends on them alone — on them personally. In Russia, Siberians are like that. Central Russia is very much dependent on the state. America also has a segment of the population heavily dependent on the state, and unfortunately, this segment is growing.
JC: Why did Putin go anti-American?
MK: The reason is simple. Things aren’t going all that well in Russia. Putin needs to have some way of explaining it to the people. Can they blame the opposition? No, because the image is that the great Putin has dealt decisively with the opposition. So there can be no opposition in the country. Now China, that can get a little scary, so China’s of no use here.
“People can believe that the Americans are capable of doing all kinds of nasty things.”
JC: What is it about America that makes us a target?
MK: Look at America, it’s great, it’s big. People can believe that the Americans are capable of doing all kinds of nasty things. America’s a very convenient enemy that can be blamed for all of Russia’s ills. It’s located ‘who the devil knows where’ meaning not near Russia, and doesn’t represent a direct threat to Putin.
VI. Future
JC: Now that you’re free what do you plan to do with your life?
MK: I’m firmly convinced that my country needs to do more than just replace Putin. I have seen in my life, and I am convinced that any person who’s put in Putin’s place will become another Putin. We need to remake our state into a parliamentary republic. We need for this parliamentary republic to be based on a real federalism. What I’m talking about is something similar to what took place when the United States was founded.
I think this works for Russia because in this regard, Russia is a country like America. For this to happen, we need to have young leaders.
“If I live to see the day that Russia gets a new political system, I will feel that this part of my life, too, has been a success.”
JC: Tell us about your civic movement, Open Russia.
MK: What I’m trying to do with Open Russia today is to help develop these young leaders. The work that we do is political education, participation in elections, and providing legal support and information to society. Our organization is currently represented in 25 regions. There are a thousand people who are official participants in Open Russia. Despite all the pressure that the authorities are exerting, they continue their work.
If I live to see the day that Russia gets a new political system, I will feel that this part of my life, too, has been a success. For anyone wanting to learn more about our activities, please visit the Open Russia website online.
