This is What Matters: Part 1 - Reflections

Join host Adam Spencer and I on the nine-part podcast series, What Matters. Together with a range of special guests we navigate a lifetime in business and investing.

What Matters is a podcast that takes a deep dive into my upcoming book of the same name.

Episode one, Reflections discusses:

• The key ingredients for a successful career based on my 'Success Cake' recipe
• Grit is the most important ingredient. Your innate hunger and desire to succeed at whatever they're doing and that they will just go the extra, they'll just work harder
• Paranoia drives success
• Surround yourself with great people
• Honesty and humility are crucial ingredients
• Vision is far more important than a business plan or strategic plan
• Kindness is not a compulsory ingredient
• I’ve baked my cake, now sell it
• Nobody ever succeeded without having the courage to start.

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If you would like to read more about the 'Success Cake' and navigating a lifetime of business and investing, head to MAFinancial.com/WhatMatters to register your interest in accessing your copy once available.

Reflections transcript

Adam Spencer

Chapter 23, quick sidestep Sydney Swans fans, 23 good number?

Andrew Pridham

Lance Franklin, Buddy Franklin.

Adam Spencer

Number 23, a sentimental bloke. The chapters called I don't know if that refers to Lance, although much is Lance that sentimental?

Andrew Pridham

Well, I think it was sentimental. It'll be Matthew Nicks that's going to go over the head of anyone who is not a Swans fan.

Adam Spencer

You call it a sentimental bloke, of course, also a great film. I think you could retitle this chapter in Praise of Grit. You talk about the characteristic common with most success being grit. Let's drill down to that. What do you mean by grit?

Andrew Pridham

I think many characteristics can lead to success. It can be intelligence. It can be hard work. It can be luck. It can be nice clean shoes. There are all sorts of things that go into the recipe for success but ultimately, I think the people who succeed the most are those that have grit and grit to me means just that innate hunger and desire to succeed at whatever they're doing and that they will just go the extra, they'll just work harder. They'll do what they need to do at all times to achieve whatever they want to achieve.

Adam Spencer

As you often do in this book, calling on your twin passions and areas of expertise, a business and management of elite sport. You point out when it comes to the AFL industry, of all the players who ever make an AFL list that means one of the AFL clubs says, we choose you to come and train with us and be part of us. Almost 40% of them play 10 or fewer games. We should pause there to point out that moment of and by already we're recording this on the night of an AFL draft. So this is the night where clubs reach out and pick players to join that moment of getting picked is a highlight and a mark of skill that puts you beyond 99% of all people who ever pick up a football and even show great talent in the sport. We're not just talking to make a list is elite 40% of those people play a handful or zero games that is fascinating.

Andrew Pridham

I think professional sports are a great proxy for life because if you think of I mean, you said 99%, it's probably 99.9 don't make it. If you think of any professional sport, whether it's football, tennis, cricket, golf, you think how many thousands, hundreds of thousands of kids play those sports and to get to the position where you're a professional, you've gone through more than likely your entire childhood as the best at that sport, probably not just at your school, but in your suburb, your district, your local town.

Adam Spencer

For many people, you're the best they've ever played against or alongside the best.

Andrew Pridham

You are destined for professional sport and you're elite and the same can go for business where, you know, you might have won the university medal or you might have been very smart. So the people to get onto an AFL list or to become a professional tennis player, it doesn't matter what the sport is, they have experienced life. They've been brought up with the expectation, their own expectations themselves that they will have a career in professional sport. They've got clearly got the skills because you don't get there if you don't have them. One of the things that's really interesting is the disproportionate number of very good AFL footballers who came into the game as rookies, which for those, the uninitiated, a rookie means that you haven't been drafted in the primary draft, in the national draught. You've been selected, you've missed out on that. Sometimes they've missed out for multiple drafts and they've been ‘rookied’, so they come in and they basically get paid a bit less. I think they have to clean the floors, wash the windows, chairman's car.

Adam Spencer

Still very handy players, still brilliant players compared to most people, whoever.

Andrew Pridham

Best player in the school, best player in the suburb, best player in the town

Adam Spencer

but in the AFL's sense, almost a second choice.

Andrew Pridham

Didn't quite make it, maybe there's something not you know, maybe they've had an injury, maybe they're not tall enough, maybe they're not fast enough or whatever but there's a disproportionate number of kids that come onto AFL lists as a rookie who become great players and end up playing two hundred games and that is because of, in my opinion, grit and that they've had to fight and scrape just that bit harder to get where they're at.

Adam Spencer

Continuing their sporting analysis, you point out that even the very best have their moments. Don Bradman for people who don't follow cricket, not just the best, but as a nerdy math’s guy who loves cricket, this is about as exciting as it gets to me. You draw the bell curve of all people who've played cricket and the average score they get every time they go out to bat and it's a remarkable bell curve. If you average above 50 in cricket, you are elite and then it drops off a cliff through the mid-50s, the high 50s. People might have heard of Steve Smith, current Australian superstar who averages in the low 60s and give or take that's the second highest average in the history of Test cricket, 50s elite, he's averaging 62 that's amazing. Don Bradman averages 99. I read it at the other day 4.8 standard deviations above the average. It's like a kid scoring 140 out of 100 in an HSC. It's a statistical blip unmatched in any other sport. You can argue he's the greatest athlete in any sport ever, got a duck almost one in every ten times he walked out to bat. One in 10 times the Don walked out to bat. He talked about under his arm; walked back into what I presume was a very quiet dressing room, having scored zip. Greg Chappell, the great Greg Chappell, seven ducks in a row at one stage in his Test cricket career. What does that tell you?

Andrew Pridham

We all have bad days. It doesn't matter what you do in life, whether it's sport or business or the music industry, the Beatles and Queen, they've all got their lousy songs and great artists have got lousy paintings. So no matter how good you are, you're not going to be good all the time and you have to accept that. I think one of the things that grit brings is that determination that when you do fail your own standards are that's not acceptable. You make sure next time, if I got a duck, next time I'm going to go out there, I'm going to get a double century and that's what Don Bradman clearly was very good at doing.

Adam Spencer

There's a great story and we will move on from the sport in a moment, but I think it's quite illustrative. I was at a Sydney Swans event presenting the best and fairest players for the previous season; the awards and someone spoke of one of the Swans senior players and one of the new guys who'd won one of the best new talents. This youngster had gone into training on a Monday and over the weekend; one of the club's very best players had a very average game. The lofty standards, he said himself, he'd not been good enough and this kid was in the gym and on the training track next to this guy on that Monday. He saw this guy flog himself in a way that he'd never seen, and it was a message to him of this is the standard champion set, this is the that's happened. I can't affect that anymore. How do I set myself for the game this week? There was a beautiful message and how hard it was, Luke Parker, co-captain of the Swans, pushed himself to a couple of days after he knew he'd not met his own lofty expectations.

Andrew Pridham

Yes, I think no matter how much talent you have; it can only take you so far. If you don't set those standards of yourself to always do your best and put that extra yard in, ultimately, you're not going to succeed because failure is often a failure by a thousand cuts. There are little things, you kind of start cutting a few corners. You don't do this. If it's sport, you don't train and you don't train as hard. You think, oh, I won't run that extra kilometer. In business, it might be. I won't go to work today, or I just won't bother reading this report.

Adam Spencer

That a meeting will look after itself.

Andrew Pridham

So I'll just wing it, I'll send someone else along. He can get away with that a little bit and the more talent you've got, you can get away with it a little bit more. If you truly want to be a leader at anything and truly succeed and be a great leader in particular, you're setting an example not only to others, but to yourself. You have to push yourself so that you don't allow yourself to cut corners. On those days when you score the duck or don't have a great business meeting or whatever it is that you're going to say, well, I'm not going to let that ever happen again and that you drive yourself in your own brain that was not acceptable and you're going to do better.

Adam Spencer

You talk about the importance of honesty and humility as a factor here. We've spoken about another episode of the podcast. Without being facetious, you are a modest person who has achieved a lot in the business world. We wouldn't be here having this podcast if you hadn't had tremendous success across your professional career. What's your own relationship with grit? Can you think about times where you've failed or things you've championed have not worked out or decisions have not gone the right way? What have you observed and learned from that?

Andrew Pridham

Well, I think my personal greatness and success is only overshadowed by my humility.

Adam Spencer

If we pause for a second and think about how amazing you are, you're quite humble.

Andrew Pridham

It won't be long. We all have plenty of failures. You know, I've had many failures in life, and we all have. You're kidding yourself if you don't think you haven't. We're only minutes away from the next one. I talk a lot about paranoia, for example, and the role that plays in success in that if you have that paranoia that, you know, you really hate the feeling of failing. You know what it's like when you watch your football team coming back to football. The difference in how you feel personally after a great win versus a loss, it's just chalk and cheese.

Adam Spencer

I read something on the weekend, I was listening to a sporting podcast saying it is quite bizarre that we as rational human beings will invest in a group of 20 odd people who we may vaguely know but don't know, and we have no effect on how well they can do their job. My state of mind for most of the week after will directly correlate with how well 22 other guys did or did not do their job between 5:30 and 7:30 last Saturday. I will just put my fate in the hands of that God.

Andrew Pridham

It's true. A coach like a CEO after a win is the best coach in the world and the contract secured forever. After a couple of bad losses, it gets shaky pretty quick. If you're in any elite endeavour, whether it's business or sport, you're there to deliver returns and to achieve. If you don't achieve for long enough, eventually you're not going to be there, and you shouldn't be there and you're going to fail. One of the things that really drives you to make sure you do is that, you know, you're just paranoid that you want to keep being successful and have that feeling of success. When it doesn't come, you're honest with yourself and you really analyse why did I fail and don't just you know, I was unlucky, or this happened or that happened. Be really honest with yourself and say I didn't do this well enough and I'm going to improve next time and that can come across if you're in a leadership position that has been quite harsh with people that you work with, for example. At times I might wear, you know, I will give very direct feedback if we as a team are unsuccessful. It's something I've learnt from sport. I think you owe it to yourself and to those that you work with to say we failed or you failed at this because you didn't do this, this and this. It's not good enough. You need to focus on doing this, this and this and have that adult discussion. I think if you can have that get over the desire to always be talking yourself up and feel good about yourself, then you can move forward and get better.

Adam Spencer

Is it simply something you're born with, you have it or you don't? When you're talking about those learnings of saying to someone, let's look at why that didn't work, and did you let yourself down and could you have worked out? Can you help people develop their own inner grit?

Andrew Pridham

Absolutely and I think particularly when people are, you know, relatively young in whatever their career is, there is time to improve and get better. You see that in all sorts of things. You know, I like to think of myself and I got asked once, what do you aim for in life and what are you most proud of? One of the things I say I aim for and I'm most proud of is I genuinely sit down and say I want to be a better person and better at what I do next year than I was this year. I feel that every year. I haven't done it yet but eventually I will.

Adam Spencer

You go through the success cake, the top 10 ingredients with the success cake, and we won't go through all that but grit, hard work, energy and enthusiasm, it's a number two. I think people would understand the importance of hard work, a desire and a capacity to learn, optimism, attention to detail, honesty, humility, great mentors, vision, kindness and love. Let's drill down into a couple of these. Attention to detail is an interesting one, because I would imagine for some leaders you talk about the visionary here, attention to detail is probably not the strongest card in the hand. How do you balance that for people if that's not their natural state?

Andrew Pridham

In terms of individual success not everybody is going to have all of those, all 10 points. If they do, some will be stronger than others and the key as a team for success is to ensure you surround yourself with people who mean that as a group, you tick every box and you've got, you know, hopefully high performing people with every one of those skills. So if you're a budding entrepreneur who's a visionary and you're full of optimism and nothing can ever go wrong and you don't have attention to detail and you try and do things yourself, you will fail because you'll miss, you won't bother about the detail. You won't be interested in that. You will focus on, you know, the enterprise and how are we going to get from A to B. You need to have somebody in your team who is the one that's focusing on every bit of detail and saying, hang on, hang on. I know it's all going to be great and we're going to dominate the world, but we actually haven't got a license to do this yet. We might want to go and fill out a few forms.

Adam Spencer

Someone who is a little bit on the OCD side.

Andrew Pridham

Little bit someone that just can focus on it and ensure that they're just making it, clearing the path for the, you know, the people who are on the horse at the front of the race.

Adam Spencer

You mentioned the word optimism. It's an interesting point because you think that most successful people are biased to the positive. Why is that? You say it feeds back and in some ways it helps propel grit.

Andrew Pridham

I think it's really difficult to be an effective leader if you're not an optimist, because I think people who are pessimistic, firstly, just by nature, they're not going to try new things with great gusto. They're going to always be thinking about the risk and what can go wrong and therefore they'll be very cautious about doing anything. Whereas an optimist is saying, yes, wrong, whatever, I'm going to do this, I'll do that. I think it's very important. Also optimism, importantly, gives very positive energy to people around you. If you're optimistic, you can lift people and make them feel we can achieve anything. We can overcome anything, no matter what our handicap might be. We can do this. If you're a pessimist, no one likes being led by a pessimist who's going to say, I will probably lose this game. You know, I don't know why we bother turning out. They are much better than us. It's not a great outlook, is it?

Adam Spencer

You talk about the fact that the glass half full, I like to think that some people are glass half empty, some are glass half full. I'm more who the hell has been touching my glass type of guy. Honesty and humility, you refer to as best mates, treating people with fairness and honesty. Having little interest in self-promotion are considered highly desirable traits in anyone you've discussed about this before. Why is honesty and humility so important?

Andrew Pridham

I thought a lot about this, and I find it very difficult to distinguish between the two. I think that if you're to be honest, you need to have humility. You need to be honest with yourself and that then leads to kindness and fairness and all sorts of other things. I think the fundamental traits in my experience, people who are arrogant or very harsh with people; they have such confidence in their own abilities that they haven't got humility. Then, you know, I think it's very hard for them to be great leaders as well.

Adam Spencer

Is it a cultural thing? You've worked with people around the world and I've observed again, in the sporting realm, there seems to be a cultural side, say between Australia and the United States. As an Australian tennis player, you could win Wimbledon for the fifth year in a row, cementing yourself as the world's number one ranked player for having broken the length of time that anyone's ever held that position. If at the post press conference, you said I was pretty good today, Australians are going back in your box, pull your head in. Whereas an American, you can win something at a minor state level and go, have you seen the car I drive? Could you imagine what it's like? Have you seen my watch? Look at this watch; the Spence owns this watch. This is the Spence's watch. You are living in my world. Is there a cultural difference around and it's implicit but you hear about those at the old the alpha male A-leader you don't associate humility necessarily with them.

Andrew Pridham

There's a significant cultural difference between countries. I've worked extensively in the United States, in the UK and Asia, Australia. There's a big difference culturally in all these countries in the way the people are. You're right in America mean I think it's often talked about in America, if there's a train wreck, for example, someone will come out of the train wreck, their clothes still burning. They'll be bloodied. The TV, CNN will come up and put a microphone under their mouth and they'll give a fantastic oratory of exactly what happened. I'll sound very impressive and you think, wow and it sounds like they've rehearsed. In Australia you can have somebody who's just won the Nobel prize and they'll sound like, they came from the pub.

Adam Spencer

You've got to thank the boys in the lab, they gave 110%.

Andrew Pridham

Yes, they were great and the blokes, you know, doing the cleaning, they're good mate, there is a big cultural difference, and we all react differently based on our upbringings and our beliefs. Certainly in Australia, I think humility, people value it greatly and they are more likely to have warmth towards someone who they feel has got humility and someone that's got excess of bravado and confidence, I think turns us off. Whereas in America can be a very different signal of, you know, it's the tall poppy syndrome, here in America, it's celebrating someone that's had great success.

Adam Spencer

With vision, you make an interesting point, because we've spoken in other episodes of the podcast about the importance of business plans, strategic plans, what those things are, how important they are. You say vision here as a category in the success cake. Vision is far more important than a business plan or strategic plan. I would imagine a lot of people in business would confuse those. They're having a really good business plan is vision. Having a really good strategic plan is vision. What do you mean by vision in a way that it's more important than a business or strategic plan?

Andrew Pridham

A business plan is something I always think of, they can be important. Don't misunderstand me, but a business plan, something that's popped up on a computer and printed out on paper and sits on your desk in a drawer, vision is something that it's in your spirit. You take it home with you every day. When you get on the bus, when you're on holidays or the beach, whatever you're doing, if you've got vision, it's in you and you're thinking about it, you're dreaming about it. It's very different than a business plan that's been put together. It's got lots of you know, everyone puts together the same words, we're going to do this. We're going to do that. This is how we're going to do it but if you've got real vision and drive, I'll take that any day over a business plan.

Adam Spencer

Kindness, not compulsory, you know, many people who are quite successful in business, sport, all sorts of endeavours do lack kindness, but if you want to enjoy your success, there needs to be kindness that accompanies it.

Andrew Pridham

I struggle whether kindness fits on the list of ingredients for success because I know many successful people who have no kindness in them whatsoever. It's the one characteristic I thought maybe this doesn't belong, but I put it in anyway because it's my book.

Adam Spencer

Someone will almost in my experience acknowledge, almost celebrate their own lack of kindness.

Andrew Pridham

Some people are unbelievably unkind, and they do, they think it shows strength and toughness. If there's a chance to take a dollar from you and it's a dollar more for them, they'll do it. If it's a chance to fire somebody because they can hire somebody two cents cheaper, they'll do it. You know, I don't, I just think it's not a great trait for success, because if you don't enjoy what you're doing and those around you don't enjoy it and you're not kind, you're not going to be, you're not going to have humility, I don't think, if you're not kind. You're not going to have loyalty if you're not kind. Kindness is something; decency is another word for it. I think it's to me, it's really important that if you're going to be successful and enjoy success that you have kindness in your spirit.

Adam Spencer

Let's say you've got the correct mix of those ingredients in yourself or a team. You've baked the success cake. You make a really important point that even if you've got the success cake baked or you go, you have to eventually sell that cake to someone, to quote, no less than Woody Allen showing up, showing up is 80% of life. Sometimes it's easy to hide home in bed. Trust me, I've done both, is what Woody Allen says. What do you mean about you have to show up and sell the success cake?

Andrew Pridham

Showing up is so important because it's easy to talk and a lot of people, we all know them. They've got big dreams. They've got business plans; they've got financial models. They've got it all, but they never actually get started. They sit around and I can only presume later in life I sit there, you know, having a cup of tea. I think if only if I have done any of that stuff, it would have been really good. So, getting started is very important and it's not easy to do. The reason why most people don't do is it's easy to have a job, get paid a salary, just turn up, you know, enjoy life, have friends, and that's fine but if you're really striving for success, it's something you have to put yourself out there. You have to take risks and being a risk taker is essential in life if you're going to be a high achiever. So, you've got to turn up.

Adam Spencer

You talk about the example of the formation of Moelis in Australia in 2009 and the most common comment from media and people external to business was, as an outsider, I think they were making a fair point here. Why would you start an investment bank during the global financial crisis? I'm no fancy pants business type. I can see some merit in asking that question, but you did show up and you did sell it. What are your recollections of that time?

Andrew Pridham

Well, I can have 20-20 hindsight. I could say that I thought that starting an investment banking business in a global financial crisis is the perfect time. It wasn't that at all that was just the time the time was open to do it. I had the time I was sitting around doing nothing. So, with some friends, so you make the most of the environment in the circumstances you're in. I didn't see my partners didn't see any particular barrier to being successful because we were in a global financial crisis. You have to look at it and say, well, yes, there's risks, there's always risk because there is risk getting out of bed in the morning but the reality is that if you look at what are the advantages of starting a business during a global financial crisis, and hopefully no one has to do it for another 100 years, maybe, hopefully never again. What are the advantages? Well, one of the advantages was that when there's turmoil, if you're in the business of giving advice, corporate advice, funnily enough, turmoil is when people want your advice the most so that's a positive. We're a people business. We need to hire people, good people. Well, all the competitors in the market were suffering. So, they were firing people or people are unhappy so we can hire people because they were coming. So, you look at the positives and you latch onto those and you ignore the negatives and you just close your eyes, grit your teeth, and hope it works.

Adam Spencer

When it comes to grit and we talk about some of those ingredients in the success cake that initial small team you started Moelis with must have ranked fairly high, I'm guessing, on grit and optimism in particular of ingredients we've touched on so far.

Andrew Pridham

Absolutely, I mean, my co-founders in the business, excluding someone like Ken Moelis, who's got more optimism and grit than I'll ever have. But, you know, people like two of the partners now, joint CEOs of the business now, Julian Biggins and Chris Wyke, what I would say, I mean, they're younger than me, not a lot, a little bit that is a joke. I would say to you that at the time we started the business and before that even they had too much optimism. I was probably the slightly the pessimist sort of the handbrake a little bit more cautious but just a bit more cautious and saying, well, hang on, it's not going to be that easy. These are the things we have to think about, a bit more measured maybe and that experience gives you that to blend optimism with being measured and realism, probably the right word you used but clearly they were more entrepreneurial than me because I wouldn't have done it unless they wanted to do it and they did We're very close and I wanted to do it and they sort of talked me into it. So, they really are the entrepreneurs and the optimists.

Adam Spencer

You say in closing that the sentimental bloke would always choose success in a team sport above that of an individual sport. Why is that?

Andrew Pridham

I think that as a frustrated tennis player and so I spend a lot of time playing tennis as a kid, and I also love playing football.

Adam Spencer

Objectively, how did you go? Where you alright?

Andrew Pridham

Well, I was alright, I wasn't obviously very good. I'm an investment banker but I was probably better, well not probably, I was better at tennis than football.

Adam Spencer

What were your strengths? Serve? Volley?

Andrew Pridham

Shaking hands at the end of it, jumping the net, making the Robinsons barley water, whatever it was. I always got despite being better at tennis than football, I always got far more enjoyment out of football because I loved the training. I love being around, you know, friends and the physicality of it, but just the whole team atmosphere, which is what I've carried on in my involvement with the Sydney Swans. I love the team environment. I just think it gives you so much whereas tennis I found was I enjoyed it. It was a lot less fulfilling. It's a bit more soulless in that you're soul trader, you're an individual. If you're playing singles, you're out in the court on your own. It's up to you. You've got no one to really no one to talk to.

Adam Spencer

It's by definition, a solitary pursuit.

Andrew Pridham

It is and it's you know, if you'd win something at the end, you'd be hip, hip, hooray me and you look around and there'd be no one there whereas as footy, if you win a game, it's a team environment. It's uplifting. I think the same goes in business. I guess the great enjoyment I've had in and certainly at Moelis in business generally, it's, you know, success is great and everything it leads to is great but the friendships you build and watching people develop and thrive and the success they have actually gives you a real kick, gives me a real kick. I just think that's one of the great secrets of business generally is if you're working in a team environment as opposed to being some superstar entrepreneur who doesn't have anyone around them possibly without kindness, they just need it for themselves. I think it's pretty lonely. I think it's great being around people and sharing success.

Adam Spencer

We started talking statistics about football. Let's finish with football, because having both been associated with the Swans during a comparatively successful period, we've been lucky enough to know people who've won premierships, the ultimate goal in football to win that grand final. Yes, and you do hear almost exclusively people who've had that level of success will say that any individual accolade they picked up in the time that they've played sport, any individual award, best this, best that, best this in the entire competition, when they get together every 10 years with the group of colleagues that they won the grand final with and sit back and reflect on that moment that just brings a degree of wholeness and fulfillment that no individual moment seems to be able to do.

Andrew Pridham

Absolutely and I think anyone who genuinely enjoys or takes more pride in individual success and team success I think has some sort of narcissistic tendencies because surely it's better to succeed as a team and in a team and share that with others because it can be just as rewarding financially as succeeding individually. I see no great joy in being able to say, well, I did this, I succeeded all on my own. I didn't need anyone else to succeed. I challenge anybody who can tell you that their success in life, even if they're the best golfer in the world, it's purely off clearly, as you know, we've got to caddy, I guess. If they genuinely feel that they have done it all on their own, they're kidding themselves because they've had coaches, parents, a lot of people to help them get there and that's, I guess, the essence of being grounded.

Adam Spencer

I think that's the perfect note in which to wrap up this podcast, we should go to a room, get in a circle, just the two of us sing the Moelis What Matters team song and then just throw Gatorade on each other.

Andrew Pridham

With your shirt, Adam, which people listening to this can't see. You wouldn't notice it thrown Gatorade on it.

Adam Spencer

We might wrap it there. Thank you, Andrew Pridham.