Integrity Is More Than A Principle -- It's The Secret To Entrepreneurial Success

Harley Finkelstein (00:00):
One thing that I don't think gets talked about a lot in business is the concept of integrity. You hear a lot about growth, you hear a lot about scale, profitability, top-line revenue, headcount, exploring new markets, all the things that make a business bigger. But one thing, it's just not talked about often, but it's important, is the concept of integrity. That there are some business deals, some areas of business that you just don't want to go into because it doesn't feel right to you.

(00:27):
And some might say that that is a luxury [00:00:30] that you get when you become a successful entrepreneur, but I think one thing that these guests showed us and demonstrated was that at every stage of their journey, from when they were just getting started ... And Jonathan Wener has this great story, where he effectively was asked to give a bribe to get something done on a particular development deal. But even from an early stage, these big shots that we interviewed, they always had this incredible sense of integrity. That yes, they were ambitious, yes, they want to build something massive, but they would never go against their own integrity. They would [00:01:00] never do something that would jeopardize their integrity, because ultimately building a business in the right way was incredibly important to them.

David Segal (01:06):
It's one of the most important things, and they all shared this value, in that if you build a bridge you can walk over it more than once. It takes decades to build a great reputation and minutes to ruin it. And they all wanted to elevate people, everyone around them. Their success should create success for others, for their families, for their communities, for everyone around them, and I think they all really saw themselves as positive [00:01:30] forces in the world.

(01:31):
I actually heard a great story just recently about Howard Schultz, who hopefully will be a big shot one of these days on one of our upcoming episodes. He's the founder of Spotify, who talks about doing a deal on Starbucks stores, where Starbucks drops Apple and does Spotify, and it doesn't go very well. And in that deal, Spotify has to pay Starbucks a certain amount of money that they frankly can't afford based on how the deal went. And [00:02:00] he figures that Howard Schultz is going to fire him and ask for the money.

(02:05):
Instead, Howard Schultz calls him all the way to Seattle and apologizes to him, and says, "We didn't do a good enough job on our side. Nevermind the money you owe us, let's keep going and make this work." And he saw the bigger vision on Spotify. And in the end, of course, Spotify became what it is, and the partnership was a great partnership. And I think you look at our guests, and they all share that type of thinking. They've all done things, whether it's Aldo and [00:02:30] the importance of love and respect in his company, and how he really valued all the different types of nationalities being at the table and treating everybody fair.

Harley Finkelstein (02:37):
Or Issy Sharp and the golden rule at the Four Seasons, where ultimately, there's a certain respect that is demanded by everyone that works at Four Seasons to the customers.

(02:47):
But integrity is this interesting thing, which again, doesn't get a lot of time because it's not that sexy of a topic. When you look at the most successful people you know, all of you think about this, all of them have this incredible desire to [00:03:00] be people of integrity, of great integrity. It goes along with the community leader thing, that if you make, you have a responsibility to give. But one thing you see is, that not only have they built great things, but how they built it was very important to them. All along the way, as they look back, they're proud of what they've done.

(03:14):
I remember sitting in Jonathan Wener's living room, and he talked with great pride beaming on his face, that big smile, and I remember him saying a lot of his people that worked for him got really rich participating in the deals, and he was almost as excited by that than he was about himself getting rich.

David Segal (03:30):
[00:03:30] Absolutely, and Aldo could have taken the easy way. He originally worked for another shoe company, did very, very well with them, was promised partnership, didn't get it, and there would be no Aldo shoes today.

Harley Finkelstein (03:44):
Well, Aldo didn't stay there because he saw someone else operating with a lack of integrity, and therefore he said, "I cannot be your partner in the long run."

David Segal (03:50):
That's right.

Harley Finkelstein (03:51):
So ladies and gentlemen, another Big Shot Short, let's talk about integrity.

(04:00):
[00:04:00] You're now going to hear from Jonathan Wener, the founder of Canderel, and he talks about this amazing story, where he left millions of dollars on the table because he refused to pay a bribe.

(04:18):
What was the actual ethos? What was the thing that...

Jonathan Wener (04:21):
Just a high level of integrity in dealings. I've left millions of dollars on the table for integrity.

Harley Finkelstein (04:28):
Can you give me an example of that?

Jonathan Wener (04:30):
[00:04:30] Well, I have two situations. One is where a large tenant, we were working on their renewal, and he invited me into his premises on a Friday at noontime. And I think at the time I was 29 years old. He said to me, "You know, my daughter's getting married very soon."

(04:57):
I said, "Congratulations." I said, "I have two daughters [00:05:00] myself."

(05:01):
He says, "You know weddings are very expensive."

(05:04):
I said, "Oh, yes, I'm starting to save now and they're only two and four years old, but I understand that weddings can be very expensive."

(05:13):
And he goes on, and on, and on like this, and this is an open office landscape environment, but there is nobody else in there except me and him. And he says to me, "Do you not understand what I'm saying?"

(05:29):
I said, "I understand [00:05:30] completely what you're saying, but if you're telling me that the renewal of your space depends on me helping you out with your daughter's wedding, we're not doing business."

Harley Finkelstein (05:41):
Wow.

Jonathan Wener (05:41):
And this was at the time about a $10 million lease, okay, and $79.

Harley Finkelstein (05:50):
And you owned this building?

Jonathan Wener (05:51):
I was a part owner, not a major owner.

Harley Finkelstein (05:55):
Yeah, but still.

Jonathan Wener (05:57):
And I lost the deal.

Harley Finkelstein (05:58):
Wow.

Jonathan Wener (06:00):
[00:06:00] And I told my guys, my bosses, I said, "If you want to overrule me, that's fine, but I will not do it."

Harley Finkelstein (06:06):
And just to be clear, it's a $10 million lease, but he probably didn't need much. He probably needed 25,000 bucks, right, something like that?

David Segal (06:13):
Right.

Harley Finkelstein (06:14):
And you still said no?

Jonathan Wener (06:15):
I don't do it.

Harley Finkelstein (06:16):
You don't do it?

Jonathan Wener (06:17):
I don't do it. I've never done it. I never have to look over my shoulder. I've never done it. And I lost a much bigger deal, which was a tendered deal where I was told to put $200,000 in a paper bag. [00:06:30] And I have to tell you, it's the only time of my life that I've been physical. I picked the guy up by the lapels of his suit and threw him out the door. I said, "You get the hell out of my office. You let your people know that we don't do business that way, and I'm ripping up my tender." I won the tender.

Harley Finkelstein (06:53):
You did?

Jonathan Wener (06:53):
I won the tender, but I wasn't getting the treasury board approval unless I put the money in the bank. [00:07:00] And I've never done it.

David Segal (07:02):
And you walked away from the deal.

Jonathan Wener (07:02):
I did.

David Segal (07:03):
Yeah.

Harley Finkelstein (07:04):
Can you talk about how you build such great relationships, particularly when you're at a young age, like 23 years old and you're asking for a lot of money from these people. How did that happen? What was your strategy there?

Jonathan Wener (07:18):
I think underlying whatever you do to build trust, you have to have competence, and we had proven competence. And there's the old expression, "You're only as good as your last deal," but as long as you have a good track [00:07:30] record to point to. And when you look at the fact that we've built over $8 billion and maybe along the way lost $60 or $80 million in real estate, that's not too bad.

Harley Finkelstein (07:40):
No.

Jonathan Wener (07:42):
I will say there were a couple of deals that we didn't make as much as we thought we would because circumstances changed. But you bring up a good point, because to me, the ability to cross the same bridge multiple times was more valuable than how much money we [00:08:00] pulled in, in any one deal.

Harley Finkelstein (08:01):
Can you explain that a bit?

Jonathan Wener (08:03):
Long story short, I had been working on a deal with IADA for a building on Peel Street, and I had acted as a consultant to Reisman to keep it going because the firm wasn't doing anything with it. And finally, I said to Reisman, I said, "Your whole company, nobody's filling in for me, have left, and I'm not coming back."

(08:28):
He said, well, why don't we do it as partners?" [00:08:30] And so we did a 50-50 deal. We only had $50,000 deposit out on the land, and so we kept going forward, and I kept moving and working on financing and getting things organized. Long story short, he had a little bit of financial trouble and he said, "Well, why don't you buy me out?"

(08:55):
So I said, you know what, Jean? I said, let's go to [inaudible 00:08:59] [00:09:00] Ziplin office. We'll sit with Herb Ziplin.

Harley Finkelstein (09:02):
Who's that?

David Segal (09:03):
That's an accounting firm.

Jonathan Wener (09:04):
That's an accounting firm.

David Segal (09:04):
Yep.

Jonathan Wener (09:05):
They were bought by ENY eventually.

(09:08):
And I said, "Let's sit down and discuss price, because I don't want to take advantage." And I said, "So Jean, what do you want?"

(09:20):
He said, "I want a million dollars." For half interest on a $50,000 deposit.

Harley Finkelstein (09:26):
Sounds rich.

Jonathan Wener (09:27):
I said, "Jean, I [00:09:30] tell you what, I'm going to give you $1,000,001."

(09:32):
And he looked at me and he said, "Why?"

(09:36):
I said, "Because I don't want you to ever be able to say that I didn't give you more than you asked for."

Harley Finkelstein (09:41):
Wow.

Jonathan Wener (09:43):
And I did it. Herb Ziplin said to me, "John, are you out of your mind?"

Harley Finkelstein (09:46):
Sure, yeah.

Jonathan Wener (09:47):
I knew exactly what I was doing. I was tired of having been through the business, joint venturing with other developers, and when you're joint venturing with other developers, there are many [00:10:00] ways to do things. So you're arguing style in a partnership when that's not complimentary. It's not complimentary, it's competing. What's complimentary was for me to be able to bring financial, money, institutions to the table. So they had the money, I had the know-how, put that together and be able to go do many deals.

Harley Finkelstein (10:20):
Yeah, the Venn diagram overlap is too much. You both have the same skillset. If they bring money and you bring the skillset, you actually form the best partnership.

David Segal (10:27):
That's remarkable. I mean, $1,000,001. And it's probably worth what, $50,000 or $100,000 [00:10:30] even if you're giving them a premium?

Jonathan Wener (10:33):
Right. So what ended up happening, and it goes back to a question you asked me earlier, is I did a deal with North American Life who put up the $1,000,0001 to buy Reisman. So I didn't put out the money. I got the full development fee, which I didn't have to split with him. And I developed a relationship with North American Life, which built my career because I did multiple deals with them. So [00:11:00] many that it got to a point where, and I loved the relationship so much that I had befriended the CFO of the company, and I told him what I had in mind that maybe I should sell 50% of the interest in the company to North American, and we just keep going forward. Ori Fidani built up a huge portfolio with North American Life, so there was the example.

(11:28):
And he said to me, "Jon, [00:11:30] don't do it."

(11:31):
I said, "Why?"

(11:32):
He said, "You're going to outgrow us before we outgrow you. You're going to have more deals than we can service. Diversify your relationships."

(11:42):
And so what ended up happening, which goes back to your earlier question, I did half a dozen deals with North American Life. I did half a dozen deals with Great West Life. I did 10 deals with Aetna. And they became my partners, and they all had different kinds of deals that fit [00:12:00] their mold. And so if this deal came along, I said, "Well, this one belongs to Aetna, and this one belongs to North American Life because it fits their mold." And there was no resentment. And lawyers were amazed they could send me a bill for $1200 instead of $12,000 or $125,000 because it was the same document over and over again.

David Segal (12:23):
Now you're going to hear from Aldo Bensadoun, the founder of Aldo Shoes, on how love, respect, [00:12:30] and integrity was one of the most important things for his success.

Aldo Bensadoun (12:35):
I had all that anger toward my former employer. I had-

David Segal (12:44):
Who's also your debtor lender.

Harley Finkelstein (12:46):
Your creditor.

Aldo Bensadoun (12:47):
What?

David Segal (12:47):
He's your lender, right?

Harley Finkelstein (12:48):
Yeah. He's your lender. He's your creditor.

Aldo Bensadoun (12:50):
And I had all that anger. I had also the feeling that what am I going [00:13:00] to do now after spending so much time working, and so hard?

(13:04):
When I started the company, I said, "How am I going to do?" I've been hurt and I'm angry at my former boss, and I want to show him that I can succeed. I'm worried because are we going to have enough money to feed David and the family and my wife? And [00:13:30] my family, I wanted to make sure that they were proud of me.

(13:38):
And so you had all those movements and I said, "Okay, I'm going to start that company at with Le Chateau, but I'm going to make sure that it's very different. The business model will be different, that we are going to eliminate the wholesaler. But also [00:14:00] I'm going to prove to my old employer and to my friends, to Charlie and Alex, that it's possible to be a capitalist and still be a fair person, and be a person that is socially minded and create something that can help the world and make the world a better place to be."

(14:27):
And that's when [00:14:30] the value of our company was created, the value of love, respect, and integrity. One of my proudest moment, I can tell you, was in 1988, they had an AIDS conference in Geneva, and at the conference they mentioned, they said, "We want to thank two companies that [00:15:00] really working hard, that help us in that Awareness Campaign of AIDS. And those two companies are Benetton and Aldo."

Harley Finkelstein (15:13):
And Benetton was huge at this time.

Aldo Bensadoun (15:16):
And Benetton was a huge company, and Aldo were just a little tiny company.

David Segal (15:19):
Right, and here you are making an impact.

Aldo Bensadoun (15:22):
Exactly.

Harley Finkelstein (15:24):
You're going to hear from Izzy Sharpe, the founder of the Four Seasons, and he talks about the golden rule and how he fired [00:15:30] those on his team that would not abide by the golden rule.

Issy Sharp (15:32):
So if you fast-forward, as we're starting to build more hotels and hiring people, I figured if this is going to be an industry that we're going to compete in, we certainly are never going to compete by being bigger, because there's Hilton, Marriott, Hyatt. These were name brand hotels that controlled the marketplace. [00:16:00] I said, "We got to have something that's going to make us different that is sustainable." Because as you both know from your own business, if you don't have a sustainable competitive advantage, you're run over pretty quick. Because everybody sees what you're doing, they copy it-

Harley Finkelstein (16:17):
They can just copy it.

Issy Sharp (16:18):
... And say, "Hey, I can do it better." So you have to have something they cannot do better. A sustainable, competitive advantage. So I'm telling our people, "I think [00:16:30] the only way we're going to be able to compete in this business," we haven't got the capital to become big, "is we're going to have to make our service, our distinguishing feature. That is how we are going to compete and to be able to continue to grow."

(16:52):
That got a lot of laughs and jeers, and "Yeah, sure. You're not really [00:17:00] serious are you?"

Harley Finkelstein (17:00):
It seems gimmicky almost.

Issy Sharp (17:02):
Because everybody does service. "How can you make service? It's intangible. What are you talking about?"

(17:10):
So the senior people in the company really wouldn't even think about it. Now I'm in control of the company. As you know, control is a privilege. And it's a great benefit if you don't have to ask other people. [00:17:30] So I wanted to figure out, how do you do it? How can we make service? And at that time, we're talking now 1970s, McDonald's was the number one fast food service company at that time. And I noticed their kids who worked behind the counter, always had this upbeat, pleasant, can-do attitude. 16-year-olds who always had a smile, [00:18:00] always pleasing the customer. So I had a friend who was the president of McDonald's, Canada, George Cohon, and I said, "George, can I come and spend a day in your orientation when you're hiring new kids?" So he said, "Sure."

(18:20):
So I spent a day-

David Segal (18:21):
The McDonald's orientation?

Issy Sharp (18:23):
... Sitting down with all these kids at McDonald's orientation program. A whole day.

David Segal (18:29):
You're running a [00:18:30] fancy hotel in London, England, and you're sitting at the McDonald's orientation. I mean, think about that.

Harley Finkelstein (18:34):
Did you wear the hat and the whole thing?

Issy Sharp (18:36):
At that time I had hair so I didn't wear a hat.

(18:42):
So I come at eight o'clock in the morning and I'm sitting with the same notebook they give you, and I'm listening, going through all the hype that creates.

David Segal (18:51):
Would you like fries with that?

Harley Finkelstein (18:52):
Yeah. Always offer to up-size the drink.

Issy Sharp (18:54):
And they showed the technical thing. But I noticed that the one thing that was the most [00:19:00] important, that they focused on, was this film that they had, that had to be 15 to 20 years old, the way that people were dressed, et cetera. But they were showing that film as the number one focus point for all these kids. "Now listen, see what's happening in there, and then I will explain it to you."

(19:24):
So they focused on this one film to try to get these kids to understand [00:19:30] what service was all about.

Harley Finkelstein (19:32):
Like an instructional video.

Issy Sharp (19:34):
It was only attitude, all about attitude. Everything came down to attitude, attitude, attitude. So I'm thinking about it and I say, "You have to get something then that sticks." Because at that time, McDonald's ads on TV changed every month. Every month. Millions of dollars. And here on the most important thing [00:20:00] that they wanted, the message-

Harley Finkelstein (20:02):
One single video.

Issy Sharp (20:03):
... 15 years old, because the message was current, it never went out of style.

David Segal (20:08):
Timeless.

Issy Sharp (20:09):
A timeless message.

(20:12):
So I figured if you could have a timeless message to talk about with your employees, then you don't have to change it. You don't have to keep reinventing the wheel as times change.

David Segal (20:25):
It becomes what you stand for.

Issy Sharp (20:28):
So I take [00:20:30] all our senior people, I say, "I want you to come with me, and we're going to spend a day on McDonalds. We'll do it again."

David Segal (20:37):
Wow. You brought the Four Season staff to McDonald's.

Issy Sharp (20:40):
All my senior people, seven of them. These are the senior people. The guy heading hotel, development, everything.

Harley Finkelstein (20:47):
Can you imagine going to your senior team, your executive team-

Issy Sharp (20:49):
"We're going to McDonald's, follow me."

Harley Finkelstein (20:50):
"I got this great idea. Here's how we're going to go and figure out hospitality."

(20:53):
"Okay, what are we going to do?"

(20:55):
"We're to go sit in on the orientation for McDonald's with a bunch of teenagers."

(21:00):
[00:21:00] I mean, they must've been mind blown.

Issy Sharp (21:02):
They said, "You're joking. We got better things to do."

(21:05):
I said, "I know you do, but we're going."

(21:08):
So, you're the boss, they have to do what the boss says. So they go and they're sitting and they're joking, and laughing and making jokes about it. And I'm sitting, and I'm taking all this in.

(21:23):
So one of the guys says, "Look, they're selling hamburgers and we're selling filet mignon."

(21:30):
[00:21:30] I say, "I know what we're selling. It's how we sell it." So I knew we were in trouble. There's no way that I could get this message down to these people. Because that gave me the idea that the message that we might use is the golden rule, because it's motherhood. Do unto [00:22:00] others as you would have them do unto you. What could be simpler in telling an individual that is how we are going to manage our workforce?

(22:12):
Well, these senior people joked about it, laughed about it, and they said, "Look, that's philosophy. We're running a business. How are you going to get that across?"

(22:27):
I said, "I don't know, but that's what we're going [00:22:30] to do."

(22:32):
So my first task at that time that I had to terminate all these senior people. I'm talking about people who were very competent. They knew how to run a hotel, they knew all the business aspects, that's how they grew up. They were competent in their field. And one of these is a very close personal friend. So [00:23:00] I decided we're going to start over. And over the next couple of years, I changed the senior people in the company.

David Segal (23:09):
They weren't willing to live the brand.

Issy Sharp (23:12):
They would give it lip service, but if they weren't going to walk the talk, if their actions were not going to speak louder than their words, how could you do it? Because if you can't get the message down to the bottom of the triangle, because those are the people who are talking to the customer, [00:23:30] so if I can't get that message down-

Harley Finkelstein (23:33):
It's never going to work.

Issy Sharp (23:34):
... You're spitting in the wind.

Harley Finkelstein (23:34):
Does that mean you actually had to part ways with a good friend of yours?

Issy Sharp (23:38):
Good friend.

Harley Finkelstein (23:39):
And so the sacrifice you were willing to make, that's a pretty big sacrifice too, where you're working with a good friend, to say, "Look, this is not going to work out because I need you to live by these principles, not just repeat them to me like lip service."

Issy Sharp (23:51):
And what I did is I wrote out a mission statement that is still the mission statement of today. I didn't say, I wrote it out. I talked [00:24:00] to our head of marketing, Doug Hall, and said, "Doug, I want to write something and it's all about the golden rule, and I want to talk about it, our goals, our beliefs, our principles. So I don't want to use the word, the golden rule, I just want to talk about our goals, our beliefs in a way that people can, 'Hey, that makes sense.'."

(24:22):
So I used that when I went out and talked to the hotels. Sat with the senior people, went through this [00:24:30] mission statement, so to speak, and said, "Do you think you can live with this? Are you prepared to work with this principle?"

(24:40):
And most of them said, "Yeah, I think we can do that, but how are you going to get everybody else to do it?"

(24:47):
I said, "Well, you're the senior people in this company, in this hotel, if you do it-

David Segal (24:52):
They'll do it.

Issy Sharp (24:53):
... "And you come across people below you who don't, make a change. So you [00:25:00] as the leaders in this hotel, are going to be responsible for making sure all the people below you are going to walk the talk."

Harley Finkelstein (25:10):
They're the keepers of the culture. And if they can't do it, there's no way they can disseminate to others.

Issy Sharp (25:15):
And they said, "What if they don't do it?"

(25:17):
I said, "Well, they'll have to cut bait."

David Segal (25:20):
Yeah. This is what we stand for. So how you do things don't stop changing, but what you stand for never changes.

Issy Sharp (25:25):
Yeah.

(25:26):
So they said, "You mean if some of the senior people," [00:25:30] like they're talking about their peers because not everybody necessarily buys, "what about them?"

(25:36):
I said, "The rule applies to everybody. So if you see things that aren't right, there are senior people above you who will take action."