Thirty Minute Mentors Podcast Transcript: Interview with Commonwealth Founder Joseph Deitch

I recently interviewed Joseph Deitch on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:

Adam: Our guest today is Joseph Deitch. He is the founder and chairman of Commonwealth Financial Network, the largest privately owned independent investment broker dealer in the country with 160 billion dollars in assets under management. Not only has Joe built a multi-billion dollar company, but Commonwealth is regularly recognized as one of the best places to work. Joe is a Tony award winning Broadway producer, a golf course developer, author of the book, Elevate a Philanthropist, and perhaps most importantly, today's guest. Joe, thank you for joining us.

Joe: A pleasure. Adam, thank you so much for having me.

Adam: First question, how did you go from a student at Penn to the founder of a multi billion dollar business?

Joe: It was long, it was arduous. There were lots of mistakes along the way. But at the end of the day, I'm an entrepreneur at heart. And I'm constantly trying to figure out how to do something better and understand the process more.

Adam: So, Commonwealth didn't start with 160 billion dollars under management.

Joe: Actually, we're closer to 200 billion now.

Adam: Wow. That's incredibly impressive. How did you scale a business? What are your best tips on how to build, grow and scale a company?

Joe: Well, you want to be treated yourself. You want to figure out what your own passions are, what your purpose is, what gets you excited, and if you can do that you're supercharged in everything that you do. And it's a joy, as opposed to slogging away at something else. And then after that it's fine to other people who share these passions. And, and just do it and refine it and constantly try to be the best that you can. And I know it sounds like cliches, but there's no simple answer. It's a lot of work. It's constant innovation. It's a lot of listening. It's a lot of everything. Interestingly, not that many people care that much. And if you do, just stick with it.

Adam: Do you have any anecdotes from your time, from the early days really building Commonwealth that stand out to you that you look back on now and say, those were key experiences in helping take the company to what it is today.

Joe: Yeah, I used to think I was the shit. Do people still use that expression?

Adam: They do, absolutely.

Joe: Like a lot of entrepreneurs or a lot of people, when we have some success in our early years, that, on the one hand, propels us to try to do more and go further. On the other hand, it deludes us into thinking that we're better than we are, and we know more than we know. So really most of my success came from embracing my limitations. Once I came to grips with the fact that my perceptions are literally just my perceptions and my experience is limited. I don't have the corner on all knowledge all the time otr experience all abilities. Once I came to understand that I could literally embrace it, I could feel fine saying to people, “No, I don't know, what do you think?” And that was the real beginning of our ascent. When I realized that I needed to listen to other people, I needed to build a team, I needed to build a spectacular team. So it was paradoxically understanding my limitations that was the secret of my success.

Adam: I love that, Joe, and clearly from your perspective, and it's a perspective that I shared deeply, humility is a core element to being an effective leader. What are some of the other key aspects to really effectively leading an organization?

Joe: The operative word is lead. That's what people want a leader to do. And there has to be clarity about where are we going? Why are we going there? Why is it important? Because our offense and hopefully is innocent, but it's fueled by passion. And we need to tap into that. If we're wishy washy, you know, we're not going to lead ourselves, let alone anyone else. So we have to tap into all of that. And there needs to be consensus. If there's three of us, if it's you and your buddies on a Friday night, you're trying to figure out where you want to go, and everyone wants to go someplace else. Where do you end up- nowhere? But if you can pause for a moment and say, what do we really care about? And then once this agreement about where you want to go, then you go there as a group, and everyone's excited about it.

Adam: What’re some of your best tips on building, managing, and leading teams?

Joe: Don't hire good people.

Adam: Don't hire good people?

Joe: No, because you can't fire good people. You know, you can't say, I’m letting you go. They go, “Why? Me? Well, did I do my job? Absolutely.” But good people aren't going to get you where you need to go. You need great people. And one thing I- and this is a hard lesson for managers, because they're always fearful that if they hire someone better than themselves, then they're going to lose opportunities to that person, because that person is going to outshine them. But in reality, if you can hire amazing people, and if you can create just an incredible kick-ass team, and you're the person who did that, you're more valuable than anyone.

Adam: What do you look for in people who you hire?

Joe: This is a very interesting question. We put a lot of thought into who we hire because that particular person is going to be performing a particular function. So we were talking about baseball earlier before the interview. If you need a pitcher, you don't hire a shortstop

Adam: Unless you're the Angels because the Angels desperately needed starting pitching this offseason and we signed a third baseman, but I digress.

Joe: But you don't have the pitcher play third base…

Adam: True.

Joe: … is what I'm getting at. The very first step is to get clear about what position you need and then what does that person look like? So that when you're interviewing people, you find someone who's great for that job. And we use a particular service. It analyzes personality profiles, and we always want people to beware someone who's social, sociable, affable, because you're gonna love that. Listen, it's gonna be a great interview. But it does not mean that they're going to be a great person for the job. Some jobs require someone who's very detail-oriented, and only wants to do a few things and do them very well. Either jobs, you need someone who's going to take the lead, and who thrives on juggling 20 things. So it's the right person for the right position. And beyond that it's respecting people for who they are but caring about them and, and it's not something you can fake.

Adam: What are the keys to building a winning organizational culture?

Joe: I'll start with caring about people; caring about the objective, being authentic. People know if you're full of it. So there's no need to put yourself into that position. So if you've got your team and you want them to go to bat for you and go above and beyond for you, then be straight with them, and care about them and help them as much as you can. And that's it. I mean, it's so weird. It sounds like, of course you do that. But there are very few leaders, very few businesses who actually do that.

Adam: What are the most important skills that you think people should develop early on in their careers? And how do you think they should develop them?

Joe: You know, it's interesting, that's the beginning of the book I wrote, Elevate. It's about awareness and self-awareness. Most of us go through life, semi clueless. We’re not necessarily in touch with, you know, our deeper motivations or our fears and desires and our issues, but those fears, desires, issues, that's underneath everything and it's really moving us to do or not do certain things. So the first step is to have self-awareness because the more you know- knowledge is power and the more you can see, the more you can do and then develop awareness of other people. It's a common fault to think that we're all the same, but we are vastly different. I'm a guy. I grew up in New England. I was brought up Jewish. I don't know what it's like to be brought up as a woman or to be a woman. I don't know what it's like to be brought up Muslim or Christian. I don't know what it's like to grow up in Asia or Africa. But because my perceptions seem to be so obvious. I think the sky is blue. I'm looking at a wall now. It's sort of an oyster, white, a little bit off white. The floor here is a beige wooden floor, of course. Of course other people see it the same way but you know what? They don't. People see things differently. You probably know on the internet- you remember the blue dress and the white dress?

Adam: Sure.

Joe: Okay. I saw very clearly a white dress with gold stripes. Other people saw a blue dress with black stripes. How's that even possible? And then there's a Laurel and Yanny.

Adam: Yeah.

Joe: I hear, Laurel, Laurel.

Adam: It was definitely Laurel.

Joe: By the way there are some things on the web you can find. There's a dial where you can move it in one direction or the other. And you actually you'll be able to hear the Laurels and the Yanny’s if you're not able to hear that. I thought that that was pretty cool. It was, but that's the tip of the iceberg. So once we realize that our view is just one view- number one, it bestows humility upon ourselves. Number two, it prompts us to be curious about what other people think. And not only does that give us knowledge, it bestows respect upon other people and because they feel valued, and they should. And the more information you have, the better your team, the better their communication. You go further, faster, and more enjoyably.

Adam: Joe, you weren't always at the top. How do you move an organization to your way of thinking when you aren't at the top of it?

Joe: If you think that your job is to convince other people of what you want, I think you're missing the boat. I think the real question is, how do you help the team do the right thing? How do you help the team do the best thing? So the first thing I do actually is throw away or just hold to the side what I want. I'll share it with people, say, “Hey guys, here's an idea I have. What do you think?” And at Commonwealth, my primary business, it's almost like a bloodsport to just rip my ideas apart. But because of that we come up, we put our heads together, we add our collective experience. We come up with much better ideas, people feel heard, they feel valued. They want to be on that team. They're not looking to go someplace else. They love where they are. So I'm not trying to convince someone of my idea. I do try to convince people that we should find the best ideas and the best pathways and pursue those.

Adam: What did you do along the way to the top that others didn't do?

Joe: I persevered. Most people are not entrepreneurial. It's very interesting. And, you know, this was actually the genesis of my book. It's very interesting to put together a list of what to do. What's harder to understand is, why don't we, and other people, do what we should do? Growing up, I thought, adults were idiots. They didn't take care of themselves physically, most of them didn't exercise. They ate junk foods. My father smoked cigarettes, and it killed them. On the package it says, in a sense, this will kill you. Why do people, so many people, today smoke cigarettes? Why, you know, why don't they vape? Why do they do that? It's, stupid. But we do it and there's so many unproductive, unhealthy things that we do. So that's what we really want to figure out. That that's, you know, there's where the treasure is.

Adam: What were notable moments of self doubt that you encountered and how did you overcome them?

Joe: Ah, there's lots of them. We all have moments of self-doubt. How do you overcome them? Get a good night's sleep. Look, things just look and feel different then the next day. Or just keep a list of your account accomplishments. There's an infinite number of things we do well, and there's an infinite number of things that didn't work out the way we wanted to. If we dwell on what didn't work, our so-called shortcomings, that's it, we're not going to be in a good place. So it's how you frame things.

Adam: What's the biggest risk you've ever taken in your career?

Joe: Interesting question. There were a lot of risks that I took, but I didn't know that they were risks. So starting my business with no money, no experience. That was a massive risk. I just didn't know how risky. I was young and dumb. It was the thing I wanted to do. So I did it. I mean, looking back, driving without seatbelts is a risk. But rather than taking risks, what I prefer to do is to make intelligent choices; to analyze the probability of any one particular thing and then figure out what I can do to improve the probability of success. So a very interesting example is some people say, “I'm not going to put money in the stock market that's too risky.” These same people will go to a casino. When you step when you go into a casino, other than just you know, betting a few dollars for the mere entertainment factor. If you're betting in a casino, the odds are against you. Do it long enough, you will lose money in the stock market, the odds can be, you know, 70% in your favor. And then you say, “Okay, what can I do to increase those odds? Whose expertise can I rely on?” Or people with experience who would let me talk to them? What do they say? And just looking for expertise and experience starts to stack the deck in your favor.

Adam: Along those lines, what are some of the most important things you've learned about investing from your career in the industry?

Joe: Well, those two things; find the experts, find the expertise. Diversify; don't put all your eggs in one basket. Invest in areas where you have some personal feeling for because if someone tells you about something, and it's not an area that you have a clue about, you can't bring your own experience, intelligence, and intuition to bear. So look for things that make sense to you. Find people who have made money and lost money and find out well, what did you miss when you lost the money? How would you do it differently today? And there's lots of books on that subject. People don't read those books. They don't talk to those people.

Adam: What does the future of your business look like? How is it impacted by technology?

Joe: Same as everyone else's businesses. Everything we do is hugely impacted by technology. Business is more complicated than it ever was. It moves faster than it ever has and the complications and speed are only going to increase. So for those people who can make use of technology, who can put their egos aside, create the better teams, the future looks bright. But for people who are just trying to hang on, it's only a matter of time until they can't hang on any longer.

Adam: Can you elaborate a little bit more on where you see the future of the business going?

Joe: It's the famous quote I attributed to Wayne Gretzky. You want to go where the puck is going. Whatever the business, you want a solid understanding of what's going on. You want to be number one in your market niche. There's a famous book written years ago. So it's a little book 22 Immutable Laws of Marketing by Trout and Ries, and they say be number one in your category, and if you can't be number one in that category, redefine the category. So the great example is- I don't know if this was before your time, but the soda. You say soda, pop? What do you say?

Adam: Soda but pop works as well. Either one is identifiable.

Joe: 7 Up.

Adam: Sure.

Joe: 7 Up was a lemon-lime drink. It was fair to middling. It wasn't doing much at all. They redefined themselves as the un-cola. They were the un-cola. And Avis, they made a big deal about “We're number two, we try harder.” They were number one in the no, we-try-harder category. And then there's Perdue Chicken. When Frank Perdue 30 years ago started marketing his chicken he talked about the fact that these are my chickens. This is what they eat. Do you know what your chickens eat? And they became number one in their category, huge lesson. But whether it's whatever business you're in, you need the right people for the right job. You need to motivate them. There's the whole chapter on motivation in the book, but this is the science of behavioral psychology.

Adam: Joe, what advice do you have for listeners interested in either breaking into or advancing within the financial services industry?

Joe: Get some experience. There’s a family friend who is now doing spectacularly well. I think he leads the country in the particular firm he works for. And after he graduated college, he came to work for me and worked in our cashiering department. And he hated it. He did. He just, it just wasn't the right fit. So ultimately he went into sales. And we laugh, because I said, “I'm responsible for your success because we learned what you didn't want to do.” But start anywhere, do something and that with this experience under your belt say, “what did I like about it? What didn't I like about it?” And keep refining where you're going. When my son graduated college, he got a job in New York. He now works in finance alongside me, but he got to work. He went to work for an advertising agency. And what he did was, he made sure he was the first person to get to the office, and the last person to leave. That was his game plan. People liked him. People respected him. He made contacts that he takes advantage of to this day.

Adam: What is your best advice on asset gathering? How can salespeople or advisors best get in front of prospective clients and then persuade them to say yes.

Joe: Part of the answer is inherent in your question. You said, salespeople are financial advisors. Nobody wants to talk to a salesperson. Everyone appreciates an advisor. So if you can truly be an advisor, if you can put your client or prospective clients needs at the forefront, if you can say to someone, “Tell me about your situation. What do you need? What's important to you? Why is that important?” And then if you can help get what they want, you become valuable.

Adam: What advice do you have on marketing, branding, and differentiation? You built a highly successful business in an extremely competitive industry, where it can be especially challenging to differentiate. I would love any thoughts you have on those areas.

Joe: Lots of thoughts on that. We are fanatics about delivering great service. Great service is unusual to think about. If you go to a garage, automotive mechanic, or a dry cleaner or restaurant, how often you walk away from that experience saying that was great. They know their stuff, and they cared about me. Oh my god. Not only am I going back there, I'm going to tell all my friends about it.” Very few people give truly wonderful service and if you do that people will come to you. They will stay with you. They will tell their friends about you. It's weird, but people either don't know how to do it or don't care. And you can fill that void.

Adam: What was your daily routine when you were building your business and what is it today?

Joe: My daily routine was get up, go to work, keep working until I couldn't anymore and go to sleep. That was my daily ritual. Part of this was because early on I got into trouble, like I was way over my head. And the early years of my business, I was literally just trying to make it back to the surface so I could breathe. I was in debt and trying to get out of debt. My fantasy was to be worth zero. Oh and I'm serious. And the notion of not having any debt to be able to breathe clean air to get that off of my back that that was my fantasy for years. Now, people forget that they don't understand or they forget what success is. Too often they might attribute success or think of in terms of notoriety or money. That's a measure of success. But money and notoriety is just something that we trade for. It makes us happy. We can use money for shelter and food and vacations and things like that. But we find ourselves chasing money for so long and so hard that people forget that money is not the objective. Health is the objective. Love is the objective. Friends and family are the best objective. And it's critical to keep all that in perspective.

Adam: Along those lines, can you talk a little bit about how you've been able to balance everything- advice, specifically around time management and how listeners can get to the top, inside and outside of work?

Joe: Those are, those are a few questions. How much time do I have for that? So the best two great time management techniques. One is to divide everything into an A pile, and a C pile. And there's a reason there's no B pile and the reason there's no B pile is to avoid any ambiguity. So A pile is everything that's a priority and important. And the C pile is everything else. Obviously, you start with the A pile, and when you finish A pile, that's when you attend to the C pile. Interestingly, you never get to the C pile, but that's okay. Another huge one is proper delegation. And I said there were only two but I'll give you a third one; someone pointed out to me years ago, the day before your vacation, think about how you conduct yourself that day. This is the day you've got to get everything done before you leave for vacation. We are so productive that day. If you can treat every day like the day before you leave, you'll be much more productive. And I totally forget the rest of your question.

Adam: Yeah. Two other big points. How do you balance everything and just general advice on getting to the top?

Joe: So, general advice on getting to the top is we're already at the top we just don't know it. We live in a glorious, fantastical life filled with wonders and wonderful people and we just need to open our eyes to that and I'm not trying to be all crunchy granola or whatever this is the truth. And for those people who you know, who ultimately attained enlightenment or call you what you will, what happens is they finally open their mind. They open their minds, they open their hearts, and they just appreciate everything that we have. That is it. That is the top. What is the other one again?

Adam: Balance. How do you balance.

Joe: Oh, balance. Yes, some people, a lot of people make the mistake, that balance is this 50/50 thing because it evokes this image of you're on a tight water tight wire and you have to balance things equally on both sides. Now, balance could be 90/10 or 10/90, or whatever it is. Whatever works for you. That's the balance. You find it by trial and error.

Adam: I love it. I have one final question for you; how do you win a Tony?

Joe: You lose a lot of money No. So some of the greatest inventions in the world was the wild card in sports because just that concept kept more teams more interested, you know? More fans are more interested for way longer into the season. And the other thing is when instead of calling Broadway investors “investors”, they call them producers. Now I feel like a Broadway producer, but this is a longer conversation. If I could end on one comment. If we think of the road ahead, as an opportunity to experiment and to engage in experiments that we control. We will learn so much more, and enjoy it so much more. We're often intimidated to go down this path or try this or that and or to change, but we don't have to change. My suggestion is that people just try something. Try something for a day. Try it for a week. See how it turned out, see what you learned. And it could be as simple as going to a new restaurant, striking up a conversation with someone you've never really chatted with before, or talking to a recruiter about a job change or opportunities. Just try things. You'll be in control.

Adam: Joe, thank you. Thank you for tremendous advice. Thank you for everything and it was a pleasure having you on.

Joe: Adam, a pleasure as well. Thank you so much.

Adam: One final point; couldn't agree with you more about the wild card especially because the 2002 Angels were the World Series champions, and a wildcard.

Joe: Ah, and they were followed soon by the Boston Red Sox, who, you know, after they had not won a World Series since 1918. And you probably know who Theo Epstein is?

Adam: Sure as I do 28 year old, he was responsible for a lot of postseason losses by the Angels. So I know him very well being on the other side.

Joe: Right, but he was the 28 year old kid, who was given the reins of the Red Sox and brought them to, you know, World Series, and then he goes to the Bubbies, sure. Who likewise had never won one, and he brought them reversing the World Series. Unbelievable. Amazing.

Adam: Joe. Thank you. Pleasure. Take care.