you've ever heard the name Jamie Dimon
the CEO of JPMorgan all right so you
already like ahead of where I thought
you'd be let's talk about Rockstar CEOs
I think one of the biggest
misconceptions amongst investors is that
popular CEOs or CEOs with name brand
recognition are going to deliver the
most upside the shareholders and in fact
often it works in the opposite way
this guy's gonna attack the SEC how
about removing it for a CEO to have
reached a certain level of acclaim
that's probably because they've already
grown a business to the point where
everyone's heard of them usually the
bigger gains are going to come from a
CEO that no one's ever heard of before
someone who's working far away from the
limelight and slowly building up the
type of company that's going to
contribute to huge shareholder wealth
when people think about CEOs they think
about people like Steve Jobs or Bill
Gates or Jeff Bezos people that are
changing the world and while that can
lead to a lot of shareholder return it's
not always the case that those are going
to be the best performing companies
Microsoft is a great example sure they
changed the world and then for ten years
the share price did nothing in the
meantime tons of nameless faceless
people came along started companies and
drove up massive share price gains
here's the thing with Steve Jobs there's
no question he was a visionary but
there's also no question that his first
time running Apple didn't end with
fireworks and roses and actually he had
to be excommunicated from the company
before he would then make a comeback and
change the world all over again
I'm pretty committed to this and seeing
Apple turn around the company I mean I
started the company with Steve Wozniak
in my parent's garage you know 20 years
ago and over 22 years ago
and so there's a definite place in my
heart for this when Steve Jobs died in
the fall of 2011 Apple had a market
capitalization of about 300 billion
since Tim Cook took over for Steve Jobs
Apple's market value more than tripled
from 300 billion up to about a trillion
dollars at its peak nobody would say
that Tim Cook is more important to
apples growth and apples innovation than
Steve Jobs so it's very tough to judge
how much of a visionary the CEO is and
then say that that's going to have some
major impact on a chair price as Apple
has grown its iPhone sales around the
world its services business its watch
all of the things that Apple does it's
obvious that Tim Cook as the CEO is
still benefitting from the legacy that
Steve Jobs built while he was alive
while he was running the company but
despite this the growth and market cap
in both percentage terms and dollar
terms under Tim Cook has been absolutely
extraordinary so where does Steve Jobs
end and Tim Cook begin I don't know that
there's a quantitative answer to that
question sometimes you can have the same
company but all it needs is a change at
the top Microsoft is a great example
under Steve Ballmer earnings grew but
the share price didn't for a very long
time Satya Nadella comes in as CEO and
yes there was some change in the
fundamentals of the company but
valuation exploded Wall Street loved the
new story the new CEO and the areas of
expertise that he was bringing to the
top job so I walked around New York
where Jamie Dimon is a celebrity see how
many people would recognize his name or
Warren Buffett's name and how few people
would have any idea who's running
MasterCard who's running visa
who's running square or PayPal or some
of the fastest growing best performing
financial stocks have you ever heard the
name Warren Buffett
never have you ever heard the name
Warren Buffett do you know what that is
okay who is that
Berkshire Berkshire Hathaway alright I
know you knew that do you know who the
CEO of square is okay no idea the CEO do
you know who the CEO is of MasterCard
PayPal square not a not a lot of people
know these either in recent years one of
the most famous CEOs has also become one
of the most notorious names in the news
and not always for a great reason
Elon Musk is the founder and CEO of
Tesla Motors Tesla had made shareholders
a lot of money and then over the last
few years there's been a stole in the
share price a lot of controversy tweets
that the regulators have taken issue
with a lot of statements that had had to
have been walked back do you think you
can work this out with the FCC over the
next two weeks so while a lot of people
are aware of Elon Musk that hasn't
necessarily been great for stockholders
oftentimes when a CEO becomes synonymous
with their company if the CEO has a
scandal the company won't escape and
vice versa
we've seen examples of this phenomenon
over the years and it rarely ends well
for investors the CEO of WorldCom had a
scandal involving borrowing money from
the company and that company no longer
exists in the modern era many technology
companies have figured out a way to have
their cake and eat it too they get to be
public companies with all of the market
capitalization benefits that exist they
can use their shares as currency to make
acquisitions to pay highly valued
employees but they don't give up any
votes Facebook is in a situation where
Mark Zuckerberg controls approximately
60% of all the voting rights of Facebook
so you have a choice you can invest in
the company but you're investing in what
Mark Zuckerberg wants to do that can
work in your favor or against your favor
and if there is a major scandal it's
hard to disassociate one from the other
the types of CEOs who end up on the news
or in
mainstream media or on the cover of
magazines are usually the people who
have grown revenues the fastest or who
have innovated the most or who have
changed the world with their inventions
or have made huge mergers and
acquisitions happen but in reality the
CEOs who deserve the most credit are the
ones who grow share price and build the
most shareholder value so I turned to a
book called The Outsiders by William
Thorndike that looks at eight of the
most unconventional CEOs and the biggest
money makers for shareholders of all
time mr. Thorndike wanted to take a look
at these companies and these CEOs and
find the common characteristics what
they did that was correct and what they
avoided doing that a lot of more popular
CEOs perhaps spend too much time with in
the Outsiders he looks at the CEO of
Berkshire Hathaway which we all know is
Warren Buffett but then also her his
protege he looks at Catherine Graham
from the Washington Post and one of the
major things that stands out about the
CEOs who are mentioned in The Outsiders
is how little attention they pay to Wall
Street analysts the mainstream media or
the business press these are people who
do not do quarterly conference calls
these are people who do not seek out
interviews or attention or publicity of
any kind when Catherine Graham's husband
passed away there were very few
observers of the Washington Post who
would have thought that she would be the
one to lead the company going forward
especially given the fact that the
Washington Post company was in the midst
of working on an IPO to bring the shares
public Katherine Graham was more of a
socialite and much less of a
businessperson at the time this transfer
happened but in the end she managed to
find the right mentor to help her make
the big decisions to make Washington
Post not only a well-regarded newspaper
but a fabulously profitable and
successful business as an investor
you're not necessarily looking for
famous name-brand CEOs what you're
looking for are people who have a very
strong sense of capital allocation what
to do with the free cash flow the
company
generates and if they become famous in
the process that's not so terrible
invest in you ready set grow CNBC and
acorns
