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Brian Chesky says, verbatim, if he could be anyone, it would be "Walt Disney." Okay, here's a CEO who read a bio on Walt Disney, he's been aspiring to be Walt D

Brian Chesky says, verbatim, if he could be anyone, it would be "Walt Disney." Okay, here's a CEO who read a bio on Walt Disney, he's been aspiring to be Walt Disney for a while, verbatim, at least since being some guy at 3DID. Is AirBnb profitable? Then? Now? Is it just really about saying the right stuff? Are they creative and innovative? Do engineers like working there? So what if they say yes versus no? Is it really about ROI versus not ROI? If Brian Chesky says, as he frequently does, that he learned a lot about management from Walt Disney, okay, he did. No dispute there. But you're talking about Walt Disney, you are speculating about CEOs who should be copying him, I found one for you. Go ahead and analyze that, Brian Chesky and his company. Management performance is, and always will be, mostly but not exclusively explained by "I was around in the right place at the right time to concentrate returns on capital in my hands." For every S&P 500 exec there are 6 Russell 3000 execs, most of them receiving roughly the same elite educations, learn of the same trends, representing a great diversity of businesses. S&P 500 median CEO pay 2019Q1 was $12.2m and Russell 3000 was $2.7m. Russell 3000 CEOs might be at worst 10 percentage points "less creative" than S&P 500 CEOs, but no way they are 4.5x less creative. It matters little what you do, if the pie is big and you eat most of it you will be the fattest. This is also incidentally VC view of management and corporate strategy.

jimbokun 6y ago
> Russell 3000 CEOs might be at worst 10 percentage points "less creative" than S&P 500 CEOs, but no way they are 4.5x less creative. How do you know that? How would you measure it?
- an_opabinia 6y ago
  Exactly. Creativity is incommensurable with developing best practices in an MBA program, going both ways - there are strong priors about the weights of factors in a model of performance, and creativity is basically impossible to measure.
ativzzz 6y ago
> Management performance is, and always will be, mostly but not exclusively explained by "I was around in the right place at the right time to concentrate returns on capital in my hands." I agree with this statement. [1] seems to agree with it as well, finding no correlation between CEO performance and quality of MBA program or past successes as CEO. Obviously those aren't the only two factors to consider what makes a successful CEO, but it's what a lot of people in society think. [1] https://www.institutionalinvestor.com/article/b1db3jy3201d38/The-MBA-Myth-and-the-Cult-of-the-CEO https://www.institutionalinvestor.com/article/b1db3jy3201d38...
smabie 6y ago
If you are 10% better at something than the second best in the world (that is, you are the best), than you are going to get paid way more than 10% more. Even if you're not the best, 10% better than someone else is going net you a disproportionate amount of money. The reason for this is that skill tends to fall along a normal distribution. As you get better and better, the number of people as good as you starts to fall at an exponential rate. But, for your example, I don't CEO compensation in many cases has much to do with the value you provide. CEOs of bigger companies usually get paid more not because they are better but because there is more money that they can personally capture, since the companies they run are large. And then there are CEOs that are incredibly compensated, like Cook and Nadela because they truly are providing incredible value.

jimbokun 6y ago

> Russell 3000 CEOs might be at worst 10 percentage points "less creative" than S&P 500 CEOs, but no way they are 4.5x less creative. How do you know that? How would you measure it?

an_opabinia 6y ago
Exactly. Creativity is incommensurable with developing best practices in an MBA program, going both ways - there are strong priors about the weights of factors in a model of performance, and creativity is basically impossible to measure.

ativzzz 6y ago

> Management performance is, and always will be, mostly but not exclusively explained by "I was around in the right place at the right time to concentrate returns on capital in my hands." I agree with this statement. [1] seems to agree with it as well, finding no correlation between CEO performance and quality of MBA program or past successes as CEO. Obviously those aren't the only two factors to consider what makes a successful CEO, but it's what a lot of people in society think. [1] https://www.institutionalinvestor.com/article/b1db3jy3201d38/The-MBA-Myth-and-the-Cult-of-the-CEO https://www.institutionalinvestor.com/article/b1db3jy3201d38...

smabie 6y ago

If you are 10% better at something than the second best in the world (that is, you are the best), than you are going to get paid way more than 10% more. Even if you're not the best, 10% better than someone else is going net you a disproportionate amount of money. The reason for this is that skill tends to fall along a normal distribution. As you get better and better, the number of people as good as you starts to fall at an exponential rate. But, for your example, I don't CEO compensation in many cases has much to do with the value you provide. CEOs of bigger companies usually get paid more not because they are better but because there is more money that they can personally capture, since the companies they run are large. And then there are CEOs that are incredibly compensated, like Cook and Nadela because they truly are providing incredible value.