Elon Musk, Risk-Taking, and the Power of High Agency in Business

0:00And the idea of moving on concrete is something I've done my - I just feel like they should allow grown adults to assume the risk. It's like, you know what? They're wet. The concrete's wet. You're a freaking adult. You know what happens on wet concrete. We assume no liability or responsibility if you slip on the... But they're not. They're like, no, no, no. They're shut down. We're shutting them down.

0:28Hey, everybody. Welcome to the Business Lunch Podcast with your hosts, me, Roland Frazier, and Ryan Dice. Ryan, how are you doing today? Exceptionally, awesomely amazing. And how about you? Yeah. I'm doing fantastic. I'm wishing the rain would clear up a little bit so my courts would dry off and I can get into my, uh, my pickleball wonderfulness. But, um, that's why by the way, I'm only, cause my son played tennis and, and, um, I get it. It's slick, but it seems like in every other sport, it's a little bit wet. You know, they're like, go figure it out, go, go play tennis. It's like the slightest bit damp.

1:01And they're like, don't nobody do anything. Yeah. The challenge with tennis is that it's a fuzzy water absorptive ball that they could probably redesign to be playable. Um, but also I think it's very slick. They would have to resurface the courts, um, so that you wouldn't, cause you're running and stopping and sliding. And even on like a dry tennis court, if there's any kind of like sand or anything on it, you're, you're going to slip and water I think would be pretty tough. And then in pickleball, even though it's a wiffle ball, when the ball is wet, um, it definitely affects the bounce. And again, you've got slippage, you know, issues.

1:37I get it. I mean, I just, I've walked on wet concrete. This is not a new concept. Have you run and done really quick stops and starts and moves? I have. Like, again, the idea of moving on concrete is something I've done my, I just feel like they should allow grown adults to assume the risk. It's like, you know what? They're wet. The concrete's wet. You're a freaking adult. You know what happens on wet concrete. we assume no liability or responsibility if you slip on the but they're not they're like no no no they're shut down we're shutting them down yeah we're shutting them down i was actually surprised because when i called this morning i was uh i wasn't thinking that they were closed i was thinking that they were too wet to play and when i ask and she's like you know yeah no they're uh the courts are closed currently i'm like closed what i mean i like i get it on like a golf course if they're overly wet because you can damage, like actually caused it.

2:34But we're talking about concrete and moisture. I think it's a hundred percent liability focused. I really do. I don't know. I think you got adults. I think let me sign something saying that I understand how wetness and concrete functions. Let me go. Let me go give it hell. But anyway, that's just me. That's just me. This is not the subject of our conversation, I'm guessing. The subject of our conversation is going to be, but you know what? It is very authentic to business lunch because you don't just sit down and start talking business without catching up and asking how each other's doing and having some conversations about little things.

3:04So I think it's, so if you guys don't like that, if you don't like that part of our lunch, just skip, you know, hit the fast forward button a couple of times and you'll get to the other stuff. We could be like other podcasts and have like five minutes of ads. Yeah. Right. What I would love to chat about today is I read an article kind of talking about Elon Musk and what he's doing at the Department of Governmental Efficiency, which I just find hilarious that it's Doge. And they were talking about him as in particular, as kind of the flag bearer of a trending topic called high agency people. And that high agency, I think it was first mentioned by somebody on one of Tim Ferriss's podcasts, and it just really caught on.

3:59And so it's showing up in job forums and lists of things or qualities that hirers want, recruiters want from the people that they're hiring for jobs and people that are getting promoted into positions and questions for interviews. And so I thought that it would be fun for us to talk about what is this high agency trend? What do high agency people look like? And how do we use that to help us in business? Is it a good thing? Is it a bad thing? And that's kind of, have you seen anything about high agency? No, yeah, no. I mean, I think I know what it means, but I don't know I know what it means. So define the term for me.

4:46Yeah, it's a really good question because it's not terribly well-defined, but it is generally somebody that takes charge, that does unconventional, outside-the-box things, that's kind of a maverick firebrand, going their own path, everybody else be damned. and just really moving outside of traditionally expected or even mandated behavior. And so like kind of Steve Jobs, entrepreneur, I think it's the successor to disruptor is what it really is. Does that make sense? And the idea is you want these people to work for you? Because I can see the benefit of being this person from an entrepreneurial perspective.

5:46It seems like having an entire team of them sounds a lot like a pirate ship to me. Yeah, it could be. What's kind of your thoughts on that? But at the same time, do you want a slave ship? Do you want a ship full of drones that are just functioning in their jobs, looking at their job description and saying, yep, that's on the list. I'm supposed to do that. No, that's not on the list. Not looking for innovative opportunities, not thinking outside the box, not trying to think about how do I make this better? Why are we doing this? Is this the right way to do things? Um, so it's a, like, it's, it's interesting to me because it's a balance because it's nice to have somebody that questions everything.

6:33And it's nice to have somebody that just does what they're fricking told. Right. And, um, and be careful what you wish for, because yes, if you had a, if you had a company of Elon Musk's, it would be chaos, you know, and they'd all be leaving in a week anyway, to start their own, you know, their own things. So I guess that's the question is, is what really is it? I think is we kind of know, um, what is the level of it that we want is probably the, the more difficult question, right? How, how do we measure it and say, you know, I want to, I want to high five, uh, a high agency person, you know, no, I'm just looking for a, you know, a mid two agency, you know, what, what is the scale?

7:21that defines what we actually want for different jobs, because I don't think you want high agency people in non-leadership roles because you need leaders to lead and you need the followers to follow. And you want the followers to be intelligent and hopefully evolving and contributing, but you really don't want them taking giant risks. The thing that they referred to with Elon, and I thought this was actually cool is it's like everybody laughed at him when he bought Twitter and they're like, you're an idiot. You overpaid for that. It's all the advertisers are going to go away. I just saw a article saying that all the advertisers are coming back now, by the way.

8:05But, but now it's like, well, that put him in every headline and elevated his presence in the media more than, you know, maybe more than a$40 billion spend could have made, maybe not, but certainly from a relevant standpoint, and then ultimately gets him to be besties with the arguably the most powerful human on the planet as the president in this unprecedentedly powerful position that 17 states just filed suit against Doge today because they said it was an unconstitutional delegation of presidential powers. Like that's pretty significant. And I honestly think he's going to turn that thing around and make money.

8:52And it doesn't, uh, it doesn't suck to own what's arguably the most influential news platform, uh, also on the planet. Like, I mean, he also didn't spend 40 billion of his own money. People forget. Yes. He wrote a check for$40 billion cash, Ryan. That's how that works. Yeah. That's an excellent point. I did also read that today, there was a lot of separate publications and separate things, but the banks that funded 13 billion of the acquisition in debt, the article said that the debt was nuclear radioactive. Nobody would touch it. They couldn't peddle it off to anybody. And now I think JP Morgan bought in and now has upped from like 3.3 billion to 4.7 or something.

9:44And now the debt is very, very, very marketable and very, very wanted. And everybody wants it, not just because they believe in the company, but also they believe we should do things that help Elon Musk because we want to be closer to the guy that's close to the guy. So he thinks outside the box. Let's reinvent the way that rockets go into space and reuse them. Let's make electric cars that drive themselves. I mean, that guy is about as out there as you can think, and somehow has managed to succeed with all of it as far as I can tell. So, uh, so it's a pretty, I think it's a pretty good set of things to have, but you are taking a lot of risk when you are going way outside the box like that.

10:30Especially when the comparison is Elon Musk, because you're probably not hiring the next Elon Musk and you're probably not the next Elon Musk. So I think you brought up an interesting point before where I think the question that you asked is, what degree, like on a scale of one to 10, what is the appropriate amount, right? I think that's the magic. I think that's the minimum viable kind of quantity of agency that gets you. And I think that that's I think there's an aspect of it. What it may also be is we need to add another. We basically need to add another layer to this. So if agency is existing on the X axis, we may need to add a Y that is judgment.

11:18Right. Right. And so can we also measure for people who have good versus bad judgment? Because give me somebody with really high agency, a 10 out of 10, but who's also a 10 out of 10 in terms of judgment. And I'm in it all day long. Right. Whereas if somebody has bad judgment, then I want them to be about a zero in terms of agency. Because there are people who have worked for us who do have very bad judgment. Right. But they're really effective. and these are the people who you point and you're like go that way and they just run they like put their head down and they run and there could be a wall there and they'll hit the wall and they'll back up and they'll just keep running to the wall over and over again until eventually that they break through the wall yeah and there is an extent to which that is effective yes and these people can be blunt instruments but they can be effective in certain roles now the second that you take them slightly out of that.

12:15If there's any change whatsoever, it's not as effective. And I don't mean to diminish or degrade the value of these people because they're grinders. And some of them, frankly, some of these folks exist in sales roles where they're making more than a lot of folks who are quote unquote smarter with better judgment. Yeah. Because they just do the freaking thing. Yeah. And they don't try to come up with their own path and create their own scripts and get overly creative. They just do the crap that freaking works that makes the money. Yeah. Right. Right. So I really do think it comes down to judgment.

12:47And so I think if you decide that you want to build a high agency team, you should also, and you want to interview for that and hire for that. You also figure out how you're going to interview and hire for, for good judgment. Yeah. And I don't know how to do that, man. That seems hard. Yeah. I really hard because there, there have been people who I have been shocked because it's not just intellect because you can interview and we have people at executive level, we have them take competency tests, like literal IQ tests that, that they will do that. And they'll, they'll do great on it. But a high IQ does not necessarily equal good judgment.

13:26Good judgment is something that I don't know how to interview for. I don't know how to, how to hire for. And so that's, that's the piece though. It's a good question. I haven't seen a, a judgment measuring tool test or device, but I'm sure there's probably one that's out there. I haven't really looked for it. What, what I was kind of playing around with that I sent to you earlier was that, you know, you could use an acronym power and say, you want somebody that, um, is productive, uh, excuse me, as proactive, somebody that takes ownership, somebody that has will, which is, you know, grit or tenacity, somebody who is comfortable with experimentation and somebody that's resilient that, you know, that will bang into the wall again and again and again.

14:17And that doesn't include judgment, but it does, it's kind of the opposite of the person you don't want, which would be a, you know, a past person, which would be passive, apathetic, stagnant, and submissive. Um, I like that. Like, I guess you're kind of always assuming a level of judgment and then you're giving more and more autonomy and authority to people who demonstrate good judgment in the position you hire them in. Um, because like, if let's say that we're interviewing a portfolio company CEO, um, we're assuming that they come with good judgment and we are relying on their track record of past performance and referrals and recommendations, and then our ability to assess what we believe their judgment is in the interview process.

15:22So I think that's a, I'm going to defer that and say, let's assume that you're just going to have to figure that out and hope that the track record carries that. Yeah. You know, I'll buy that. Like just, just to kind of put a pin, I think that, I think what you said there is important. You can interview for a good judgment because it's going to show up in their past performance. Yeah. Somebody who has succeeded has almost certainly succeeded because they have demonstrated good judgment. Some level. Some level of good judgment. Yeah, they must have done it. Even if they were merely on a good team, like they did a good job, like luck will only take you so far.

16:00You had to have shown some good judgment at some point in time. And you can also interview for it through scenario-based questions. And so throwing a lot of scenario-based questions out during an interview, okay, so this happens. What would you do? Yeah. And that is a key aspect of interviewing, especially when you're talking executive level hires, then that's that's critical. But and I do think you said something earlier and we kind of glossed over it, but I think it's critical at the executive level, leadership level, certainly CEO. though, yeah, I think you want somebody who's a seven plus on the agency level.

16:36Because what I don't want is somebody who's an executive leading a team and certainly leading a company who's low agency. Somebody who's going to come in, it's like, just tell me what to do, boss. No, chief, you're the freaking boss. You tell you what to do and then tell everybody else what to do too. And you make it bigger and you make it better. You got to have high agency. And I think that that's such an important distinction. I love that we're talking about this because I'm, as we're thinking out loud, I'm getting more excited about this concept because I think the mistake that we've made in the past is we have merely promoted effective people into roles, into high, you know, high level roles, but, and they've gotten there because they've been effective because very often they've been low agency, just whatever you tell me drill sergeant, Yes.

17:29Right. And because they've done what we told them to do, they've been effective. But because they don't know how to do anything than what they've been told to do, they don't, they're not able to succeed or expand at the next level. Yeah. And that's when we get frustrated with them. Yeah. And so that's where you need to have people of high agency. Sorry, I'm rambling, but it's because I'm slowly, finally freaking figured out what I think you figured out forever ago. I love that. And I don't, I don't think it's rambling. I think it's great. And I think it's super helpful to anybody that's watching or listening.

18:01Um, what I was going to say is, um, how many jobs did you have before you became an entrepreneur and were your own boss? I know we're looking back here a bit, but I think it'll be helpful. I mean, I, I worked on the family. I was a laborer on the family tree farm. um i worked in retail um in college uh and i worked uh so maybe three ish kind of but i mean i basically started my first company at 19 so yeah not many same here right okay so yeah um so in those jobs uh how well did you succeed or how happy were they with your performance because you did what you were told versus how many challenges did you have because you worked around the system to find better ways to do things yeah i mean i i crushed all of them yeah i mean that's and they all Did you run into frustrated bosses at all?

19:20So setting aside the family piece of it, on the retail side, I would ask a lot of questions and I would come up with ways to make things a little bit better. And my manager was like, hey, cut it out. Just do it the way it's supposed to be done. I remember your Abercrombie stories. Absolutely. You're, you're like, what if I go and talk to the customer and help them? And they're like, no, you need to piss the customer off. And you're like, what if we don't throw away these giant, you know, boards of handsome models that everybody wants to buy and we just sell them, you know, no, we're going to throw them away.

19:56Okay. Can I have them? Yeah. You're going to sell them. And then they're like, Hey, you can't sell them. You know, it's like you to me. And, and cause I had the same thing, like from my very first job, you know, supposedly sweeping the tennis court. courts and then taking my own money and going out and renting a leaf blower and doing it in five minutes and then having the rest of the day to do what I wanted to do and having them pissed at me for doing that because I didn't do it right to being a runner for a legal office who waited and created my own routes that were much more efficient than there.

20:26You need to take this thing here and this over to the other side of town, then go back to here and then back here. And I'd be like, what time does it have to be there by this? Okay, great. This is the route I need. And then I'm done in an hour and a half with something that would take the average bear six, not, you know, it's not, I'm not trying to say that to flex or brag. I'm saying I am not a good employee to do what I am told just historically. I'm going to fight management because I'm going to try to innovate and do it better. And in those positions, for whatever reason, I still, I still think I'm right.

21:00You know, I still think you're right. Um, it's like, well, let's try. I don't think I'm right. I was objectively right, Roland. Okay, me too. I mean, but seriously, it's like, so then it's like, well, maybe I don't understand the bigger goals because I run into friction with my son right now because who may even be on this because I'm like, we need to do this, this, and this. And he's like, that's dumb. We should do this. And I'm like, you don't understand the bigger picture. The reason we need to do this is because these other things are affected by it, right? Or I've already done what you're talking about doing and I know it doesn't work because I lived it.

21:39Right. I have the benefit of being significantly more experienced or older than you are. Right. So so I think that what I'm what I'm driving at here is that you should be able to identify within your company the people who are doing that. They're the people who like, if you're unhappy with the performance of somebody, not because of the results they're achieving, but because the method in which they're achieving them, that's not unethical or illegal. Then that to me is a good indication. You've got a high agency person and you will absolutely lose them if you don't find a way to work with them and embrace the high agency that can really help your company.

22:22Does that make sense? Yeah, absolutely. And it's one of the reasons, you know, my frustration with those previous jobs and my frustration with what you just described is one of the reasons that one of our core values at every company that I've ever been a part of in the leadership team, one of the core values is always know the why. I am very big on, you know, I want everybody to know the reason that we do something, the why behind it, so that they can make a judgment on does it make sense to break something? Does it make sense to do a little bit differently? I want them to have the context behind it.

22:57And to your point, very often high agency people will try something new, they'll innovate and it won't work. And what I say is I've got no problem with you doing something new as long as you knew the why behind it. If you can tell me why you chose to do something, then I'm okay with it. If you just were flailing around and saying like, well, I don't know. And what I say is that the only unacceptable thing is, well, that's just the way it's always been done. That's the only unacceptable response. I don't want to hear that. Like if you can say, no, I want to do it this way because I believe this would be true.

23:39I had a hypothesis about this. Fine. But furthermore, if I'm going to tell somebody, don't do it that way, I believe that I owe them. I don't believe an acceptable response from me even as a leader is because I said so. because I hated it when people said that to me. What I can say is I don't have time to explain it to you right now at this exact second. Please trust me right now. I promise I'll explain it later because one of our core values is know the why. So I need you to trust me in this moment. We'll set up a time. I'll tell you later because I've got to know the why. But for the love of God, trust me right now because I've been down this road, right?

24:15And I still signed your check. But that's exactly why. I don't literally, but you get what I'm saying. Yeah. Yeah. So I think it's interesting. I would like as we, and we can talk about it here. So our plan is to do a book about this because we thought it was an interesting subject. I'm glad that you're more excited about it because I was like, this is pretty cool. And you were like, yeah, it's cool. I was like, but, um, I think that, I think that having some sort of scale to identify it and, um, and measure it and nurture it and embrace it. And, um, within the organization and also how to identify it in the people that you're interviewing.

24:55Cause I particularly like power versus pass. And, um, and then, um, what I sent you, I think it was in there as I was thinking about, it was hack H A Q, the, um, high agency quotient, which is the measurement, right? So, um, so that's that, I think that's, and then an assessment around that. And then how do we embrace it? That, that I think would be really, really cool for, for us. That's my brainstorm with us for two seconds. Um, but as far as for, so within the company, you've got these people who maybe you're butting heads with, if you're butting heads with them, because the status quo seems wrong to them, that's an opportunity, not a threat.

25:38And, um, and if they are questioning, then they just need to be in a position where you don't need somebody that's just going to go bang their head against the wall until they accomplish it. My, my question is like, um, is it possible to encourage more high agency behavior in the team that you've got as well? Can it be taught as opposed to, is it a natural thing. I know like, uh, Steve Harward at prime corporate services is constantly frustrated because why aren't people thinking to do this? Why aren't you guys taking this and running with that? Why aren't you doing it like that? And yesterday I had a conversation with, uh, Deanna who runs one of our portfolio companies about that because I said, well, how many sales have come from this so far in this thing that we just did?

26:31And she said, well, none yet, but you know, there's a bunch coming. I'm like, well, what are we going to do to capture the 3 ,100 people that registered for this, you know, of those dripping wet, 400 of them came and saw this stuff. So we've got 2 ,700 people who raised their hand and said they were interested that are just in the wind at this point, they're going to get email nurtured, but like, what can we do to put them over the edge now? And why aren't you thinking about this? It's your responsibility to think about this now, not in a bad way. And some people like that management style might seem too harsh to people.

27:13It's definitely too harsh when I bring it home to my family, but, um, it's, but you know, it's, it is, it's like, you know, look, your job, your responsibility is to ask questions like that. So if you're not, why aren't you? And why don't you have the information at the top of your mind on that? This is the number of people that we brought in that aren't currently being activated. And what could we do and what are we testing to make it happen? And, um, and so now I'm, I, and I'm not doing that in a scolding way. I'm just doing it in a matter of fact, let's get on that and figure it out. And we came up with an action plan that we'll see what happens with it.

27:51But, um, but But that's what I want in the people that are in those leadership roles. And it's honestly what I want in the people that are in lower level roles as well. I appreciate it when my son has an idea and he had one yesterday. And my initial reaction was, you know, no, because people don't like that. But we haven't tried it and tested it. and it's wrong for me to shut him down and say that and not say, like, if I don't have current data on that, then I should receive that with an open mind and we should try it. And if I don't do that, it shuts him down from giving me additional ideas, which is not good for the company or him.

28:33And if I do embrace it, maybe it'll work. And if it doesn't, then what did it cost? you know it cost a test so that that's a lot of rambling too i know it's a that was my turn to ramble but um what are your thoughts on all of that mess of thoughts i'll tell you what i believe and i think it'll be fun to do some actual research on this and to to see if we can't can do some studies do some do some research and and try to maybe come up with some some some real data around it but what i believe right now based on my own experience of having worked with i don't know hundreds of people over the past couple of decades is i think that we can create an environment and a culture where agency can either thrive or be stifled in people right And I think anybody listening to this, you can create a culture where it can thrive or be stifled.