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Weill’s World View

An Interview with Sanford I. Weill, Founder and Chairman of the Board of Trustees, National Academy Foundation (NAF)

EDITORS’ NOTE After graduat- Are you surprised at the severity of and hopefully we learned a lesson and are go- ing from Cornell University, Sandy the economic crisis, and where are ing to treat our trading partners and people with Weill cofounded the securities we today with regard to recovery? respect. I hope and pray that President Obama brokerage fi rm, Carter, Berlind, I was very surprised at how fast meant what he said the night he was elected Potoma & Weill, which later be- and how severe the decline was. and that he is going to be the President of all came Shearson Loeb Rhoades Inc. Before the downturn, there were a lot the people and not the President of just one and was acquired by American of good things happening around the party. He has enough support to be a person Express in 1981, while Weill was world because of globalization and a that can do a lot of great things by governing serving as Shearson’s Chairman. lot of economies following models that from the middle and not giving in to the politics He proceeded to serve as President the U.S. and others had put in place, of his own party or to anybody else and work- of American Express and Chairman which created more of a middle class. ing toward making this world a better, more and CEO of its Fireman’s Fund But the exuberance went too far. So effi cient place. Insurance Company subsidiary. In Sanford I. Weill much was based on models, and when Are you concerned about U.S. competi- 1986, he was appointed Chairman times became abnormal, the models tiveness long-term, and will we remain a of Commercial Credit Company, which through didn’t work, which led to a global freefall. global leader? a series of acquisitions, changed its name The good thing was that the world worked You have to worry about that because we fi rst to Primerica Corporation and then to the very well together in recognizing the issue and see a lot of things that point to more govern- Travelers Group. In 1998, during Weill’s tenure governments reacted appropriately, and it’s ment involvement in a lot of areas, which will as Chairman and CEO of Travelers, the fi rm safe to say we’ve stopped the freefall in the not end up being the right answer. Having an merged with Citicorp. Weill served as CEO of the global economy. And now, you’re looking at important fi nancial regulator that understands merged company, Citigroup, until October 2003, what happens next. Do we see a V-shaped re- all the markets is a very good idea. The Federal and as Chairman until April 2006. Today, he covery? No. The U.S. companies have cut costs Reserve was the regulator of bank holding com- holds the title of Chairman Emeritus. Among and inventories and become more effi cient, panies, so they monitored the markets as it re- Weill’s numerous professional affi liations, he so as things stabilize, we should see a ben- lated to the banks. But they didn’t have any real has served as a director of the Federal Reserve efi t coming from having to restock inventories. infl uence over the investment banks, the hedge Bank of New York (2001-2006) and as a direc- But the consumer is still shell-shocked having funds, or banks in other countries, so they didn’t tor on the boards of United Technologies Corp. seen their net worth shrink, so they’ve stopped know what was going on in the whole market. (1999-2003), AT&T Corp. (1998-2002), and E. the spending binge they’ve been on, and for And now because of what they understand from I. Du Pont de Nemours and Company (1998- the fi rst time in a dozen years, they’re saving; what happened in the past, I hope we’ll end up 2001). The 1997 recipient of the New York State the savings rate is up to 6 percent and may go with it being the regulator of the markets, and Governor’s Art Award, Weill has been Chairman higher. But the higher the savings rate goes, that we don’t have everything being divided of the board of trustees of Carnegie Hall since the worse it is for the economy; the U.S. econ- up between three or four different regulatory 1991, and is Chairman of the board of over- omy is over 70 percent powered by consumer bodies that are fi ghting over who has the right seers for the Joan and Sanford I. Weill Medical spending. So it’s hard to see where we’re going authority. That will give us a chance to make a College and Graduate School of Medical Sciences to get a signifi cant recovery in the short term. much more effi cient system that can deal with of Cornell University. He is also Cochair of the I think we’ll see the economy go to positive the tremendous increase of liquidity that exists Board, along with his wife Joan, of the White GDP before the end of the year but it’s going around the world. Nights Foundation of America, and Honorary to be a bumpy ride before we see a lot of blue Many entrepreneurs who have built Chairman of the Committee Encouraging sky. Hopefully, we have the patience to stay some of today’s leading companies talk Corporate Philanthropy. the course. about the diffi culties of managing the In addition to the importance of good markets today with regulation. Is that a FOUNDATION BRIEF Founded in 1982 government policy, many talk today about concern? by Sanford I. Weill, the National Academy recovery being stimulated by the efforts of It’s always a concern, and I hope that’s Foundation (NAF; http://naf.org) is an acclaimed the private sector though entrepreneurship not where we end up going. When you have national network of high school career acade- and innovation. Do you agree? a problem like we had, there is a need for bet- mies primarily based in urban districts – schools I worry if that doesn’t happen, because the ter regulation than what we had, so regulation within schools – with rigorous, career-themed cur- innovation of the private sector and the money should change. But the opportunity and growth ricula created with current industry and educa- it spends creates at least twice the productivity for people over the past 25 years has been tional expertise. NAF serves more than 50,000 of what happens in the public sector. Americans enormous, and what has come from technol- students in over 500 Academies in 40 states and are very lucky to have someone like President ogy and the increases in productivity have been the District of Columbia each year through the Obama who is liked by the American people, phenomenal. The United States went from be- Academy of Finance, the Academy of Engineering, but perhaps even more important, is liked by ing a country that couldn’t compete with the the Academy of Hospitality & Tourism, and the the people all around the world. People are Japanese in the early ’80s to becoming the most Academy of Information Technology. generally looking to this country for leadership effi cient place in the world. A lot of unskilled 60 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2009 LEADERS MAGAZINE, INC. VOLUME 32, NUMBER 4 jobs left the United States, but we became lead- needed back on the family farm or if they got and four other CEOs if we could raise $100 mil- ers in technology, services, and other kinds of too smart, they wouldn’t want to take an unso- lion of that. The people in Pakistan were typi- products. We ended up being a dominant coun- phisticated job. That’s all changed. So we have cally under the impression that whenever the try. When you have a leadership position like to do something which directs the educational U.S. brought anything in, it was strictly political. that, it should be pretty easy to treat everybody process to where the opportunities are. But when they saw all this aid and support com- with respect. Two and a half years ago, we started a new ing in from American citizens, it sent the message Can large companies still be entrepre- high school of engineering (through NAF) to that the people in America really care about them neurial? Can you still drive those values train people that might have an interest in it as a as people. Business has to do more of that. once an organization reaches a certain size career. All these terrifi c engineering companies How do you defi ne the key characteris- and scale? in the United States are now having to look to tics that make a good CEO? Large companies can defi nitely be entre- other countries to get their engineers. We’re not A successful CEO should play to his or her preneurial, and be driven in an effi cient way. going to be able to compete with Russia, China, own strengths and not necessarily try to emulate Citigroup was very entrepreneurial; it was a or India, who are all training engineers, unless somebody else. It was important to me to build family company, the management knew what we do something different. teamwork, to not be afraid of having people was going on, they understood the products, around me who were smarter than me because the business, and the technology, and we that’s how I learned, and to encourage people worked together as a team, and had incred- to say what they believe. It’s also important to ible results. Jack Welch (former Chairman and not just speak to the seven or eight people that CEO of General Electric) is an entrepreneur, are your direct reports because chances are as is George David (current CEO) at United you’re never going to fi nd out anything until Technologies. Nobody could pull the wool its way too late. Teach people in the company over their eyes because they were involved to give back, because philanthropy is not just with everything. Jamie Dimon (current CEO A successful about money; it’s about giving your time, en- and chairman of JPMorgan Chase & Co) is an ergy and your brainpower to make the environ- entrepreneur. Entrepreneurship is not just for ment around you a better place. If you’re good little companies – it can also be a key factor in in business, you can be helpful in public/pri- building bigger companies, becoming part of CEO should play vate partnerships and the not-for-profi t sector. their culture, and having incredible impact, and Whether or not your employees do good things that’s what we need. When you look at the in- is going to refl ect on the company. The busiest creases in productivity that we’ve achieved and people are the people that you want to ask to the growth of a lot of companies from 1982 to to his or her own do more things, because if somebody has plenty 2006, it was a phenomenal period led by a lot of time, it’s usually not the person you want. of entrepreneurs. Do you ever miss the day-to-day role of Is entrepreneurial spirit something leading a company? you’re born with, or can it be taught? strengths and not In some ways, yes, but this is not a very You have to believe you can teach it. Who friendly time to be in the fi nancial business. knows what anybody is born with? The United I regret the fact that when my company was States was built by people who were persecuted, headed toward trouble, I wasn’t able to do any- came here, didn’t speak the language, worked necessarily try to thing about trying to stop that slide and change hard, and built something, so that’s what we the focus. But when I worked, I was never able have to keep on doing. We have to go back to to sleep on Sunday nights, because I was al- our roots and what built our great country. ways worried about what was going to happen You’re very personally involved in emulate somebody during the upcoming week. You want to have the health care arena. Has the health care the kind of business where you tell people its reform debate been constructive, and are okay to make a mistake, because if you’re go- you optimistic for long-term reform within ing to have such a fear of making mistakes that health care? else. you don’t do anything, then you’re not going It’s very hard to be optimistic about reform to have a very good company. But I’ve been in health care because we’ve been talking about lucky that for a good part of my business career, it for 40 years. We have a system that is success- I’ve been very involved in the arts, medical sci- ful at making a lot of new discoveries and bet- ence and health care, and education. I love the ter treatments for diseases. Having said that, it’s people I partnered with, so I was able to move a very ineffi cient and expensive business. The from the business side into a whole other area cost of health care delivery in the United States to continue to make contributions. I miss the is unbelievably high. We defi nitely need to dis- While there is much good being done for-profi t area a little, but maybe I can be help- cuss reform as it relates to malpractice because by leading companies today, public percep- ful to some company in the future that wants the cost of malpractice insurance is chasing doc- tion tends to be negative. After spending someone with a lot of experience. tors away. So if we’re serious about health care more than 50 years in business, is it frus- How can businesses help the young reform, malpractice would be a way to get the trating for you that a more positive message people who are having diffi culties fi nding whole medical community to work together to doesn’t get across? jobs today since most companies are cut- create a solution. Even in good times, the message doesn’t ting back? You are also similarly passionate about always get across, and these are the times when Everybody has lost money, but most busi- education reform and, while much has people have lost a lot of money so a lot of peo- nesses can still do something and it’s important been done, the system is still broken. Why ple are looking for someone to blame, and there that we encourage them to do it. Even if they’re is that? is plenty of blame to go around. But the focus laying off people to save money, they can still Our young people make it through the should be on getting this thing turned around. make a difference in the lives of kids they hire eighth grade fi ne, but with high schools, we’re The Committee Encouraging Corporate as interns at minimum wage by giving them an maybe 20th or worse, which is not the place we Philanthropy was started to get companies to opportunity. Even though they’re getting rid of should be if our country is going to be the leader work together, and it has also changed percep- a lot of people, companies can do this without 10 or 20 years from now. Our high school sys- tion a bit. President Bush pledged $500 million it costing a large amount of money, but the im- tem was built for the time when we didn’t want to the victims of the earthquake in Pakistan to pact they can make on young people and their half the kids to graduate because they were rebuild the schools and clinics, and he asked me futures is phenomenal.• VOLUME 32, NUMBER 4 POSTED WITH PERMISSION. COPYRIGHT © 2009 LEADERS MAGAZINE, INC. LEADERS 61