https://youtubetranscript.com/?v=Slw1Pa9yCo8
Now, you said you also became a good problem solver, and then you also developed this idea that you could rent your own garage and start producing your own tools. Now, one of the things you said was that when you went out to sell your services, you told your potential customers that you could solve a problem, and if you didn’t, they didn’t have to pay you. And the reason I want to focus on that in part is because I want to know how you developed the vision to rent that garage to begin with, but also how you knew that the proper thing to sell to potential customers was your service as a problem solver, right? Because what you’re saying to them essentially is, well, you guys have a problem, and it’s plaguing you, and you need it solved, and I’m the guy that can solve it, and I’m willing to demonstrate my capabilities, which is really an excellent approach to sales, because you want to find out what the person’s problem is, and you want to be the solution. But how did you develop that problem-solving ability and your confidence in it, and then why did you think it was worth taking the risk to rent that first garage? Jordan, you ask great questions. It does have to be answered. The reason why I’m sitting here is, look, I want to roll off the experience I accumulated. There’s thousands and thousands and thousands of young Canadians out there which could do the same thing if we teach them the basics, right? And I think a society would be much better off with thousands of smaller companies than one or two large companies, right? That’s the idea. So anyway, so I opened up that factory. I could solve a few problems. I got some orders, and I, like I said, after two years, I had about 20 people, and I noticed my foreman was a little different, right? Because when he had just got, you work so closely together, his name was Herman. I said, Herman, what’s the matter with you lately? Well, he said, Frank, I’m thinking of opening my own factory. I said, I sympathize with that. That’s what I did, too. I said, look, why don’t we talk tomorrow? Maybe we can find a better solution. That evening, I was talking to myself, and I said to myself, if that foreman’s gonna leave me, that would stifle my growth. I didn’t like that. The next reason was, if that foreman’s gonna leave me, I got to do all the work myself. I liked it even less. The third reason was, if I hire a new foreman and I don’t show him how to run a business, I still got to do all the work. And if I hire a new foreman and I show him how a business is run, it’s just a question of time before he goes out and opens up his new factory. I think the key is we need, we need those experience. There is this huge potential, right? This huge energy, which lies dormant in people. We have to teach them the right way. So I think it’s important while I’m still, I have everything in my mind quite clearly that we record that. And it’s great that you’re skilled to ask the right question, how come and how what, right? Okay, so I’m delighted to sit here. Well, so you grew very rapidly. So there’s two mysteries there to me, because one of the things I’ve noticed with small businesses, for example, is that it’s very difficult to get your first customers, right? It’s very difficult to get from zero to one. Once you have a customer or two, the next customers start to be easier because you can refer them to other customers you have, but getting those first people to decide that you’re the person when no one else has done it or has been willing to show that faith, that can be very tricky. So what do you think you managed successfully, how do you think you managed to present yourself successfully to the first people that you offered your services to? Well, price and quality doesn’t function, right? And if you have a lot of knowledge and you transmit that knowledge to other people, then you can get a great service, better pricing, better functioning machinery, better tools. So that’s the very key. And that’s what I would like to transmit. So fortunately, around that time, that’s why I’m always saying life is a question of fate and circumstances, being at the right place at the right time. Around the end in the early 60s, there was a free trade arrangement signed with the United States. And I see this huge potential out there. I should say, I didn’t finish up when I talked the next day with my foreman, where I said to him, look, why don’t we open up a new factory? You own a third. And I said, no more overtime, I own two thirds. And by the end of the year, we take pro rata some monies out and we leave some monies in for expansions. He said, do you mean it? I said, yes. We went right away to a lawyer and signed the thing here. And the guy hustled like crazy. He spent more time in there. That was his factory. Basically, I took the next foreman, the next foreman, the next foreman, the next foreman. I said, business is easy. And then when I had about, I think it was about six or seven factories. And the free trade arrangement came into being. I saw this enormous potential up there. Up to that now, I only shared with the foreman. I said, and then I got to know the United States better, Canada better, the power of the unions, the size of the unions. And I said, if I, I would have to do certain things to be competitive. So I had a friend of mine, machinery dealer, and he said, I can explain to him, I really should go public because I want to have the workers also participate. Well, he says, I know a fellow, which his name is, I’ll remember the name, it’s a material, but anyway, he gave me the name. I met him at the ski hill. We went skiing to get up at George Beaks. And he said, look, that was Magnelectronics. He said, I have a certain age, I would like to retire. Why don’t you sell your companies in Magnelectronics and you have close to control. And then you could put that program in that where we also, where you can share the profits with workers. So that’s what I find. I was totally green when it comes down to public company, right? I did not have total control. I had a board there, right? And they were more in driving the stock up, right? In the end, the defense industry was very, they were mainly Magnelectronics, mainly defense work, right? And that was very popular. And I was in automotive and I said after a year, so I said, I don’t think this makes a lot of, I said, I want to be out, okay? And I said, I sell my stock on the market. So they pleaded with me, please sell the stock to us. And I said, fine, no problem. And give us a year time. And I said, fine. They were basically okay guys, but the market kind of went down, the shares there, they didn’t have the monies. I never sued anybody. And I just said, look, under the circumstances, you guys can’t be on the board. And then I put in different directors. And after a while, I went to the board and right to the public and say, I forego about 25% of my stocks if you the shareholders vote for multiple vote. Because I came to the conclusion, I want to run things and I can’t have 20 guys or 50 guys left and right discussing, debating forever. Right? So the shareholders voted for that. Then I said, in the return, I also give your thing a certain discipline. This is where I put the global constitution in. That if I had control, I only could take out so much. There was clear cut control what management could do. And that sort of became the Magna environment. Well, let’s go back to your foreman. So you had said that when you made that arrangement with him that you valued his work and you wanted him around and you were concerned that if he left, well, all of that work would fall on your shoulders again and also stop you from moving ahead. And you sat down and contemplated what sort of deal you would have to make with him in order for his needs to be met in yours. And there’s something very important there about the nature of a deal. You know, people often think that with a deal, you try to win or with a deal, you try to compromise. But my sense with a proper negotiation is that you want to figure out what you want so that you’re thrilled to progress with the deal and you want to figure out what your partner wants. So he’s thrilled to progress with the deal because if you set it up that way, then your interests are aligned and you’re both going to work as hard as you can autonomously. Now you knew your foreman had the same kind of entrepreneurial vision you did, and you wanted to unleash his abilities. And so you offered him a third of the company. You said you’d take two thirds. And then you said he was thrilled, which is a good thing to have happen in a partner. And he went off and like treated this factory like it was his own, partly because it was. Now, and then you said you duplicated that subsidiary structure across six factories and then expanded much more dramatically. And you also at that point also noted that that principle of distributed ownership should be brought down to the workers. So you were starting to develop that as an explicit philosophy. Now, why do you think it was that you realized that your foreman needed ownership? Why do you think you were willing to grant it to him? And why do you think that the agreement that you made, which was that you would own one third of the, or that he would own one third of the company and you would own two thirds, why do you think that was a desirable and compelling motivational arrangement for your foreman? First of all, a deal, it gotta be a deal for both sides. It’s gotta be good, right? And as a company grows, circumstances might change a bit, et cetera, et cetera. So you make provisions if you can. The reason why I think he was delighted with the deal is when we had verbal arrangements, I never went back on my word. I think that’s a very key, right? So he felt comfortable when they say, we take out the third, right? We take out a portion in a pro rata. So he felt kind of comfortable, right? That I, that’s very crucial. Like later on, if I, if, you know, once when they had about 30 or 40 or 50 or 100 factories and I had a prospective manager, which I interviewed, I said, look, there’s the name, the addresses of 100 factories. Like whoever manager you wanna choose and ask him how I run things, okay? The message what I wanted to get across, if you promise something, you must keep it. Doesn’t matter what the thing is, because if you got the ability, can always make money. If you lose your reputation, you can never repair. So I think I had a reputation build up. And again, when I said small companies, you don’t need a, you don’t need a formal structure. It’s kind of loose. It’s pure free enterprise. Like when I was small, when I had about 20, 30, 40 workers, I showed you my bank book and said, look, this is a contract we have here. If you do XXX, I shared with you, right? So you don’t need, it’s pure free enterprise. And that’s what I wanna get across. That’s pure capitalism. But capitalism, if we don’t change, if we do not like workers participate, capitalistic, the system is self-destructive. And let me give you a quick story, right? I spent a lot of time in Washington. At one time I had a meeting with the leader of the house, Mitch McConnell. He’s the senator from Kentucky, was the president of the Senate. I had a farm in Kentucky, so I knew him. So I said, Mitch, let’s, you know, I’d like to see you one of those days. So we arranged, I met him and I said, Mitch, America did great with the free enterprise system. And without free enterprise, there’s no free society. So we must do everything we can to have free enterprise. But I said, free enterprise got a major problem. So he said, what do you mean by that? I said, Mitch, more and more capital is helped by few and fewer. And I said, in nature, when a species does not reproduce itself, another species will take over. And the laws of nature are much stronger than any man-made law, right? And that’s what happens now. That’s the way we’re gonna go. So we gotta share with the employees. Because without employees, we can’t make a profit. And if employees make more monies, they have more purchasing power. The economy functions better, okay? So we must, we must have the large companies, they must have more of a discipline because they sometimes they run by institutions, by a by, and they have got no more affinity for people that they just look at the share price, they look at the profits. So it’s not there, right? So the owners are not there anymore. So anyway, we need a discipline there. But we must open up, we must. It’s so crucial that small enterprise that we don’t die am up in chains and with regulations. [“The Star-Spangled Banner”]