#143—Robert E. Siegel: Mastering the 5 Cross-Pressures of the Systems Leader

Robert E. Siegel is a lecturer in Management at the Stanford Graduate School of Business, where he has taught various courses ranging from Systems Leadership to Financial Management for Entrepreneurs to The Industrialist’s Dilemma to Corporations, Finance and Governance in the Global Economy. He is also a Venture Partner at Piva Capital and a General Partner at XSeed Capital, and sits on multiple Boards of Directors and has led investments in Zooz, Cirrosecure, and Lex Machina, among others. 

His multi-lens background and approach have afforded Robert a deep, intricate understanding into leadership in our constantly in flux world today, and how it requires an ever-more nuanced approach.  

In this discussion, we dive into key insights from his most recent 2025 book, The Systems Leader: Mastering the Cross Pressures that Make or Break Today’s Companies, a perfect complement to his first book, The Brains and Brawn Company. We discuss the constant web of dualities that the modern systems leader confronts on an ongoing basis, as well as: 

• How while our business frameworks have long been trending towards change-driven  frameworks with terms like “ambidextrous organization” and “exploitation vs. exploration,” world parameters have grown increasingly complex, requiring a different set of leadership skills 
• The key characteristics of a systems leader, including the 5 cross-pressures that these leaders must learn to balance to be effective.  
• The four abilities that leaders must develop, including developing a product manager mindset—the ability to live at the intersection of customer needs, market demands, and the inner workings of your company  

Episode Timeline:
00:00—Highlight from today's episode
01:30—Introducing Robert + the topic of today’s episode
05:32—If you really know me, you know that...
07:48—What is your definition of strategy?
08:44—An overview of Robert's first book, The Brains and Brawn Company
15:30—What are some key questions in your toolkit to become better at self-diagnostics
17:50—Can you explain your quote: "leadership is ability to restrain in response to a certain stimulus"?
21:30—Can you define a systems leader for us?
23:42—What can we learn from the product manager's mindset?
25:35—Can you give us an overview of the 5 cross-pressures leaders face?
29:28—How is the landscape of investors changing under these pressures?
32:25—The effect of AI on the workforce, and the role of leaders
37:45—What is your advice to someone looking to shape strategy in light of these cross-pressures?
40:39—How can people continue learning from you?

______________________________________________________________
Additional Resources:
LinkedIn: https://www.linkedin.com/in/robertesiegel/
Link to website: https://www.robertesiegel.com/the-systems-leader

Thank you to our guests, thank you to our executive producer, Karina Reyes, our editor, Zach Ness, and the rest of the team. If you like what you heard, please follow, download, and subscribe. I'm your host, Kaihan Krippendorff. Thank you for listening.

Follow us at outthinkernetworks.com/podcast

Transcript

Kaihan: Rob, it is great to be here with you.

I have been really enjoyed preparing for this, going from your experience as an operator, as an entrepreneur, as a VC looking at this merging of of of digital and physical and now landing on what I think so few people talk about is the leadership implications of that. So first of all, thank you for taking the time to join us today.

Robert: Oh, thank you so much for having me. It's great to be here. Where are you joining us from? I am actually in my office at Stanford University, and I am about to go teach a class on systems leadership right when you and I finish with my co teacher and friend and mentor Jeff Himmel, the former CEO of G.

Kaihan: Of course. Of course. Is he in every class? Or is this Yeah.

Robert: Well, in this course, we've done it together for the last eight years, and we we do a tag team. So those are the process we get a guest to come in. Jeff and I he'll lead off with a lecture based upon him. Framework that we're introducing in that session, we do a case on the guest, and then the guest kind of interacts with the students at the end of

Kaihan: the month. Great. Great. Great. Who's your guest today?

Are you allowed to

Robert: I I have a a Cereal Traxie, who's the CEO of VANTAGE data centers. So we've got a lot of stuff on data centers and power and energy. This year, we've been lucky enough to have people like Roger Godel from the NFL. On Thursday, we have the president of Darmouth. Next week, we'll have the president of BYD Auto.

Robert: We've had to it's really and we got entrepreneurs who've come in. We had the founding managing partners of Blockchain Capital earlier in this quarter. So it's been a great class of speech.

Kaihan Amazing. We'll get to this later, but just quickly, do you think we'll ever get to buy a BYD here?

Robert: Oh, that's complex. I I don't see it happening anytime in the near term. I think as long as there's geopolitical conflict between The US and China, I can't see it happening. By the way, they build great cars. You see them in Europe, but I think issues around competition, data protection, lack of trust between the governments, I think it's gonna be very difficult.

Kaihan: Yep. Yeah. I've got to spend a little time in China this last year and did see a a manufacturing plant, not for BYD, but for Cherry. Yeah. So impressive.

So impressive. Okay. Let's I wanna start with the same two questions I'd ask all of our guests. The first one, it could have nothing to do with your work at all. Just to get us to know you a little bit more personally, please complete the sentence for me.

If you know me, you know that.

Robert: If you know me, you know that I'm a big Liverpool football fan.

Kaihan: Really? Really? Where did that come from? How how long have you been a football fan and when Liverpool? 

Robert: I was part of the first generation that ever played soccer football in this country. So I started when I was five and played through university. It wasn't very good, but loved the game. And I never had a team because, you know, soccer in The US never really took off at the professional level. And there was a show on television on the old Fox soccer channel called B Liverpool.

Brandon Rogers was the manager. It was kind of one of these behind the scenes shows. This was in about 2012. And I started watching the show, and it was so well done. And I said, yeah.

You know, Liverpool, they could be my team. I I you know, the Beatles are from Liverpool, but perhaps most importantly, you know, the the the song that's the the Anthem of the team is you'll never walk alone. And I just love that sentiment. And, you know, one of my bucket list items was to go see. You'll never walk alone with 45,000 of my best friends, which I did in October of twenty twenty three.

And I had it tell you, it was better than the day our children were born. Which makes me a horrible person, but it was amazing.

Kaihan: We'll filter out the advertisements to your kids on this podcast.

Robert: They've heard me say it before. Yeah.

Kaihan: Yeah. Gotcha. That is awesome.

That is awesome. But do you think that American US football is is coming up? I mean, US soccer football is coming up. And I'm a I'm a die hard Philadelphia Union fan. I watch every game.

So and we did have one of the owners of Philadelphia Union on the podcast as well. So patience. We're gonna get

Robert: But, you know, with with with 330,000,000 people, and it seems like every child in this country plays will make it better than than we are. And hopefully, we'll eventually figure it out.

Kaihan: Yeah. Well, I think we have we our, think our bench is so deep. We started two decades ago, and I know that I'm I'm traveling all over the country with my daughter and sitting there watching her and her girl's play. So okay. Let's talk about strategy.

This is a podcast and strategy. I asked this question for everyone. I always get a different answer. What is your definition of strategy?

Robert: For me, strategy is the ability to see key trends and vectors before others and to come up with a set of actions based upon a thorough understanding of both internal and external forces of a company. And so it's it's you know, you gotta be able to get to 90,000 feet and kinda see the wins before everybody else, but then be able to come up with a plan of attack for your company. It can't be too theoretical. It's gotta be applied. Great strategist, understandable strategy and execution.

Kaihan: Yes. Yes. And the and then the linkage between there of I mean, and many of the points that you make in systems leader, I think, are related to that translation so that it activates people and understanding and knowledge. Excellent. Thank you.

So I am excited to dive into the systems leader, but I I think a good setup for this for those few people who haven't read brains and braun. I love the framework. Would you mind just laying out first of all, what did that book come out of? And then if we can go into the framework.

Robert: Absolutely. So I used to teach a course here at Stanford called the industrialized dilemma. And it was started first with me and Aaron Levy, the CEO of Box, and then we were joined by Max Wessel, who at the time was the chief innovation officer at SAP. And the thesis of the book was that we are in a world where every product and service has a digital and connected component so that even if you make a physical thing, be it a car or a piece of, you know, camera equipment or whatever it is, it's gonna have a digital component. And when every product and service is connected, you have to design products differently, and you have to organize your company differently.

And so we looked at a whole bunch of attributes as to how these things shape the way companies are making and selling things. And our thesis was that incumbents are not doomed and disruptors are not ordained, that we could learn the best practices from companies and be they incumbents or be they disruptors on how to do digital and physical well. And that led to the book, The Brains and Bronze Company, which was a way of kind of capturing how we saw and learned from leaders from all over the world over the eight years that we taught that course. And so the framework was we we came up with five digital attributes. The that's the brain side.

And the first was, like, the last left hemisphere, the ability to use analytics in product design. There was the right hemisphere of our brain, which is creativity. There's the amygdala using empathy. There's the prefrontal cortex, how we think about risk. And then finally, the inner ear, which was balancing ownership and partnership, and we really thought about those as digital or softer attributes.

But the physical side, you know, the bronze side, you know, we talked about the spine logistics. We looked at hands, the craft of manufacturing and making things, muscles operating at scale on a global basis, hand eye coordination, how you shape and guide your ecosystem, and finally stamina, how you survive for an extended period of time. And we studied you know, companies that were disruptors here from Silicon Valley or or from other parts of the world as well as global incumbents, and then maybe you're a hundred or 200 years old, and tried to learn best practices from each with the thesis and belief that if companies could learn both the brains and the bronze framework. They could figure out where are they good and how to stay good and also where are they lacking some of the things that they needed and how could they improve upon them.

Kaihan: Well, just to help us visualize that, what was an example of a company that exemplifies the the the right combination or the ability across both of brains and brains.

Robert: Well, you know, it's funny. We looked at companies that did really well and maybe one thing particularly well because no company was good at all 10. And that was actually the point of the framework was just to say, if you had 10 of these attributes and 10 of them on a one to 10 scale, you could score yourself. A perfect score would be a hundred. No company was gonna score a hundred.

So for example, when we looked at analytics, strangely enough, we started with Schwab, the large financial services company, and you might sit sit back and say, how do you think about Schwab as an analytics company? They're a financial services company, but they have a ton of data on their customers. And so what we found when in setting Schwab as a as a prototype was that at an archetype was that they had data scientists and they had data engineers. That was just kind of, if you will, what got you into the game. But how they thought about using the data and when to use the data and when not to use the data?

You know, how do you build trust with your customer base about making people feel confident that you're gonna use their data in the right way? That's where Schwab really shined. We looked at things like empathy with the amygdala. We studied Kaiser Permenente, the large healthcare service provider. And Bernard Tyson, who has since passed away, talked a lot about how we used empathy in dealing with doctors and nurses and patients and members as well as the government, which they had to interact with.

On logistics, with spine, we looked at three retail companies. We looked at Home Depot. We looked at Target, and we looked at Best Buy, and how they really blended digital and physical on logistics. And and, you know, on organizing ecosystems, we looked at Google and what they do with Android. And so in each of these areas, we tried to look at companies and say, they excel in this particularly one asset attribute better than others, but no company was perfect.

And the whole point of brains and brain was to allow companies to be able to think about, okay, where am I doing well and how do I hold on to my competency there? And where do I need to improve and invest?

Kaihan: Got it. Let me ask you what, I can think of three reasons why you would find that no company does them all well. One is that it's just a lot of work to be good at 10 things. Another is there hasn't been the list of the 10 things. So I've only been focusing on a few of them.

Another is that being good at one necessarily makes it difficult to be good at another. Do you think it's any of those or or or something different?

Robert: I think it's some combination of all of them. I you know, I think that that a lot of times, like, you look at the DNA of an organization, and that's what we saw. Like, the DNA would shape why a company was good at one versus the other. So let's compare Airbus and Uber. You know, Airbus is really good at manufacturing.

They're really, really good at systems engineering. They struggle in getting data off the asset. They struggle in hiring digital talent. Uber. Great at user experience.

Great at logistics. Terrible at driver relations. Terrible at government relations. A lot of times the DNA of the organization would shape where their strengths were. I think the thing that that, you know, it kind of led us into the system's leadership work was we were starting to think about the leadership attributes of companies And what we found is that the technology is moving so quickly that a lot of these things we need to embody these competencies inside as individuals.

It's not just the whole company needs to be good, which is hard, but as you pointed out, it's even really hard you know, if we have to, as individuals, be good at both these things. And so that's you know, I started teaching the system's leadership course shortly after we did industrial dilemma. And and and that was supposed to be about the leadership side, but that really we found that the outside world so much of what was happening to business leaders and even political leaders today was so much more than just blending digital and physical. There were there were some other bigger systems at work that we spent a lot of time unpacking.

Kaihan: Yeah. Got it. So a few places I wanna go, what is this this theme that I'm starting to hear that emerges is this idea of becoming self aware? And I've I've heard you talk about and I've read you right about when you work with companies because you work you you you teach, but you also work with companies and you have experience as an operator and entrepreneur. What are some of the key questions that you ask companies that you work with or leaders that you work with that our listeners should start asking themselves?

Robert: Well, I'll often ask them to start outside the building. You know, what are the key forces in your ecosystem that are shaping what's happening? What are your customers need? And what shape shaping in their world? And then I start to bring it in.

What are the things that we're not doing as a company that we need to be doing and why not? And then I try to bring it into the individual. And with the individual, like, the phrase leader know thyself as a mantra that I really think is important, and you talked about self awareness. You know, we all have strengths and we all have development needs. And the question is, do we know what our own are?

And in times of volatility and in times of disruption, we, like, default back to that which with which we're comfortable. So, like, you know, my example for me is, in my case, my greatest strength is also my greatest development need. My passion is my greatest strength. If I'm in front of the classroom running up and down the aisles and interacting with the students, like, that's my happy place. Like, I'm in the flow.

I can't wait to get in the classroom. Like, it's awesome. My passion is my greatest development need. And and when I was younger in my career, the way it would manifest itself, I gotta tell you, I used to send the most amazing flame emails you could possibly imagine. Kyle, I would I would get I would get an email that would anger me.

And I'd hit, like, reply all, and then maybe put a few more names on, and I'd start typing. And I and I I'd write these emails, and I gotta tell you they were awesome. Everything would flow. I would enter the flow when typing these emails. These emails were caustic, sarcastic, accurate, and always ineffective.

And I would spend days cleaning up my mess. And I've had to learn over time to, like, figure out how to restraint that that passion. And and I'm not as good as I need to be. I'm better than I used to be. And I think this is a thing for leaders to be aware of.

It's like, we all have these strengths in development needs. We're human knowing what they are for us as individuals, and being able to kind of lead through them is is a key thing.

Kaihan: And and you've said leader you've you've quoted a definition of leadership as leadership is the ability to constrain a response to a certain stimulus. Can you can you unpack that for us?

Robert: Well, I first heard that when I was in a junior executive at GE decades ago. And they and in Croydonville, the the we had this leader, and he taught us this. And I thought, you know, I'm in a room full of 70 of my peers. And he said that. I thought, okay.

He said that just to me because he knows, like, that's my problem. And and, like, for me, like, that email. Like, you know, I see an email that that that triggers me. And it and and the leadership is the ability not to react. And and, by the way, I find that I have those reactions when two things are true.

When I'm really tired or if I'm hungry. And god forbid both. And so, like, for the the ability to constrain a response is, like, somebody says something that upsets me. It's, like, don't take the bait or somebody says something that I disagree with. Because, by the way, I'm not effective.

And that's not my goal. Like, if if your goal is to get it right, but not be right, sometimes, like, for me, I need to, like, pull back and say, okay. Don't respond now. Process thing can come up with a good strategy to lead. I see that in my teaching.

You know, we've not got Gen Z at the grad school level, and they're different than millennials. Now they're better nor worse, just different, and their lived experience is different. So if if somebody from that generation, and I say this is a father of three beautiful Gen Z children, if they have been raised and their experience, their lived experience has been a set of of interactions, how do I, as the teacher, be effective in trying to guide them, lead them, coach them as opposed to reacting if if I don't you know, I'm not happy with something that somebody does. Mhmm.

Kaihan: This is a tangent. I know, but could you characterize how Gen Z and your experience is different?

Robert: I'll give the positive and the negative. The the positive side is they they're they're not afraid to speak up and advocate for their needs, which I think is a good thing, you know, or if they're if they're able to articulate and talk about if they're having challenges, which is a good thing. This notion that I'm gonna keep it all bottled up inside is not healthy. On the other hand, sometimes people don't understand the action and the reaction, and my worry is that and by the way, I blame my generation. Right?

Because I'm Gen X, and we raise them. That sometimes that that they're not always aware of of how stuff that they will do and say, well, come out and how it'll land on the other side. So I believe, for example, my job as a teacher is that every day I go in that classroom, do my best. Every day go in and do my best and and and deliver for them and be prepared and ready. They deserve that.

I expect my students to be the same way. And what I want from them is if they're having a bad day or something going on where they can't bring their best selves, Tell me ahead of time. Just tell me ahead of time so that I can, like, see their whole self and and just be aware of it as opposed to just taking the the notion of what I'm just not gonna show up today to class. I'm not gonna I'm gonna hand in a project late and just not talk about it. And I see this, by the way, in the labor force.

Right? This isn't just a teaching thing. And you talk about people who will manage that generation and whether it's it's millennials or Gen Xers or even boomers who don't know how to manage that. If there's a set of behaviors that was made to be okay in how that generation was raised, and we've gotta figure out how do we make sure that we guide them and coach them and lead them in a way that can be effective without judging them.

Kaihan: Great point. Great point. I'm starting to hear the connections to your framework of the systems leader, which I wanna get into. But first, maybe just set up what is a systems leader before we go into the five that you cover in the book, the kind of five aspects. What's your definition?

And maybe an example I know you talked about, like, target CEO as being an example of an example of a a good systems leader.

Robert: Well, so systems leaders have the ability to do two things. Well, actually, let me even back up. We're in a world of constant crisis and increasingly rapid technological change. This is just and if we look over the last twenty five years, we can go from the dot com meltdown to nine eleven to the global financial crisis Populism one dot o, which was Brexit. It was Bolsonaro in Brazil, Yellow Vest in France, Trump here in The United States, the pandemic.

Right? You know, the social unrest that came out of the pandemic, and then we've gotten out what's happening in government. In 2025. And, you know, at some point, after, you know, kind of seven, eight major kind of fundamental things in twenty seven odd years, this is the new normal. And the challenge that leaders face is they kinda don't know what to do with all of this constant disruption.

And it feels like no matter what they do, they're gonna get it wrong. And I argue that the reason that it's hard for them is they haven't been trained in systems thinking. And the idea behind systems leadership is the ability to fundamentally master certain dualities and bring it inside of ourselves. And then also to see systems and understand action and reaction of functions inside of a company, a company in its ecosystem, etcetera. And in the book, I define both the crisis.

I define what doesn't work, and I talk about unserious behaviors in a serious world, which we see quite prominently by a lot of our leaders. And then I talk about, well, okay. How can we handle this and how can we deal with it? You know, the ability to have, you know, a product manager's mindset. Understand outside and inside.

What do customers need? The ability to live in the duality. The ability to manage context. And and then how do they navigate through what I call cross pressures? These cross pressures that people are are are struggling with, and and that's the the the point of the book.

Kaihan: Explain what you mean by the product manager's mindset.

Robert: So this will be conscious bias. You know, my career on the operating side came up through products. And I think product managers are very interesting. Product managers are responsible for everything and owe nothing inside of a company. And so, you know, we we were talking earlier about organizational jigitsu and that ability to get an organization.

Like, strategic leaders need to do that. You need to get a company to move in a direction when you don't control the resources and product managers to meet are the ultimate people who do that. You have to understand what customers want. Like, you really have to know your customers and and what do they need and what's their business and how do you solve their problems. Internally, you've gotta know how a product is made or how a service is delivered.

And so, like, in Silicon Valley, you need to understand engineering. Not having to be an engineer, but you need to understand the engineering process. And then there's the third part, which is the go to market momentum. You know, how do you sell something? And great product managers understand customers, understand how products are built and delivered, and then understand kind of the commercial aspect of it.

And that's that product manager's mindset. And the ability to do that organizational jujitsu, where you as a product leader can be accepted by different functions inside of a company. You know, it's like, you know, she's in the she's a product manager, but she's really an engineer. No. No.

She's a product manager. But, really, she's a salesperson. You know, she's a product manager, but, really, in her heart, she belongs on the factory floor with us. And so that's what I mean by the product manager's mindset and great systems leaders. Have that ability to kinda blend in with different functions inside of a company because that's what it takes holistically to serve customers well.

Kaihan: Got it. Okay. So so I I I love it. They they have to have the range to go across to understand the entire system even if they don't have direct influence over the system, they need to understand that they fit together and influence the system to have the outcome. And and and so I I'd love to go into, you know, basically, your your your five the crosstecs that that linked to these five areas of priorities, people, sphere of influence, geography.

Could could we just go through each one?

Robert: Sure. So one of the things that we found as we were studying leaders that we asked them, like, what are they really wrestling with? And we came up with five, or they're not the only five.

Kaihan: I love that you said that. Yep. I love that you said that in the book. There are these are these are five, and there are others. But these are the five that you chose.

Okay.

Robert: And these five, by the way, they interact on each other as well, speaking of systems. So, like, the first one we talked about was priorities. How do you simultaneously have the ability to both execute as well as innovate? And historically inside of companies, there were leaders like Charles O'Reilly and at Stanford here and Michael Tuchman at Harvard who came up with the idea of the ambidextrous organization. Where you exploit and explore.

But those were generally two separate parts of the company. You had the people who made the trains run on time and then the crazy long hairs who innovated. Well, given the speed of innovation right now, leaders need to be able to know how to hit their numbers. But then also make sure that they can manage small teams who are innovating. And similarly, if you're one of the crazy innovators, because innovation is moving so fast, you gotta figure out, okay, here's a new technology.

How do I quickly get it into commercialization? Because the next set of technology is following right behind it. So that ability to both exploit and explore inside of us as the individual. That's the cross pressure. And so we studied certain leaders who are particularly good at it, like Julie Sweeted Accenture.

Who, like, make sure that they can deliver on key technologies today that that that matter for their customers, but also have the ability to keep investing so that the the the the people are learning new skills like artificial intelligence. They've moved from cloud to security to AI. And people need to be fluent in all of these things. The the second one we studied was people. How do you project both strength and empathy?

And as an example there, we looked at a leader, Kathy Masarela. Cathie runs a company. Most people have never heard of called Greybar. It's the old Western Electric. And, you know, she's got $10,000,000,000 in revenue, 12,000 employees, and she was described by somebody as, you know, an iron fist in a velvet glove.

You know, Kathy walks into a room and we all sit up a little straighter. This is a strong leader, but she's one of the kindest people I know. She shows you met her humanity and sees the other person's humanity. The third cross pressure we talked about was sphere of influence, internal and external. How do you understand what's happening outside of the building and inside the building?

And we looked at leaders like Charlie Sharp, who's the CFO of Wells Fargo. When he took over, you know, they had committed massive fraud the regulators were all over them, and he had to be able to simultaneously clean up the mess with the regulators, which Wells Fargo created. And he also had to kinda fix a broken culture internally. And this idea that these things interact with each other is critical. Like, the notion of an externally focused CEO and an internally focused COO.

That doesn't work anymore. You need to understand that. Fourth is geography, global and local. You know, how do you understand the the the issues around what's happening inside of a city, but also what's happening in another part of the world be it for customers or supply chains. And with communication and collaboration tools, even if China and The US, you know, decouple their economies, we're still gonna be crossing borders.

And we gotta know what's going on and how what happens in one part of the world impacts another part of the world. And we're seeing this now in in spades with the terrace. You know? And then and then purpose is the last one. How do we band you know, balance ambition and statesmanship or statesmanship or stewardship, whatever you'd like to call it.

How do we kinda balance that notion of I wanna be ambitious and I wanna have a career that does well and I wanna succeed and be successful? And at the same time, how do I make sure that I'm also thinking about others and not just myself?

Kaihan: Love it. I I wish we had more time, but you've got a great book that will encourage readers to read and and dig into them. I just wanna touch on a few of these that have linked to things that have come up on this podcast before. Certainly, under priorities, the short term, the long term, the exploit versus explore, that is a a a challenge that has existed for strategy officers and leaders for a long time. Is anything changed?

I think maybe, like I'd like that the way that you talk about kind of the investor level and investors role, and you, you know, you're we we had David Wharton on here who's also Stanford, and, you know, he's very adamant against, hey, don't if you take VC and I know that you you worked in in VC firms and in that world and you're in that world, you know, they're very short term. So just talk to us a little bit about how do you see dynamics in the investor landscape changing how people manage this dilemma of the short term and long term.

Robert: Yeah. Dave's a great guy. I've known Dave since we were both undergrads and Cal together, and then we were at Stanford at similar times. And, you know, his new book where he talks about Evergreen companies. And and the idea of an Evergreen company where it is, you know, one that doesn't have a like, have to return capital within a a finite period, the way venture capital works.

And and so there that's that ability to have kind of that short term, long term mentality. And and so I think what happens is the venture capital model is you wanna get really, really big, really, really fast. Not because VCs are selfish, self centered jerks. They might, in fact, be that, but that's actually not the business model is one where you've gotta return capital with high returns in a quick period of time. And some companies, you you know, play for the long term, and they can you know, that that phrase is a great twenty year overnight success, especially if sometimes you're doing deep technology development, it takes longer.

We see this in climate tech. We see this in in certain businesses. And so I think that you need to be able to invest in the near term and in the long run. And I think what's different, you know, if you're an operator and you're managing an operating budget, you need to have some of your budget in near term and some in long term, and you gotta be able to do both. As an investor, you need to kinda figure out what is your investment strategy.

Most VC firms with a ten year fund are gonna be looking for high growth organizations. What Dave's talking about with with the Evergreen model, if you don't have, like, a fund life cycle that ends in ten years, you can actually be backing entrepreneurs where their business might take longer and actually might be more sustainable, so it may not have the hypergrowth of of a of a venture back from. By the way, it's not that one of these is good or bad. They're just different.

Kaihan: I love that. Yep. And I think that's that's the main point. It well, I don't wanna put words in mouth, but that's what I walk away with. That people want to take sides and say, oh, it should be long term or it should be short term.

It should be for the people or use the people to have the outcomes. It should be local or should be global. But what you're saying is it is that that there are cross pressures that we have to understand and balance both of them.

Robert: And you need to do both. You know, the one of the things I talk about, you mentioned people. I a big believer in investing in your labor force, and you have to for a couple of reasons. I joke, like, there's two types of people in the world, those who have hearts and those who don't, and, obviously, I'm being sarcastic. But, like, in a world where AI is gonna fundamentally reshaped the labor force so hugely.

And jobs are gonna go away, and new jobs will be created. Okay. If you have a heart, you see the men and women inside of your company who are gonna lose jobs. And you say, okay. How do we help them put food on the table in a roof over their head?

Let's assume that you don't have a heart and you only care about the bottom line. My teammates in the economics area here have taught me that it's actually 40% less expensive to retrain and rescale my labor force than it is to fire somebody and go hire somebody new. So no matter what's motivating you, you've gotta be doing the same things. And the speed of technological change, higher ed universities, k 12 can't keep up. So Edge companies need to educate their labor force, They need to be investing in that.

And I think that's that duality of kind of, like, thinking about, you know, I believe learning is the new pension is to use a phrase that Heather McDonald made popular. And so the question is how can companies be thinking about my labor force Yeah. People need to own their career, but at the same time as a company, we can invest in them to allow it to to help them succeed and thrive in a rapidly changing world.

Kaihan: Yeah. Love it. I mean, each of these are so pressyant. We could dig more of that. We've had Stephen Meyer from Columbia.

He wrote a book about the people advantage and, you know, that your people are the new customer. I think there is this interesting shift, like, you know, that we've gone from cycles, to competition, to customer, and maybe people is the new kind of winning perspective. But yeah. But let's talk about geography a little bit because I think that's especially right now as we're recording as we're recording right now. Tariffs are the number one topic.

You know, you talk about globalization two point o. How do you see that evolving? You know, or when you wrote this, it wasn't as dominant as it is now. Just any thoughts on that?

Robert: Yeah. Better to be lucky than good. And then when all of a sudden, you know, the the world comes your way, you say, oh, look. I I'm lucky. So so when I think of of so globalization one point o was basically the displacement of labor and capital, and we moved from a labor arbitrage opportunity, we moved labor, like, low cost manufacturing to Asia.

We moved low cost software engineering to Eastern Europe and low cost customer service to India. Globalization Two Dot O, I believe, is is an interconnected world We have centers of excellence all over the world, and the and companies work together. And so some of the companies that we studied on this, and they're thoughtful about understanding these interactions. Like, one of them was a gentleman by the name of Haldunam Mubarac, who runs Mubadala, which is one of the world's largest sovereign wealth funds based in Abu Dhabi. And and, you know, Haldon's one of the most amazing leaders I've ever studied.

You know, one of the things that he talks about is the DNA of Ameradis' trade. If you look at the history of of of that very small country, They've always interacted with their regional neighbors. And, you know, they're caught between The US and China. The US is their security guerantor. China's their largest customer.

And so they don't have conflicts with either. So they're trying to figure out How do we maintain our friends to all approach and not have exclusive alliances? And and they're a very, very small country, but they understand they play a disproportionate role in the world. And he's very aware of that local and global. Like, what does The UAE need?

And how do they serve their citizens and the, you know, the people who live there, but also understanding the bigger picture. Similarly, another leader we studied as a gentleman by the name of Bill Winners, who's the CEO of Standard Chartered Bank based in London. Bill, you know, understands very much you know, they do business in The Middle East, Africa, Asia, etcetera. And how do they kinda balance different needs and points of view with the places that they do business? So they will often they'll put local talent you know, in in into regions to make sure they understand that.

But part of their business value is they help their customers do business around the world. So they have to understand that interconnected capability that they is the value they bring to their customer base if Coca Cola wants to sell you know, Coke and and Gola that, you know, they can help them get there and finance the the their operations there. So on the other hand, how do you make sure that some of the values of Coca Cola or the values of Standard Chartered or the values of that country, how do you navigate through them when these things are in conflict? And Bill has a very nuanced approach, and and Nuance, I think, is a key thing. In a world like this where it's moving so fast, leaders today need to lead on very nuanced issues in a world that seems to have very little time for Nuance.

Kaihan: Great point. Great point. They want to know what your view is and which which can't be sitting quickly. Yep.

Robert: Okay. And sometimes it's hard. Like, these these are hard issues for a reason. And most of our leaders are not trained in how to navigate and manage these hard issues.

Kaihan: Yes. Yeah. Which goes back to your sort of influence chapter as well that they're the the lines are blurring between the external, internal. We we could spend. We could do a different podcasts on each of these.

I'd love to do purpose. We won't. You know, externalities becoming internalities and and and all the rest. We'll encourage people to read the book. Let me finish with one question.

There's a quote from Alan Watts. He basically says, like, in the the Wuhuwe. In the in the West, We want growth without decline. We want health without sickness. We want up without down.

And WU Way tells us, well, you know, there's these two. And it kinda leaves us from a Western perspective kind of frozen. Like, well, what which way do I go? So what what's your advice for someone that is looking to shape the strategy of a company understanding that there are these cross pressures that we need to balance?

Robert: I think at the highest level, it's seen the systems and seen action and reaction and understanding that these things are constantly in motion, I think it's the acceptance that these problems are hard and it's gonna stay hard. It's not gonna be easy. And then the for us as individuals, I often like to talk about the parable of the crab, and and, like, how to get through this. Now, crabs, like, all crustaceans need to molt their shells in order to grow. And what they do is they fill themselves up with water, and they pop off their shells.

And they do this because their shells get, you know, chips and parasites. They if they don't pop off their shell, they don't grow. And I was reading this paragraph about craps, like, don't ask me why, but I was. And it and I read this great sentence when crab smolta shells, they go from being vicious predators to soft paranoid cowards. And when I read that, I went, oh my god.

That's just like us as humans. You know, we build up these shells that make us successful, and we get promoted, and raises. And then all of a sudden, we have to pop off our shells and change. And it's scary and it's hard. And what crabs do is they go and hide.

And then eventually, their shell grows back and they can go back to being predators again. And I think that's kind of like us. Like, we have to learn to let go of that which made us successful. Knowing that it's gonna be uncomfortable, knowing that it's gonna be scary, but the show will grow back. And, you know, I think that that leaders can do a bunch of things that will allow them to just, you know, not only be successful in navigating through these transitions, about finding good mentors inside and outside of the company or trusted partners, learning to actually try new things.

There's a whole butt just little things that I talk about in the book that people can do. But I think the most important one is kind of that acknowledgment and acceptance that it scary. It's scary for us, and it's scary for our team. But that, like, this can be done. Like, there's nothing that I write about in the book that we, as normal people, can't do.

Ernest Tammy White quoted the new testament when he wrote his book, the son also rises. And I I like that metaphor, which is yeah. Today might be hard and the sun might be going down, but the sun will come up tomorrow. And the sun also rises. And if we can hold those two truths of, yeah, today's a challenge, but tomorrow's gonna be better.

I think that's a way to get us and our teams through these times, which, by the way, this is the new normal, and our job as leaders is to take a deep breath and to stand up and lead.

Kaihan: Amazing. Well, Rob, thank you so much. Again, we could go on. This is what the time we have. We're gonna certainly encourage people to buy and read the book the system's leader, mastering the cross pressures that make or break today's companies.

How else can our listeners, other people, connect with you, learn from you.

Robert: You can go to my website, which is robertesegal.com, s I e g e l Com. My Stanford faculty web page is up and available, and you can ping me with an email. You can link with me on LinkedIn. At at Robert d Segal, and look forward to connecting with the leaders if the listeners excuse me and doing what I can to help and support them in their journeys.

Kaihan: Awesome. Well, Rob, thanks for the work that you do for taking some time to unpack it for us. And for writing this a great book. Thank you.

Robert: Thanks, Kai. Have a great TV here.

Kaihan: Thank you to our guest, Robert Segal. Thank you to our producers, Kareena Reyes, and Zac Ness, our editor, and the rest of the team. If you like what you heard, please. Bye follow download and subscribe on your own. Cayan Cripendorf.

Thank you for listening. We'll catch you soon with another episode of Outfitters.