Peter Munk: Recipe for success? Learning from failure Gordon Pitts November 5, 2007 –

It's hard to think of Peter Munk as a failure. This is, after all, the man who built Barrick, the world's largest gold miner, as well as a property empire, a philanthropic legacy and a reputation as a shoot- from-the-hip tycoon. Yet in the 1960s, he was tarred with the collapse of Clairtone, a Canadian manufacturer of cutting-edge stereo equipment and colour televisions that he had co-founded. Now approaching his 80th birthday, he considers the strange alchemy of failure and success, and how entrepreneurs are formed.

Why are you so eager these days to talk about Or maybe we don't accord enough respect to entrepreneurship. people who fail, as you did in the 1960s. Anything we can do to encourage and foster the I learned more from that failure than all the entrepreneurial spirit can't do much harm. We Harvard business graduates could have learned in could do with some, after what happened to the five years at Harvard. industry. Anybody who fails can come up again. They have What happened to the mining industry? the wisdom of what they learned from failure and the self-confidence of having got there in the first It got wiped out. What happened to Alcan? What place. happened to Falconbridge? What happened to Noranda and Inco? Think of the guys who bought Is that what happened to you? them - out of Switzerland and Brazil. These It happened to me with Clairtone. They were tough companies were run by entrepreneurs, while here times, colour TVs were a tough thing, but you in Canada the companies were run by managers. But don't entrepreneurs eventually sell out too? Peter Munk Did you see me sell out Barrick? I think you could shoot Ted Rogers before he sold out. It's the Title: Chairman, Corp., difference between company builders and investors: Investors sell out. Born: Nov. 8, 1927 in Hungary Education: Bachelor's in electrical But in the end, won't you just die and your engineering, , 1952 holdings will go on the market anyway? Career highlights: That is, I'm afraid, true. But even then, if a board June, 1958: Founded Clairtone with partner can have vision, it can move into the top chair a David Gilmour. man who not only has leadership qualities but also 1964-1965: Shifted production to Stellarton, entrepreneurial ambitions. Then a company can do N.S. like what happened to [Australian mining giant] August, 1968: Fired by Clairtone, which BHP Billiton when it hired Chip Goodyear [its went out of business. recently retired CEO]. 1970s: Invested in properties in South Is the problem that we don't have people with Pacific, Australia and Egypt, with mixed results. big dreams? 1983: Made move into gold mining through The question is how to encourage more Canadians Barrick. to have the guts to risk everything to realize their March, 2006: Barrick became No. 1 gold dreams. If enough people try, some will succeed ... producer with takeover of Placer Dome. My personal experience is I didn't inherit my October, 2006: His real estate company, money, I created it and I created thousands of jobs Trizec, sold for $4.8-billion. in the process and made many people quite rich. learn from your failure and you bounce back. You being high up means you're in the public eye. don't allow the conditions of your failure to When you treat somebody wrong and you start intimidate you. failing, that's a better story than carrying on being successful. Did you ever think of giving up and going to work for someone else? You love to speak your mind. I'm a lousy employee. I'm much better as a leader, I am uncommonly outspoken, and my family hates getting people committed to a common dream and me for it. Every time I go to annual meetings, they working toward a common goal. I'm good at that. say 'Don't tell them all the truth, or the way you I'm good at motivating people, and I like to lead see the truth.' But that's the way I am, and I am old from the trenches. enough to keep it that way. I've been able to do that at Barrick and I was able This is a volatile time. Did you get caught up in to do that at Clairtone. Clairtone wouldn't have the troubles of asset-backed commercial paper? been such a failure if it hadn't been such a major [As a company, Barrick has reported $65- success. million of exposure to these illiquid notes.] What do you mean? That's out of my field, thank God. I'm not a banker and I'm not involved in those things. But what do You can't have a big-time failure if you never got you expect in an economy that has been booming high enough to fail. If Clairtone had been a little now for a decade? There are never totally smooth, one-man shop, and I would have failed, you upward curves. The whole world is doing well wouldn't have known about it 30 years later. now. Clairtone was an impossible dream in the 1950s - Look at the number of people who have come out to start up in a high-tech product area and to sell of poverty in Latin America, China, and Southeast enough to become No. 1 in the market - in a Asia. Look at India. This was a spectacular, country that traditionally bought its consumer spectacular run. products from the States and Germany. We must have done something right. Then I made a very Is it over? major mistake, and we paid for it. No, but nothing lasts forever. What was that? What is your advice to someone caught in the We went to Nova Scotia and hired 3,000 people middle of this volatility? who were more interested in lobster fishing and It's the same advice given by many people - don't drawing their unemployment insurance, and we sell when there is a panic button out there. Just do got screwed up. We got caught up, of course, in nothing, sit back and enjoy it. the wrong timing, the supply of Japanese colour TVs, and a whole bunch of things. I think you sell when people feel good about things. Look at when we sold [property company] You must bear some responsibility for that. Trizec - a year ago. I had all the responsibility. I was the boss. I got There is an old saying of my grandfather's: 'There wiped out, I got fired. is room for bears and room for bulls but there is no Does Canada tear down its venturesome room for the pigs.' So if you try to buy at the people? lowest point and sell at the very highest, you're never going to make it. Don't look for the last People say that about Conrad [Black] but I don't penny. think it's the Canadian thing. I think when you're high up and you start making mistakes ... well,