First published in the Sunday Times on 1st November 2015.
Entrepreneurs are not appointed to run their companies by committee. Instead, they make their own job. Their résumé, academic qualifications, class, dress and demeanour under polite questioning are not really factors in their ascent to the top. They are mostly self-taught and self-made. They succeed by taking risks that others avoid, by swimming against the tide and by finding alternative answers to difficult problems.
By contrast, the boardrooms of large organisations are full of mediocre people whose faces and personalities fit, who interview and present well, who are collegiate — but pretty ineffectual. The preponderance of such safe, conventional but ultimately second-rate individuals is why such companies tend to decline over time. Superficial things like a nice face can help to get you the job, but in the long term it is character and intellect that matter.
Various economists have noted that physical appearance and financial success can be related. They contend that if you are beautiful or handsome, you are more likely to do well in business. For example, two economists — Hung-Chia Hsu and Joseph Halford — published a paper last year called Beauty is Wealth: CEO Appearance and Shareholder Value. It suggested that better-looking public company bosses did well for shareholders when they were first appointed, and when selling the company.
Of course, we live in a visual age. If you possess matinée idol looks, even venture capitalists and institutional investors might be swayed. The journalist and author Malcolm Gladwell has written about the height of corporate leaders. In a poll of Fortune 500 companies, more than 30% of the chief executives were 6ft 2in or taller, while in the general US population only 3.9% are that tall.
Of course, even though certain forms of discrimination are illegal in employment matters, cultural biases persist in our ideas about leadership. To a degree, the process of nominating a chief executive is a popularity contest. Overall likeability can play a big part and an imposing physical stature and/or facial allure can be big factors — albeit possibly subconscious. Yet height and niceness are by no means the most vital ingredients in an effective and productive boss. As the 16th-century essayist Montaigne said: “Why do people respect the package rather than the man?”
Choosing tall, handsome/beautiful leaders can be self-perpetuating. Because they are more likely to land high-powered positions, such individuals gain a track record, experience and confidence. This feeds into a narrative that says they are good commanders. But it can also play the other way. Someone who has learnt to use their appearance to do well in interviews might well suffer from arrogance. Good-looking people will be subject to more temptations — and consequent distractions.
Those who do not have the advantage of good looks must try harder, which hones persistence. They will have less of a sense of entitlement and greater hunger.
I have also observed that certain glamorous men and women who enjoy early success fail to maintain that initial promise. It has come too easy. Sweeping rivals before them, they collect prizes at school, university and work.
But enduring achievements are secured in the long term by persevering and adapting to circumstances.
Building companies is tough — it takes fortitude and tenacity over the long haul. It is not a pursuit for the lazy or those who have been indulged.
I’m often suspicious of strikingly good-looking men and women who do remarkably well when very young. I was interested to read the brilliant investigation of Theranos by The Wall Street Journal, which casts serious doubts over the company’s technology.
Theranos is a Silicon Valley healthcare start-up that claims to be revolutionising the medical testing industry. It was founded by the photogenic Elizabeth Holmes, who has been feted by the media. The privately held business is valued at close to $10bn (£6.5bn). I wonder if the investors who have pumped in hundreds of millions of dollars are worried.
Similarly, I think the dashing Jack Dorsey, chief of Twitter and Square, is going to stumble; no one can do two demanding full-time jobs at once. People have fallen for his image and forgotten the basic rules of business.
I feel the same way about Elon Musk, the lionised inventor who is chief executive of both SpaceX and Tesla Motors.
Investors have been dazzled by the fanfare surrounding these people. Those who would buy the shares need to focus on the balance sheets and cashflow statements instead.
The French poet Jean de la Fontaine wrote: “Beware, so long as you live, of judging men by their outward appearance.” This maxim applies as much to investing and choosing managers as it does to other aspects of life.
A perfect face is much less valuable to an entrepreneur than the desire to win.