Revisiting Greed is Good

Why greed is not good for BIGG SuccessGordon Gekko (played by Michael Douglas) is perhaps one of the most memorable villains in movie history. He is the tempter of Bud Fox (Charlie Sheen), showing him a world of money and power, in the movie Wall Street.

Many people don’t view Gekko as evil. In fact, he’s a hero to some. That’s one of the reasons why one of his quotes – greed is good – got so much acclaim.

He’s at a meeting of the stockholders. They’re considering his offer to purchase all the outstanding stock of the company.

He stands up and grabs the microphone. He begins by addressing Cromwell (Richard Dysart), the CEO of the target company, Teldar Paper. You have to see the full quote to really understand the context.

“Well, I appreciate the opportunity you’re giving me Mr. Cromwell as the single largest shareholder in Teldar Paper, to speak. Well, ladies and gentlemen we’re not here to indulge in fantasy but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here own less than three percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than one percent. You own the company. That’s right, you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their luncheons, their hunting and fishing trips, their corporate jets and golden parachutes.

Cromwell retorts, “This is an outrage! You’re out of line Gekko!”

Gekko replies, “Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. [laughter] One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. [laughter] The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. [applause] Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much. [applause]”

A second rate power

The movie was set in the mid-1980s. Think of America then versus America now. But don’t stop there. What about other developed countries? How strong are they now compared to then? Perhaps Gekko was prescient.

From entrepreneurial capitalism to golden parachute capitalism

In days gone by, Wall Street was the place companies went to for growth capital. Wall Street worked with Main Street to build empires.

Wall Street served an essential purpose. It reduced the risk of investing in companies by creating a market for the ownership stake in them.

But the entrepreneurs behind these companies still held significant stakes. They benefitted with the shareholders, not at the expense of them.

Today, most companies are run by agents, not principals. Sure, the top executives may own a small stake. But they don’t have the same skin in the game required of the entrepreneurial executives of the past.

These executives share in the upside, but they don’t have any significant risk other than reputational risk. If they don’t perform, they still get a golden parachute.

The entrepreneurs of old lost wealth along with the shareholders. Now executives still gain financially even in the worst case.

Perhaps Gekko was on to something.

Greed is a misnomer

BIGG success is life on your own terms. Terms are very important.

And this is the point where we can all take away an important personal lesson. Because Gekko got this wrong.

He was close. But he used the wrong word.

Greed is excessive. Greed is never satisfied. Discontent is one thing; greed is another. We’ve talked before about why you should be happy, but not content. But greed pushes it to an unhealthy extreme.

Greed is selfish. A greedy person is largely only concerned about himself or herself. They only care about others unless their concern directly helps them out.

Greed is covetous. A greedy person wants what others have. They will stop at nothing to get it.

Greed has no principles. The acquisition of things is what matters. One cannot be concerned with moral or ethical boundaries in the pursuit of these objects of desire.

Zeal provides the crucial connection

We like the term “zeal”, rather than greed. Zeal implies the same degree of intensity but it offers the benefit of being grounded.

Zeal comes with an attachment to a higher cause. By keeping your pursuits connected with your principles, you don’t step over a line which causes turmoil and leaves you feeling empty in the end.

There is value in your pursuit because you keep your values intact!

So let’s look at Gekko’s quote again, paraphrasing it somewhat and substituting the word zeal:

“Zeal is good. Zeal is right, zeal works. Zeal clarifies, cuts through, and captures the essence of the evolutionary spirit. Zeal, in all of its forms; zeal for life, for money, for love, knowledge has marked the upward surge of mankind. And zeal will save that malfunctioning corporation called the USA.”

We believe our best days are still ahead of us. But we need our leaders to create an environment where entrepreneurs can succeed.

And we need you to be zealous in your pursuit of prosperity. It leads to BIGG success!

Are you zealously pursuing a better, brighter future?

Image in this post from stock.xchng

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  1. […] clear, we’re not blind to the abuses of a few. We briefly touched on the difference between financial capitalism and entrepreneurial capitalism recently. Wall Street and K Street often collude at the expense of […]

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