Full transcript
0:00everyone same ovens here and in today's
0:02video I want to tell you why Outsiders
0:04always win now I just finished reading
0:08this book called The Outsiders and it's
0:13by William in Thorndyke and I'll put a
0:16link to this book in the resources
0:19section beneath this video on my blog so
0:21that you can find it and you know this
0:24book is actually number one on Warren
0:27Buffett's reading list and it's an
0:30incredible book and I highly recommend
0:32that you buy it and you read it and you
0:35will learn a lot from this book
0:38now what this book's basically about is
0:41it's about outsiders and what an
0:46outsider really is is that somebody who
0:49is outside of the traditional industry
0:53so let me give you a perfect example
0:55like Elon Musk is an outsider when it
0:59comes to the auto industry you know for
1:02for a very long time car manufacturers
1:06in Detroit and overseas they've really
1:09just dominated the auto manufacturing
1:12industry and they've had these specific
1:14ways of doing business in these specific
1:16routines and methods and processes and
1:19everything and then someone like Elon
1:21Musk comes along and he brings radical
1:25new ideas because he's an outsider
1:28you know Elon Musk is from Silicon
1:31Valley and he comes from the software in
1:33the startup world and then he comes in
1:37and he starts looking at making econo
1:39right and whenever an outsider
1:43approaches an existing industry with
1:46outside perspectives and outside views
1:50of things they create a big ruckus and
1:54most of the time they win and they
1:58change the industry for ever they
2:02completely radicalize it turn it upside
2:04down and shake things up now Elon Musk
2:09is also done the same thing to the space
2:10industry you know he entered an industry
2:13we
2:13it was basically NASA and governments
2:16where we hadn't seen any innovation in
2:19like 40 years and he came in and started
2:22bringing his Silicon Valley view's and
2:24has start-up mentality to space
2:28exploration and he did the same there
2:30and what this book's really about is
2:34different Outsiders and specifically
2:37outsider CEOs throughout history who
2:41have really performed at the world's
2:45best levels now what's really
2:48interesting is if you say to someone or
2:51if you ask most people the question hey
2:53who is a CEO who is one of the greatest
2:56CEOs of all time all right
2:58they will typically say well Jack Welch
3:01right from GE but what's funny is that
3:05you know Jack Welch's is most commonly
3:08known as one of the best CEOs or the
3:10best CEO of all time right and it's like
3:13an Owen thing but when you really look
3:17at the numbers it's quite different and
3:20what this book the outsiders does is it
3:25looks to find the most successful CEOs
3:28of all time not by this social
3:32popularity not by their fame or not by
3:36public opinion but by their return on
3:40capital over the tenure of their role of
3:44the tenure of their role as CEO right so
3:48it takes a proper look at the numbers
3:51not just the public opinion and when if
3:56you really look at Jack Welch throughout
3:58his tenure at GE based on the numbers
4:01and return on capital he's actually not
4:04that good but what Jack Welch was a
4:06master of was being like being out there
4:12you know he would go and attend press
4:14conferences he would he would fly around
4:17to network you know he would make
4:19himself public he was he had like
4:22charisma and he was an extroverted
4:24person and he made himself
4:27and he made himself famous that was what
4:30Jack Welch was good at but when it comes
4:33to the raw numbers of it he actually
4:36wasn't there good and this is something
4:40that I find very fascinating because I
4:41see this all over the place in every
4:43industry all the time constantly there
4:47is two there is two very separate and
4:50distinct things there's being famous and
4:53then there's being really good at what
4:57you do and these two things are not the
5:00same thing and quite often they're in
5:04stark contrast to each other
5:06generally the people that are very
5:08famous aren't very good and the people
5:12that are very good aren't very famous
5:14but what's funny is that most common
5:17folk mistake fame for skill or
5:21performance and so in this book The
5:25Outsiders William the the author he
5:30studies about how many CEOs eight CEOs
5:33so the sub headline is eight
5:35unconventional CEOs and the erratically
5:38rational blueprint for success right so
5:41in this book he studies eight of them
5:42one of which is Warren Buffett and all
5:46of them other than Warren Buffett you
5:48will have never heard of before and all
5:50of them are extremely high performing
5:53CEOs and what's funny is that all of
5:57them share pretty much the same views in
6:01the same philosophy and what that is is
6:04it's they calls them Outsiders because
6:07all of them are basically outsiders to
6:10the industries that they operate in and
6:14being an outsider enables these people
6:17to think differently and to really throw
6:21out all of the dogmas and all of the you
6:25know conventional assumed truths of the
6:28industry and all of the standard
6:30processes and best practices these
6:33people because they're outsiders they
6:34come in with a fresh perspective and
6:37they refuse to just accept the status
6:39quo they
6:41want to analyze everything in forensic
6:43detail and ask why about everything and
6:46really just shuffle everything around
6:49and shake things up and do it the way
6:51they think makes sense regardless of
6:54what is the normal or the standard way
6:57of doing things and one thing I find
7:01very interesting is all of these CEOs
7:03have these traits in common the first
7:06one is that all of them believe that
7:11leadership is about analysis not
7:16charisma which is something I find quite
7:19interesting because someone who is
7:21someone like Jack Welch you know he's
7:23more of your charismatic CEO who was
7:25very well-known to people but you know
7:29we when it came to the numbers he wasn't
7:31actually that good but these people viii
7:34unconventional CEOs including Buffett
7:36they weren't that well-known they
7:39weren't that charismatic but they were
7:42exceptional at the numbers the second
7:45thing is is they all view their
7:48businesses as if they're private
7:51companies so even though these companies
7:53are public all the CEOs treat them as if
7:56they're their own private businesses and
7:58they have a particular focus on cash
8:01flows so not so much profits but cash
8:04flows which is another very interesting
8:07thing and the third thing is that they
8:10have a unconventional like idiosyncratic
8:15way of thinking and way of operating
8:17so all eight of these unconventional
8:20CEOs they will basically analyze
8:25everything and then they will make their
8:27decisions based on what based on what
8:31they think is right even if that is at
8:34odds to what everyone else does and
8:37everyone else tells them to do and this
8:40is a very powerful skill you know
8:42whenever you go to do something there's
8:44the socially accepted like right way to
8:47do it and then there's the way that the
8:50data tells you that you should do it and
8:53what I've observed
8:55in in my life so far is that most people
8:59don't look at the data they don't
9:02conduct their own analysis and instead
9:04what they do is they just seek social
9:07validation and they will just follow the
9:09crowd and that is pretty much how all
9:12CEOs believe it or not right run their
9:16businesses most CEOs run their
9:19businesses by just doing what everybody
9:21else is doing and just doing what's
9:25fashionable but these eight
9:28unconventional CEOs they actually take
9:31the time to break everything down
9:33analyze it and then do what the data
9:38says and pretty much all of the time
9:40what the data says is not what everybody
9:43else thinks they should be doing now let
9:46me give you some examples of these
9:47things because you know right now I'm
9:49just talking about like a concept but
9:51let me give you an actual example to
9:53really bring some clarity to this point
9:55so pretty much all of these CEOs they
10:00decided that it was not worth their time
10:03to do press conferences interviews and
10:08even go and meet with analysts and
10:11investors and news channels which is
10:17pretty interesting right a lot of CEOs
10:20think that their job is to you know keep
10:23a public appearance to you know to go
10:26around and meet different people get
10:28photos with different people do
10:30interviews on all of the different TV
10:32stations and then to also go and meet
10:35with Wall Street and analysts and all of
10:37that to make sure that they're looking
10:38after them and very quickly you know a
10:42lot of CEOs they become people pleasers
10:44they just become a face with a nice
10:47smile and a handshake and you know all
10:50they're really interested in doing is
10:52keeping up appearances as soon as a CEO
10:55starts keeping up appearances you know
10:59that they're done and what these CEOs
11:04instead do is they do not keep up public
11:07appearances
11:08they don't even do any public
11:10appearances a lot of these CEOs never
11:13attended any trade shows never attended
11:15any events they never met with Wall
11:18Street once and they never did any
11:20interviews with the press or the news
11:23ever they didn't do any of it and when
11:28they were asked why they just said well
11:31it's simple like our role is to run our
11:35company the best we possibly can and
11:39running our company means you know
11:41focusing on the company making sure
11:43we've got good talent we're producing
11:45good products and that we're keeping our
11:47eye on the ball in the numbers so that
11:49we can produce profit and you know grow
11:52the the total market valuation of this
11:57company so that our vests our investors
11:59make a return right that's what a good
12:02CEO does now if you're out meeting with
12:06Wall Street and if you're out doing
12:08public appearances and if you're out
12:11doing TV interviews then you're not
12:14doing that because that isn't that so if
12:17you're doing that you're not doing that
12:18and if you're not doing that then you're
12:21not really doing your job as a CEO and I
12:24find this one fascinating because I see
12:27the same thing existing right now in
12:30business not with public CEOs but just
12:33with small business owners and
12:35entrepreneurs and you will have seen
12:38this one - you know there's business
12:41owners these days in 2018 with social
12:44media and all of this crap like a lot of
12:46them have confused business with like
12:50being a celebrity and they think that
12:54and they actually spend most of their
12:56time like on Instagram doing Facebook
13:00lives creating posts creating blog posts
13:03doing podcasts doing interviews speaking
13:06at events writing an Amazon best-selling
13:08book and basically doing all of this
13:11crap that is basically just keeping up
13:15public appearances and trying to look
13:18good and none of the
13:20is actually running a good business all
13:22right
13:23and so this is a thing that I find
13:26interesting because this is what great
13:29CEOs don't do and I've experienced this
13:33myself like the fashionable thing to do
13:35right now you know if we're gonna follow
13:37fashion in business well it's to create
13:40a YouTube channel as snapchat and
13:43Instagram and Facebook it's to do
13:45Facebook lives it's to have a podcast
13:48it's to have a blog and it's to go speak
13:52onstage have a best-selling book on
13:54Amazon it's to do all of this crap all
13:57right that's what's fashionable right
13:59now and garyvee will tell you that and
14:02the problem is is that a lot of business
14:06owners are doing this and when they're
14:09doing so much of this they don't have
14:10any time to actually work on the things
14:12that really matter
14:13so they're not improving their product
14:16they're not hiring and maintaining great
14:19talent and they're not improving their
14:21systems in their efficiency and they're
14:24not watching their numbers and making
14:26good capital allocation decisions
14:28instead they're just trying to be famous
14:30and I noticed this one myself and I
14:34actually followed that path for a little
14:36bit and I started trying to be this you
14:39know social this entrepreneurs celebrity
14:42person and it sucked I couldn't I
14:46couldn't wrap my head around why I was
14:49out there making videos of myself and
14:52instead of actually just working on my
14:54business and creating great products
14:57shipping them to customers
14:59making sure my customers are looked
15:01after hiring great talent building
15:03systems and growing right and I just
15:07couldn't handle it so I stopped doing
15:09that completely and I started focusing
15:10on my business and that's really one of
15:13the things that's enabled me to have
15:14such massive growth in my business to
15:17date is by being unconventional like by
15:20actually ignoring what's fashionable
15:23which is the social media stuff ignoring
15:26that stuff and just focusing on the
15:28business so this book was quite
15:30fascinating for me to read and it will
15:32be fascinating for you too
15:33because it really proves that if
15:36everyone's doing it it's probably the
15:39wrong thing to do and all of the best
15:42CEOs of all time and this is not by
15:45opinion this is by the numbers they were
15:49unconventional and they were not people
15:51that just wanted to be famous you you
15:55cannot mistake fame for success the two
15:58are not the same thing and they at odds
16:00with each other and another thing I
16:03found very interesting about these CEOs
16:07is that a lot of them were
16:11mathematicians and engineers so they
16:13weren't people with like pedigree
16:16business MBAs or things like that almost
16:19none of them had that you know these
16:21weren't people with business degrees or
16:24or Harvard MBAs or things like that
16:26these were like engineers chemical
16:29engineers or like chemists and also
16:33mathematicians right so they were
16:36systems thinkers they were problem
16:39solvers and systems thinkers and they
16:41were obsessed with inputs processes
16:44outputs feedback and efficiency and they
16:47approached business in every way shape
16:50and form as if they were an engineer and
16:54this is something that I've noticed to
16:56be true across pretty much all of the
16:59best business minds in history you know
17:02they're not really business people
17:04they're not what public opinion makes
17:08like entrepreneurs out to be they're not
17:10just people who want to make a lot of
17:12money and you know a really smooth
17:15talking salespeople or anything like
17:17this really they're just problem solvers
17:19and analytical thinkers and they
17:22approach business as if it's a problem
17:25and they seek to solve it and really
17:27engineer it to be as efficient as
17:30possible and this is something that I
17:33find very interesting and it's also you
17:37know Elon Musk is a classic example he's
17:39an engineer that is in business and
17:41doing quite well in business and Jeff
17:44Bezos if you read any
17:46books about him and actually there's
17:49only one I know of which is called the
17:50everything store highly recommend it go
17:52buy it it's an awesome book you'll
17:55notice that basil Supremes the same way
17:57he approaches things like an engineer
18:00and you know most of the best business
18:04men of all times they they do this
18:07they're do syncretic they don't really
18:10care about public appearances they focus
18:13on analysis not charisma and they don't
18:17worry about people pleasing they just
18:19focus on actually delivering results and
18:22they're all they also approach business
18:24as if it's an engineering problem and
18:27they have a particular focus on cash
18:30flow instead of profit and they've also
18:34got you know an idiosyncratic way of
18:36thinking so a classic example is you
18:40know a lot of these companies they in
18:43times when they didn't know where to
18:45allocate capital efficiently they would
18:48just buy their stock back off the public
18:50so like the traditional company back in
18:54these times they would they would issue
18:58dividends so they would try to make a
19:00profit they try to make a profit as big
19:02as possible because then with big
19:04profits they could make big dividend
19:06payments to their investors and they
19:09would try to match analysts projections
19:12of their company and try to keep up on
19:15their earnings forecasts and they were
19:18people-pleasing with Wall Street all the
19:20time and that's and they never bought
19:24back their own stock they would always
19:26try to acquire more companies and
19:29basically just grow profits and then
19:32just distribute all of those profits to
19:34their investors through dividends right
19:36that's what the typical company did but
19:39pretty much all of these guys all of the
19:41eight unconventional CEOs and they
19:45bought back their own stock which was
19:48something that like no company did
19:50because they believed in the company so
19:52much that when they thought it was
19:54undervalued they would buy their stock
19:56back off the public and own it
19:58themselves and they
20:00huge share buybacks which was very
20:04unconventional another thing they did
20:06was they didn't pay any dividends they
20:09instead just focused on growing the
20:12valuation of the company and so there's
20:17another thing another thing they did is
20:18they did not care for earnings
20:22projections or forecasts or matching
20:25analysts projections for for the
20:28company's earnings instead what they did
20:31is they just reported the numbers as
20:34they were and they told investors
20:36through their letters to shareholders
20:37which are great to read as well I
20:40recommend reading Warren Buffett's
20:42Berkshire Hathaway leaders to
20:44shareholders all of them it's it's
20:45really good reading and they would tell
20:48they would tell investors through their
20:50leaders sushi holders like we will not
20:53smooth our our our project we will not
20:57smooth our financial results you know if
20:59if the reports if the financials are
21:02spikey when they come through to
21:05corporate they will be spiky when
21:07they're delivered to you because what a
21:09lot of companies do is they will they
21:12look at what analysts are forecasting
21:14for their company and then they're so
21:16obsessed about keeping up this public
21:18appearance with analysts that they will
21:20then manipulate their numbers so that
21:23they're on par with what analysts
21:26forecast for them because they believe
21:28and this is delusional but honestly this
21:30is what most public company CEOs do they
21:34believe that the way that their company
21:37is going to be worth more is if they
21:40continue to match analysts forecasts for
21:43their company which is so stupid
21:47right like these people they've become
21:50so obsessed with what the public thinks
21:52of them that they're willing to make
21:55manipulate their numbers just so that
21:58the public thinks good of them and then
22:01they think that if the public thinks
22:02good of them then their company will be
22:05worth more money which is totally messed
22:08up you know if you're running a company
22:10based on public perception it's you're
22:13just you're you're
22:15you've got a ticking time bomb in your
22:16hands you know at the end of the day the
22:20only thing that really matters is value
22:23and you can fool people for a short
22:25period of time through perception right
22:28but over time that perception will fade
22:32away and people will always weigh you
22:34based on value and so what good CEOs do
22:38is they focus on value and they ignore
22:40perception because they know that if the
22:44public just doesn't think that they're
22:46very good at the moment it doesn't
22:48matter because they'll eventually find
22:50out that they are good all right in a
22:52classic case of this is Amazon you know
22:56if you look at Amazon's
22:57early history as a public company back
23:00when did when did Amazon IPO 1997 so if
23:05you look back at Amazon in its early
23:07years 1997 to 2000 you'll see that you
23:11know the public markets absolutely hated
23:14them the public markets thought Amazon
23:17was a scam
23:18there was actually websites out there
23:20that said like Amazon is a scam calm and
23:23they all thought that Amazon was just a
23:27stupid business in a scam and they
23:30thought that Jeff Bezos was an idiot
23:33because he didn't want to make profits
23:35in his business and this is again what
23:38I'm telling you about
23:39you know Outsiders unconventional
23:42thinking and unconventional CEOs you
23:45know Bezos took a different view to
23:47things he thought making profit was
23:49inefficient and instead he seeked to to
23:53grow the size of his company because he
23:57knew that if he could take the market
23:59and have massive growth that in the long
24:02term he could then make massive profits
24:06but that would mean it in the short term
24:08he would have to sacrifice profits and
24:12investors back in the times when he was
24:14pulling the strategy they couldn't wrap
24:17their heads around it you know back then
24:18investors they were just the only thing
24:21they knew was profits so in Amazon
24:23didn't deliver any profits they thought
24:25it was a scam but just
24:28got what how much money you would have
24:29right now if you invested in Amazon back
24:32in 1997 and you still had that stock
24:35today and just imagine how the people
24:39who called Amazon scam and who called
24:43Jeff Bezos an idiot will be feeling
24:46right now looking at the numbers right
24:49and this is what I mean you've got to be
24:51you know if you want to be really
24:53successful in business you have to be
24:56willing to go against the crowd and you
24:59have to be willing to really analyze
25:01things you know look at the data break
25:04things down to their first principles
25:07and analyze them and really question
25:10everything ask why about everything and
25:13then determine the right way that you
25:16think it should be done and if you do
25:19this correctly you will find that pretty
25:22much the way that everyone is doing
25:24everything is wrong and what I mean by
25:28that is that pretty much the popular
25:31common fashionable ways of running a
25:33business and doing anything they're
25:36wrong and if you don't believe me just
25:38go and read this book or go and study
25:43any of the most successful companies or
25:46the most successful entrepreneurs of all
25:49time and you'll see what I'm talking
25:51about and if you want some classic
25:53examples well you can read The Outsiders
25:56but you can also read Amazon's
26:00letters to shareholders from 1997
26:02through to 2017
26:04all right I'll include that PDF beneath
26:06in the resources also I'll include
26:11Warren Buffett's Berkshire Hathaway
26:13letters to shareholders I'll include all
26:14of them as one PDF below and also you
26:17should read Google's letters to
26:19shareholders they I P owed in I can't
26:24remember the exact date but I think it's
26:25around 2004 they opioid and so I'll
26:28include 2004 all the way through till
26:312017 so I'll compile them into single
26:35PDFs and you can download them beneath
26:37in the resources section read those
26:39letters to shareholders from those three
26:42companies you know that's Warren Buffett
26:44Berkshire Hathaway
26:45that's Jeff Bezos or Simmons on and
26:48Larry Page and Sergey Brin at Google
26:51right so we're looking at three pretty
26:54good companies Google Berkshire and
26:57Amazon and we're also looking at eight
27:01other unconventional CEOs and if you
27:04read this book and study those things
27:06you'll see what I'm talking about you
27:08can also look into Elon Musk and there's
27:12a great book written about him I think
27:14it's just called mask and it's written
27:16by a woman there's only like one major
27:19book written about him I'll put the link
27:22to that Elon Musk book beneath this
27:24video to read all of these things
27:26they're incredible resources you'll
27:28learn a lot and it'll make you a lot
27:30smarter and a lot better businessman or
27:32businesswoman but you'll find that all
27:36of these people are unconventional all
27:39of them go against the crowd all of them
27:42do things differently
27:44all of them are Outsiders all of them
27:46were ridiculed in the early stages right
27:51so the thing about being different and
27:53the thing about being unconventional an
27:57idiosyncratic
27:57is that you're going to piss some people
27:59off you're going when you you know it's
28:02like imagine I'll give you an example
28:04imagine if you went into a church filled
28:07with avid believers right and you just
28:11started saying things like you know the
28:14church like God doesn't exist or things
28:17like this right if you walked in there
28:19and started saying that to those people
28:20you're gonna you're gonna that you're
28:22gonna cause a ruckus in absolute ruckus
28:24you might even get killed right
28:27and so when you quit when you go against
28:31someone's firm beliefs you're going to
28:33cause some drama and so that is why like
28:37a lot of these people Bezos goggle
28:41Buffett and all of these CEOs in this
28:44book they caused ruckuses but they
28:48didn't cause them on purpose they caused
28:50them because they did their own analysis
28:53and they found that the way to do things
28:54was
28:55print than the way everyone else was
28:56doing it and they didn't really care
28:59about what they thought because they had
29:02so much conviction in their own analysis
29:04and they just did it anyway and this is
29:08another thing you've got to learn as an
29:09entrepreneur like when you have
29:11conviction about something and you've
29:13got good data that backs it up and you
29:15do it you're going to piss some people
29:18off people are going to ridicule you but
29:20you cannot back down
29:23you can't waver you have to stay on that
29:25path and see it through to the end and
29:27often it takes years and then eventually
29:31everyone realizes that you were right
29:33and they were like oh he got that
29:36right just like the people who thought
29:39Bezos was an idiot and that Emma's on
29:41was a scam and then you know now he's
29:44the richest guy in the world and Amazon
29:46is like one of the largest companies in
29:47the world and it actually had a
29:50valuation of a trillion dollars recently
29:52so that's what happens that's what
29:56happens by being unconventional now it's
29:59not just a better make this point to
30:02being unconventional for the sake of
30:04being unconventional is stupid right so
30:07if you just see the way everyone's doing
30:08something and then you just decide I'm
30:10going to do something differently like
30:11that's that's not a good reason to do it
30:13like what you've got to do is you've got
30:16to do your analysis find out the way
30:19that you believe is best and if the way
30:22that it you believe is best is the way
30:24that everyone else believes is best you
30:27still do it anyway
30:27right like myself and the guys in these
30:31books like they didn't if the way that
30:35they believed was true was the way
30:37everyone else believed was true so just
30:39do it anyway they didn't care they
30:40weren't trying to be unconventional an
30:43idiosyncratic
30:44but if the way they found was true was
30:48not the way everyone else believed was
30:49true they just did it anyway and so
30:52you've got to actually have some
30:53evidence and grounding in your decision
30:56to to do what your going to do but if
30:59it's not conventional don't worry about
31:01it and you've got to be willing to take
31:03the heat and take the ridicule for doing
31:07it anyway that's an
31:09important thing and an important message
31:11that I would tell most entrepreneurs
31:13because I see a lot of people try to do
31:14things differently in the and then they
31:16get they get like ridiculed or
31:19criticized and then they back down or
31:21they change their ways and they just
31:23retreat back to the standard way of
31:24doing things you can't do this you have
31:27to stay on the path so that's it for
31:31this video I just wanted to tell you why
31:34Outsiders always win get this book buy
31:38it links beneath this video on the
31:40resources as well as the Elon Musk book
31:43and those three letters to shareholders
31:46these are incredible pieces of content I
31:49really recommend books and resources and
31:53things and so if I do they're ones that
31:57I've personally read and probably read
31:59more than three times so go grab them
32:02and if you liked this video just click
32:05that like button and also let me know
32:08what you thought in the comments section
32:09below and also if you like this video
32:13just click that subscribe button
32:14subscribe to my channel on YouTube and I
32:17release a video like this a new blog
32:20video about once per week as well as
32:22customer interviews and other resources
32:25so that's it for this video thanks for
32:27watching and I look forward to seeing
32:28you in the next one soon