Trump's 10 Commandments for Business

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0:58Josh Brown:Generated assets are like ETFs with infinite possibilities. Customizable based on your thesis, not someone else's. Go to public.com slash compound and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash compound, paid for by Public Investing, full disclosure in podcast description. Welcome to Live from the Compound. My guest today is a returning champion, Professor Jeffrey Sonnenfeld of Yale, founder of the Chief Executive Leadership Institute, and one of the world's leading scholars on corporate and political leadership. Jeff is a Senior Associate Dean for Leadership Studies and the Lester Crown Professor in management practice at the Yale School of Management, as well as the founder and president of the Chief Executive Leadership Institute.

1:52Josh Brown:Hi, Jeff. Thanks so much for coming back. Josh, it's a huge honor to return.

1:57Jeffrey Sonnenfeld:Thank you very much. I must say that I hope I don't trip any potholes today because last time we had such great feedback from appearing on this show that I think I'm still responding to texts and emails from you, from your viewers.

2:11Josh Brown:So thanks a lot. Oh, that's so great to hear. Jeff just launched a new book. It's called Trump's Ten Commandments, Strategic Lessons from the Trump Leadership Toolbox, which peels back the curtain on the 10 guiding principles that define how Donald Trump thinks, how he leads, and importantly, how his leadership playbook works in practice across business, politics, and media. Put that back on screen one more time. This cover is great. It's evocative. It's hilarious. I absolutely love it. Can we start with how you and Stephen came up with the concept for the book itself, and then we'll dive into what's in it?

2:50Jeffrey Sonnenfeld:No, thanks a lot. Yes, Stephen, Stephen Tien is our research director here and was the number one political science student at Yale, and he hates when I reveal him that way.

2:57Josh Brown:as he went off to Rockefeller to become a quant, but we lured him back to the world of poverty

3:01Jeffrey Sonnenfeld:to work with me on all kinds of fronts. And this particular research goes back about a quarter of a century, believe it or not. And this is not overstating things. I actually have known Donald Trump longer than anybody in the current Trump 2.0 administration, and longer than anybody in 1.0, other than family members that were working with him. Obviously, you know, is Ivanka and Jared and some others. But I was originally asked to be the first critic, actually the supposed positive reviewer of The Apprentice. Back when Jeff Zucker was running NBC Universal, they had gotten the same producer who had produced Survivor, Jack Welch and Sistence.

3:52Jeffrey Sonnenfeld:to, so they got Mark Burnett to take the, throw them off the island elimination game device and put that into the business world. And then, uh, they thought, could I critique each episode and print it in the wall street journal each week, which is what I did for season one. I'll tell you about that if you want to hear how it unfolded, but, uh, it, uh, it got a little scary at times, but we ultimately, uh, Trump and I became, um, pretty good friends if you can believe it at all, but it was, it got pretty nasty. And then it's a little bit of litigation if you, but that's how we got to know each other.

4:27Jeffrey Sonnenfeld:The genesis of the book then is having known him so long is his son-in-law, of course, Jared Kushner, who I'm in touch with almost daily, even though we have different points of view on a lot of fronts, is he said, look, you know him so well, you should do something like this. He said that people don't understand if they want to criticize as my father-in-law or support him. They need to first understand them. And he's different. He said he's, and in fact, Jared said at one of our CEO summits, he's unorthodox. He's different than all of you people as a leader. And he is. And what occurred to us is that if you look at what he's doing, every day's headlines, we get surprised again.

5:06Jeffrey Sonnenfeld:And we shouldn't because they are predictable patterns of what he does.

5:10Josh Brown:Well, so let's start there. You have this thesis that Trump's behavior is not chaotic, it's patterned. So I wanted you to summarize one of your commandments that you think is most misunderstood by critics, by markets. Like, give us an example of one of the things where you explain, no, no, no, no, no, this isn't as crazy as it looks from the outside.

5:34Jeffrey Sonnenfeld:You know, I will do that. That's a perfect lead into it because people, friends of ours and the adversaries of ours like to say that he's uninformed, so they presume he's ignorant, and then they say that means he's stupid. He may not know the geography all that well and world history magnificently well. I don't know how good a student he was at Wharton. They won't release the grades. He doesn't want them out there. But he is not stupid. He is as dumb as a fox. And that doesn't mean he can't be outfoxed from time to time. But for an example, the second commandment, just in the way we list them, I don't know if there's any particular order, like maybe there is, is basically it's a divide and conquer.

6:18Jeffrey Sonnenfeld:We have some cutesy title around it, but the basic idea is he hates coalitions and alliances. So when people don't understand why he's attacking not just NAFTA, but USMCA, that was his creation, why would he go to war with that? Or why would he go to war with all these trade agreements or the EU or, of course, having NATO itself or the Business Roundtable or the organized Republican Party? is he doesn't like there to be any power bases that can be a threat to him. And any bully knows this, that your greatest threat aren't the individual players, but the collective action. So only could you ask for this, give you one example, that I'll keep you here until dinnertime on this one, because it's a really good one on collective, is that when, as we've seen in recent weeks and in recent months, He's gone after off and on Jamie Dimon and J.P.

7:25Jeffrey Sonnenfeld:Morgan. He's gone after Brian Moynihan of Bank of America. He's gone after Coca-Cola. He's gone after Walmart. He's gone after U.S. Steel. He's gone after the Intel through this last year. On and on and on. Harley Davidson. These companies are American icons. They are pillars of the American economy, but also their very symbolism is so important. The mascot for Harley-Davidson is their logo is the bald eagle. It's a bald eagle, right. And yet when Harley-Davidson on their own had trouble getting bikes that were 100 % made in North America into the EU because of retaliatory trade barriers based on Trump tariff issues, he couldn't get them in there.

8:15Jeffrey Sonnenfeld:So he had to circuitously build a plant in Thailand. That meant he had to shut one down in Kansas City. President Trump took that as a personal offense and told everybody to stop buying Harleys. Now, this is a guy who is a very centrist, nonpolitical CEO, Matt Levitich. I'll have him in class next week again. And he just wants to pilot his place down, his company down the center of the road. His customers, the riders, lean somewhat MAGA and his employees lean somewhat anti-MAGA. He's not a politician. He just wants to run a company for the shareholders and the employees and everybody else. So Trump says don't buy his bikes because his competition, he's only 3 % of the global market.

8:57Jeffrey Sonnenfeld:His major competitors are Japanese, Korean, and German. So this is not a pro-American campaign from the president attacking his company. His stock plummeted. He got fired. And that's a cautionary tale that all the others hear. When Delta and Coca-Cola spoke out against the Georgia voting rights law, President Trump said to have a consumer boycott against those companies. So happily, I got together 100 CEOs, including PepsiCo and other consumer goods companies, but also American Airlines, Doug Parker and American Airlines. I said, would you be interested in running air cover for Delta and Ed Bastian?

9:38Jeffrey Sonnenfeld:And they did. And Scott Kirby, who I didn't really know at that point at United, was willing to jump on board, too. So if you're going to boycott beverages or planes, you better have your own beverage machine and your own private jet. But that's how they similarly, as he was attacking universities last spring. Now, there was some justification for for bloats, for bias, for some of the woke excesses of a lot of the universities that we don't deny. However, they're getting their act together and the attacks on freedom of expression, attacks on staffing and all the rest was getting a little crazy.

10:11Jeffrey Sonnenfeld:So and the endowment hits and things. So we pulled together, yes, 700 college and university presidents late April last year. And you know what happened after those 60 universities were hit? All those edicts out of the White House stopped immediately. So that's an overly long answer to how collective action can work. How it can backfire on him then, because he would try to subvert that, is by attacking our allies. And I'm not sure where things will be by the time this is shown before the public, but we have seen that the UK was reluctant to let us use bases that they had oversight over to help for staging for the attack on Iran.

10:50Jeffrey Sonnenfeld:We've seen that Macron is thinking it's unjustified in terms of France's enthusiasm and that it sure would be nice to have allies support us when we're going after countries like China or Iran and certainly Russia. So that has a downside to it. But his goal is he doesn't have to adjust to their preferences if he can take them down one at a time.

11:16Josh Brown:Well, he seems to prefer a bilateral behind closed doors conversation as opposed to here's a group of 12 nations or five power brokers. And here I am in public playing this game with them. He doesn't seem to want to do that. He seems to want to pick up the phone or sit in an office one on one, make a deal with that entity and then come out and say, this is our new best friend. And in many cases, that does break the sort of diplomatic logjams that have existed for decades in this world. It does.

11:57Jeffrey Sonnenfeld:And he doesn't have to deal with countervailing power. He feels he has the upper hand because dealing with any one of them, he's usually in a stronger bargaining position rather than to have to bargain with them collectively. So that's right. He comes up with a deal and a deal that he thinks is more favorable. but it's not just bullying. He's actually very, as you know, when he wants to be very charming backstage, I actually thought as he was calling me in 2015 and much of 2016, almost every day through his campaign, that he was going to pivot to the center because he could have surprised a lot of people.

12:29Jeffrey Sonnenfeld:In fact, just between us, I have him on video with a left of center political scientist that took with me into Trump Tower at that point. And he explained why he was going to go to the left of Bernie Sanders. Yes, I can show you the video because he wanted to tap into a lot of populist unrest. But it was a point after that, as the Ted Cruz campaign imploded, that Steve Bannon showed him that a faster route was to go to the right. But it was, that's where all his impulses, all of his moves are not impulsive. They're strategically chosen. It's sometimes because it's delivered in an emotional way, he packages that way.

13:08Jeffrey Sonnenfeld:It doesn't mean that it wasn't thought out. It isn't strategic. They are strategic. You argue that Trump's strategy

13:17Josh Brown:bends arenas to his will. And I'm curious, from a CEO or an investor risk standpoint, what's the read through to a strategy like that, where it's not enough in many cases for him to win an argument, he almost like will force the opposing party to completely change itself just to survive him or to come to a detente. Can a corporate leader do that? Can an investor do that with markets? Or is that something that's unique to the political realm and nothing to do with business?

13:56Jeffrey Sonnenfeld:It's such a good question, because in some ways, we're still dealing with just that one divide and conquer point as you're basically asking me, okay, let's presume that's accurate, Jeff. What's the so what question as a CEO, as a business leader, how would I deal with that one commandment? And that's working it through. As you have, Josh, you just take a look at how the BRT has been MIA, the Business Roundtable, which had been very effective. In Trump 1.0, after the killing, the murder in Charlottesville by a white nationalist of a peaceful demonstrator on a Friday night. On Saturday, he came out with a statement that wasn't so great, but wasn't so awful.

14:37Jeffrey Sonnenfeld:Just let it go. But somebody got to him and said to double down on it on Sunday and said that, you know, the good people on both sides. And that's when Ken Frazier of Merck said, look, I can't stay on here anymore. I'm one of four black CEOs of a major Fortune 500 firm. I'm stepping out and told the Merck board, I don't speak for Merck. I'm speaking for myself. The Merck board said, no, you are. And that set off an exodus, a stampede that all three of the business advisory councils collapsed. Well, that's an example of sort of, you know, how it works that way as a single person where they back them.

15:07Jeffrey Sonnenfeld:But often a better way to do it is not to to throw your fingers into his face, but because humiliation rarely works with him. and I think you're getting at that, is that, but if you can get to him, but doesn't put him in a corner, so he's not like a caged animal or a wounded animal slashing away in a corner, is that not the public humiliation. I mean, he's still mad at Barack Obama, of course, because of that National Gridiron dinner, Washington Press Club dinner, where he was being teased for even thinking he'd be a credible candidate for president. He's still upset and mad about that. Is there anything Trump hates worse than losing money?

15:45Jeffrey Sonnenfeld:it's losing face. So what you don't do is grandstand and embarrass him. But when the BRT's fallen apart, what has happened? Well, people like Michael Dell and Arvind Krishna of IBM and Tech Titans would meet with him in small groups. It was extremely effective. A company like IBM, Arvind Krishna, this is no secret, but people don't know this. He's not giving any gold tributes. He hasn't given any ownership over to the... And IBM, in their entire history of 120 years, they've never paid a penny in lobbying fees, but they get their message across. And this is how – so they meet in a small group.

16:24Jeffrey Sonnenfeld:The pharma kings did this too. They weren't as successful because RFK Jr. is a pernicious problem for them. But they did get some messaging across. And the Trump-Rx messaging is – it's not as great as advertised, but it's way better than the critics say. And the Trump-Rx plan, of course, is developed by these private meetings with the pharma types with them, largely led by Pfizer and the others followed very well, especially Merck and Eli Lilly and J &J have been very effective at that. Similarly, you could take a look at the retailers. They, after a liberation day, they were pretty upset about what this is going to do.

17:03Jeffrey Sonnenfeld:So the CEOs of Walmart, Home Depot, and Costco went and met with Trump privately. The business roundtable should have done this for them, but they dropped the ball. They're a little cowardly. So they do it as a splinter, splinter groups. And that's been another way to deal with it, but not to go in there alone. If Target just went in there alone or Home Depot went in there alone, it wouldn't be an effective. And even Walmart, as we've seen, he's taken them on when they've gone in alone. But they go in collectively, but privately. You can get the win-win that way. And Trump doesn't necessarily have the upper hand.

17:35Jeffrey Sonnenfeld:he recognizes the national interest might be something different than what he had in mind.

17:40Josh Brown:One of the things that I've noticed is that Trump seems to be very pragmatic. And yes, I agree with you. Like if somebody has humiliated them on a big stage, that's probably a death sentence for that person. But in the lesser cases, we've seen him say somebody is an enemy of the American people. And then a week later, they're at the White House. This is my very good friend. We see him able to get over differences with people like Mayor Mondani. Recently, we've seen the Elon Musk thing go from, we're gonna kill each other to, hey, we're friends again. There is an underlying pragmatism there. And I do think it's sort of admirable, even if like on the surface, it seems chaotic.

18:30Josh Brown:Like how much of that is is just stagecraft versus how much of that really is emotional where he can go from this is the worst person ever to, you know what, actually, this person and I can work together.

18:45Jeffrey Sonnenfeld:People are wondering if he's going to sacrifice one or two, maybe three cabinet secretaries right now because they're they're not bringing him positive acclaim. And we've seen in Trump 1.0, he didn't mind tossing out a ton of people, no matter how loyal to them they were. Does anybody remember who Senator Jeff Sessions was anymore? And that's he was the attorney general is what happened. He became a liability to him and they became history. Sarah Palin. Well, I was going to say he would love to do that with Jerome Powell. He laid it with Jay Powell, but Jerome Powell was never a supporter of his.

19:26Jeffrey Sonnenfeld:But to your revolving door idea is that Pete Hexeth has obviously gotten on thin ice, but right now he's quite center spotlight. I think the Secretary of Homeland Security, she's on thin ice right now. And it's hard to see how Kristi Noem is any less of a problem for him than Sarah Palin would have been.

19:51Josh Brown:But he think there'll be some sacrifices leading into the midterms. There could be.

19:55Jeffrey Sonnenfeld:Yeah. Is that he wants to go with who's a winner. If you have a major constituency, he loves Mondami. Now, one of the reasons he and Mondami get along so well is because the populace are on the left and the right. And Trump has, as I said, migrated from the left populace. He wouldn't be on the left of Bernie Sanders. Bernie Sanders in his office now still has a plaque as a tribute to Eugene V. Debs, who was the populist on the left. He created the national – the American Socialist Party. And his – a guy who had an office next to him was Tom Watson, the agrarian rebel back in 1896. And he had the agrarian – he had the populist on the right.

20:36Jeffrey Sonnenfeld:And that is the MAGA movement's pregenitor. So Trump has gone from one to the other. But they're both people that are kind of anti-institutional. They don't like Wall Street. They don't like immigration. They have a lot of similar concerns. So that is, so Trump finds though, that if a person has a major constituency, he likes them and he wants to relate to them. He can be extraordinarily charming, again, backstage when he wants to be -

20:59Josh Brown:He looks at it like an audience, right? He looks at it like, this guy's hot. He's got a big audience. Therefore, he's got a hit show. Therefore, he's on my level. And we can, we don't have to agree on the issues, but he respects people that have an audience. And no tolerance for losers. Exactly right.