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Business Is Hard

By Morgan Housel - Apr 21, 2016 at 4:40PM

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The battle of stakeholders.

I sat down with Whole Foods co-founder and CEO John Mackey this morning. Mackey sits on the Motley Fool's board of directors, and in addition to being one of the most successful businessmen of our time, he's an avid investor. The two experiences make him a fascinating guy to talk to, because he's seen both sides of the coin: As a CEO who shareholders watch critically, and as a shareholder who critically watches CEOs.

Every business has three main stakeholders: Customers, employees, and investors. The CEO's job is to make all of them happy.

Mackey said something that surprised me: "Investors are by far the easiest to please."

I didn't expect that. I thought shareholders would be the least understanding of the three, the ones most likely to leave and find opportunity elsewhere. I figured employees, happy to have a paycheck, would be the easiest group to take care of. 

And that's kind of true. But Mackey explained: Investors just want the stock to go up. As long as it's going up, they're happy. It's a one-way goal without much nuance.

Employees are way more complicated.

If you pay employees little, they're unhappy. If you pay them more, they're still unhappy if they don't have opportunities to advance. If you pay them a lot and give them opportunities, they still may hate their boss. Or their coworkers. Or their hours. Or your policies and culture. They may feel abused by customers. Problems at home may turn into problems at work. They get tired of doing the same thing. It's like this at every business.

Same with customers.

Customers want the quality of your most expensive competitor at a lower price than your cheapest competitor. In a convenient location. In a nice setting, with friendly employees. They want a huge selection that is predictable but also stays exciting and new. They leave negative reviews on Yelp even when you seemingly do everything right.

Damn, business is hard.

Every shareholder knows this. CEOs are paid well because they're expected to work magic. And not every CEO succeeds at making shareholders happy. Most don't, in fact.

But investors – I'm probably guilty of this – get caught up in a world where success is hard, but easy to define and quantify. Success means stocks going up and wealth being created. But for the CEO who we're judging, success isn't just hard; it's nebulous. You don't really know what it means, because it's always changing and redefining itself with conflicting demands. It leaves behind old goals and develops new desires.

I often think how hard to would be to run a public company and have to deal with us shareholders. And we're the easiest part of the job, because our desires are straightforward.

It's not until I talk to someone like Mackey, who's sat on both sides of the table, that this becomes clear.

So, thanks, CEOs. You work for us, but it's easy for us to underestimate your job.

For more:

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