The Real Way Amazon’s 🏮NEW WORLD MMO PVP System Works (Impressions, Feedback, Community Concerns)

I’m just kidding, I had to do it. We knew this was coming. What’s up everybody
My name is Ser Medieval and if you somehow missed the angry mob with pitchforks on your
way in, we finally finally got ourselves some of that PVP blog for New World. On top of the system itself we also
got more information how other key systems were going to work, and although this entire
thing just left myself and I’m sure many others with way more questions than answers, it’s
time to dig into it. Let’s do this. [break]
So to start off, first I’d like to begin by saying that no matter what we talk about today
I am still standing by in support of full loot open world PVP or PVP servers because
of the unique experiences and longevity that it can bring to a game as we talked
about in one of my previous videos… HOWEVER. We also just yesterday, or I suppose 2 days
ago now since I haven’t gone to sleep yet, just finished going over how the lack of MMOs
and games in general from this genre of sandbox-like titles has
left me wanting more. So much more for getting just a taste of that
freedom. And I said that for that reason and many others,
no matter what happens with the PVP system I will still feel ready as a cucumber to jump
into New World, and that’s also something I intend to stand by. So to continue on this, I know many of you
may be feeling mixed emotions right now. If you haven’t guessed it already, the PVP
system was in fact confirmed by both the PVP Blog post and New World video Q&A they did
today to be Opt In with the ability to get extra unknown bonuses
for flagging up. Which I’m really crossing my fingers is only
possible to do while in a safe zone. So people can’t flag down out in the wilderness
at the very least. And this was something that a good amount
of the PVP community was afraid of, because on top of that, it appears that you no longer
have a chance of losing anything upon death and… Criminal Intent is completely removed. Now of course, we could go
all day long about subjects like how this could negatively effect the economy and supply
and demand of crafted gear, or the lack of the feeling of danger while traveling in the
open world. But none of that matters right now. The truth I believe is at this point we are
far far too close to release for anything we suggest
at this point to be switched around before launch. Amazon has in mostly clear terms explained
to us what they want the PVP system to be, and why. At least during it’s launch phase. But my friends, as I’m sure
many many wise men and women have said, this is not the end. I’m sure you’re as tired as I am of switching
from game to game in this genre, just looking for a home or maybe even something just to
burn a few months on and enjoy yourself in the process. It gets frustrating dumping all your hope
and desire into something just to watch it turn sour and get
turned upside down from your perspective. I totally get it because I’ve been there too,
many times. And that’s why it’s about time we stop running
from these situations and face them head on, if you still think
there’s even slightly a chance that New World is still a game that you can enjoy. But you don’t exactly agree with the direction
it’s going right now, as a player your voice still matters. That’s why the strongest thing we can give
them right now is things like feedback, solutions, work-arounds. It might not be perfect and it might not come
right at the start of the game, but this here is a title that is completely oozing with
potential and promise. Just this morning the whole lot of us were
probably collectively gushing about these recently added combat clips added
to the New World Steam page alongside the legendary confirmation that we are in fact,
about to get our Gandalf The Grey On. That right there should say alone how this
could still work if the community is willing to do just that, work together. I know we don’t like doing it but in these
types of situations there could be compromises, there could be improvements, and without a
doubt there could be solutions. So first, let’s talk about what else we found
out during this PVP blog specifically. They actually give a few more hat tips to
the territory and corruption system during both the video and the blog post itself that
many people may not have realized. Case in point, we may actually be getting
dynamic events in the game. Take a look at this – We have also deeply
invested in PVE, creating many new features that pit players against challenging enemies,
place them in perilous situations, and introduce new enemy types. Including Corruption Breaches, world events
that open up the ground and spew out dark energy and enemies alike. That has got to be a dynamic event. And who knows what else we might find inside
the game. In the interview it’s said that
we may get activities similar to dungeons and raids but they wont be in a traditional
sense. Instead of teleporting inside of them for
instance they would be points of interest we would probably find out in the world. Alongside the confirmation of bosses
found around the world of aternum. And It might not sound like much
but all those aspects and the horde mode is a really good start. And on top of that, they actually mentioned
full on SIEGE WARFARE during this news. Stating that we could upgrade gear and build
better defenses, or on the attacking side, even make use of siege weapons and towers. Which of course doesn’t sound too crazy on
paper but in the thick of battle with constant fire from a trebuchet or catapult, or
standing behind a giant gate as the enemy ram smashes up against our fort. Something like that could enhance the crap
out of the territory system for sure. It’s also mentioned that the territory war
may or may not be necessarily instanced, Scott lane describes
it as an event where it shields everyone but the 50 v 50 participants in the battle outside
of the settlement zone. So we may still be able to crack out the picnic
chairs and watch from the sidelines. And that the appointment system that we originally
talked about previously that came from the german-based
article, that does get mentioned here again as well. Now before we dive into some suggestions and
solutions for the New World open PVP, let’s talk about how it works a bit. So to start off, opting into PVP is solely
tied to the factions. And you will not be able to join a faction
until level 10. And as for the rewards or bonuses we get for
opting in, that part we don’t know yet and certainly leaves us with a lot of questions. But they also say that they haven’t fleshed
out the systems fully yet and maybe that could mean we’ll see some good
ones. I’ve been trying to think in my head what
might be a really good bonus to see, and I’m not entirely sure yet. But if we were to see around 20-50% for experience
gained, money gained, and maybe even a bonus towards better loot, I could see that being
a really good incentive for players. On top of that, to finally get into some suggestions
and solutions for the game. If they are really dead set on going for the
opt in route, I think one of the good ways we can start getting more benefits in-game
for PVPers would be some sort of honor system and
also a leader-board. The players that want the experience of fighting
all day long being given the opportunity to turn in currency earned for resources, gear,
and other items that you would obtain by normally farming, would be a good. But then also having that
leader-board system to show off how much time, dedication, and bush-camping skill we all
really have. On top of that, a system I really liked from
Ascent: Infinite Realm is that if you were in the leaderboards whether it was Player
vs Player or Player vs Environment which this game could also have leaderboards
for too, you could get rewards, sometimes exclusive ones depending on how high up you
were. Maybe even things like special costumes or
mounts if that becomes a thing in new world, maybe even house decorations, and
gear. Of course then you’d have to worry about people
doing things like win trading but overall it would probably have more benefits than
consequences. Another thing we could get and this ties directly
into the factions, is special titles, outfits, and bonuses for the highest ranking people
in these factions. Make people commanders, warlords, maybe even
kings, queens, or emperors. It doesn’t have to be entirely like
ESO where emperors might become really powerful in-game, although that would also be cool
to see if it took at least 2 or 3 players to take down one person because of how powerful
they got, but still. There could be something there too. And also something
that would have been cool is the bounty hunting system. This is just one thing I wanted to include
because about a week or so ago I had mentioned on my stream that if they did keep the bounty
hunting profession and open world pking in, that it would be
really cool to see a system where people that spec into bounty hunting could then track
players that committed crimes. Maybe you could see their last known position
on the map and then travel over to it, see an ethereal copy of what the player looks
like and maybe even some tracks to go off of. Then you might be able to pinpoint their location
much faster for each crime they commit and that could also spark bounty hunting guilds. That could’ve been a really cool mechanic
if they kept it in but I could only assume because criminal intent is now gone that bounty
hunting is following out the door as well. And now of course is the very last suggestion
I have which would be for the open world PVP zones. At this point it would probably be far too
late to change anything drastic where the first few zones have open world PVP that can
be initiated, but maybe this could be something to consider for future zones in response to
the massive feedback this has sparked. Maybe 3 or 6 months down the line new world
could get entirely new areas or events that were strictly open world PVP and either gave
the same type of rewards at endgame, or maybe more of them or better ones. Maybe we could have things like
dimensional rifts that we can find around the map and travel to, then we could fight
against other players and monsters or strictly other players to try and earn really good
rewards. Or you could have open world PVP initiated
world bosses or dynamic events, new zones from expansions that could be considered
as black zones where you can earn double the amount or close to that amount of resources
and experience as you would see in normal zones. It doesn’t have to lean all the way to the
PVE side, it can lean both ways and it can work. If any studios could pull something like this
off, I’d be willing to bet that the one we have before us would be one of them. But all in all folks let me know what you
think about these changes down below, if you need
to get that pent up rage out in those comments, just let it all out folks. There’s no judgments here. It may or may not have been what you were
hoping for but that doesn’t mean the fight for those features
has to be over. Those of us all who will still play the game
will of course do our very best to help drive this game onto a good path. But ultimately, we’ll of course have to see
how everything goes down. We can only cross our fingers or find other
things to distract ourselves from here. But no matter what happens, whether you dislike
these changes or like them, let’s hope to a better gaming year for 2020 all around. The world already knows that we really need

Michael Che Finally Pays Back the $1,000 Tommy Hilfiger Loaned Him

Great season you’ve had on SnL man Oh, man every week you guys came out of it, and you destroyed it was so great to watch it was fun I mean turns out America Like Scott Yeah, but now you’re going primetime. Yes. It’s like a different deal now next Thursday starts 9:00 p.m.. On NBC. That’s right this is you and Colin, but maybe some is there gonna be some special guests, or yeah, maybe you You gotta come for this is a big deal This is the Seinfeld slot yeah It is Thursday nights at NBC right Thursday nights on NBC if the seinfeld fly so Seinfeld What the unit’s you you Colin? Oh, man? What a break who is he’s what just because it was such a a big year that NBC was like Hey, would you do with three primetime deals? I don’t know they just lauren texted me and said hey you’re showing up to work You know we’re doing within three episodes. You know it should be fun I mean, how often do you get to go back to work during your vacation? Okay, were you doing stand-up over this breaker? Yeah? I did a bunch of stand-up all pacific Northwest one of not a lot of nice places. It’s pretty cool Yeah, it was pretty dog went to Boston. Oh Boss is a great city. Oh, it’s a gray suit. I love that place. I do like if you’re white. Yeah, yeah I’m kidding. I’m kidding I’m kidding you could be ourselves A great place, but you did you always want to be comedian what you always knew yeah? I go that’s comedies my thing. I honestly didn’t know like you always want to be who doesn’t want to get paid to make medium jokes but First I used to paint I used to do art and I used to like you know put like art on t-shirts need to sell T-shirts in the Street right here in New York City Could you show them to anyone famous one time? I sold it one time. I sold a shirt to this kid there’s this white kid and I’m just painting the picture guys I Sold the church to this kid and he was like old man. My dad is a designer I’m gonna bring him by to buy a shirt, and I was like yeah, okay, whatever next week He brings his dad, and it’s tommy Hilfiger. I know yeah no, fruit, Tommy hilfiger comes by and He’s like. Oh man. I love your stuff. We’ll come down to the office and I’ll give you a job or something and I’m like all right this Is amazing I go little is off he introduces me to everybody in the office individually. It’s like this is Michael Che one of these days is gonna be a great artist and I was like How’s the person haven’t heard the term Froyo? But they had a froyo machine and the girls was like yeah, yeah I like dummies on my What is going on right now? That’s something about Froyo and dry ingredients the People love it, but anyway he he took me down. He took me to his office, and he’s got this giant big American flag there, and I got nervous because you know whenever I see too many American flags. I’m like oh boy. I Start you know sometimes yeah, I don’t know if he missed the good old days You can’t have it. You got to make sure it’s 50 stars going to America. Yeah, yeah Yeah, you count it There’s got to be a flag that recognizes hawaii. Yeah This play yeah, this is like, but this was a goodness legit flash this thing beautiful flag yeah, honey and he paid me took a thousand dollars out of his pocket and Gave it to me cash, and he said you know why I’m giving us to you because somebody gave me a chance And I’m Gonna give you a chance That’s cool I took that money and I went to work and then I went home and I never came back I stiffed them. What do you mean? I got nervous. I stepped. I just went home and just stopped showing up Spent the money How could we can’t do that tommy hilfiger? That was a great thing you did I did it Have you ever run into tommy again? No on purpose? I’m afraid But I always want to pay him back actually I wanna I want to do something if it’s okay sure I want to but my checkbook And I want to write out a check to Tommy hilfiger right now on National TV whatever No, this is really Michael Chase And I like brown leather because I’m a 70 year old black man on the inside Tommy how many eyes are on Tommy hilfiger? Yeah? Nice. Yeah $1,000 this is how long I don’t know what I’m doing I signed in a memo section so it’s not gonna clear, but this is the tommy hilfiger. I got your money, bro I can do that you get that de jonge go get it so I can get it down Get up. I’m Gonna get this I can get this to it to Tommy 2017 I’m you know I’m this I’m gonna start paying taxes, and I’m gonna pay Tommy hilfiger There it is right there we can bleep out things It’s good. Just make sure you don’t cash it until October Big time now though I saw a video of you Say bring a bottle of champagne. You know I’m talking about. Yes. That was a misunderstanding No, because they was like hey, would you this guy comes up to me at a bar? He’s like hey, you wanna Saber, but I thought he said saver I thought you’re saying do you want to savor some champagne sure? I was like yeah, I want to savor some champagne Yeah, what do I don’t and why not favorite champagne so he comes over with a big old bottle of champagne and a knife? And I’m like this dude’s insane, but I like them we have a video of you Michael Che savoring a bottle of champagne so we can talk about this – do you worry, Tommy oh slightly less now Cuz it’s a commercial Hoppin open champagne looking all cool. Yeah. He’s Gonna put me on the boat He’s gotta put you on the boat on a boat. He’ll be psyched up man that you made it well I thought it’d be fun since weekend update is now going to be prime-time Thursdays at 9:00 on NBC Would you like to saber a bottle of champagne? Good luck. Yeah, let’s do it This is exciting now. You know how to do it all right listen. I’m a pro. I’ve done this one time So we can update oh Now you know it takes three times. I’ll say don’t do it Michael chair everybody weekend P.m. On NBC will read back the boys. I’m George Ezra around everybody

MBA Salaries: How Much Do Consultants With An MBA Make?

One of the main reasons that people go
get an MBA, is they want to have somebody show them the money! And we’re here today to talk about the MBA salary for consultants. Specifically, if you get an
MBA and you get an offer, how much can you expect to make? First of all, I want to
talk a little bit about our methodology for this. We have the only primary sourced
research, that focuses on getting actual content from people that are in the
field. And we get hundreds, sometimes even topping a thousand responses, from folks
that are going into multiple firms after graduation. We can verify their base,
their bonus, their “relo” [relocation], their 401k match, everything that is involved with your
compensation after graduation at the MBA level. And this is really exciting
because there’s so much that goes into deciding whether you want to pursue a
job in consulting, there’s a lot of case interview
preparation, there’s resumes and cover letters that need to be absolutely
perfect and pristine. And so sometimes when people are thinking about, should I
invest in this or not, it’s really helpful to know, from the source,
how much firms are paying and why. The second thing that’s helpful to
understand, is why consulting firms change what they pay, and when they make those changes. Consulting firms usually do compensation reviews, right before the
offer process. So for example, for MBAs during the internship, they will make a
comp review, between when they give out the interviews and when they are about
to prep for the interview process- usually in December or January. But
before they give out offers. And if they’re going to escalate what they’re
going to offer, they’ll usually do that review and then make that public in the
offer process. For full-time, because that happens at the beginning of the year,
usually they make that comp review just before the end of the MBA interns, that
are in office. Because when they hand out offers to return, they’re gonna want to
make them on the next year’s salary. So for MBA interns, it’s
December & January when they make their changes. And for full-time MBAs, it’s in
the summer, usually in July they make their changes for the upcoming year. So
in 2018, they would assess for 2019, and 2019 they will assess for 2020. 2020 they
would assess for 2021 and so forth. MBA consulting salaries are a big hot
topic, and we are here to pull back the curtain on what you actually make. You
can read about all of this on a report online. But just at a high-level, it’s
good to throw out some numbers, right? MBAs at MBB firms, which are the targets
for many folks that go into consulting, are about $165,000 base. And
that has jumped recently because firms are facing increased pressure from
internal strategy groups, which offer a similar programatic benefit, the
ability to work on different projects with X consulting staff, but the ability
to stay home. And with tech, which offers a fast-paced escalation in pay, some
equity compensation, the ability to have free lunch on campus, and also the
ability to stay home. So $165K base which has escalated in their competition, versus
tech and internal strategy. About a $150K at Big 4 firms, and about a $140K at boutiques. One of the notable exceptions to this is that LEK is a boutique firm, but they pay the same
rates that MBB does. So overall if you are thinking about getting your MBA and
you want to know what will be my MBA salary for a consulting. We’ve laid it
out here. We lay it out by firm, by office, in even more detail on our website at If you like this content follow us on social, and
make sure you subscribe to our Channel, right here on YouTube. Thanks for

How Buybacks Have Warped the Stock Market & Boeing (w/ Dr. William Lazonick)

MAX WIETHE: Hello, everybody. Welcome to Real Vision’s Interviews. I’m Max Wiethe, sitting down with Dr. Bill
Lazonick of the Academic-Industry Research Network. As well, Bill has been an economics professor
at many different academic institutions over the course of his career. We’re here today to talk about your recent
book that you’re publishing, Predatory Value Extraction, and to understand how stock buybacks
and the warping of the stock market has really disrupted what is actually driving stock gains
over the past three to four decades. Thanks for coming in today, Bill. WILLIAM LAZONICK: Okay. My pleasure. MAX WIETHE: Why don’t we just start out with
what you do at this? It’s a nonprofit organization, which focuses
mostly on economic research, if I’m not mistaken. WILLIAM LAZONICK: Yeah. Basically, I’ve had a career as an academic,
been a professor at various universities, as you mentioned, and I set this nonprofit
up, this 501(c)(3) nonprofit up almost 10 years ago, to do research outside the university
for a variety of reasons, and I’ve been working with a number of people, now it’s about 15
people who I’m working with regularly who are in various parts of the world who have
worked with me, some for as long as 20 years to do research on how companies become innovative,
how they create products that people want to buy at prices that they are willing to
pay, and can compete on national and global markets. What happens once they actually become successful
to the profits that they make, so the profits are really outcome of some value creation
process. That makes these companies successful, which
I can get into how that works. Basically, once they are successful, there
is a huge pot of gold there in these companies, and if someone can say, that’s mine, and take
that money, they can become very rich. If it’s not theirs, someone’s got to talk
about that. That’s what I do. A lot of the changes that I talk about from
going from companies retaining their profits and reinvesting them in their organizations
to what I later, in the ’90s, called downsizing the companies and distributing cash to shareholders
not just as dividends, but stock buybacks, a lot of that transition took place in the
1980s when companies started articulating and imbibing this idea that company should
be run for shareholders. I was at Harvard Business School in the mid-1980s
when that ideology came in in 1984, no one was talking about that at Harvard Business
School. 1986, they were. There was an easy explanation for that. 1985, Harvard, went out of its way to hire
the guru of maximizing shareholder value, a guy named Michael Jensen. I came out of economics by that time. I had been in the Harvard Economics Department
for over a decade and a half, I was now at Harvard Business School. I saw that no, those aren’t the people are
creating value. Shareholders are just buying and selling shares
on the market. People have gone to work for these companies,
often for decades. They are the ones who create the value. We as taxpayers, have supported these companies
with the infrastructure and knowledge, we should get a decent tax rate back. This ideology is not an ideology that’s being
put forward or it’s being put forward as an ideology of value creation, but it’s actually
an ideology of value extraction. I started researching that and learning about
how that was going on and did that, within the university structure, often with collaborations
on people not just looking at the United States, but places like Japan, Korea, various countries
in Europe, then got into looking closely at China, India, and trying to understand basically,
what we’re talking about is capitalism. How countries get rich and what happens when
they get rich and whether there is a way in which we can explain, particularly what’s
going on in the United States, of this extreme concentration of income at the top and the
loss of middle class jobs, extreme income inequality. I started this organization outside the university
for various reasons. In, I think it was 2010, there is an organization
that started up which has its offices probably about a 10-minute walk from here, called the
Institute for New Economic Thinking which started it up and I’ve gotten through this
organization, the Academic-Industry Research Network. Various grants from them to do research, they’ve
been one of the one of the main funders of the research. I pulled together, this group of people, many
of them who are doing PhDs, now have academic jobs. Some of them are mid-career, who were in touch
with basically all the time. It’s almost a virtual organization but we
can write about things that have been going on historically, can write about things like,
let’s say, the Boeing crashes that have occurred more recently. We have a certain level of expertise that
I don’t think actually is things quite unique in terms of academics and really digging critically
into business and saying, not just the dark side, but the bright side. How businesses become successful. That’s what we’re mainly interested in, is
how you can understand the way the central institution in our economy, the business enterprise,
some which grow to be bigger than whole countries, small countries, how they actually can create
value, share the value with their employees, not just because they wanted to show the value
of in place, because it helps those employees get some incentives to be more productive. It’s the result of them being more productive,
how you get this positive dynamic going on in these companies, which we call retain and
reinvest and how we can all be better off as a result. Then critiquing a lot of what’s going on in
the last particularly last 30, 40 years, in people who have often very little role, if
any, to play in these companies claiming those profits of theirs, and even more being able
to lay off 5,000, 10,000 people and claim. The stock price goes up and they gain, how
that can happen. The book that just came out this past week,
which with a colleague of mine, Jang-Sup Shin, who is a professor of economics in Singapore,
he’s originally from Korea, it’s called Predatory Value Extraction as you mentioned. The subtitle summarizes the book, it’s How
the looting of the business corporation became the US norm, and how sustainable prosperity
can be restored. By sustainable prosperity, it’s a shorthand
for stable and equitable growth that we want. Growth, it’s stable employment, equitable
distribution of income, which we have neither of those. We want to get productivity growth, which
can support those things. Right now, we have sagging productivity growth
problems, real problems of many US companies competing in global competition, partly the
because of what I call the predatory value extraction, this looting of the business corporation. That has been something that we’ve been doing
a lot on this group of mine and getting a lot of visibility for that research through
various outlets because it strikes a chord with a lot of people who are saying, where’s
all this inequality coming from? MAX WIETHE: Well, that visibility, I came
across your New Yorker profile, and I got to read about some of the research you had
done and it really sounded like something that I felt would resonate with a lot of our
viewers here at Real Vision. We’ve covered buybacks, and we’re very interested
in what’s driving the stock market. You mentioned briefly before that you’re not
just looking at the bad, looking at the predatory value extraction, you are also looking at
what makes these companies good. That’s really how you started out your book,
was looking at the theory of the innovative enterprise, as you call it. I think that’s a great place for us to start. WILLIAM LAZONICK: Well, yeah. Trying to summarize in a 30-second something,
that’s going to be another book because there actually is a real problem if you’re trained
as an economist as I was. I’m a PhD economist, got my PhD at Harvard
early 1970s. Things have basically in this regard have
gotten worse since then. Economists generally, PhD economists, do not
understand how business enterprise operates. They see the states, they see the markets
and in fact, what is being taught in introductory economics courses every year and it’s been
taught to millions and millions of people since a guy named Paul Samuelson wrote his
introductory textbook in 1948 is– and I’m not going to get into this other than just
state it because as I stated, it’ll sound totally absurd– it’s actually being taught
that the most unproductive possible firm is the foundation of the most efficient economy. They call that perfect competition, of course,
then they say, well, that doesn’t really exist. Then the whole mindset of economists is that
oh, competition is imperfect so we have to move through policy, through business, what
business does and make it more perfect, so that we get rid of monopolies that we just
have lots of competitors out there who are all competing the same way, producing commodities. Now, if we actually had that state of affairs,
we’d be living in poverty. The reality is that well, first of all, that
building even a small business enterprise is in many ways, a heroic feat. I would tell students when I’m teaching students
if you can start a company and can keep people productively employed, pay them a decent wage,
let’s say for 10 years, that must mean you have something that people is buying, some
product that people out there are buying. You’re probably going to do quite well, you’re
going to do quite well for you, and they’re going to what? Profitable employees. How do you get to that point that actually
you can be around for 10 years? You can’t do it by doing what everybody else
is doing. You can’t do it just by saying, well, here
with the market says you should do in terms of technology prices, you have to make an
investment in learning. Now, obviously, in some companies that we
can see that on their financial statements, it’s called R&D. That’s not the only type of learning that
goes on. In fact, if you take the S&P 500 and you look
at how many of those companies is one of the 500 largest companies United States, only
about 210 of those do any R&D at all. About I think it’s something like 38 of those
companies do about 75% of all the R&Ds so it’s some pharma companies, aerospace companies
like Boeing, companies like technology like Apple, etc., but any organization, including
your little organization here, people are learning how to make the product, how to do
it better. If you’re going to survive, it’s because you
have might be a neat short, might be a mass production market, but you’re going to be
able to produce a higher quality product and you’re going to get a larger market share,
you’re going to then cover the costs of the people and which are often the fixed costs
that you’re investing in, not just buildings and get up competitive advantage. That’s what I basically study how companies
do that. It’s when you’re talking about companies that
grow to be 10,000, 20,000, 30,000, hundred thousand people, you’re talking about credibly
complex social organizations. When they work well, when they’re actually
over a sustained period of time, generating a high quality product that they can get economies
of scale and get the low unit costs, even as they’re paying their employees more, and
they’re giving them employment stability, you’re getting productivity growth, it has
a big impact on the economy, particularly if lots of companies are doing that. If we look at a time historically, when American
companies were really very good at this value creation, innovative enterprise, it was a
fast forward two decades, when there was much more set of norms that prevailed that once
you hired people, you kept them employed over their career, it wasn’t a contract, but it
was basically in practice, you could see it by defined benefit pensions that were not
partible that had to do with how long you stayed with the company. You could see it at the blue collar level
with collective bargaining and sometimes enforced by unions but this was so that you would get
a labor force that showed up every day and cooperated in mass production, but you also
saw it at the white collar level without any unions, that companies crane people, and they
want to retain them. We had that system, which actually made the
US the world leader in the international economy, the US got the challenge by that in the early
19, late in the ’70s and ’80s by the Japanese, but the Japanese actually did that, perfected
that system. Now, that system doesn’t work quite as well
anymore in any case, because we live in a much more open system environment, much more
global value chains. China’s not really competing with the same
thing as the Japanese system but this way in which you understand innovative enterprise,
not just the level of the enterprise, but the whole ecosystem that supports it is changing
all the time. We’re talking about a moving target. Just that part of the research and that part
of the documentation, that part of the argument that that’s a real challenge for anybody who
is looking at these things seriously, and we look at them seriously because we’re academics. We looked at seriously, as I do, coming out
of a training in economics where I know that most economists actually don’t have the slightest
idea how to do that research or were doing because they think the market should just
be allocating resources. I just thought at this point that just by
making one more comment, because one of the markets that of course is looked to allocate
resources to alternative uses, is a stock market. The fact is that historically the stock market,
that’s not been the role of the stock market in United States. The stock market has been the way for private
firms to allow their owner entrepreneurs or their venture backers, capitalists backers
or private equity backers, to exit from having the money tied up in the company. You do that by going public on the stock exchange. If the stock exchange is liquid enough, then
you have no problem capitalizing your investments, and that’s the main function of the stock
market. The other side of that, historically, is that
you can then use the stock markets to separate ownership control, you can break the link
between the original owners who build up a business and the ongoing management of the
business. Here, I’m very highly influenced by a business
historian who I got to know after I had done my PhD, he was at Harvard Business School,
named Alfred Chandler wrote a book called The Visible Hand, The Manager Revolution in
America Business, which was published in 1977, won the Pulitzer Prize in history, and really
ended at 1920 as a historical book and said, by 1920, or in the 1920s, you had people who
were not the founders of business running companies, they were managers. What made those companies strong is that those
people came up through the business through the stock market, the old owner entrepreneurs
got out of the way and now, you could move up to the company, to the top of the company
being an employee, which is basically this situation today, except now some companies
go public much quicker and the founder stay around. Basically, the stock market’s rule is really
fundamentally historically to separate ownership control, not to fund company. That’s one of the implications, or big implication
of the research we’ve done. MAX WIETHE: There was one exception that you
mentioned in your book, which I thought was just too interesting not to bring up here,
just in that late ’20s, where the companies that realized that the stock market had gone
too far, actually sold stock and it was one of the only occurrences ever that a company
had a secondary issue of stock on the market and they had a cash surplus that they were
able to weather the Great Depression with and it actually worked, but since then, you
don’t see it at all. WILLIAM LAZONICK: Well, you see it– because
we don’t get into much of the details of some of the research we do, you see them in biotech. Certainly companies are going public on the
stock market around where I live in Cambridge, Massachusetts. There’s a lot of them, we call them product
list IPOs. They do an IPO. They’re a research entity. They might have some investment from Big Pharma. What happens there is people make lots of
money in those companies they want, they never produce a product. It’s not that you can’t use the stock market
that way, although, and we saw it also in the internet boom of the late ’90s, the dot-coms,
often it’s very speculative. If companies are sound companies, they can
generally grow organically, not be exposed to the stock market until they actually have
that growth secured through their own profits and then can control their own growth because
they have as long as they can control the profits and reinvest them a significant amount. They can then leverage that with debt, by
the way, the world– I won’t get into this, but it also totally says throw up my Danny
Miller because debt and equity are not substitutes, debt is a compliment to the equity that you
retain in a company. What you’re referring to there is probably
the biggest period or a period of ’28, ’29 when companies actually sold shares on the
market is that all the speculators were out there, the companies that had become dominant
on the New York Stock Exchange in the 1920s now had a lot of profits. They were paying their workers better, but
they were just awash with cash. They actually started lending that money out
on the New York call market for 10% to 15% for people by their stocks on margin speculating
up, and then they sold the shares at the higher prices and paid off their debt. The Japanese did the same thing in the 1980s. It’s financial engineering, but it’s actually
to solidify the corporate Treasury to pay down debt or to just put money in the corporate
Treasury which then became very useful once you get slow demand in the Great Depression,
just to say right now, we have an article– hadn’t been published yet but it’s on debt
finance buybacks is just the opposite. You’re actually using debt to finance buybacks
that don’t– so now, not only do you not have productive investment that is going to generate
returns related to the buybacks, but you have debt on your books that you have to pay off. There was actually a very good article in
CNBC yesterday on Oracle and Larry Ellison and them getting into trouble. Actually, it’s an article that fits everything
we say about companies getting into trouble by just trying to boost their stock price
through buybacks and not investing in the products of the future. MAX WIETHE: Well, you mentioned a period of
time when we did have innovative enterprise, which was that that post-World War II era,
the decades following that we as America, we grew at an astronomical rate. What was different about that time that allowed
that innovation to occur that we haven’t seen today? WILLIAM LAZONICK: Yeah, well, so first of
all, I think it was the financial sector was highly regulated. They used to talk about 3-6-3 banking, 3%
was what you got if you put your money in the bank and let that out to its prime customers,
corporations at 6% and the other 3% was when the time of day when the bankers went to play
golf. That’s actually what prevailed into the 1970s. The ’70s changed a lot of this in terms of
the financial sector. In terms of the companies themselves, there
was a norm that set in that once you employed people, if you just started laying those people
off, you’re not going to get good people to join your company, that you are building this
company by investing a lot of vertically integrated activities. It could take decades to build a company you
would invest in research, if you’re a research oriented company, not just in research and
development of corporate research labs, very long term research that could result in products
in the future, but no one really knew when they were doing the research, even what closed
products will result in. In companies more generally, you just treated
your workers better because you wanted those workers to show up every day, give the customers
good service, and that became the norm. Companies that didn’t do that are not company
people would want to work for. Unfortunately, that was mainly a white man’s
world. Even up until the Civil Rights Act, companies
had marriage bars where they could tell women to leave quite legally from the company if
they got married. Harvard Business School didn’t admit women
to the MBA until 1964 when they saw the writing on the wall with the Civil Rights Act, that’s
now over 50 years old but that’s not that long ago. Also what– we have a book coming out on what’s
happened to African-American employment over the last 50 years. One of the things that happened in the 1960s
and 1970s, there’s still a big demand for blue collar labor in the US. This is just before the Japanese impact started
to occur. There’s expansion, particularly the automobile
industry of blue collar work. If you could get a semi-skilled blue collar
job, that meant you’re on the assembly line and you’re represented by union, you had very
good pay. Well, whites were the children of blue collar
whites were moving, going to university, often free tuition, or very low tuition and moving
into white collar work. Blacks who had been, of course, in a less
privileged position in the United States or much more disadvantaged position, there was
a big push helped by also by the setting up of Equal Employment Opportunity Commission,
to move those people up in the companies from unskilled jobs to semi-skilled jobs. That started to work. Unfortunately, I think one of the reasons
why the system was not maintained in the 1980s was because, in fact, as those jobs get challenged,
I think of it had been more still a white male society, the companies might have– there
might have been more of a consensus, but we need to retain and reinvest. It fed into it. Well, no, we can buy take responsibility for
people we don’t care about. I think in the end, we can see what’s happened
to the white blue collar worker now downward mobility, lower life expectancy, opioid crisis. It hurt everybody, but I think that that fed
into it. What I’m trying to get at here is there are
lot of social influences on what companies do and how they act and what the norms are. Those norms changed. Then they changed dramatically in the 1980s. As I said, what I saw at Harvard Business
School that Harvard Business School went away from this notion, which they really had retained
and reinvested and call it that, to yeah, it’s good to downsize and distribute. That’s what they started teaching the students. That’s what the students started getting jobs
on Wall Street and be able to make a lot of money by participating in that, as if it’s
all about value creation. That’s when things went from really changed. That’s when you went from having stable and
equitable growth coming out of the practice of these companies, these companies to contributing
to unstable employment in equitable incomes, and actually in the end, in many industries,
say in productivity growth, loss of international competitiveness. MAX WIETHE: You talked about the maximizing
shareholder value, but also it was coupled with changing regulations. You really think it was more of the changing
regulations or this new economic theory which really was the driver, or obviously, it was
a combination of both, but they’re both major factors. WILLIAM LAZONICK: Yeah. There was a lot of changes in the institutional
environment which are often regulatory that fed into this. The creation of NASDAQ in 1971, out of basically
the National Association of Security Dealers automated system, you had all these security
dealers around the country trying to sell small shares and small companies. There was no national market nor liquid market. The Security Exchange Commission in 1963 had
a special study of the potential of companies being able to go public more quickly if there
was a national market for more speculative companies. The impetus to that was that there were a
number of companies which were called glamour stocks, which they get on the market in the
late ’50s and ’60s coming out of military technology that started catching people’s
attention that you could use this for commercial purposes. Of course, then you had the rise of Silicon
Valley. Silicon Valley, actually got named that name
the same year that NASDAQ was started in 1971, where you had all these things startups going
and taking a lot of the technology. They’ve been done in corporate research labs,
and developing, in this case, semiconductor chips and people leaving one company to another
and then being able to get listed on the stock market, Intel, which was founded in 1968,
was listed in 1971. By comparison, Hewlett Packard, which was
founded in 1938 in Silicon Valley, the heart of Silicon Valley was really an old economy
company right into the ’90s. The HP way was you never laid people off. That’s how you got innovation. They didn’t go public until I think it was
a 1957. I think that one of the reasons they went
public in 1957 was precisely Hewlett Packard were now looking at not just being the only
people who control that company, brought managers up. There wasn’t so much finance at that point. They were still a very careful company in
terms of growth. You started getting this market where you
could put companies on Stock Market Watch more easily. That then meant that you could get things
like the dot-com boom, you could get things like these biotech startups that I’ve talked
about. MAX WIETHE: It changed the reason that people
own stocks. Was that owning stocks now– WILLIAM LAZONICK:
Yeah. Then the other thing was that if you held
stocks in the 1970s, you had a problem because there’s no inflation. Then people started saying, and also there
was global competition. There’s a question, can you pay dividends? The stock market was not doing very well throughout
the 1970s. There was the change into fixed commissions,
which was actually forced upon the New York Stock Exchange by– in 1975 by NASDAQ, there
was very important was the Employee Retirement Income Security Act, ERISA, which was 1974. Now, that was actually impetus to that was
a bankruptcy, and a particular case, Studebaker, the auto company got bankrupt in the ’60s,
their employers were left with their defined benefit pension so there was a movement for
defined benefit pensions to have some backup by the government. That was the impetus behind it. However, you had the other side of that, how
were the fund managers in this case, mainly the companies that ran the pensions like GE’s
pension. How are they going to get enough yield to
fund the pension when you have all this inflation? There was lobbying basically to clarify under
what was called the prudent man rule, which was part of a risk of what a fund manager
could invest in without being liable for if they lost money for being too risky. On July 23rd , 1979, the Department of Labor
which was overseeing ERISA clarified that you could put a certain proportion of your
pension fund into risky assets like venture capital, and not violate the prudent man rule
and not be held liable for taking undue risk with your– MAX WIETHE: Other people’s money. WILLIAM LAZONICK: Yeah, other people. From that moment, there has never been a shortage
of money for venture capitals in the United States. It’s always been a question of what are good
companies to invest in. We always find things like the dot-com boom,
it happened actually in the mid-1980s. They call it vulture capitalism, venture capital
just setting up companies just to go public in then not being worth much. You had a lot of that going on. The problem really has not been any lack of
money. The institutions made the money flow more
easily through the system. There’s certain amount of that that you want
money to be able to flow through the system but how it flows through the system is another
question. Now on that particular issue, because what
happened at that point, buybacks we’re not being done. If you are a company, you are paying out dividends. You were– the last speech by a guy named
Harold Williams, who was the head of the SEC when Ronald Reagan got elected and then he
resigned, he had some time to go in as the chair of the SEC was to security dealers,
this was called the corporation as a continuing enterprise. This was 1981. He said, corporations are paying up too much
dividends, they have to reinvest more. That was before stock buybacks became a problem. Now, companies have been doing stock buybacks,
which is something that I spent a lot of time researching over the last decade. There’s a major regulation that actually just
led to what I call the looting of the company, company tried to do stock buybacks. Sometimes they did through tender offers,
I’m not talking about it but sometimes, they just went to the open market and did repurchases. The Security Exchange Commission, their lawyers
said well, is that manipulation of the market? It looks like manipulation of the market to
me. There was a rule proposed that would have
tried to limit– not ban them, and they were never really illegal, but limit them. It was proposed three times, but never adopted. Then once the Security Exchange Commission
changed under Reagan, they put a guy named John Schad from Wall Street as the head of
the commission. He believed in Chicago economics, efficient
markets, the more markets sloshing around through this system, the better of what as
he stills says today, capital formation. That’s not capital formation, it’s the money
sloshing around through the system. They adopted really under the radar without
public comment in 1982, in November of 1982, a rule called Rule 10 B18, which was totally
obscure until some academics written about it, but until the research that we did say
this is when you allow buybacks to occur on a massive level, and we call rule 10 B18 a
license to loot basically. It now said you can do massive amounts of
stock buybacks with a safe harbor against being charged with manipulation. Even if you exceed that safe harbor, you won’t
necessarily be charged with violation. It turns out right to this day, the Security
Exchange Commission doesn’t know whether you’re ever exceeding it because they don’t collect
the data on the days of buybacks, but some people do. Then that was a regulation which basically
created a whole new instrument, on top of dividends. Not instead of dividends, because they haven’t
been instead of dividends, but on top of dividends, our data shows this to take money out of companies,
and it’s one that’s favored by people who want to go into the company, get the stock
price up, and then cash in because if they can time the buying and selling of shares,
they can make more money than they would otherwise. In the book, we have a framework for looking
at this looting, which, so it’s the core of the book after we get through the theory of
innovative enterprise, the critique of shareholder value and ideology, the role of the stock
market, not what people think it is. We get into how is this predatory value extraction
occurring? We have a framework where we talked about
one chapter is the value extracted insiders. There are the CEOs and top executives who
are motivated by the way they’re paid, stock based pay, stock options, stock awards, which
are structured in a way as a stock price goes up, you cash in. There’s a long history of stock based pay,
it goes back really to 1950 in the United States, that we’ve gone through that history. I won’t go into it now but then we talked
about it a bit in the book, where basically it was a capital gains tax dodge up until
it was eliminated in 1976. It really came back in the 1980s. Stock based pay, actually, not because of
the large corporations, but because of Silicon Valley startups that were now using stock
not simply to separate ownership control, but also to pay people as a mode of compensation
and not just people at the top, they were paying people down through the organization
and actually, what the reason they’re often paying people in stock was because they want
to lure them away from in the ’80s and even in the ’90s, from secured employment in the
old economy companies. MAX WIETHE: Like the HPs and IBMs– WILLIAM
LAZONICK: If you think of pharma, Big Pharma, one of the reasons Big Pharma started having
problems with their corporate research labs and doing really invest original research
and new drug development was not just shareholder value ideology, but a lot of their best people
now, there was an institutional framework for startups, for products that take billions
of dollars and 10, 20 years ago through, it wasn’t really appropriate but there’s a way
of just going to a startup, getting lots of money, making a lot of money, much more money
that you can make as a research scientist in, well, in the pharma or at Lou Center,
HP or IBM, etc. These companies started themselves trying
to change to that new model of stock based pay. This then, at the old economy companies often,
when they weren’t paying stock based paid down through the organization, this then led
them to adopt that as the main way in what they were paying top executive. Then one by one, these companies changed their
own internal ideology. Later, we’re going to talk a little bit about
Boeing, but Boeing did that in 1997 when it merged with McDonnell Douglas and brought
in a lot of people who were much more imbued with shareholder value ideology as a way of
running a company than the existing management of Boeing. It changed in different ways, different places. Hewlett Packard, it lasted the old economy
model into the late 1990s. Even though Hewlett and Packard who had founded
the companies were no longer active in managing it in the 1990s, David Packard, the year before
he died, published a book called The HP Way, which said, we don’t fire people here. We keep them employed, we find other work
for you. Then at the back of the book, he had looked
at all the innovations we did over the decades with this model. That then gave it some legitimacy until they
brought in a new CEO. Her name was Carly Fiorina in 1999. She went with the flow and turned it into
IFR company, a company that’s shareholder value oriented. You had these changes going on that. If you hadn’t had that change in the regulation
at the Security Exchange Commission in 1982, well, you would have had to have at some point,
but that’s when it occurred and what happened then is that the agency itself turned from
being a regulator of the stock market, in this case to being a promoter of the stock
market. It started being promoter of the stock market
by allowing companies to do something that was contrary to the original mandate, and
supposedly, the current mandate of this SEC, and that is to eliminate fraud and manipulation
in the stock market. Open market repurchases, I would argue are
nothing but a manipulation of the market and they’re legal. Hence the license the looting, legalized looting
of business corporation and they’re massive, which I could go into. MAX WIETHE: Well, we’ll get into that with
the example of Boeing later. I think it’s a fantastic example. It’s really visceral, especially with what’s
happened recently. I wanted to get into some of the accomplices
that these value extracting insiders have you bring up to, which are the value extracting
enablers, and then also the value extracting outsiders. I think both of them are equally implicit
in this process. Why don’t we start with these enablers? WILLIAM LAZONICK: Beyond the value extracting
insiders, then the framework of the book, we then look at the enabler. We put our money into securities to a certain
extent, increasingly not as individuals but indirectly through pension mutual funds, and
they hold about 60% or 65% of all the stocks outstanding, stocks still tend to be concentrated
among the top 10% of income earners in the population, not everybody holds stock, but
a lot of our stock is controlled by pension funds and mutual funds. Let’s say the case of pension funds, I would
argue if you’re running a pension fund, just from the point of view of those 2,000, 4,000
stocks or whatever you have in your portfolio, first of all, you’re not going to know what’s
going on with those shares, you can’t possibly know. What you should want in general is a set of
rules that say okay, when companies can afford to pay dividends, they should pay dividends
and then under the rules for savings that we have, they’ll accrue tax deferred until
people want to make use of that money, pull the money out if you have a pension that’s
accumulating through dividend payments coming into the pension. We don’t want buybacks because buybacks are
people who are timing the buying and selling of shares now, and what we want is them to
pay out a reasonable amount of dividends and reinvest in the company so that if and when
we sell the shares in the company at some future date, change our portfolio, those shares
are likely to be worth more rather than less. From an individual point of view, that should
be the same. If I have hundred thousand dollars and then
putting it into the stock market, I should put it in– unless I think I have some particular
insights on when companies are manipulating the market, I should put it into dividend
stocks and I should look at companies that are reinvesting and I should have a notion
of what an innovative enterprise looks like, which I’m not going to get from studying economics
generally, but from understanding the fact historically how businesses become successful
and put it into those companies. Now we could make mistakes, but I would say
if you had a portfolio of those shares, you would do better. Now, of course, one of the reasons we don’t
do it ourselves is because we can get diversification and expertise, etc. from the fund managers,
but that’s how fund managers should be behaving. In fact, what turns them into enablers is
the fact that they’re being judged by the yields that they can get. In here, you can say quarter to quarter, I
don’t think everything is quarter to quarter, but it often is in this world. If someone else is getting a higher yield,
and you’re not getting it, you might not be the fund manager for all. Everybody is looking to get those higher yields
so they start trying to figure out where are the companies that are going to get this price
boost and they stop thinking or even trying to understand of course, because of the way
they’re trained, not just now in economics department, particularly business schools,
they’re just going to be thinking about how you diversify, get a high yield, etc. They’ll just go with the flow. They become enablers. Now, here’s again regulation that made them
more powerful enablers is that in the 1980s, there was a movement in the name of shareholder
democracy, for shareholders to not only have votes but exercise more power in companies. Now, on some level, you might think that’s
a good idea but if shareholders are just people who buy and sell shares, it’s not such a good
idea from my point of view. In fact, at the time, the push really came
not because more and more people were holding shares, but because shareholding was becoming
concentrated among a few big asset managers, which has become quite extreme now. You then have the question, well, what do
those asset managers do with the proxy votes to those shares? Now, an argument can be made that they’re
just holding the shares for you, why should they get to vote the shares? Well, it was ruled basically, yeah, they get
the vote the share, but in 2003, the SEC sanctioned a rule that says not only they vote the shares,
they have to vote the shares. That gave rise to two companies that want
to exist, that ISS, [indiscernible] shared services, the other, Glass Lewis that divide
up the market in proxy advising and have very small number of people working for them and
advising on massive numbers of proxy votes and then shareholder proposals. They then became part of a system where if
you could get them to advise in a particular way, then you could actually with a very small
percentage of the shares of a company have an outsized influence on the shares, and that’s
where the outsiders come in. They’re the shareholder activists. The one we write about in the book is Carl
Icahn has been around since the late 1970s. People like Paul Singer, Nelson Peltz, William
Ackman, there’s about a dozen of them, and I wouldn’t say in every case, they go in and
do damage. There’s a few of them who tried to get into
companies and cooperate with the companies in investing for the future, but in general,
the way they’re going to make their money is by getting them to pump money out of the
company and figure out when to sell their shares. That doesn’t mean they’re going to hold on
just for a month or two. They might hold it as we show with the case
of Icahn on Apple for 30 months and took out $2 billion in 3.6 billion in just buying shares
on the market. In that period of time, Apple did the highest
amounts of buybacks of any company in history. This was in 2014-2015 when Icahn was holding
in the shares, 45 billion in one year, 36 billion the next year. Apple actually is far outstripped that since
then. That was a game changer because now you take
an iconic company that actually, we document in the stuff we wrote when Apple had previously
gone to this shareholder value mode which was between 1985 and 1997 when Steve Jobs
wasn’t there. They almost drove themselves into bankruptcy. Jobs came back, it was retain and reinvest. We know the story. Now they have lots of money. He died and Tim Cook became the CEO. Since 2013, they’ve done 288 billion in buybacks. Just in case anybody thought that Warren Buffett,
who built up Berkshire Hathaway by protecting all those companies from the stock market
is a patient capitalist, he’s not. He’s now is the biggest, by far biggest, about
10 times the stake that Icahn has and he’s just a rabid cheerleader for stock buybacks
to increase his stay. What that means is you’re not going to replace
an Apple. It means that Apple is not taking money. It’s 288 billion just in buybacks since 2013
and investing in the Tesla’s and other companies of the future that it could be investing and
this is even with someone like Al Gore on the board, one of the longest standing board
members since 2003 who is, of course, we all know, not just the former Vice President,
but one of the main advocates for climate change. What Apple have done with $288 billion in
saying, we have a company that can hire the best people, that has an iconic brand name
that can compete globally and can move into new technologies if it had gone into green
technology, if it had gone in that direction, which it could have, it hasn’t. That’s a lost opportunity and you don’t just
recreate those companies to be in that position to have all this money, to have the ability
to track people, all that learning that’s available. We then get to these outsiders who have become
much more powerful, and were made much more powerful by this rule in 2003, this proxy
voting system where you can hold a very tiny fraction of the shares, still a couple billion
dollars, maybe of a company like Nelson Peltz at GE with never more than .8% or 1% of the
shares but get that company just pump all kinds of money out of the company for the
sake of shareholder value, and cease to have any potential to be that it had to be the
innovative company. It’s in the case of GE, it’s we rely on GE
as US as it’s the main– the really the big company in energy. What damage does that do to its ability to
compete? Actually, it’s losing markets, even in the
United States, so a Danish company investors. That’s the thing we look at it and we see
it again and again but we see that there’s now this whole configuration of the insiders,
enablers, the outsiders all focused on getting stock price up. Buybacks are the tool in which they do that
and we’re saying, hey, let’s stop letting them do this. Let’s change the rules, so that we have a
system that doesn’t allow this predatory value extraction and allows the value creation,
sharing the gains with the employees, paying us as taxpayers who help support this infrastructure
of knowledge, a decent tax rate so we can not only get a return on that, but invest
in the next round of innovation without the government going more into debt to support
the companies in innovation. That’s the model we have and well, that’s
the model we put forward but it’s not the model we have. We have this model, which is really deeply
entrenched now in what we call predatory value extraction. MAX WIETHE: Well, and I thought, also a really
interesting transition you did was from Carl Icahn as the corporate raider where he’s taking
25% stakes and now he only has to take less than 1% stake and people would suppose maybe
that that’s because they’re afraid of him becoming the corporate raider, but really,
all the incentives are aligned. He doesn’t have to, it’s really that he doesn’t
have to, not that they’re afraid. WILLIAM LAZONICK: Yeah. It was because of him that the term green
mail got coined. It actually only looked at it, only that he
puts [indiscernible] around 1982, ’83 and he went after a small number of relatively
small companies in that were locally based. He started getting control and/or threatening
control. All he had to do was threaten and then they
would buy him out green mail. They were doing that even before it got turned
green mail. Now, what is fine? We’ve looked at a few of these cases is that
within those companies, there were some people, there was actually– should we try to fight
him off? Should we let him in? There are some people who said no, okay, let’s
do this, we’ll get our stock price up and offered then their own stocks. You start getting this aligning, but sometimes
it was called hostile takeovers at the time because often, it was seen as hostile. The people who are running the company do
not want these outsiders so they say, well, they’re incumbent, they’re just protecting
their own interests. It could be that those companies are not being
run properly, but it’s not going to help to have someone come in whose only purpose is
to get the stock price up and using the ideology of shareholder value as to legitimize this,
you have to understand the principles of innovative enterprise. I think good executives do understand that. The only one case that that occurred relatively
recently that everybody probably knows about is Whole Foods. Whole Foods was known as now owned by Amazon,
but known as being a really good employer, charging high prices, but it was getting–
yeah, people going there, shopping there. In the fall of 2015, I was asked, actually
by someone in one of the presidential Democratic presidential Bernie Sanders campaign actually,
someone asked me why is Whole Foods, because I’ve been saying Sanders should talk about
buybacks. Why is Whole Foods, they’ve done about a billion
of buybacks? Why did they do that? I looked at it, I saw that in fact, in September
of 2015, Whole Foods had laid off about 7% of its labor force, about 1400 people. The stated purpose was that so they could
charge somewhat lower prices to compete with Trader Joe’s other premium brand. I thought unreachable, that means the other
93% of the people are going to have to work harder and I then did a calculation of what
they did in terms of buybacks per laid off employee, it turned out $727,000 per employee. If they hadn’t done the buybacks, they could
have kept those people employed, what their benefits if they’re 60,000, which is probably
high, they could have kept those people employed, and they would have had plenty of money to
lower prices, and they wouldn’t have forced people to work harder, who are the main people
that would have been much more rational thing to do. The reason they didn’t do that was because
they were being attacked by hedge funds. Now, when just before or just after they sold
to Whole Foods, the CEO of Whole Foods who was on the record of saying, and it’s one
of the few times I’ve ever seen this, calling those activists, a bunch of bastards, a bunch
of just– hardly anybody will speak out against him, he actually did. The reason he sold to Amazon which what they
used to call a white knight, there was someone there who could at least protect the company
then there was a logic in their business model. We see that going on still to some extent. Now, the other thing that changed with someone
like Carl Icahn, although he was making lots of money, he actually– when he ended up having
to take run TWA because the green mail didn’t work. That was he lost a lot of money in that. The notion is you get in, you get out. The other thing that changes as he became
wealthier, he didn’t have to rely on other people’s money so in 2011, Icahn Enterprise
is just his own money basically. That gives them even more power too because
he doesn’t need to keep his own investors aligned with the raid or whatever he’s doing. He always, right from the late ’70s when he
started doing this, called this money is a war chest. The more he has, the more the value he extracts,
the more of a war he has, the more power he had. I think the other thing that’s going on is
that on the boards of companies first of all, I think there are a lot of people just believe
in shareholder value. A lot of people on boards who don’t have the
slightest idea what those companies are really doing in many cases. You often can, without a proxy fight, just
influence people on the board to say, yeah, back doing more buybacks, back pumping more
money out, back things that are– do a merger or do an acquisition but do the acquisition
so we can get control of the money in that company and pump the money out rather than
do the acquisition so we can spend a lot of money to build that company up. You don’t really know what’s going on, the
bearing point, it’s like I can talk about an era back then when it was more retain and
reinvest, that’s still going on in some companies now. I think this conflict is still going on now. We talked about a tension between innovation
financialization, and you don’t really know how it’s being played out until you look at
these companies, but there’s much more forces are aligned for being played out on the financialization
side than on the innovation side. MAX WIETHE: We touched on a few examples of
places where stock buybacks and insiders, outsiders enablers have allowed predatory
value extraction to take over the place of reinvest and innovation. I think one of the most the best examples
right now that you can see, because it’s one thing to say the company isn’t innovating
anymore, or they’re not making as much money as they could be, but Boeing people are actually
dying because of this process of the financialization of what was really an engineering company
for so long, and I actually had a conversation with my father. He said they kicked the engineers out of the
boardroom. You brought it up earlier, I think it was
1997, they had that merger with what was the company? WILLIAM LAZONICK: McDonnell Douglas. MAX WIETHE: McDonnell Douglas, and I think
really just starting with that, and moving forward, what happened at Boeing, and how
did we get where we are today? WILLIAM LAZONICK: Yeah. Boeing was founded in 1916. It was a beneficiary of a lot of government
subsidy, including the couple of acts from the postmaster general office at 1925, 1930
that created subsidies for airlines to buy more advanced planes– I’ve written about
this in Boeing Emerged Along with Douglas as the innovators in– it was integrated wing,
all-metal fuselage planes in the depths of the pressure between 1930, 1932. Actually Douglas ended up doing better as
a commercial company in the 1930s and beyond. Boeing was much more oriented towards the
military side. Boeing then with their jumbo jets, was able
to emerge as a stronger company. That was lucky, there was a few other companies
and was able to then consolidate as the main, really the only big aircraft manufacturer
in 1997 when it acquired McDonnell Douglas. At that point, you had Airbus which had been
created from a consortium of European companies to be a competitor to Boeing which was rising
as competitors. It’s well documented that there were a lot
of financially oriented people who came into Boeing with the merger, some of them had come
from General Electric and they started pushing shareholder value. That year actually, 1997, significant to other
ways. That was the year in which the Business Roundtable
declared that shareholder value would be the primary purpose of companies. This is an organization of which CEOs are
members of major companies. People might know, recently this few months
ago, they changed the tune on that. They said, now, we’re run for stakeholders,
but Boeing at that point actually turned to being a shareholder value company. The other thing that happened in 1997, it
was the first year that dividends– that buybacks surpassed dividends in the form of distribution
of shareholders and you had the stock market boom going on and many companies trying to
keep up with companies that had high flying stocks by doing buybacks. Let’s say Cisco, which ended up having the
highest market capitalization in the world in 2000, March of 2000, didn’t do buybacks. Other companies tried to keep up like Microsoft
and Intel by doing lots of buybacks, so this was increasing. Now, at Boeing by 2001, the top executives
said we don’t want to be too close to the engineers here in Seattle, which was the original
birthplace of Boeing and they have been for since 1916 so they moved their headquarters
to Chicago specifically to be away from the engineers and said, okay, you can do the hinge. Now, you started having lots of business. Their business is producing major aircraft,
their large aircraft under that time, there still is the case, or two companies capable
of doing it. The Chinese are on the horizon, maybe the
Japanese in the future. They needed a new long haul plane, they needed
new mid-range plane, and partly it’s because of advanced materials, avionics and fuel efficient
engines. They built the Dreamliner, which was what
they call a clean sheet, it was a wholly new plane really. It wasn’t even a replacement, it was just
a new plane. They had a number of problems with that in
terms of the outsourcing of stuff, they were doing a lot of outsourcing of the capabilities,
but they were doing that from the early 2000s. Then they knew they had to have a replacement
for the 737 and gee, and the 737 series was a single aisle narrow body plane for mid-range
flights, which they call the workhorse. This is the one who would be biggest selling
plane, and it would be one where they would be used for a lot of longer domestic flights,
some shorter international flights. They had this architecture from the 1960s
for the 737. It had been reengined two or three times. The last one was 1993, which was called at
737NG, reengine just meant they kept the same architecture and put in a new engine. Already with the NG which meant New Generation,
they, which was a big selling plane and their main competitor is the product in terms of
these narrow body mid-range plane, they had a problem because of the wing being too close
to the ground, which Airbus did not have, because they’re series 320 originally in the
1980s, when you were using the loading equipment and you built the wing higher up from the
ground, so you could put more of an engine, a bigger engine underneath. The fact is that the bigger the engine, the
higher the fan diameter– the longer the fan diameter, the higher the bypass ratio, the
more fuel efficiency, generally, all other things equal. This had already become a problem with the
NG, it’s actually doesn’t have a purely round shape. It’s flat at the bottom to give a bit of extra
space between the wing and the tarmac. The fact is when they were thinking of what
to do in the– probably about 2003, 2004, 2005, they actually had a project called the
Yellowstone Project One to think about what they were going to do to replace the 737NG. What they should have done, there’s no doubt
in my mind, what they should have done is done what they call is clean sheet replacement. They would have been enough to take advantage
of all the modern avionics, all the modern materials, and have plenty of space for the
most fuel efficient engine. That was on the books. Apparently, apparently, it was still a possibility
even up until the spring of 2000 or summer 2011 when they announced that they would do
a re-engine plane, the 737 Max. They did that also in reaction to the fact
that in December of 2010, Airbus had put out the 320neo using their company CFM, which
is a joint venture between GE and Saffron, a French company. Leap engines which were much more fuel efficient. Actually, the fan diameter on the leap engines
that Airbus uses are 78 inches. Now, this was a problem for Boeing because
they’re already had reached the limits. There was then a debate at Boeing which I’ve
been able to find out a little information about, of how big those engines could be. There was never even an issue that they could
possibly be 78 inches so it was a question. On the NG, they had been 61 inches the fan
diameter, they may be up to 68 inches, in the end, they put some extra height on the
front landing gear and they got it up to– well, first supposed to 68 inches, actually
69 inches so they reached the limit. If they hadn’t done that, they would have
been subject to a critique, as they were, in fact quite vocal from Airbus is that you
weren’t going to get the fuel efficiency on the Max to compete with the Neo. That would have been a big problem so they
were trying to figure out how to get these fuel efficient engines on there, given an
architecture where you had to reposition them more forward, more upward. Now, here’s something where a lot of people
have opinions but the investigations really haven’t been done to really say what’s going
on and that is that the opinion, there seemed to be a widespread opinion that that repositioning
of the engines created a tendency of the nose to pitch up during takeoff when– it’s on
manual before you get up to your cruising speed. If it peaked up too much, the plane could
enter a stall and so often, you want to get back to a safe what they call angle of attack. This is something that pilots to be aware
of and will be looking at readings from two sensors that are on the exterior of the fuselage. If they agree, then they just see what the
angle attack is. If they disagree, they would get a lightness
on the NG and say disagree and then they would just shut the system off, they would just
figure out how to get the angle of attack. They would– MAX WIETHE: Fly manual. WILLIAM LAZONICK: Yeah, but what was happening
here was that this, they put on a system which later became known as MCAS, maneuvering characteristics
augmentation system, that was doing this for them and they didn’t even know about it until
after the Lion Air crash which happened in October of 2018. The timeline is the planes launched in 2011,
the end of 2012, they have 2500 orders. It just before the second crash of the Ethiopian
Airline’s plane, that was in March 10th of this year, 2019, they had just over 5000 orders,
387 delivered. The plane had been certified in March of 2017. The first delivery in 2018. Now, a year and a half later, you have this
crash. Immediately, it’s well, suspected that it
was a faulty sensor. Then Boeing was forced to reveal when American
Airline’s pilots went after them, what’s going on here that they had this MCAS system on
there. They didn’t call it that at first, but then
it became known as that and they hadn’t put it into the flight manuals, and there’s all
kinds of issues that have been written about whether they let the FAA, the Federal Aviation
Administration know about the system or know how more powerful the system had become. There’s a whole lot of issues of concealment
that are there and still being investigated in Congress and an issue right now because
as of today, what’s today, December 6 th , 2019, those planes have not flown since last March
13th around the world and nobody knows when they’re going to fly. The issue is, are they going to fly? I wouldn’t know whether I should bet on this
because I don’t bet but I’d say the odds are, in my view, that they won’t ever fly again. That would be true if they have this structural
defect and there’s been more evidence that there is this defect, that it’s not just a
software fix, and it’s going to– the deal with it is not a software fix and now, pilots
know about it. If it was, you would think that plane would
be up in the air again. The other thing is, you would think that Boeing
would have come and rebutted the notion that it had this structural design flaw, because
obviously that’s out there, everybody’s talking about it. You just see it on the chat on an article,
people think of it as a structural design flaw. If that’s not the case, come out and say no,
that’s not the case. Now, obviously, if they– here’s the crux
of it, if they had built a plane they should never should have built back when they had
the choice 2011, when they launched the Max and they could have gone to the clean sheet
replacement, by some estimates, it would have cost them $7 billion more, maybe $8 billion
more to do that, rather than the re-engine plane, it might have taken a year or two longer,
but this is one of the greatest engineering companies in the world. There was every reason to do it in terms of
material avionics, fuel efficiency in the planes and they actually still have it on
their books that they’re going to do it, that they should have done it then, they didn’t. Why didn’t they do it? Well, we don’t know for sure. We have some possibilities. We do know that Southwest Airlines, which
was the biggest purchaser of 737 planes wanted a plane that would fly just like its previous
plane, so it didn’t have to retrain the pilots. The pilots were in an airport, they’re going
from an NG to a Max, it would be not going to a different type of plane. That might be a part of it, but they could
have paid a million dollars for pilot to retrain them or give him a- – they could have figured
that out financially. It may be it’s more speculative that they
already are having problems with the Dreamliner with all the outsourcing they had done, which
was part of their business model and they didn’t want to start that whole process anew
at the same time with the mid-range plane. That’s possible. Then there’s also possibility that’s where
the financialization comes in, but it’s not the only reason. The fact is the period when they should have
been thinking, how do we mobilize all our resources to build the planes of the future,
between 2004-2011 and on top of paying very ample dividend, they paid $11 billion out
in buybacks and so when you come to 2011, most companies stopped doing buybacks and
a lot of them in 2009 in particular, the financial crisis or a little reticent in 2010. MAX WIETHE: When you actually should have
done that. You ever actually should have done it. WILLIAM LAZONICK: When I was buying stock
with the high prices, but that money would have come in handy, that money plus interest
that if they had had it, we don’t know if there is. I think there really should be an investigation
into why they didn’t build a clean sheet replacement at that point. Once they went the route of the reengined
plane, if it’s true, and this, we don’t really know but there are congressional investigations
that could find out that this plane had a design flaw that made it inherently unsafe,
and they didn’t want their customers to know about this so they tried to fix it with the
MCAS, and they didn’t tell anybody about it. Oh, that’s pretty serious. Now, where does financialization come in beyond
that? They didn’t do much in the way of buybacks. I didn’t do buybacks up through 2012, but
in 2013, right at the beginning 2013, they started doing them. By that time, it was clear that in terms of
sales that the Max was a success. It’s the fastest selling plane they’ve had
in history. I think the NG might have sold more than they’ve
sold so far, but any case the fastest selling plane and this looked pretty good. Airbus was doing very well with its planes
so it wasn’t just that it was huge demand for planes, which also particularly why Lion
Air is one of the biggest purchasers, it means that you’re also getting huge demand for pilots. You’re not going to have every pilot being
trained as a military pilot so we need planes that we need competent people, pilots, but
when we get on a plane, we can’t assume that solly is on their [indiscernible]. Any case, at that point, we don’t really know
what they do, or they didn’t know but we do know that they started propping up the stock
price. Between January of 2013, and the week before
the Ethiopian Air crash, they did 43 billion in buybacks, including about a little over
9 billion in 2017, 9 billion in 2018. Less than two months after the Lion Air crash,
they increased the dividend by 20%. They authorized a new $20 billion buyback
program but it hadn’t been for the Ethiopian Air crash in March, they probably would still
be doing buybacks and another plane didn’t crash. We’re not sure, but I would have said they
probably would have done 12 billion this year or something like that. March 1st , 2019, which is when the new dividend
went into effect, they hit their all-time peak in stock price. The Ethiopian Air crash 10 days later. Now, here’s think that this might have occurred
if they hadn’t been focused on their stock price. You might have had, I use the example of like
Volkswagen with the diesel emissions, not a particularly financialized company coming
out of Germany but if you’re at the top of the company, and you’re trying to meet regulations,
and you can fake the data, and you can sell your cars, there might be some executives
who are tempted to do that. Actually, I think there’s some in jail now
because of that. It’s not that it’s only going to happen in
a company where you have all these buybacks going on and you’re focused on your stock
price, but it certainly supercharges the incentive to do this. If the public is buying into the notion that
a high stock price means a company is doing fine, then it creates a certain aura of success
of the company. That it’s got its high stock price, it must
be okay. Even what’s– the frightening thing is that
even after the Lion Air crash when they knew that this may have been– they started discovering
why this may have occurred, there was still an attempt by Boeing to blame it on the pilots
to say that one particular plane was not air worthy and they doubled down in a sense on
trying to get their stock price up. Meanwhile, the executives are doing very well
in this. McNerney who had been the CEO from 2005-2015,
I think we had something like $257 million went into his pocket, his actual pay, a large
percentage of it stock based and other related to higher profits, which of course come from
having all the order for the plane. For Muhlenberg, the current CEO, then now
stepped down as chairman, but he was between 2015, summer 2015 when he became CEO and the
end of ’18, for which you have the data, it was about $2 million a month falling into
his pocket. Now that’s a lot of money, even if you are
successful in producing a safe plane because it’s really the engineers– the whole, but
if in fact, you’re not doing what you basically should do is produce a safe plane, then it’s
a big problem. Now, one last thing I’ll say about this is
that a lot of the– and we have this an article in American prospect group published last
May, which talks about this, a lot of the notion, the ideology behind shareholder value
is traced back to an article by Milton Friedman, well known as Conservative Economist of Chicago
School in 1970 in the New York Times Magazine, where he said the only social responsibility
of a company increases profits. This was actually came out in direct response
to Naderism and Ralph Nader and the push for more fuel efficient and safer cars and in
fact, the context was that there something called Campaign GM that wanted to put three
public interest people on the board of General Motors to push for more fuel efficient and
safer cars. Friedman publishes articles solicited by an
editor at the New York Times and called this and it was repeated in some editorializing
opinion of that article by the editor. Pure unadulterated socialism. Now, we know the future of the auto industry. They should have had people on there who were
pushing for producing safer cars because that’s what went out in the auto industry. The only social responsibility of a company
is, you could say, is to produce fuel efficient safe cars. It’s not a social responsibility. It’s an innovative strategy so he was basically
telling people, saying there’s pure unadulterated socialism, don’t be an innovative company. It comes full circle back to what the start
of the book is about what the value creating company is, what innovation is, where it comes
from. It doesn’t come from saying we’re going to
increase our profits. It comes from producing a high quality product
that people want, in this case, fuel efficient cars, safe cars, in the case of Boeing plane,
first and foremost, obviously a safe plane and then getting a large market share to spread
out the fixed costs and get economies of scale and make it more affordable. That’s where we get productivity growth, that’s
where we get a basis for paying people higher wages, paying higher taxes. That’s where we get the posit of some scenario
in the economy as a whole. The Milton Friedman article was really putting
the cart before the horse and we say you want the profits, no, if you want the profits,
produce the product that the market needs. MAX WIETHE: They actually want. Well, I think you make a very strong case
and I was hoping today, we’d be able to get into your last five points. I don’t think we have the time so we’ll leave
it to everybody. If you want to hear Bill does lay out, he
doesn’t just lay out the problem, he also does give five points as to what he thinks
will be the way to fix this problem of the lack of innovation in major corporations in
America but also across the globe. Bill, I just want to say thank you for coming
in today. It was really fascinating. WILLIAM LAZONICK: Yeah. My pleasure. Thanks.

MMS066 – How To Negotiate A Better Salary

Welcome to the Money Mastermind Show. Let’s
Talk Money. Welcome to the Money Mastermind Show. For
tonight’s show, we’re discussing one of those big financial win situations that could
put a lot of money in your bank account but it’s also one of those that I think a lot
of people are hesitant to try and that’s negotiating your salary. Joining is tonight
is Jason Hull of Welcome to our show Jason. Hey, thanks for having me guys. I appreciate
it. Thanks for coming and the rest of the Money
Mastermind Show is Kyle Prevost of, Miranda Marquit of Planting Money Seeds, Peter
Anderson of Bible Money Matters, Tom Drake of the Canadian Finance Blog and I’m Glen
Craig of Free From Broke. Before we start, I want to direct you to our
events page. If you have any questions about negotiating your salary, head on over there,
use the app and ask us. We would be happy to answer your questions. Negotiating your
salary; we’ll start with you Jason, why don’t people do a better job negotiating
their salaries? I think it’s fair. So first and foremost,
Times Ten Cellars, this is their anniversary blend. It is a winery in Fort Worth in Dallas,
Texas so cheers, thanks for having me on the show. Why don’t people ask for salary negotiations?
I think it has a lot to do with fear of the unknown. You probably think, “Hey, my boss
has a certain budget that he can allocate for my salary and if I go ask for a raise
and I don’t get it then they’re going to fire me.” And that’s really not the case of what’s
going to happen. I have run a company before we had employees and we certainly didn’t
fire anyone for asking for a raise but I think it’s something that people are really nervous
about because money overall is a taboo topic. I mean the one, two, three, four, five, six
of us and however many people are listening online are kind of the exceptions to the rule
in that we’re all comfortable talking about money and most people are not. And especially
in a work situation where you are asking someone who has power over you and control and ability
to say whether or not you continually have a job. So it’s a large psychological burden and
statistics show that it’s even more so for women. They don’t ask for raises, they don’t
negotiate for salaries and as a result, they earn 79 cents on the dollar compared to men.
Part of that is due to women also leaving the work force but part of it is due to the
fact that they don’t ask for raises and they don’t negotiate their salaries when
they take on a new jobs. Right and one of the things too is when you
don’t negotiate your first salary and one of the things that I found especially with
women is not negotiating that first salary means $500,000 over a lifetime left on the
table because that starting salary is where you begin with promotions where your bottom
is for the next job and all of that kind of stuff and so that’s a really big deal when
you talk about negotiating your salary. It really does matter. Yeah, I mean how many of you have been in
a job interview and the recruiter asks, “What are you being paid right now?” It’s an
anchor, absolutely. And everyone’s like, “I am never interviewed. I am an entrepreneur.”
Okay, how many people who are watching, who are not in this panel, you can raise your
hand and ask questions about this but it’s an anchor. Yeah, you are absolutely right
Miranda. Every time you get a pay raise, pay raise
is based on a percentage usually of what you’re currently making. If you are hamstringing
yourself by not asking for that salary in the first place, then really the best way
to increase your salary is going to be jumping somewhere else and getting a lateral promotion
that way and that way, you can get yourself a lot closer to what the market bears. Do you think that a lot of people go into
a performance review or whatever, maybe they go into those unprepared and they don’t
come in actually knowing what they want for a salary increase or what they should be getting
and as a result, they are just unprepared for that question when it comes. Yep, it’s not just knowing what you want
and what you should be getting. So you should be coming in armed to help your boss and really,
this should be happening before your performance review. If you’re doing this at your performance
review, it’s too late. I know I worked at Capital One and I managed a team of 40 people.
We had to have a forced distribution ranking by the performance review. By that time it
was too late. Instead, have those weekly one on ones. Have
sessions where you were documenting, “Here is what I did and here is the value that I
bring to the company.” All of this is focused on I am delivering value to the company so
let’s help capture some of that and make sure that I am being compensated for the value
that I’m bringing and it’s comparable with the market bare. If you’re in a performance
review then by then, your boss should already know all the value that you’re bringing
to the company so that you can have that negotiation either then or at the time that you take a
new responsibilities and roles. If you get a promotion and they say, “Hey,
we’re going to have 20 more things to your list of stuff to do,” then you want to be
able to say, “Hey, I have found comparable job descriptions and this is what they are
being paid and therefore, I’d like to discuss how we could get me aligned with what the
market pays for the responsibilities that you’re asking me to do because, one, here’s
all the value I have delivered and two, here’s all the value I’m going to deliver.” James Altucher has a good idea, which take
off for me to take off of Ramit Sethi’s briefcase method which is, if you’re going
into a situation like that, you bring 10 ideas of, “Hey here are all the new things that
I’m going to do for you,” and you share five of them but you leave the other five
uncovered so that you’ve got some stuff kind in your back pocket but you can show,
“Hey, I am thinking about how to incrementally drive value beyond what you guys have seen
so far.” How do you really find your market value though?
A lot of times jobs they’re not so cut and paste where I can look it up somewhere’s
else. It’s not like, “Well, we all produce TPS reports so I know if I do 10 of them and
you do 10 of them that you get paid this and I should get paid that.” A lot of times,
jobs are very dynamic and maybe it has a little bit of this and a little bit of that. Without
asking the guy in the cube next to me how do I really get a gauge on what my value is? There’s Glass Store, and
Those are three good websites and then the other is use your network. You should have
a network where there are people in your network who you can talk to about these issues. Someone
who works at a company that does something similar to what you do or has a job similar
to what you do or a recruiter or someone in HR in your network, I think those are the
places that I would go. Even if it’s not a direct apples to apples comparison between
Glass Door, Compare and, you can probably get at least fruit to fruit and that
should be close enough to be able to draw the conclusions of what you’re asking for. Yeah, I know when I was in the corp world,
as big as the company was and all the other companies in the industry, it was actually
a pretty small industry because the people that you work with today, a lot of them are
going to leave and be in the next company by tomorrow. Before long, you know people
in a lot of different companies that you could probably bounce ideas off of. If you’re good, then the people that leave
that go somewhere else probably want you to come along with them and so they’re going
to tell you, they’re going to give you, “Hey, you’re making X at this company
and you can make 1.2 times X at my company so why don’t you come on over?” In negotiations
with your boss, you don’t want to have the threat of like, “Hey, if you don’t do
this, I’m going to leave.” You don’t want it to be confrontational, you want to
be positive of, “Hey, here’s the value. Here’s the value I deliver. I want to be
loyal. Let’s make sure that we’re compensating me in a way that it’s fair for everyone.” The thing is, if you bring that offer of,
“Hey, Smith Company just offered me 1.2 X salary,” you are now on the boss’s cut
list because even if you don’t leave right away, I as a manager always knew, “Hey,
this person is seriously considering leaving and so what I don’t want to do is differentially
invest in them as a high performer to like send them to training and to get them up to
speed on something new that I’m doing because I’m afraid when I train them, they’re
going to leave. They’re going to go to my competitor and then the competitor is going
to get all that benefit.” So be careful with the salary negotiations
but at the same time, like I as a manager always told my team, “Hey, you should know
what you’re worth and you should know what the market will bare so that you know that
you are staying where you are staying by choice as opposed to feeling like your trapped in.” Okay so one of the things that I was wondering
about is, is this something that is actually dependent on your particular career path or
your field? Because when you talk about don’t come in and try to leverage another offer
with a higher pay than your current place but this is actually something a strategy
that they use in Academia. My ex-husband that is something that they do all the time in
Academia where they go out, they apply for other jobs and they get a higher offer then
go back to their department and say, “Hey, I have this other offer. Are you going to
match it or exceed it? You either match it or exceed it or I walk,” and that is actually
a negotiating strategy in Academia as opposed to the corporate world. Yeah and I’ve seen that with friends. I
have a friend who works in a federally funded — that’s not champagne — a federally
funded research in the center. It’s a rosé. It says it’s a rosé. Oh okay. It’s barely there… It says “Sweet Rosé, California Champagne”,
that’s what it says. It’s just missing the bubbles by now. So
yeah, I have a friend that works in a FFRDC, a federally funded research and development
center. I think it was Albany National Laboratories, except it’s not that one. And he effectively
does the same thing. He’s got someone that wanted to hire him as an assistant division
director and so he kind of let it be known through the grape vine that he had that offer
and his current boss was like, “No, we got you on track. In the next year, we’re going
to promote you assuming you continue to perform at this level and we like you. We want you
here.” I think in a more structured environment like
Academia or probably the government, you could probably pull that like, “Oh hey, the Navy
is offering me this. Why make me stay in the army, if you’re a GS civilian.” But in
the corporate world where the exchange and the free flowing of talent is much more prevalent,
I think it’s something that you probably have to walk a little more carefully on. If
people in the audience have experience with this, if they have tried to wave the “Hey,
I have an offer letter from this awesome startup,” what happened to them? That would be an interesting
story to hear. It’s good to know what you’re worth with,
like you said, Glass Door. But twice, I’ve gone and asked for a raise and gotten a pretty
nice raise without having necessarily having a number in mind. Like just knowing that,
like you said, you’re bringing value but I didn’t have this idea of, “Oh, I should
be making $10,000 more.” I just went in and said, “Can I get a raise?” Basically.
And I’ve done this twice and then both times, it worked out nicely. It wasn’t really about hitting a certain
number that I knew other people are making. It was just saying something. If you feel
like you deserve more and you ask for more, they might actually just do it. They don’t
necessarily go out of their way to do it on their own. You don’t have to name the number. If you
wanted to say, “Hey look, here’s all the value I deliver, here’s all the great things
I’m going to do for you. Let’s talk about my compensation.” That’s something that I was going to ask
you about that because that’s one thing that I have heard. When you’re going into
the salary negotiation that you should never be the first one to throw a number out, that
you shouldn’t allow the person on the other side of the desk to make the first offer and
some of these people are adamant about this. Even if they ask you a number first, turn
it back on them with, “I’d like to hear about what you think I’m worth,” or all
sorts of things just turn it on back to them that you shouldn’t never give them a number. Yeah and you can — you could say things
to turn that conversation like, “Hey, let’s talk about all the things I’m going to be
doing. Let’s talk about the roles and responsibilities that you’re looking for. Let’s talk about
the plan for the future.” Eventually, someone’s going to come up with a number and if you’re
in the same position that the other person is in terms of “I am never going to say
the first number,” then you’ll never get to a number. I mean I’ve done tons of negotiations and
I’m perfectly comfortable laying out the first number. It sets an anchor somewhere.
There are two streams of thought. One is you let the other person say something because
you might have been thinking, “I want a raise of $10,000,” and they go, “Okay,
well I’ll give you a $20,000,” and you’re like, “Woo-hoo alright, I can go up from
there!” But the other one is, “Hey, why not, if you’ve got a number in mind, set
an anchor even higher and then make the negotiations from there?” If you set higher than what you’re targeting,
you could always say, “Look, I am meeting you half way”. There’s a lot of reciprocity
that works here. If you make the first concession then the other person feels pressured psychologically
to make a concession to you assuming you have a good relationship. By the way, all of this
is predicated on “You kick butt at work!” Then you need to go bring it. You’ll figure
out what it is, it’s going to make you valuable at work and do it. If you’re the anchor,
if you’re the albatross, if you are the left hand side of the bell curve, you cannot
do this negotiation. This is all predicated on you delivering value. Yeah, we need to have a separate episode for
like if you’re not very good at your job and you’re okay with that, just making sure
you don’t get negotiated down. How to snow your manager to thinking you don’t
really suck that you’re sort of mediocre. I think I need that, I need add advice right
now. I’m embarking on a new job and I’m like, “Yeah, I just hope I can prove that
I don’t suck.” How not to be melted in your negotiations,
“Yeah, we’re just not going to pay you anymore.” I was going to mention though, that very point
there Jason just because especially for some of the younger listeners out there, I know
it’s a bit stereo type amongst millennials but I think each one that maybe has a little
juice behind it that, “Hey man, we have no problem asking for promotions. We’re
good with all of this. It’s all you folks that like to work hard and put in extra hours
and you are usually a little older than us that you guys have the problem asking for
the money. We can ask for it.” But if there’s no value proposition there,
then there’s really negotiation. If you can’t articulate what you’re doing different,
then the guy down in the next cubicle or another company or what you’ve learned since you’ve
been there, how you’ve developed and grown and why you can deserve this, why would I
want to and if you don’t have the communication skills to communicate that reality, why would
I want to give you more money? That was awesome Kyle. I mean that’s a great
point and remember, your employer is not a charity. They are not a non-profitable, well
I mean they might be a non-profit. Yeah, we always joke that some of the startups I’ve
been involved in have been involuntary non-profits but their goal is to make money and it’s
always critical to understand two things. One, how does the job that you do help the
profitability of the company you work for and two, what are the thing that are on your
boss’s evaluation that they get measured on and how are you making your boss look like
Steve Jobs? Yeah, you see it took me a while to figure
that part out but then after a while, I realized, “You know, if I can get into my boss’s
head, if I can make their job easier and make them look good, I’m just going to write
their coat tails up because when they get the promotion, I’m coming with them,”
and they’re the ones obviously doing my review half the time. It took me a while but
once I realized that, it was like, “Okay, I need to not just do my job but keep asking
them what’s going on, what makes them tick, how can I make their load lighter?” One thing you can do is we call them “skip
360’s” which is basically, where you spend an hour with your boss’s boss and that’s
the perfect time to say, “Hey, what is Tom being measured on? How do you view a successful
year for Tom? What are the measurements and how can I contribute to that?” And that
way, you get it from your boss’s raters mouth. If your boss does A, B and C then their
good. If you can help them do A, B and C and you free up their time for them to go D as
well, then you’re crushing it for them. If you can make them look like a superstar
as long as they’re not the type of people that are going to step on your on the way
up, then you’re going to set up a good spot for yourself. For the people that step on others on the
way up, karma has a real way of biting them in the — am I allowed to curse on here?
Biting them in the beep. If your boss takes all the credit, eventually other people will
realize that it’s you that’s doing something because every time you’re not involved,
your boss falls on their face. People figure it out and sometimes you just have to wait
for karma to kick in. The other thing that you can do is find are there other opportunities
where I can deliver value for other people so that I can get cherry picked out of my
organization into another organization. Did you ever feel less respect or maybe think
slightly less of a person because they didn’t have the guts or the strategic thinking to
ask for a raise Jason? I was never going to complain but someone
didn’t ask for a raise. As a company owner, any salary I don’t have to pay goes into
the pockets of the owners and the retained earnings. Where it did concern me was if I
thought that that was going to be a retention problem. We paid about 75th percentile and
we had some pretty awesome perks. I wasn’t that concerned that people were going to stay
because it was a cool company and people wanted to work with us. We had a line out the door
basically so if someone left, it was automatically filled. So it wasn’t that big of a deal. But if I thought that there was someone who
I really wanted to keep who was going to leave for something that wasn’t in their wheelhouse.
I mean yeah, we lost people with Google, okay I’m going to lose people with Google. I
understand that. But if they are going to go to a competitor down the street who paid
more but had a not so fun work environment, kind of turn-the-crank work and it wasn’t
really that exciting, then that’s where we took the opportunity to say, “Hey, what
is it that’s driving this interest in this other competitor when you’re not going to
go have fun there?” And so that — I mean I’d like to think
that it was be being pro-active but realistically, it was probably them not being willing to
ask for the raise and if someone else was paying higher opening salaries than we were,
then that was something that I hope they would have said, “Hey look, I can go make more
down the street,” and we could have that discussion and maybe it was, “Hey, you don’t
realize the value of the healthcare benefits because we give you the Cadillac plan where
you don’t have to pay anything. You have a fully stock fridge full of beer, you get
to work on whatever you want to work on on Friday,”s and hey, that’s how I roll. But for some people, it’s still, “Hey
look, I’ve got two kids, I’ve got a mortgage, I have whatever.” And I mean I wasn’t
a financial planner back then. I was a software slinger but still, if I don’t know what
the situation is then I can’t help find a solution for it and for the people that
I wanted to keep, I won’t iterate the concessions. But if you would have come to me, then yeah
it wasn’t be me that will volunteer like, “Hey, I can give you an extra $10,000. It’s
not going to hurt me.” I wouldn’t go and volunteer that! Like, “Let me throw some
money at you. Here you go”. Make it rain. I know what you’re saying though. It took
somebody trying to leave for them to get a 10, $20,000 offer from their own company and
it always seemed frustrating like, “Why do I have to get a job somewhere else in order
for you to either hire me back at so much more or?” This is what we talked about in the beginning
that you cannot and should not be afraid to bring up salary as part of an annual review
or when you take on a new job, new roles, new responsibilities or something like that.
It has to be a two way street. Right? The employer’s job is to pay you as little as
possible to keep you on board. Their goal is to make money. There’s something called zone potential
agreement, which is you are willing to accept anything above X and the employer is willing
to pay you anything up to Y. Usually there is a zone between X and Y where you will both
agree. The employer’s job is to get you as close to X as possible. Your job is to
get as close to Y as possible but the employer is not going to volunteer, “Hey, we have
this number over here.” It’s up to you, the employee to suss that out. I think that’s a hard thing for a lot of
people too in any negotiation and not even like a salary. They could be buying a house,
buying a car or whatever that you don’t want to low ball yourself and feel like, “Oh
man, I cheated myself.” Even if you get something, you’ll still feel like you’re
cheating yourself if you found out that somebody else got much bigger raise or was able to
get a deal somewhere. I think there is also the fear of maybe going too far like, “Oh,
I need a $100,000 raise,” and then like, “Well yeah, sorry. Bye.” It has to be grounded, this is what we talked
about in the beginning. It has to be grounded by data that says, “This is what people
who do what I do get paid and I happen to be super exceptional and therefore, I deserve
10% more than the average,” or whatever. The difference between negotiating with your
employer and negotiating with the used car salesman is that unless you are a used car
junky, you are only going to have a onetime interaction with that used car salesman. In
a transactional interaction, it is your goal to extract as much value as humanly possible
out of that transaction. Whereas with your employer, ideally you are
having this on an annual basis and you like them, they like you and you have a long career.
Although, I do have the statistic which is pretty interesting from Forbes. Let me finish
the thought and I will go to the Forbes statistic. So instead of being transactional where you’re
trying to extract value, the idea is you’ve got to grow the pie. And so in creating value,
you have to show what you’re going to bring to the table that they don’t have right
now and then once they agree to it, you’ve got to deliver it. It’s a contingency clause
contract. Whether or not it is actually written in your employment agreement, if you are saying,
“Hey, this is the value that I am going to deliver, this is why I am worth this much”,
you better deliver. There is a Forbes article and I can paste
it in the chat and you guys can share this. The people who stay in companies longer than
two years, get paid 50% less than the people who jump every two years. I remember seeing that one, that’s where
they can expect about a 3% raise but if you leave the company and go somewhere else, you
can negotiate 10 to 20% for this. I’ve seen a lot of people where they change jobs every
year or two and they end up leaving for that and then that’s where loyalty gets you. Yeah, 3% number. There is a survey by Buck
Consultants which is an HR consultancy. I’ve got it pasted in the chat. The average pay
raise is 3% but even then, the HR folks that were surveyed, they differentially invest
in their high performers. So if you’re an average Joe/Jane, you’re going to get 1.4%
pay raise. That’s probably not going to keep up with inflation. One of the underlying themes of all these
is you’ve got to bring it at work. You have to deliver value. They hire you to help with
profitability or to drive a non-profit mission or if you work for the government, do governmenty
things. You have to bring it and if you’re an entrepreneur it’s the same thing. You
have to deliver value because people are paying you to do something. If you want that referral
or if you want that testimonial, if you want them to continue on and hire you again, you
can’t just ship it. There are a few jobs nowadays where you can
just show up and open the mail and do nothing. Deliver value and then you get to claim it. One of my favorite podcast is the Jalen & Jacoby
Podcast. I’ll give you a free plug here, they got sports podcast of the year this year.
I’ve been with them since the second episode, just saying, and Jalen Rose was like… Long time listener for some caller. That’s right, a long time MBA vet and he’s
fond of saying in this very cool way that I can never mimic, “it’s not what you
know and it’s not even who you know, it’s what you can leverage,” and I just think
that such a true thing and whether it’s freelance work or what’s your job. Freelancing
is nice because once you reach a certain point and Miranda can certainly speak with more
authority than I can, once you reach that certain point, you can leverage because, “Hey,
I don’t really need what you’re giving and I know I’m worth a lot” so go ahead
and leverage up on that. On the other hand, if you’re depending on
that income and you’re living paycheck to paycheck, you don’t have much leverage and
that’s where personal finance can even come in and affect your bargaining position. Yeah, if you’re in debt. One of the things
that you don’t really want to, even though I mentioned this before, you don’t want
to bring up in a negotiating session about your salary is, “Hey, I’ve got a $25,000
worth of credit card debt and I need you guys to give me a raise to pay it off because I
was irresponsible with my money.” That’s not the story you want to tell. I mean your
boss may like you, may care about you as a person but the focus of this conversation
for what you’re getting as a salary has to be what am I bringing on an eight to five
basis, or if believe the research 48 hours a week is probably the optimal amount to be
working. So a seven to five basis that is benefiting the company. And yes, you’re right. This is not salary
negotiation but absolutely, when I sold down my shares and my company, the ability for
me because we were in a good financial position and we had managed our personal finances,
it allowed me a lot more flexibility in the negotiations than it would have been if I
needed to sell the company to pay the mortgage payment or something like that. So having
that flexibility because you got your house in order from a personal finance point of
view does so much in your life and it’s beyond just what your job is. I kind of wanted to touch on, because we were
talking a little bit more and I had left a comment on my blog recently as well, but we’re
talking a little bit about — that’s right. Thanks Jason! We were talking a little bit
about when to accept less. I was talking about sometimes just accept less. If I can work
with somebody I like to work with and who will let me do whatever I want to do when
I want to do it, I’ll accept less because that flexibility and that time and everything
else is a little bit worth it but I think in salary negotiations, there might be times
when it is worth it to consider the benefits package and not just the bottom line salary. Right. It doesn’t have to be monetary. Can
you take four weeks off instead of three? Can you work remotely? Do you have fly time? Do you have a beer fridge? Yeah, they have a beer fridge yeah. Any developers
that are really good in Solr Hadoop , go to, we’re always
hiring. I say “we” because I am still a minority owner in the company. Yeah, it’s
not just monetary. It is, “Can I wear jeans to work?” I mean there’s a lot of things
you can do that are not directly salary related. Anything in negotiation where you can give
away something that doesn’t mean much to you but means a lot to the other party is
always a win. If you’re in this negotiations, try and
find the things that are important to you but are particularly costly to an employer.
Vacation time is a huge one and especially in a smaller company. There are companies
now that have no vacation policy whatsoever, you can take however much you want as long
as you do whatever you’re doing. If you’re in a position like that and you want to work
from the beach on Thailand and you could deliver what you’re doing, maybe ask for that because
hey, you don’t have to have as much salary because the beach in Thailand is a lot cheaper
than a condo in New York City. I think also the mistake is that a lot of
people, they measure the salary based on what their paycheck says and really what you’re
getting paid is more than that. It’s, are you contributing to move my 401(k)? What are
my health plans or do you give me any sort of life insurance? All these other things
like even a week of vacation, you don’t necessarily see that in your paycheck but
you’re being paid to not be there basically. Right, right. It’s HR parlé, that’s called
total benefits. A good one is, “Hey, will you give me a high deductible heath care plan
and fund my HSA — my health care savings account?” Because that is a backdoor retirement
plan as well. The HSA is my favorite thing. It’s like
my favorite thing. Oh yeah. I have a heartache. I hope they’re
on the pitch for health equity. If you’re an independent contractor and you don’t
have a HDHP or HSA, go to Health Equity, those guys are awesome. So yeah, you’re right.
It’s not just the money because really, money buys you two things. It buys you stuff
and it buys you time. If there are things that your employer can do that either give
you stuff like, “Can I get a company car or can you pay for my subway ticket?” Or
it buys you time like, “Can I get more time off, can I work from home so I don’t have
to commute?” Those are also valuables but you have to know what is the value of your
time in order to make that negotiation. I have a friend who actually did something
like this where the company didn’t give anything up. He just wanted to work from the
office four days a week and just take Fridays off basically. He said, “I’ll work four
10 hour days instead of five eight hours a days,” or whatever and they were fine with
that and he ends up saving gas money and saving all sorts of money and getting that Friday
off every week. That he spends on three day weekends every
week right? Exactly. You can’t take that on certain — because
if you are in an office environment, some people sometimes have to have in person meetings.
There is a reason that they have offices. You can’t all be working three day weeks
where you have to be in an office but it’s completely dependent on the situation and
if they ask and they say no, at least you ask and now you’ve started the conversation.
You’ve planted it in their mind of, “Hey, I deliver value. Here’s why,” but that’s
the whole, “Hey, I deserve a raise.” I mean you’re not going to say, “Hey, I
deserve a raise” to your boss but the underlying thought behind that conversation should not
be blind siding your boss with that conversation at performance time, whenever. It should be
a steadily documented building up kind of wave of, “I kick butt at work, here’s
why, here’s the value I deliver, I will make you look good let’s have the discussion
about flexibility in my work arrangements.” Okay so you said something about not blind
siding your boss. When are good times to ask for a raise or ask for a promotion or have
this discussion? I mean when is a good time like obviously Friday afternoon as everybody
is trying to leave early is not a good time. Yeah, chasing down the car and running at
it and like, “Hey, hey, hey!” That’s the best time to do it because they just want
to go home and they’ll give you whatever they want. To me, it’s two times. One is
when you take on a new roles or are going to take on new roles and responsibilities.
When they ask you to take on something new because you’ve been kicking butt and they
want to give you more stuff for you kick butt at. The second is successful completion of a large
delivery. If you’ve had a project that you’ve been working on for six months that drives
$10 million worth of MBV for the company and you deliver it and it actually drove 11, that’s
probably a good time. Because now you’re writing a wave of goodwill so that you could
point at, “Hey, look at what I just did” and you can take advantage of something called
the recency bias which is a psychological bias that says, “Hey, I’m going to look
at the last thing that you’ve done”. The whole “What have you done for me lately”
question is the recency bias. So if you could say, “What have you done for me lately?”
And it’s, “I just kicked butt on this project and I made you look like a rock star,”
perfect time to take advantage of that opportunity. I remember and this is not even in the corporate
world, I was working at a supermarket and obviously the scale is a lot lower and what
I was getting paid was a lot lower than what people are saying to minimum wage should be
now. A bagger. I was a grocery bagger. Yeah, pretty much that and I did something
and my boss was like, “Oh yeah, that’s really great,” and I’m like, “Yeah and
I probably deserve a raise”. I just threw it out there and he’s like, “You know
what? You probably do,” and I had an extra quarter to my minimum wage or whatever it
was. Yeah but it’s probably because you were
the only bagger who asked for it. But it was also the value that I brought.
I mean not that I was like so phenomenal but it was like you’ve got to do it more and
I really appreciate the fact that you’re really talking about how you have to bring
something to the table. You have to be a performer. You have to be somebody who’s doing something. Because the other side of it is that I’ve
discovered is, if you’re the person who does just enough, if you’re just getting
by not only are you not getting the raise but you’re the person who’s going to get
outsourced. If you’re just doing the thing where you just have to check the box or just
entering the data, that job is going to disappear. Yes, I can find crank turners in the Philippines,
in India, in China and we even outsource call center works to Canada. Wow. To third world countries. Third world countries like Vancouver, god! Developing countries is like Quebec. No, well I mean the point is outsourcing doesn’t
just happen to what we think of as third world countries which are the Philippines, India,
Indonesia etcetera. While I was in Capital One, we did outsource in India, we outsourced
to the Philippines, we outsourced to Ireland, we outsourced to Canada. And in my development
company, we outsourced to Costa Rico and Nicaragua, Honduras, Uruguay, Brazil, Argentina and England. Outsourcing happens and it’s not just to
places where they have to get a bus to drive everyone in to the call center. It happens
to countries that you think of developed world countries. Don’t just think because you
don’t have a job that necessarily can be done by someone in a call center in India
that you are subject to outsourcing. Because you are absolutely right. If you are delivering
value, then it’s encumbering on the company to try and find a supplier that can deliver
value at a reasonable price and outsourcing is always on the list. The thing is too, you may not think that your
job could fit that description now but that doesn’t mean that somebody’s not going
to create a technology tomorrow that makes your job like, “Well, you know what? Jones
over there, he just does that anyway so we’ll have the computer do it.” If you’ve got
a guy like, “Oh, you know what? I need this guy on my team. You can let everybody else
go but let’s find something for this guy.” Right and so innovation is something that
computers are not going to be able to do for a long time. Anything that involves creativity,
that involves using your brain to come up with stuff that no one else has come up with,
that’s always valuable. That’s where you want to focus your extra energy. You have
to do the things that you are expected to do on your performance evaluation but where
you will create differential value is in using your brain to have creativity to come up with
the things that no one else has thought of because the computer can’t do that and won’t
be able to do that for years and years and years. It’s like… Sorry. Go ahead. Rock, paper, scissors. I know right? I just facilitate the conversation. I’ll
let everybody else speak. I don’t actually add value, I just facilitate. Not at all. Actually what I really want from you Jason,
now, is a pep talk because as we know, as we know women have a harder time asking for
raises. Women have a harder time even if they’re providing value, they have a harder time recognizing
the value that they provide and talking about it. They have a harder time talking themselves
up, they have a harder time trying to get out there and do it so give us a pep talk.
Give us a pep talk, we need a pep talk, really badly here Jason. Tell us how we can feel
good about ourselves and feel good about asking for more without feeling like we’re being
total bitches because that happens. Women bring a lot of value to the workplace
particularly because they think, and you could look at FMRI’s all day long and this is
proven, women think in a different way than men do. There is inherent value in that first
and foremost. If you’ve ever read Pygmalion, the George Bernard Shaw play. There is something
called the Pygmalion effect, which is basically, the more you expect of yourself, the more
you will be able to deliver. The opposite effect is called the golem effect.
And it’s not the, “Oh, me wants it, give us the ring.” It’s g-o-l-e-m, so the less
you expect of yourself, the less you deliver. If you believe that you deliver value and
you believe that you can deliver value, then you will deliver value. This is all based
on your own personal belief and there’s no reason that a woman who does the exact
same job as a man can’t claim the exact same amount of value that a man does. My software
company had unfortunately, not nearly enough women. We tried to hire them, we tried to
keep them, they were awesome but they brought something completely different than the guys
did. Isn’t it true that there are still a lot
of them… I’m not done with my pep talk! No go ahead. Isn’t it true that there are still a lot
of boys clubs where it is very difficult to kind of crack in there? I could tell you stories about the other side
of the fence in public education where like 85% plus of the new people coming in are all
female and it’s incredibly difficult to justify that there should be more men for
the exact same reason Jason just said because there is different value pitches, different
ways of approaching certain situations and you do want diversity. I could tell you stories
from that side of the table. I guess what I’m asking for too Jason though
is — I mean I have a hard time feeling like I should be pushy about — I feel like I
offer value but I feel bad asking for it. We had one situation where I was trying to
hype myself up and it just went poorly. Tom was there. It was ugly and it did not go well
because I just was like, “Hey, I’m going to try this thing.” And I was like, “No,
I don’t do this well,” and it was horrifying. One of the things that you can do is practice
beforehand. A lot of people and this is men and women, walk into this discussion cold
and just like you don’t expect the keynote speaker to walk into a presentation and present
without having practice before, it’s the exact same thing. You need to practice this
discussion. You’ve seen preparation for a presidential debate, right? If the president
is going to be in a debate, they’re going to get the vice-president to play the other
side and to throw all the hardball questions at him to see if they’re ready to answer
the questions. You need to have that same preparation before
you even go to the conversation so that you don’t have these feelings of, “Wow, am
I being a bitch? Am I asking something that I shouldn’t ask?” You should be done with
those feeling because you practiced it already. This isn’t the Allen Iverson, “we’re
talking about practice”, you know, this is real practice. I mean you have to know
all your talking points cold when you walk into that discussion. By practicing it, you
will eliminate the emotion that will override what your logic tells you need to be doing. It’s like having a cold efficiency, like
you’re not emotional about it but this is what it is, this is the accesses that I’m
bringing and this is what I’m asking for it. I’m not trying to be mean, I’m not
trying to be whatever, but this is what needs to happen. You have to believe it and you have to . This
isn’t the Jack Handy “I’m good enough, I’m strong enough, gosh darn, people like
me.” You know, you have to believe, “Hey, I do a good job.” I mean Miranda, do you
do a good job? Can you say that from your heart? Yeah, well most of the time. I’ll say it for her. Okay, so yeah, you know you bring value. I need Kyle standing there going, “Miranda
rocks!” Right, yeah! You know in your heart you do
a good work so really, all this is, is the practice of getting what’s in your heart
into a cohesive logical narrative that is practiced and that has emotion removed from
it and that is just doing it over and over and over again until you have the conversation
down cold and until you know what are the objections that the other side is going to
raise? I mean this is in any negotiation. You try
put yourself in the other person’s shoes and say what are the objections that that
other side is going to raise? And so, how do I counter act this objections in a logical
way as oppose to being emotional about it? Even if it’s woman to woman in the negotiations,
it should still be based on logical rational thought, you should take the high ground,
which is logic and rationality. I think we just touched on something that
I think is a big problem for a lot of people too in salary negotiations. I’ve done a
bunch with some resumes over the summer for both myself and other people. And one thing
I’ve noticed is, a lot of people don’t realize the value in what they’re doing.
They say, “Oh yeah, I just do this,” and they don’t think much about the job maybe
because they’re so good at it that they just maybe hit a couple of keys and they done.
But to somebody else, it’s like, “No, no, no you’re adding a lot of value and
you don’t notice it.” They don’t really know the things that they’re doing that
really brings a lot of value. Yeah. And the way that — so I’ll say this
in resume coaching and it’s the same thing in terms of preparing for your performance
evaluation. Your resume should always be quantitative, it should not be qualitative. By quantitative,
I mean delivered X which helped the company do Y, which are number based. “I reduced
overhead by 33%” or “I reduced the amount of time it took to run a crone job process
from four days to six hours.” If you can have quantifiable numbers that are behind
the things that you do, that helps you understand the value that you’re delivering for your
employers. And it helps, if that’s on LinkedIn and
it shows up, “I saved X money, I drove Y profitability,” recruiters are looking on
LinkedIn all the time and they’re going to key in on that stuff. If you aren’t getting
the salary that you want at your current employer, beef up your LinkedIn profile because they’re
looking for stuff, they’re looking for keywords and the more quantitative it is that you can
show specific value that you deliver, the sexier you look to a recruiter. We are having some great discussions here
and I really think that we could probably go on for maybe hours because I think we didn’t
even touched maybe on a lot of the psychology of what it is and why people can’t talk
to other people and just being assertive and confident about things. But we are bouncing on an hour or so almost
right now. One thing we’d like to do is sum up our shows. We do a final word and we
go around and we’ll take everybody’s final word on negotiating their salary. We’ll
start with you Tom, what’s your final word? Whether you’re regular or an entrepreneur,
it still comes down to the same thing. You have to ask for what you’re worth. You don’t
just wait for things to happen. Even as an entrepreneur, there’s going to be those
times where you do low ball yourself and someone says yes too quickly. It’s the same way
if you ask for a raise. If they say yes too quickly, you kind of think, “Yeah, I probably
went a little too low on that,” so it’s good to know what you’re worth and aim a
little higher than that. Peter what’s you’re final word? My final word is just to again, we’ve touched
on this multiple times, but focus on the value that you’re bringing to the company, what
you can do for them and not on what you want from them. Keep the focus on “this is what
I’ve done for you, this is what I’m going to do for you and make it quantitative,”
like he said, and make sure they know that you’re an invaluable member of the team
and that they should be paying you. Miranda, what’s your final word on negotiating
salaries? Do your homework and figure out how much you’re
worth and how much it makes sense to get paid. This is difficult in the freelance world because
there’s such a wide variety of rates out there and so people are always like, “How
much do you get paid?” and a lot of us go, “Well, I’m embarrassed to say” because
we’re either embarrassed because we’re asking too little or embarrassed because we’re
asking a lot. We fall into this range but getting a general idea at least of what other
people are making so that you know how much you should be getting paid and you have a
general idea of where you stand and then also, on top of that figure out what really matters
to you. It may not be money so it may be worth it to accept a little bit less if you can
get something else in return like what Jason was talking about earlier. Kyle, what’s your final word? I guess one of my final thoughts was just
to flip around. One thing that was said earlier, if you can give us something in negotiations
that means a lot more to another person than does to you, do that. In the flip side, look
at what your employer can give you that cost them little. It may not be a bump in salary
but it might be a very good lifestyle increase for you. I’ve seen weird things like for
example, I don’t know what it is but I hate organizing my dry cleaning and I hate ironing
my own shirts. Value based proposition I’ve seen in places
where it’s like, “Yeah, we’ll take care of your dry cleaning just bring it in.”
Man, I would be willing to give an absurd amount in negotiations for something that
small or little and it’s often a very good value proposition for the employer because
of course, looking at how taxes work and different things like that. Just have some of those
things in mind especially if you know you’re in a market where maybe there has been a little
bit of a salary stagnation, you might be able to get a lifestyle bump somewhere else. And Jason, if you could close out a final
word and tell us what your thoughts are on negotiating salaries. Positivity. There was recent study by the
Center for Retirement Research out in Boston College that said basically that, “Happier
and more positive people make more money and have more money”. Anytime you want to enter
into a negotiation, you have to do it in a mindset of positivity. “Here is what I have
delivered, here is what I am going to deliver for you, let’s work together.” This is
not meant to be adversarial. It has to be a situation where both parties benefit, otherwise
you’re just going to be fighting a losing battle. Thank you so much Jason. For anybody out there
that’s not familiar with your work, can you fill them in and tell them where they
could find you and what you are all about? Yep, so I am a certified financial planner.
I am the chief technology officer of My Financial Answers — which is
a comprehensive online financial planning software service. So if you want to know “will
that raise help you retire earlier?” Then you can go to our tool and it will answer
that question for you. Excellent. Thank you so much again for educating
us and our viewers and thank you everybody out there for watching and listening and until
next week, be good with your money. Thanks for joining us on the Money Mastermind
Show, get more information at Don’t forget to subscribe to the show on
iTunes and YouTube and follow us on Google Plus.

How I Negotiated A Post-MBA Salary and Title One Year Out Of College ––and then got FIRED.

Did you ever have a basement dwelling phase or was it always like smooth sailing? No. Hell no. It was never smooth sailing for everyone. So I grew up in Pittsburgh Pennsylvania like suburbs. Definitely was like a rebellious kid. Not getting great grades but like getting good enough grades. And I went to Carnegie Mellon which is a great school, in Pittsburgh. I got fired from my management consulting my first management consulting job. For can I ask for what? So I had been working for two years out of undergrad. I negotiated – I think this is like one of the things that people always talk about like “You gotta negotiate for what you want”. I negotiated for a post MBA title and salary. But you weren’t post MBA. No I was like two years out of undergrad. I was nobody. I negotiated for this amazing role and in no way was I ready for it. Right. I was just like some kid and you know..I sucked at my job pretty much. So I got fired. Yeah.

Desired Salary

Hey, this is bill at
and in today’s video I want to talk with you about some changes in the law that
affect what questions an employer can ask regarding your previous salary, so
stay tuned. You know one of the most dreaded
interview questions that’s asked is what is your salary expectation. Well guess
what Oregon, Delaware, Massachusetts, and California now have in common? All of
these states have enacted laws where they’ve made it illegal for a potential
employer to be asking salary history questions. Okay, before you get too
excited about this keep in mind it’s an early law and I wouldn’t be surprised
if you’re still asked this question periodically; especially during the early
stages. But again, you can just politely respond, “hey I thought that question was
illegal to be asked,” and you can even add that doesn’t mean that I’m not open to
discussing salary negotiations. And in California here’s a little bonus:
It is now lawful that the individual interviewing you must let you know what
the salary range is for that position that you’re applying for. What a great
resource when it does come to salary negotiations. Other states are looking
into adopting this. This is not across the country as of yet, so you do need to
know what your individual state laws are. But as far as California Delaware
Massachusetts and Oregon, they all have this in the book as well as I think New York
City and Philadelphia. Again, check with your local states for what the laws are
there. It’s a very quick google search on the internet. I hope you found
this video informative and useful and if so make sure that you subscribe to this
channel, like the video, share it. And also I have a download available right there
in the notes of the Top Five Interview Questions that any hiring manager wants
to know about you. So if you are in the interviewing process, make sure that you
grab that download. It would be a great help for you. Thank you so much and I
will see you in the next video

2019 Consulting Salary Information Promo

Hi, I’m Jenny Rae, Managing Director
of Management Consulted. Really excited to bring you one of our favorite pieces
of information every year, this is the result of months of research. We do
primary research on salaries for over 20 firms in the consulting space, not just
McKinsey, Bain, and BCG, not just Deloitte Consulting and PwC, and other big 4
consulting firms. We go into great detail on the big firms and also a number of
boutique’s. Not only that but we don’t just cover base salary, we cover signing
bonuses, relocation, 401k match, employer contributions for education, and we do
multiple levels. We do it at the undergrad level, at the MBA level, which
includes other advanced degree candidates, and we also do it at advanced
levels. In addition, we don’t just cover the U.S., we cover international
locations and even inside the US there are some firms that pay differently by
city or by office and we will cover that as well. So there is a tremendous amount
of information. The best news about it all is that it’s totally free! So make
sure that if you want to know anything about salaries, how they’ve changed from
2018 or how different firms are compensating people differently, make
sure to check out our 2019 salaries. If you’ve got any additional information
that is not included in there for firms that are outside the ones that we
included, please share it at, or come visit us on social. We always love to engage with you and our three and a half million readers are
the source for all the great information that we get ,so the more you can share,
the better we make it every year. Thanks so much for watching.

Pete Davidson Got Stuck Paying for Kid Cudi’s Birthday Dinner When Kanye West Crashed

-Welcome back to the show,
buddy. -Thank you.
-I want to show a picture, because Kim Kardashian was on
our show a couple weeks ago. -Yeah.
-And she showed us a photo. She showed me —
Explain this to me. So, you’re out to dinner
with Kanye? Is that Timothée Chalamet
and Kid Cudi? -Yes.
[ Laughter ] -What was —
-And I am — that is really me. I’m not superimposed at all. [ Laughter ] -That’s an actual,
real photo, yeah. -So, yeah,
it was Cudi’s birthday. -Okay.
-And he was like, “Hey, let’s go to Nobu,” and
I was like, “That’s awesome.” “I’m going with, like,
my manager and producer.” I was like,
“Cool. That’d be great.” So, I got there a little early so I could, like,
give him my card. You know, so it could be — You know, I thought it was just,
like, us three, you know? -You were gonna treat
with your credit card. -Yeah, you know.
-Sure. -Buy my boy a birthday dinner,
you know? -That’s nice.
-You know, ’cause he’s, like — He’s the best musician
that’s ever lived, and, yeah. [ Cheers and applause ] And it’s like an honor, right?
-That’s nice. -So, I get there,
and we’re outside, and, you know,
we order a couple things. I’m like,
“All right, this is cool.” Everybody’s like, you know,
skinny and whatever. It’s all fun.
[ Laughter ] -“Everyone’s skinny.”
-Yeah. -It’s like,
“I can treat for these people.” -Yeah.
I was like, “This is chill.” -Yeah.
-Then, Timothée Chalamet shows up, and I’m like,
“All right, also skinny. Gonna be fine.”
[ Laughter ] No problem.” And then, Cudi goes, “Hey,
Kim and Kanye might come by.” And I was like,
“That would be awesome.” And then, I was like, “Oh, no.” [ Laughter ] So they come by,
and we’re outside, right? And then, Kanye goes, “Let’s get
the special room in the back.” And I was like, “Oh, no!” [ Laughter ] I was like, “Yeah!
All right! Cool, sick.” So, we’re sitting in there,
and I’m, like, texting my touring agent, I’m like, “Yo,
you gotta book more shows.” [ Laughter ] “[Bleep] getting real
over here.” [ Laughter ] So, then, you know,
the waiter comes, and Kanye’s like — “What would
you like to order, Kanye?” and he goes, “I want that stuff
that’s not even on the menu, that crazy stuff.” I was like, “Oh, my God.
The crazy stuff?” -“Crazy stuff”?
What does that mean? -I just want to say, like,
Kim and Kanye, the cutest couple ever.
Very, very sweet people. I had a really good
time with them. -Yeah, they’re great.
Yeah. But you still don’t want to pay. Like, “Dude, you’re Kanye.
You should treat.” -No! Like, it was fine.
It was just, like — It actually wasn’t as bad
as you would think. But, you know, it’s not like
it’s Applebee’s, you know? [ Laughter ] It’s Nobu, you know?
-It’s Nobu, yeah. -Which is like 77 Applebee’s-es. [ Laughter ] -Dude… Did you just pluralize
“Applebee’s”? -Yeah, yeah.
-Applebee’s-es. -Applebee’s-es.
[ Laughter ] -Tell me about
what you’re doing. I’m so excited about this. What are you doing
with the new “Mortal Kombat”? How are you involved with this? -“Mortal Kombat 11” —
it’s my favorite number. -I love “Mortal Kombat.”
-Yeah. Also, well, they are paying me
to be here to talk about it. -Oh, wow.
[ Laughter ] -Yeah. Yeah, and I —
Yeah, that’s why. [ Cheers and applause ]
That’s really — -Thank you for being honest.
-Yeah, no, yeah. You know, I’m trying to get
a helicopter to Coachella. [ Laughter ] They were like,
“Do you like this game?” I was like, “Sure.”
No. [ Laughter ]
It’s actually really sick. There’s this guy that
I really like to kill in it. [ Laughter ] ‘Cause he looks like
a real douchebag. [ Laughter ] So, there’s this guy,
Johnny Cage. -Oh, yeah, Johnny Cage.
-Yeah. So, he does splits
and punches you in the [bleep] is his special move.
[ Laughter ] -Yeah, so it’s one of his moves,
yeah. -And he just looks like
everybody I grew up with in Staten Island,
so I just kill that dude. [ Laughter ]
I enjoy killing him. Also, he has, like,
a hot daughter, which is, like, weird,
because I’m lonely and she’s, like, not real. [ Laughter ] So there’s that
in the video game, as well — sexual confusion.
-Sexual confusion! With the new “Mortal Kombat 11.”
-Yeah. The effects are,
like, really good. I’m actually wearing — I have to shout-out,
“Mortal Kombat” sneakers. [ Cheers and applause ]
Yeah, they exist. -Wow.
-Yeah. They are real things. -I like —
My dude I like is Scorpion. -You like Scorpion.
Oh, I got you — -That’s my dude.
-I heard you like Scorpion, so I got this for you…
-“Get over here!” -…in case you want
to have fun with your wife over the Easter break. [ Laughter ] [ Cheers and applause ] -I don’t know if this
is gonna fit, but we’ll see. -No, I mean —
Yeah. [ Laughter ] -Oh, me! Oh, I see.
-Yeah. I mean, wear it for sex. [ Laughter ] -Thank you. I understood —
I understand the first time. Yeah. Thank you.
Yeah. But you do love video games. I heard you’re building
an arcade at your house. -I am.
So, I live with my mom. Well, we bought
a house together, but nobody believes that.
[ Laughter ] So, I live with my mom, kind of, so I have, like,
a basement that’s, uh, mine. [ Laughter ] It’s like —
But that’s like an apartment, so I live underneath her. [ Laughter ] -Yeah.
-Yeah. So, like, I’m getting, like, a
little arcade setup down there, try to make it —
try to make it a little mine. [ Laughter ] -What do you have?
What does that mean, an arcade? Do you have, like,
a bunch of pinball machines? -Well, no, you know,
I’m gonna get, like, a “Mortal Kombat” machine. [ Laughter ]
-No, no, no, you’re good. ♪♪ No, the check has cleared. The check has cleared.
You’re good. Yeah.
You can have “Mortal Kombat.” But, yeah, we’re good.
-Okay, cool. -So you’ll get one
“Mortal Kombat” machine, but what else?
-Well, I’m redoing my whole entire — So, I was calling it
The Man Cave, but the Mulaneys told me
that if I call it that, they will no longer
be my friend. [ Laughter ]
I didn’t know. Do you not call the basement
the man-cave? Is that weird? -Some people do,
but, no, you can’t. -Yeah, so now I call it
“The Basement,” like The Ohio State University. [ Laughter and applause ] Yeah, it means something. -“The.”
-Oh, I don’t like that college. I just — You know.
[ Laughter ] It’s the “The”
that’s the important — -Go, CSI!
Division III. Whoo!
-Oh, my gosh! Division III.
D-III, man. -D-III, baby.
-That’s the real deal. Are you gonna charge people
when they play the video games? -Hell yeah. Absolutely.
[ Laughter ] One of my many schemes
I’m working on, Jimmy. -Pete, we always love
when you come here, and I’ll let you know what
happens with this guy, yeah. -Oh, yeah, sure.
Thanks for having me. -Pete Davidson, everybody.
-Thank you very much. “Saturday Night Live”
returns May 4th. And “Mortal Kombat 11”
is available April 23rd. -Go get it!
And get Machine Gun Kelly’s “Hotel Diablo” album coming out.
-There you go. -My boy MGK’s album coming out.