2023-05-02. What Succession Gets Wrong

Rich, do you have any go-to TV shows?

Yes.

What are you watching these days?

Well, I'm watching what everyone else is watching. I watch succession.

Oh, me too. It's, frankly, it's the only thing I watch that isn't something I watch with the kids. Right. Like it's, I, I'm just a little tuned out right now and I didn't want to get into that show cuz it's annoying and predictable to get into that show.

I know you don't like to go where the masses are going. Even though like if you look at the viewership, it's like 800,000. It's actually small.

It really is. They all live in this neighborhood

They all live in this neighborhood. We're in Brooklyn. Um, yeah. So, uh, anti spoiler alert. Don't worry about it. There will be no spoilers here. We're going meta

meta.

just to frame it for everyone, Paul, take 30 seconds and tell everyone who doesn't watch succession. What succession's about. We're gonna try to make this entertaining for everybody.

succession is about, um, essentially it's about Rupert Murdoch. It's about, uh, a, a man who founded and built a huge media and entertainment empire, uh, and owns a sort of proxy, Fox News and his, he's worth billions and billions of dollars, which means his children are too. And his children would like to take over the company, but they show a lot of signs of being spoiled, rich, self-indulgent, narcissistic, goon balls, and he himself is an absolutely nefarious, manipulative monster human.

yes.

So it's very, it's very watchable and it gets a lot

classically

Oh yeah. There's good town on this show. And there's also, um, it gets a lot right about the vibes of the media industry. They go to places that are, you know, they go to conferences that look like the weird Aspen type of conferences that media people like to

They're on plane, private planes and boats a lot.

So it's, it's definitely you get to watch. There's a great, um, somebody, I, I won't go too far into this, but somebody wants to ask the novelist Henry James, you know, like, why do you only write about rich people when he's sort of like, what, what you, what do you want to see? Right?

yeah,

that's, and actually his point, which I think is a really good one, is,

I

I wanted to understand in my novels the behavior of human beings unconstrained by their material circumstances. Yes. What is the human when they have absolutely no barriers to living any life they want. Yes. And that is what succession shows you that like it's a point of view on that like, These humans can and all, they all want father's love. That's the thesis of the show,

which is also very Shakespearean.

Yes, that's right. Like, I can't, they can't let it go. So, but that's not how, when Rich and I watch the show, what, what do you see when you watch the show, rich?

I may see, I mean, I've been in business

over 500 years.

I've also visited very big, like I've, I've lived inside of like, probably one of the most revered investment banks in the world. I've lived inside of the largest transportation agency in the world. I've, so I've, I've been places. I don't, I'm not gonna sit here and advertise that I, I, I, you know, have been. In the control room, but I see a lot of these worlds. I also, based on our past history, have dealt with a lot of lawyers and accountants.

Yeah. And I mean, and we have spent time with what I would call, what are, you know, the banks referred to as, uh, NWS or ultra high net worth individuals and.

bunch of those have been our clients, so, So what does succession get wrong? It's a bit of a caricature of a lot of that world.

does. So we're

but they're entertaining us. I'm not, this isn't, by the way, we're gonna talk about what

we love succession, we love it. But we're gonna talk about three things that it gets completely

All right. Go Paul. I'm

I'm gonna tell you number one. Number one is I watch this show and it gets a lot right about like the spaces, like they, they shoot in Hudson Yards in New York City, which is like this very bleak like mall style apartments, where in just all the. The very, very wealthy communicate through furniture cuz they're no longer able to use words or feelings. And so like, so there's a lot of that, right? But as you're looking, there's all these empty spaces and they're talking and they're doing deals.

all ways. So let's describe

it. So, so here's the thing. You are a giant. Media company,

You

you can only make so many decisions with the people at hand. You're the people who work there are supposed to run the company. Yes. But now you need new things. You need to know, should I buy Pierce the big, uh, publishing firm? Should I, um, go into the internet? Should I do whatever? Yeah.

Yeah. And if you decide yes, then the process of buying causes a swarm of consultants, lawyers, bankers.

But even before we get there, somebody needs to create a PowerPoint to present to you why you should go into Industry X, or why you should sell off the cruise ship division. Right. So we even even gotten to execution. Typically, there would be like a thousand humans swarming in suits. Yeah. From different consulting firms all trying to screw each other

Everywhere we've seen it, we've seen it with clients where we were one of the agencies, and there'd be like a dozen others.

You'd be, you'd be walking in and then like Deloitte would be walking out. Right. And so there is a world of PowerPoint. And, and Excel documents that is just simply not represented on the show. Like all these things where they're fighting and talking on, on a boat would actually be captured in PowerPoint and Excel meetings that ran for three and a half

Yeah. I just, you know, maybe that's cutting room floor stuff like HBO's, like, guys,

do it. What they did is

can't do 20 minutes of PowerPoint. What

they did is they have filmed four seasons of offsites, essentially like, you know, when, when everybody goes and talks and really gets it all out on the table. Yeah. Yeah. The other 99% of the work happens in, in, in in bad decks. Yeah. That are just like, um, you know, 2025 vision cruise ships, you know,

they're not gonna cut to a scene. It's like, did you see the fees

Exactly. Tom Wosk is like the perfect consulting client actually. Yeah. Because Tom can't make a decision for himself in any way. He's just constantly terrified and vulnerable. There

are a lot of people in leadership who have consultants.

Tom would have a team of 20 people creating decks for him that he, hundred percent that he can then run back to the family. Yeah. And the family has to sit there and watch presentations and, and decks that have been created that are presented by senior leadership, but created by, by consultants. So when you're watching it, for me, there's this enormous vacuum of the actual incredibly boring way. They want to make capitalism exciting,

experience and they want to make it trivial and emotional. Yes. Uh, and meanwhile, when a decision gets made, we've been there.

It is. It can start trivial and emotional, but then what happens

trivial cuz people are like, I like you, I will buy you.

Yeah.

And they're like, he loves me. That's great. And then the slog kicks in of like due diligence.

So, so let me set you up here. Right. So the consultants have been swarming and swarming and they're, they're billing and they're doing good. They have nice houses. They're, you know, they have large apartments. Not as nice as the people on, on succession, but Nice. And then it's time for a company to buy another company.

And it's a whole, a whole world kicks

in and now the real money gets made cuz there's a transaction, a giant transaction's gonna happen and a percentage of that transaction is gonna go to bankers, consultants, and lawyers. And this is where the actual like sharks show up everybody else's amateur

Absolutely.

And so, yeah, so, so

and it's brutal. It is

buying things on succession. What, when you look at that, what do you think is missing?

I mean, uh uh, we used to get called in to do technical due diligence on stuff that was being bought. Stuff that was being bought for hundreds of millions of

So how long does that take?

It could take months. Yes. It could take months. And it's a grueling

exhausting. You're looking at code bases. Okay. How big is technical due diligence as part of the overall transaction?

actually small,

So, so think like hundreds of people looking with a dental pick and,

And, and, and what, what is ironic about that, or counterintuitive maybe is the better word, is that both parties want to get to close, they want to finish the deal, right? But you have this other set of parties, accountants, lawyers, not bankers. Bankers are incentive to close cause

That's right. Cuz they, they get the active percentage. They're not billing hourly. They actually, they want the biggest payday possible. That's

right. That's right. And so there's consultants that come in the mix that the thicker the deck, the thicker the binder for the deal, the more they get to bill you. And so all of that, that sort of love letter that started the whole thing is way off in the rear view mirror at

And the really big ones, you've also got government,

and you might have government and you might have to get

I mean, if, if you told me that a thousand or 2000 people touch a major transaction like that, I would be like, yeah, of

A hundred percent. A hundred percent. And, and, and

so I mean, let's play it through like, you've got, you, what do you hire? So you've, we're back to consultants actually. Why? I'm about to buy a company. Mm-hmm. I'm gonna hire McKinzie. The, the bluest blooded of all the

blue. I need to validate. I need to validate that the revenue they got is real. Mm-hmm. They're not lying.

Mm-hmm.

So I'm gonna have armies of lawyers look at every single contract they've ever signed. I'm gonna have armies of accountants look at accounts receivable. Check their, their bank accounts, the amount of money owed outstanding.

Look, you and I sold a company. We had things real buttoned up. We had HR and accounting in from day zero, and it was like, do you have receipts from that coffee you bought seven years ago?

You feel like a failure.

Oh, it's so bad.

What

Versions of every contract is there. You know, they,

What made me feel good

that never existed and then demand them.

absolutely. And, and what made me feel good was when the bankers would tell us, you guys are actually pretty

Yeah,

we've seen way worse. Right. And that makes you feel

So we were a little baby company in the little baby woods. Imagine a like 6 billion. I'm gonna buy a media firm. So, so when it's like we're gonna go buy whatever, yeah, that's a complete, and we're gonna go have like dinner with the families and Bubba, they

They are capturing, I think, the spirit of the handshake,

The first, they're getting that first 2%. Yeah. But then there's a slog, 98% slog. That actually completely changes the nature of the organization cuz everybody's aware of it. It leaks out.

It's, it's, it's, and it's, it's not romantic at all.

No

Closing is

you know what it is.

final day. You get like, oh, we're done.

If you've ever bought a house and you get, you fall in love with the house, you're like, I can't wait to move in there. Yeah. And now come, you know, the seller broker, the buyer broker closing. Yeah. And they're like, you know, uh, you said, and then it's did, you said that you were gonna install those lamps,

Yeah. All of it. Yeah.

Okay, so one was no army of consultants. Two is m and a is seen as like a casual family process instead of an excruciating accounting nightmare with lawyers involved. What's number

good that we're not the producers of this show. It would've been really boring. Absolutely.

the worst and least watchable program. It would be, it'd be like watching spreadsheet it. It's like

episode four accounting,

It is. It'd be like watching Excel influencers.

Yeah, exactly.

But this is excellent. Let me just like as a metapoint. The absence of Microsoft Word, PowerPoint and Excel as stars of the show is, is actually really problematic to me. Like, like Microsoft should have been in there.

Not even that. There's nobody even turning to anyone saying, did you put the Dropbox link in or do you have the file? Nobody, I've never seen a USB stick get handed over,

No. They did pee on a, on a phone once cuz the app was bad.

Oh, right, right, right, right. That

So that was at least, but but even there, that's not accurate credit

to them. It's all entertainment

I've never seen anyone urinate on a device to, to demonstrate the quality of an app. May, maybe it happens. All right. What, what's your third?

The third is a little more on the human side. We're sitting here flexing our consulting backgrounds. Um, on the human side is, um, you've got, essentially the structure of the show is a bunch of kids are fighting for power and ownership of this conglomerate because

Mm-hmm. He's

the founder, the old man, Logan, is older and wants to step down, and he's watching these kids just sort of, Pull on his pant leg and say, Hey, I'm the smartest one. And it's so casual. And if you look at actual succession, um, founders love their thing more than their children.

It's true. They wouldn't express it that way, but they'd be like, these are two separate worlds. And I would love to see it line up cuz I love my son or daughter,

But it is them. It is an ex, it is a form. What people don't realize is companies that are founded that reach a ton of success are literally a form of expression of the founder. Companies succeed is because people become obsessive about them and it becomes the ultimate judgment of themselves, right? As leaders and as founders and whatnot.

for,

how, how? Short, everyone is falling in terms of internalizing what the thing is. It's always like, you're not even serious. Like you're not even legitimate here. And what he's really saying is like, not that you're dumb, it's just that you'll never get it. You'll never

there's a lot of conversation about like, he's just not a killer.

it's not a killer. And you just, you know, this is, you think this is a toy? Like, and it, and what that is, is that person A, not wanting to let go. People don't want to

Well, one thing they get right about the, the, the character I think is that it's not just a he, he can't let go because it all came outta him.

him. He can't,

and, and for him, they go back to his like, crappy Scottish childhood at one point. Yeah. It's not really a spoiler. Right. And he's just like, you know, looking at, at that part of his past and you can see like everything that he built comes out of that crappy little house. And his kids have been born on helicopters. Yeah. And so the con, there are no consequences for him. Everything is a profound consequence. I think they get that part right.

right. I think they get that part right, I think. But I think what they get wrong is, is, I mean, the kids are like dodo birds. Like it's a really comical, like they're smart, they're bright kids, but then nobody's doing any of the work. Everybody's looking for the big shortcut. And the truth is legit founders would never let

Well, let's

they're not gonna let that happen.

happen. You and I are co-founders. We have very little interest in raising our children into our companies. That's not really our goal. I mean, if they want, if they're interested in it. But, but let's be that for a minute. Let's actually, so Rich, you and I, uh, we have this company aboard, it's the sponsor of this podcast. Let's say it, let's say all of our dreams come true and it's a giant internet platform that everybody loves. And now we're planning a, a next. Generation.

25 years of apprenticeship?

of all, you gotta go get an mba. Or or equivalent or go be a lawyer or go like, you have all the resources in the world and so you better go get a fundamental professional grounding. Yeah. Right. So there's that. Like you're not, you know, like you can't be COO of this company unless you are also a lawyer.

yeah. I mean, look, succession is, is painting this as like a quasi monarchy, right? Like that's the whole point. Which is like, wait, I was born into this. Obviously

but there's no way. There's no way that Logan, as a character would risk the foundation of his company by putting Roman in his c o o if this was real life. Because unless the kids that succeed in these worlds are the ones who essentially get over credentialed, they think they're gonna earn their parents love. It's still pathological. Yeah,

Yeah, yeah, yeah.

but like they get over credentialed so that they are, they don't have to prove themselves every day in the role because otherwise everyone is just like, you're a joke. I'm gonna, and everybody,

that too. That's a terrible thing. Right.

Well, there's a fun, there's a fantasy of imperial power inside of organizations. And yes, if you're the founder and you created all the money and you are just an absolute monster, you can have imperial power. But the kids coming in, what they don't show, those kids get dropped in. They kind of get air dropped into these rolls throughout the seasons. No one would take them seriously at all. It wouldn't just be like they'd undermine them. They would just ignore them completely.

Yeah. Or or, yeah. En route around them

and they would be, and that doesn't happen actually. They get into these roles and then suddenly the CEO is like, all right, I'm gonna partner with you. And so it wouldn't even happen. She'd be like, all right, I'm gonna create a basically a play pen for

it's not that exciting. It's not a soap opera at all. It's actually pretty boring. And,

this is the thing, like Roman is a character his entire life would be looking at spreadsheets.

you'd have to pay those dues,

right? Yeah.

And, and, and you do, you pay those dues because for two reasons. One, you want to get it right, and two, you also don't like, it's a horrible feeling to feel like you just took a shortcut and like cut the line and nobody respects you, right? Like for, you know, here it's ruthless,

Well, but let's also be clear like, Those roles are important and they result in billions of dollars of transactions happening around them. And so there's no, and if you put incompetent people into those roles who don't execute, you do material damage to the company and the shareholders get upset.

maybe

Roman alone would've resulted in like a horrible Andrew Sorkin profile in which the whole of the company loses about 20 billion in shareholder value. At which point he's not on the chessboard anymore, right. He goes home, he goes back to like some big apartment. So, so there's like a fundamental mismatch between.

It's funny, and I want to close it with this observation about how organizations strangely optimize for the best leadership automatically. Almost. Um, you know, there's the classic mail room store. I started in the mail room and I became ceo, right? And what that is, is, is very anti-political in nature. And that is because the organization. You would think would have mechanisms that measure success and performance, right? Like I'm, I'm, I'm a great sales leader regionally.

a little politics, but mostly merit.

Mostly merit because people all are on the same ship and want to see it do well.

that's the theoretical narrative

That's the theoretical. No, no. There's some that don't do that. Yeah. And they suffer. Right. Um, there's the really slick interview of the new leader who's supposed to come in and turn it around and they, and they fail within six months. Right. But a lot of times, organizations as sort of these like

com

compositional organisms of that are. That have a, an immune system that sort of rejects people that like, okay, you get three strikes and then you're not gonna have that much responsibility. You're hurting the whole thing. Right.

Here's the thing, you could never have that much objectively, that much drama at the top of an organization and have, and not pay a tremendous material price. It filters down

and, and, and when people start to feel the ground shaking, it sort of rejects. The host rejects the, the, the virus like it, it'll get rid of it. It'll, it'll marginalize it. If it's the kid, they'll get like some island roll, like just overseeing some fringe thing that can't do more damage if it's the kid of the o of the founder or whatever. But the organism. The organism, and I say organism cuz it is kind of like one, right? It's sort of like an immune system.

I always think of the body rejecting the transplant, right? Like if, if you get a new kidney or a new liver, the body might go like, I don't want it.

yeah, that's right. That's right. And, and you know, can you have bold innovation and whatnot coming from the descendants? I, I, I don't know. I don't know if Hershey Park was the idea of the founder or the idea of the kid or the founder. I think the founder had no kids, if I'm not

Um, well, you know, that's an interesting thing that you bring up. I'm about to. We're just gonna have a digression right now cuz you can't bring that up and I don't have this digression.

well kick. Tee up the next podcast.

So, um, Hershey, the Hersh

loves chocolate.

I know the Hershey Chocolate Company really well because I went to the boarding school created by the founder of Hershey Chocolate. Her, um, Milton Hurt Milton Snavely Hershey,

Mm-hmm.

uh, could not conceive with his wife Fanny.

or

Or Franny, I can't remember. But, uh, they instead founded a school for children of limited means.

And you went to that school at

point, orphaned and then it was later expanded.

This is, I know, I know this. I'm aware of this, and I think this is a wonderful topic about what you learned in that experience.

know, we could talk about that. That'd be interesting.

See now look, we, we, we took, we went from succession, which is kind of gross, all the way to wholesome chocolate bars.

Yeah, well that part's a little tricky, but yes, we could talk about that. Anyway, so succession, we're gonna continue watching it. This is the last season.

Last

It's the on

are sad. It's

the only, uh, TV show I'm kind of committed to, frankly. Yeah. And, uh, I'm curious to see how they wind it up. It's been a hell of a hell of a ride so far. I haven't seen the last couple

look, this sounds like criticism, but it's a very entertaining

Oh no, it's

just delicious umami in your face.

I, I have a high tolerance for boredom. Everything we just described, I don't think I need to see it in a TV show.

Exactly. Exactly. Um, who is this podcast sponsored by?

Rich. I'm so glad you asked. If you go to a board.com, you'll see a, uh, a little website. We're now in, um, late, oh no, it's May, it's May. We're in May, uh, 2023. When you listen to this, Go sign up and give us your email. A board is a tool for managing all kinds of things in your life, but especially the things that you see on the web, the products you wanna buy, the articles you want to read, um, it puts them in, it makes it really easy to import them and put them into a beautiful format.

It is marketing. That's okay. Marketing's

Yeah. Is it, it's okay.

aboard.com. Sign up and, uh, spread the word about the podcast. I'm Rich Ziti.

I'm Paul Ford.

This is Ziti and Ford Advisors. Uh, follow us at Zzi Ford on Twitter and ziti ford.com. Thanks everybody. Have a lovely week.

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