I am the first prominent Jew to give public business advice. What is the connection?
Let's start with my background in banking. I knew from my seven years in banking that banks have little to do with business. Banks lend only to sure things. They prefer to lend on a gold mine in a secure stable country. The mine can’t be moved and has a gigantic market. Everything else is less appealing and is measured by the certainty of repayment within a year. That is banking; most people never get the chance to learn that.
U.S. government loans to businesses are irrelevant (SBA). No real entrepreneur has the patience to do the paperwork.
Loans to small businesses and new businesses come from family, friends and from my experience in Japan loans also come from suppliers and landlords.
People who start businesses are known and appreciated by the people personally close to them. Several clients, after a few years in business, have said to me ‘Does it ever get any easier? Ten new problems everyday?’ My answer “No. If you don't like it, quit and become an employee.”
My first client was a bar-restaurant. I looked at the successful ones I knew in San Francisco and observed that they all opened with big crowds of friends for the first few months. Word of mouth was the only issue. Booze was generous at the openings. That was the advice I gave. The three owners were already supplying meals to airlines and knew how to run a profitable kitchen. That client took my advice and went on to open a chain of 80 locations.
In San Francisco, I already had a reputation as a banker and founder of MasterCard when I opened an office to help small businesses in 1971. The first day 12 clients arrived at the same time and I realized that they could help each other. They were hippies and loved the freedom that small business offered. They were open-kind of people and were each part of a generous community.
That set the groundwork for my future success in giving advice. Of my first 600 clients, 80% were still in business five years after opening. That compared to the traditional business norm of 2 out of 3 failures in the first 3 years. Orders of magnitude of difference.
The core of my advice was always built around community. Look at the headline of this blog. Meritocracy, diversity and openness; these are necessary to create a community, these are what make businesses work. Nepotism, favoritism and tribalism just don’t work for business in America.
That understanding comes from my Jewish tradition. Torah, the core Jewish sacred text, is a document that is open to community interpretation and debate. The debate has gone on for 2,000 years and is called the Talmud. Orthodox Jews (all Jews before 1850) read all the debates of that 2,000 years and learned the logic of debate: clear innovative thinking, lived experience, community and openness.
My book (with Rasberry) Marketing Without Advertising is based on the direct observation of over a thousand client businesses where I saw the financial books. It is empirical. Like technology. The book sold more copies than all but two other non-academic books on marketing in English; nearly half a million copies over 6 editions in 20 years. Look at the glowing comments on the Amazon book page from every reliable business media source.
Because the core of my advice came from my experience with hippies, I was able to see that the key factor in success was their love of business. Their motive for getting up and going to work every day was their love of business and their sense of responsibility to their community, to their employees, to their friends and to their customers. A little different from Adam Smith’s views 250 years ago.
I saw clearly that 90% of building a successful business was cooperation, not competition. Cooperation with suppliers, workers, customers and everyone on whom the business depends. Cooperation is built on openness and the concomitant trust.
I also wrote an earlier book (with Rasberry) called Honest Business. I learned over a few years that ‘honest’ had too narrow a meaning. Many people are ‘honest’ but that alone doesn't generate trust. ‘Openness’ was the correct broader term when discussing commerce and trust.
Both my parents came from business families. But my father was a rabbi who was not good at business. My mother was the one who transmitted to me the values of candor, clear empirical thinking and trust. Her family were the founders of Ethical Culture, an 1880s German sect of Judaism.
Summary: it has been my Jewish background that values (1) clear empirically based thinking and (2) the centrality of community. Together they create the trust that underlies successful commerce. This view has made my business advice useful. Commerce is based on cooperation which is based on trust.