Ep 489 | The Highest Form of Leverage – Your Reputation

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Just yesterday, I aired an interview with Mark Hodelick. Mark is the CEO of 29029, an amazing business person has some great partners, built an extraordinary family, extraordinary relationships, an extraordinary reputation. The guy is, is just world-class in so many ways. And I loved interviewing him. And I want to encourage you to go back to yesterday's episode and listen to that interview, all 56, 57 minutes of it, because it was just solid gold in my opinion. The next few days, we're going to spend some time breaking down different parts of that interview. We're going to extract certain things that Mark shared about his world, what he believes in, his upbringing, his relationships, his business building and partnerships. We're going to talk about different things we learned in that interview. And today, I want to talk a little bit about a quote that, that Mark had. Mark had said that the highest form of leverage is your reputation. The highest form of leverage is your reputation. I believe he said this when I, when I asked him for his 3 truths, which was really the question of, you know, if you, if you, uh, leave this planet and you only have 3 things you could leave behind, what would those 3 learnings, those 3 sayings, or, or, or things that that you want people left with, what would you, what would you leave? And one of those things he shared was his belief that the highest form of leverage is your reputation. Mark believes that the influence that one's reputation holds is incredibly important in achieving success, not just in business, but in life. And when he said this quote, it really resonated with me. Because I think in business, leverage comes in so many different forms. We think about leverage in terms of capital or in terms of technology or networks, but the highest form of leverage isn't something you buy or you build if you believe in what Mark's saying here. It's something that you actually earn, and that's your reputation. We can all earn this sort of thing. We may not have the capacity or the capital to invest in the other forms of leverage that I described, but but we all can build a solid reputation. So, the question I've been really kind of thinking around is, if that's true, then what's the ROI of a great reputation? And how can that reputation be your biggest advantage? The concept of your greatest leverage being your reputation is just an important one. So what does reputation mean in business? Let's, let's kind of back up a little bit. When I think about reputation in business, if I were to define reputation in business, I think about a few different things. Number 1, I think about trust. I think when you have a reputation, a solid one, you are trusted. And when you're trusted, deals get done faster. When you trust somebody and they trust you, When you have a reputation of trust, the underwriting, the due diligence, if you will, gets done much faster than if you had no reputation or even worse, a bad reputation. Bad reputation may not even get to the part of negotiation where you look to even get something done. It might just burn up. But trust gets deals done faster. When I think about reputation, I also think about opportunity. A strong reputation attracts clients, investors, partners, talent into your world. Again, when you've got a great reputation, opportunity finds you. And then lastly, when I think about reputation in business, I think about risk mitigation. See, a great reputation creates goodwill, and I think goodwill helps a ton in tough times. So in summary, I think about trust, opportunity, and risk mitigation when I define reputation in business. Charlie Munger, who we talk about so much here at No Days Off, has a great quote. Charlie says, remember that reputation and integrity are your most valuable assets and they can be lost in a heartbeat. I'm going to say that one more time because I want you to listen to it very carefully. Charlie says, remember that reputation and integrity are your most valuable assets and can be lost in a heartbeat. Not many people think about reputation and integrity as valuable assets, especially somebody like Billionaire Charlie Munger, who knows dollars and cents, what he's saying the most, and assets, he knows balance sheets. He's saying the most valuable asset is your reputation and your integrity. Now, there's a great story talking about, you know, Charlie Munger. There's a great story about his buddy Warren Buffett, and it has to do with Warren's acquisition of a company called McLane distribution, McLane Distribution. In 2003, Warren Buffett's company Berkshire Hathaway bought McLane. McLane was a division of Walmart. It was a, it was a company that was more or less the middleman between supplier and consumer. He bought this company called McLane in what Warren described as a one-day deal. With no due diligence. They literally met for 2 hours and within a month closed on the transaction. Berkshire Hathaway bought McLane. Now, this wasn't a small transaction. It was $1.45 billion. So in 2003, Berkshire Hathaway buys McLane, this division of Walmart, in a 1-day deal, 2-hour meeting. Shake hands, and within 30 days closed the transaction. How and why did this occur? How's it even possible? Warren went on record saying that it all had to do with Walmart's reputation, their reputation for integrity. In other words, Warren had felt that because of Walmart's reputation, if, if McLane was a company and the people of McLane were individuals who Walmart would do business with, then they were good enough for Warren and Berkshire Hathaway. There were no lawyers, there were no back and forth negotiations. It was just a handshake and a wire transfer of almost $1.5 billion. Less than 30 days. Now, Warren said, hey, it was a public company. We could do all sorts of research that way if we wanted to. But usually you do a deal like this in today's environment, It's a year plus, and that's if, you know, that's if the government doesn't strike it down for fear of monopoly. This is reputation as leverage in action, in my opinion. As you can see, when you have a reputation like McClain did, it speeds up decision-making and it eliminates friction. So if we believe that reputation is the ultimate form of leverage, like Mark described. It begs the question, how do we build reputation in our business? More specifically, how do we build reputation leverage? I think it's easy to state but difficult to put into play. I think number one, it's about consistency. You got to do what you say, you say what you're gonna do. Like, do what you, you say you'll do every single time. It's about consistency. It's about ethical decisions. It's about choosing long-term trust over short-term gains. I think it's about delivering more than expected and expecting nothing in return. I think reputation compounds when you exceed expectations. So deliver more than you expected, or I'm sorry, more than expected, but don't expect anything necessarily in return. And then lastly, I think when I think about reputation leverage in business and how to build it, I think about handling setbacks publicly and honestly. I think mistakes won't ruin you. How you handle them can potentially ruin you. So, handle setbacks honestly and publicly. So, in closing, I think your reputation, just as Mark said, is arguably your greatest asset. I think in business, you can borrow money, you could outsource work, you could buy software, but no one can lend you a great reputation. You have to build it yourself. And once you have it, it's the ultimate form of leverage. So, the question for you today, or the challenge I should say, is to take a moment today to ask yourself, what's one thing I can do to strengthen my reputation in business and strengthen my reputation outside of the office? Again, take a moment today and ask, what's the one thing I can do to strengthen my reputation in my business? And what's the one thing I could do to strengthen my reputation in my personal world outside of business? That's all I have for you today, the No Days Off Podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.