This is one of the best, most relevant real-world mail bag questions I’ve ever received.
Dear Mr.Kennon,
I have a question: How do you retain humility and empathy as a businessperson without constantly analyzing worth/profit/opportunity?
Background behind the question:
I am an 18 year old girl from the UK and I have just applied to study International Business with 2 languages at university. To me, this sounds fantastic, but it wasn’t an easy choice. It’s the age old problem really: head or heart? I am also passionate about interiors and creating art and in some ways I am very torn. Business represents the head and interiors (creativity) represents the heart. In the future, I would like to merge these and become an entrepreneur in interior design. The thing that most worries me about about studying business though is that it will cause me to become self centred and lack empathy. Some say that in the end, money doesn’t matter, and although I understand what they mean, I believe it does matter. Money = freedom to do anything in life. And the more money one person has, the more they can share to benefit the collective. This is my motivation to become a businesswoman, combined with a fascination with business psychology, creative advertising and the drive to live in a beautiful city, not struggle to make ends meet. Most people have the desire to do good in the world and also to have great personal wealth, so how can I do both, without the desire for wealth eclipsing the desire to do good?I would also like to say how much I enjoy reading your blog, especially the mental models, it’s really interesting and relevant stuff. I have also followed you on Pinterest (I spend half my life on that sticky website).
I hope this message isn’t too long, I respect that you’re a very busy man.
Thank you,
Evie O’Callaghan
These are the right sorts of questions you should be asking yourself. The fact that you are concerned about this type of thing makes me believe you’ll grow into a responsible, caring, and successful adult. I look forward from hearing from you in ten or twenty years when you’ve achieved everything you want.
To answer your specific quandary, indulge me for a moment.
Imagine that I showed up on your doorstep and said in my best Hagrid voice, “You’re a wizard, Harry … er Evie”. I hand you a magic wand and show you how to use it. I teach you how to throw fireballs or freeze things; how to make plants grow or make a broom fly.
How do you use your new power? Do you kill and maim those who get in your way? Or do you head to the hospital and start healing people?
[mainbodyad]Alternatively, imagine that you had a wealthy uncle who passed away and left you a collection of Holland & Holland shotguns. To inherit the rest of the fortune, you must pass a marksmanship test.
Once you’ve learned how to use the gun, do you go shoot people in cold blood in a food court or do you use it solely for recreation, to target clay pigeons, or hunt to provide food for your family?
Knowledge is the same way. It is a tool, a skill set, that you can acquire and put to use, either good or evil. The knowledge itself isn’t bad. Having it in your power, and at your disposal, reveals your character. It’s what you do with it that counts.
Wealth (in terms of absolute standard of living) is not mutually exclusive with doing good in the world. In fact, I would argue that Bill Gates has done more good with his fortune than almost anyone who has ever lived. Not only did he market a product that revolutionized the way the world worked and communicated, drastically increasing efficiency for billions of people, but he made his employees and shareholders multi-millionaires. Then, he took his billions and is using virtually all of it to cure diseases in third-world countries, fix educational systems, and fund projects that otherwise would have no natural donor constituency. There were no low-wage employees slaving away in sweat shops or back room illegal deals cut with politicians to get some sort of market protection through artificial government intervention.
If you are worrying about your desire for wealth “eclipsing the desire to do good”, the Catholic church has a word for this temptation: Avarice. If that is something you struggle with, acknowledging it is a huge step because it makes it easier to keep it in check.
Two Tricks That Can Help You Act In a Better, More Moral Way
I’ll give you two tricks that can help you act in a way that reflects the moral choice.
The first: Read a short story called The Egg.
Seriously. Stop reading this mail bag response and go read that story right now. I’ll still be here when you are finished.
Now, assume that the story is true. Convince your brain of the possibility. It will change the way you do business, the way you live your life, and the way you treat people. It’s really an adaptation of “the golden rule” as prescribed by Jesus Christ in the gospels but placing it in the medium of a parable is useful.
The second: Set aside a specific portion of your household income – say 10% – and donate it to charitable, selfless causes that provide you no benefit but help those less fortunate than yourself. That way, the more money you make, the more cash flows into the food pantries and homeless shelters in your community. Don’t get your names put on plaques; do it anonymously. Do it even if your household budget is strained. Do it even when you don’t think you can. It changes how you behave.
Certain Decisions Get Easier with Experience
Knowing when to draw a hard line in the sand can be difficult but it does get easier. Imagine you take over a failing factory and it has 40 employees. However, you need to reduce it to 10 to save the business. Your choice is not to be “heartless” and fire 30 people. It’s to either save 10 jobs and make money for the stockholders or cost everyone their job and wipe the stockholders out completely. That doesn’t make the pain any less, but you sometimes have to think in terms of the whole picture. Opportunity costs are just as real as explicit costs. Cases like that are comparable to a doctor being forced to amputate a limb, as must sometimes be done to save the life of a frost bite victim or someone suffering from severe diabetes.
It also helps to have a hierarchy of priorities in your life. Imagine you own a rental house and suddenly, one of your elderly tenants, a widow, can’t afford her rent. Your income stops. That income is being fed into an account to fund your children’s college education. You don’t have to be heartless and evict her overnight, but you do need to know at what point your children come before the widow. Allowing her to live there indefinitely without paying is, de facto, choosing her over your own children. Life is full of trade-off decisions like this. That is how it works in a limited world.
When you do have to make a hard decision, be kind about it and assist in any way you can, within reason. In the case of the widow, you could try to find a cheaper apartment for her and agree not to report her failure to pay on her credit report. You could even buy her groceries for a couple of months to help her get on her feet. You have to follow your heart on this one.
Target a Happy Business in a Happy Industry
You can combine the head and the heart.
Study people like Mitchell Gold+Bob Williams and Clive Christian. Both have made insane amounts of money through furniture and interior design.
[mainbodyad]Look at a business like Creed, the famous fragrance dynasty in France. The family has tens of millions of dollars in wealth. They have it because they create a product, with a handful of employees, that makes life better for people. I’m happy to pay them! When I pick up a bottle of Sublime Vanille, sure I think about the $640 price tag, and more specifically, the $90,907 that it could have become by the time I am Warren Buffett’s age (to pick an arbitrary example using the world’s most famous investor). Despite that, I decide that the experience, now, of enjoying that fragrance for the next few years, while supporting one of the last great arts in a world of mass commoditization, is worth it to me. Creed has been present at nearly every important event in my life since I became an adult. I was even wearing it (Green Irish Tweed) when I got married!
As a result, the wealth of the Creed family represents countless transactions with ecstatic customers, relies on no exploitation, and makes the world a better, more enjoyable place as they practice their art of perfuming. That is the type of fortune you should be trying to replicate given your concerns. That should be your model. Go after a happy business in a happy industry with happy customers and happy well-paid employees (the latter of which will require high operating margins per employee).
Do that, and your journey of staying true to your moral values will be far easier than if you were to try and make money renting hovels in the slums of Calcutta. Set yourself up for success in the first place and things are a lot easier. Then, if you want, you can redeploy your profits to those same slums and build affordable housing.
Reader Comments (7)
Comments are presented chronologically, with replies indented beneath the comments to which they respond.
David Tolman
January 26, 2013
I liked The Egg. Thanks for sharing.
FratMan
March 13, 2013
What do you think of the mainstream media's coverage of the Catholic Church?
Joshua Kennon
March 14, 2013
Replying to FratMan
The timing of this question is interesting because some of my close friends come from devoutly Catholic families so this has been a topic of conversation over food the past few months, with increasing intensity.
The question is: What is the coverage, and is it deserved?
The problem seems to be not with Catholics, but the Catholic Church - the institution proper that is akin to a religious government. Like all governments when given unchecked power, money that wasn't earned directly, and prestige, corruption inevitably follows.
All things considered, I think the media has been far, far too easy on the Catholic Church, the institution. The level of abuses that have been covered in the media are a drop in the bucket to what is going on if you pay attention to some of the news agencies around the world, which is inevitably part of my reading for my day-to-day work.
Did you see the story a few months ago? Great Britain had uncovered that the Catholic Church had made a significant investments in London real estate, worth more than £500 million, all of which came from bribe money terrorist dictator Mussolini offered for the Church to keep out of his affairs in 1929 before he began marching across Europe with Hitler and slaughtering Jews. That's disgusting.
Did you see the news out of Europe the past couple of week? At the same time it was fighting marriage equality in the United States, the Church used $30 to $40 million to buy a block of real estate that included the biggest gay adult club in Europe, and then had one of the cardinals taking place in the recent Papal election live in a 12-room apartment a few yards from the entrance, along with 18 other Vatican apartments that house priests. That's idiotic. People can forgive a lot of things, but they cannot forgive hypocrisy. Humans seem to have a low level of tolerance for it. If you want to spend your days going to gay clubs and watching muscular, sweaty men grind their crotches in each others' faces, fine, but few people are going to be forgiving if you spend your days decrying that very behavior and then collecting cash from the patrons who do while living across the street from it. In other words: An honest whore is better than a lying priest.
And what about the recent discovery that the most senior member of the Church in Britain, Cardinal Keith O'Brien, had spent his life fighting for "traditional values", while sexing it up with the other priests? Who does that? I mean, how screwed up does your mind have to be to behave in a way so inconsistent with what you espouse to others?
And then you have that Priest in Ireland recently who defended child pornography! Actual child pornography!
Those are some of the least offensive examples of hypocrisy.
You want true evil, some demonic level stuff, you are talking about an institution that protects men like Priest Jerold Lindner. When an organization continually, repeatedly, relentlessly engages in and covers up this sort of behavior, there is only one likely reason: Too many people are involved, and those who aren't don't want to lose their reputation.
If the media were doing it's job, the Church would be burned to the ground so it could be cleaned out of the rot and returned to its glory and mission in a reformation that would make the last one look like a walk in the park. Imagine the good it could do in the world with the power and influence that it could have.
The Bill & Melinda Gates foundation is a better representation of the values the Church is supposed to stand for than the Church itself. Frankly, based on the past 25 years, it is difficult to argue that the world wouldn't have been a better place had the Church not existed at all and part of that is the media's fault because it stood by and did nothing for fear of criticizing someone's religious beliefs. On nearly every major advancement that has made life better, the Church has stood against it. On nearly every civil rights issue, the Church has closed its door. How many people are dead in Africa now because of the last pope's utterly idiotic - that isn't even a strong enough word - admonishment to the people of Africa that condoms "even aggravates the problem" [of AIDs]. This story does a decent job explaining the issue. It should have been widespread outrage. Mathematically, I have no doubt that there are dead children now because he took that stance. It's a stupid, stupid way to behave if your goal is to alleviate human suffering. Every newspaper in the country should have had a headline criticizing this moronic line of thinking. It kills people.
The problem most people have is they see a criticism of an institution with which they identify and they take it personally instead of thinking rationally about it. Just try to go into a bar in Boston and insult the Red Sox.
TL;DR: They haven't gone far enough, just as they haven't with the government expansion of power over the past three decades. Journalism seems to have died shortly after Watergate. Hopefully, I'll live to see it return.
FratMan
March 14, 2013
Replying to Joshua Kennon
I knew I'd get an interesting answer from you on this one!
Yeah, I was pulling for Dolan because he confirmed a lot of my high school friends, and I got to see him perform mass a couple times. More importantly, I think the dude's awesome (he's one of the few Cardinals that I see and don't immediately think "I wonder what he's covering up).
"The cardinals had to choose another papal successor after the former pope retired due to age (I don't think that's the real reason, but I'm not getting into that now)..."
Short version, I'm guessing you think that document report revealed that the Church is going to deal with the outpouring of another epic sex abuse scandal that will rock the Church, and Benedict XVI didn't have the energy to handle it?
When I asked you the question, the original thing I had in mind was that the Catholic Church gets treated with much less respect than other religions by say, The New York Times, Washington Post, MSNBC, etc. Over dinner, I mentioned to a friend that if you substitute the word "Muslim" for "Catholic" in some of these news stories, it would probably end the journalist's career and/or get him killed.
And plus, let's say that a few dozen Muslim clerics were involved in some kind of epic sex abuse scandal, child pornography, pedophilia, or whatever monstrous thing. I guarantee you that, after reporting the story, the New York Times, CNN, or whatever media outlet would stress that the actions of a few dozen Islamic men don't speak for the entire Islamic community. While this hasn't happened to my knowledge, the closest thing I can think of that actually did happen was the New York Times editorials after 9/11 that stressed that not all Muslims share the philosophy of the attackers. When a small handful of Catholic clerics run into trouble, they seem content to blame the whole Church. But it seems your position is that such a stance reflects the truth, and it is the entire church that is corrupt. My position is that the Catholic Church does so much good that goes unrecognized by those who revel in finding hypocrisy and wrongdoing on behalf of the Church. Do you believe that the Pope, current and former, as well as the cardinals, are corrupt as hell and protecting monsters and fighting justice to protect the reputation of the church? Do you think someone like Timothy Dolan knows about sex abuse scandals and is sitting idly by to protect the church's reputation?
Buffett and Munger often say things to the effect, "We have 250,000 employees. Someone, somewhere, is doing something we don't like." The Catholic Church reportedly has 1.2 billion members (yes, I realize media outlets are likely inflating the hell out of this figure when you adjust for practicing Catholics). And obviously, the Catholic hierarchy is held to a higher standard in much the same way that we expect things from Buffett that we don't expect from a cashier at See's Candies. On the whole, do you think the Catholic leadership, meaning current pope and cardinals, are mostly "good guys"? Do you consider Pope Francis a holy man, worthy of emulation? When you read the biographies of most of the cardinals, do you think "there's a guy a could learn a thing or two from" or do you have negative opinions of almost all of them? Your comment makes me think you've very unimpressed by the Catholic leadership, and I'm wondering how sweeping your feelings on that are.
And yes, I agree that the church has a less than perfect past, particularly during WWII and the Civil Rights Movement in the past century. Although, I do think that part of its beauty is that it does move at a glacial pace, and the continuity and consistency of many teachings over time are part of the appeal. Although it sounds like you think we're ready for a Vatican III "tear down the house" overhaul.
And on a side note, I agree with you that journalism in this country has gone to hell. Thank God for your blog, I don't read anything good on finance anymore that tells me something I don't already know. In fact, a lot of it is...wrong. Sometimes, I go to the Kiplinger website and see how many factual errors I can find. It's sad reaching the point when it becomes hard to find good reading material online.
Same thing with the recent Conclave. I read so many news stories that contained errors. For instance, almost every news story I read implied that the next Pope had to come from one of the Cardinals participating in the Conclave. I write "Pope Urban VI" in the comments section of each one (a petty thing to get peeved about, I know). But I get frustrated reading material when I feel like I know the facts better than the author (I hope that doesn't sound arrogant).
You make a lot of good points. But I do feel a certain frustration that I can't read a single article on Catholicism in the mainstream media that doesn't mention something negative about the church. We just got a new pope today. Can't these folks write an inspiring biography on Francis' life and path to the papacy without playing "ruin reputation by association" game and mentioning "sex abuse scandal" and "child molestation" in every article about him. We have a lot of problems in this country, but when Barack Obama got elected President, they sure were able to put aside our country's problems for a day to wax poetic about his election. When mainstream media outlets criticize the Church, do you think it's out of good faith? Or do you think that destroying the legitimacy and reputation of the Church is an agenda point, and they make sure to find available evidence to support that agenda (even if, as you point out, the evidence is there)?
FratMan
March 14, 2013
Replying to FratMan
*I just reread my post. I apologize in advance for the grammar atrocities I'm forcing you to tolerate.
James Samson
August 26, 2015
If you want to learn more about Clive Christian: http://www.jamessamson.co.uk/magazine/profile-clive-christian/
FratMan
January 28, 2016
"Allowing her to live there indefinitely without paying is, de facto, choosing her over your own children."
Another element worth considering: You could argue that permitting the elderly widow to stay there indefinitely actually is choosing your children first by giving them a real-life role model of what it looks like to lead a top-tier charitable life. In much the same way that your family accepted the unusually high transaction costs associated with purchasing Coca-Cola stock through the transfer agent so that you could provide a real-life example of the publicly traded markets for businesses, I would argue that a willingness to make yourself a market loser (defined as accepting less when bargaining for contracts or enforcing them) to demonstrate how charitable/moral behavior is distinguishable from what is legally permitted is also a lesson worth considering.
I do like your suggestions about avoiding credit reporting agencies, providing assistance for an alternative apartment, and helping with groceries. It does serve the moral good of guiding the widow towards independence. But it also involves the agency/frictional costs of moving (leaving a place of familiarity and comfort) at a time of heightened emotional vulnerability. In your writings, you seem to suggest just about every charitable alternative short of willingly accepting less than one's contractual due...is this deliberate, and if so, why? My speculation is that you like to keep economic matters operating solely in the rational field, and then you like to take the residue of your efforts and view that pile of existing money through a charitable lens. This segregation may clarify thinking. But I am speculating.
I agree with your principle in this article that people must define their priorities and hierarchy of duties in life so that they can lead a consistent, coherent life and pass their best practices on to their children by way of example. My only alternative view is that letting an elderly widow stay in the dwelling rather than funding a kid's education may be choosing her over your kids in the near-term economic sense, but it is still possible to be choosing your kids first in that scenario if you place a high value on setting a charitable example of what it means to be moral in business practices. And it also assumes that it is better morality to permit her to remain rather than aid with groceries + cheaper apartment + no reporting.