Give and Take Read online

  Another signal was compensation: the taker CEOs earned far more money than other senior executives in their companies. The takers saw themselves as superior, so they felt entitled to substantial pay discrepancies in their own favor. In the computer industry, a typical taker CEO took home more than triple the annual salary and bonus of anyone else in the company. By contrast, the average across the industry was for CEOs to earn just over one and a half times the next highest paid. The taker CEOs also commanded stock options and other noncash compensation of seven times higher than the next highest paid, compared with the industry average of two and a half times higher.*

  But the most interesting clue was in the annual reports that the companies produced for shareholders each year. At the top of the next page are the pictures of Ken Lay and Jon Huntsman Sr. that I showed you before, but now they’re in context.

  The photo on the left appeared in Huntsman’s 2006 annual report. His image is tiny, taking up less than 10 percent of the page. The photo on the right appeared in Enron’s 1997 annual report. The image of Lay takes up an entire page.

  When Chatterjee and Hambrick looked at the annual reports from the computer companies, they noticed dramatic differences in the prominence of the CEO’s image. In some annual reports, the CEO wasn’t pictured at all. In other reports, there was a full-page photo of the CEO alone. Guess which one is the taker?

  For the taker CEOs, it was all about me. A big photo is self-glorifying, sending a clear message: “I am the central figure in this company.” But is this really a signal of being a taker? To find out, Chatterjee and Hambrick invited security analysts who specialized in the information technology sector to rate the CEOs. The analysts rated whether each CEO had an “inflated sense of self that is reflected in feelings of superiority, entitlement, and a constant need for attention and admiration . . . enjoying being the center of attention, insisting upon being shown a great deal of respect, exhibitionism, and arrogance.” The analysts’ ratings correlated almost perfectly with the size of the CEOs’ photos.

  At Enron, in that prescient 1997 report, the spotlight was on Ken Lay. Of the first nine pages, two were dominated by giant full-page images of Lay and then-COO Jeff Skilling. The pattern continued in 1998 and 1999, with full-page photos of Lay and Skilling. By 2000, Lay and Skilling had moved up to pages four and five, albeit with smaller images. There were four different photos of each of them, like a filmstrip—only they were better fit for a cartoon. Three of the photos of Lay were virtually identical, revealing the subtle, smug smile of an executive who knew he was special. A fairy-tale ending was not in the cards for Lay, who died of a heart attack before sentencing.

  So far, we’ve looked at two different ways to recognize takers. First, when we have access to reputational information, we can see how people have treated others in their networks. Second, when we have a chance to observe the actions and imprints of takers, we can look for signs of lekking. Self-glorifying images, self-absorbed conversations, and sizable pay gaps can send accurate, reliable signals that someone is a taker. Thanks to some dramatic changes in the world since 2001, these signals are easier to spot today than ever before. Networks have become more transparent, providing us with new windows through which we can view other people’s reputations and lekking.

  The Transparent Network

  In 2002, just months after Enron fell apart, a computer scientist by the name of Jonathan Abrams founded Friendster, creating the world’s first online social network. Friendster made it possible for people to post their profiles online and broadcast their connections to the world. In the following two years, entrepreneurs launched LinkedIn, Myspace, and Facebook. Strangers now had access to one another’s relationships and reputations. By 2012, the world population reached seven billion. At the same time, Facebook’s active users approached a billion, meaning that more than 10 percent of the people in the world are connected on Facebook. “Social networks have always existed,” write psychologists Benjamin Crosier, Gregory Webster, and Haley Dillon. “It is only recently that the Internet has provided a venue for their electronic explosion. . . . From mundane communication to meeting the love of one’s life to inciting political revolutions, network ties are the conduits by which information and resources are spread.”

  These online connections have simulated a defining feature of the old world. Before technological revolutions helped us communicate by phone and e-mail, and travel by car and plane, people had relatively manageable numbers of social ties in tightly connected, transparent circles. Within these insulated networks, people could easily gather reputational information and observe lekking. As communication and transportation became easier, and the sheer size of the population grew, interactions became more dispersed and anonymous. Reputations and lekking became less visible. This is why Ken Lay was able to keep much of his taking hidden. As he moved from one position and organization to another, his contacts didn’t always have easy access to one another, and the new people who entered his network didn’t gain a great deal of information about his reputation. Inside Enron, his impromptu actions couldn’t be documented on YouTube, broadcast on Twitter, easily indexed in a Google search, or posted anonymously on internal blogs or the company intranet.

  Now, it’s much harder for takers to get away with being fakers, fooling people into thinking they’re givers. On the Internet, we can now track down reputational information about our contacts by accessing public databases and discovering shared connections. And we no longer need a company’s annual report to catch a taker, because lekking in its many sizes and forms abounds in social network profiles. Tiny cues like words and photos can reveal profound clues about us, and research suggests that ordinary people can identify takers just by looking at their Facebook profiles. In one study, psychologists asked people to fill out a survey measuring whether they were takers. Then, the psychologists sent strangers to visit their Facebook pages. The strangers were able to detect the takers with astonishing accuracy.

  The takers posted information that was rated as more self-promoting, self-absorbed, and self-important. They featured quotes that were evaluated as boastful and arrogant. The takers also had significantly more Facebook friends, racking up superficial connections so they could advertise their accomplishments and stay in touch to get favors, and posted vainer, more flattering pictures of themselves.

  Howard Lee, the former head of South China at Groupon, is one of a growing number of people who use social media to catch takers. When Lee hired salespeople, many of the strong candidates were aggressive, making it difficult to distinguish the takers from the candidates who are simply gregarious and driven. Lee was enamored with one candidate who had an outstanding résumé, aced his interview, and had glowing references. But the candidate could have been faking: “talking to someone for an hour only gives you a glimpse, the tip of the iceberg,” Lee thought, “and the references were self-selected.” A taker could easily find some superiors to sing his praises.

  So Lee searched through his LinkedIn and Facebook networks and identified a mutual connection, who shared some disconcerting information about the candidate. “He seemed to be a taker, and it carried a lot of weight. If he’s been ruthless in one company, do I want to work with him?” Lee feels that online social networks have revolutionized Groupon’s hiring process. “Nowadays, I don’t need to call in to a company to find out about someone’s reputation. Everyone is incredibly connected. Once they make it past the technical rounds, I check their LinkedIn or Facebook. Sometimes we have mutual friends, or went to the same school, or the people on my team will have a link to them,” Lee explains. “You can understand someone’s reputation at a peer level pretty quickly.” When your relationships and reputations are visible to the world, it’s harder to achieve sustainable success as a taker.

  In Silicon Valley, a quiet man who looks like a panda bear is taking transparent networks to the next level. His name is Adam Forrest Rifkin, and he has been called
the giant panda of programming. He describes himself as a shy, introverted computer nerd who has two favorite languages: JavaScript, the computer programming language, and Klingon, the language spoken by the aliens on Star Trek.* Rifkin is an “anagramaniac”: he has spent countless hours rearranging the letters in his name to find the one that captures him best, generating candidates such as Offer Radiant Smirk and Feminist Radar Fork. Rifkin has two master’s degrees in computer science, owns a patent, and has developed supercomputer applications for NASA and Internet systems for Microsoft. As the new millennium approached, Rifkin cofounded KnowNow, a software start-up with Rohit Khare, helping companies manage information more efficiently and profitably. KnowNow achieved a decade of success after bringing in more than $50 million in venture funding. By 2009, while still in his thirties, Rifkin announced his retirement.

  I came across Rifkin while scrolling through the LinkedIn connections of David Hornik, the venture capitalist whom you met in the previous chapter. When I clicked on Rifkin’s profile, I saw that he was coming out of retirement to launch a start-up called PandaWhale, with the goal of creating a public, permanent record of the information that people exchange. Since Rifkin is clearly a staunch advocate of transparency in networks, I was curious to see what his own network looks like. So I did what’s only natural in a connected world: I went to Google and typed “Adam Rifkin.” As I scrolled through the search results, the sixteenth link caught my eye. It said that Adam Rifkin was Fortune’s best networker.

  What Goes Around Comes Around

  In 2011, Adam Rifkin had more LinkedIn connections to the 640 powerful people on Fortune’s lists than any human being on the planet. He beat out luminaries like Michael Dell, the billionaire founder of the Dell computer company, and Jeff Weiner, the CEO of LinkedIn.* I was stunned that a shy, Star Trek–loving, anagram-obsessing software geek managed to build a network that includes the founders of Facebook, Netscape, Napster, Twitter, Flickr, and Half.com.

  Adam Rifkin built his network by operating as a bona fide giver. “My network developed little by little, in fact a little every day through small gestures and acts of kindness, over the course of many years,” Rifkin explains, “with a desire to make better the lives of the people I’m connected to.” Since 1994, Rifkin has served as a leader and watchdog in a wide range of online communities, working diligently to strengthen relationships and help people resolve online conflicts. As the cofounder of Renkoo, a start-up with Joyce Park, Rifkin created applications that were used more than 500 million times by more than 36 million people on Facebook and Myspace. Despite their popularity, Rifkin wasn’t satisfied. “If you’re going to get tens of millions of people using your software, you really should do something meaningful, something that changes the world,” he says. “Frankly, I would like to see more people helping other people.” He decided to shut down Renkoo and become a full-time giver, offering extensive guidance to start-ups and working to connect engineers and entrepreneurs with businesspeople in larger companies.

  To this end, in 2005, Rifkin and Joyce Park founded 106 Miles, a professional network with the social mission of educating entrepreneurial engineers through dialogue. This network has brought together more than five thousand entrepreneurs who meet twice every month to help one another learn and succeed. “I get roped into giving free advice to other entrepreneurs, which is usually worth less than they pay for it,” he muses, but “helping others is my favorite thing to do.”

  This approach has led to great things—not just for Rifkin, but also for those he’s shepherded along the way. In 2001, Rifkin was a big fan of Blogger, an early blog publishing service. Blogger had run out of funding, so Rifkin offered a contract to Blogger’s founder to do some work for his own first start-up, KnowNow. “We decided to hire him because we wanted to see Blogger survive,” Rifkin says. “We gave him a contract to build something for our company so we could use it as a demo and he could keep Blogger going.” The money from the contract helped the founder keep Blogger afloat, and he went on to cofound a company called Twitter. “There were several other people who also contracted with Evan Williams so he could keep his company going,” Rifkin reflects. “You never know where somebody’s going to end up. It’s not just about building your reputation; it really is about being there for other people.”

  In the search for Fortune’s best networker, when Rifkin popped up as the winner, the reporter on the story, Jessica Shambora, laughed out loud. “Not surprisingly, I had already met him! Someone had referred me to him for a story I was researching on virtual goods and social networks.” Shambora, who now works at Facebook, says that Rifkin is “the consummate networker, and he didn’t get that way by being some sort of climber, or calculated. People go to Adam because they know his heart is in the right place.” When he first moved up to Silicon Valley, Rifkin felt that giving was a natural way to come out of his shell. “As a very shy, sheltered computer guy, the concept of the network was my north star,” he says. “When you have nothing, what’s the first thing you try to do? You try to make a connection and have a relationship that gives you an opportunity to do something for someone else.”

  On Rifkin’s LinkedIn page, his motto is “I want to improve the world, and I want to smell good while doing it.” As of September 2012, on LinkedIn, 49 people have written recommendations for Rifkin, and no attribute is mentioned more frequently than his giving. A matcher would write recommendations back for the same 49 people, and perhaps sprinkle in a few unsolicited recommendations for key contacts, in the hopes that they’ll reciprocate. But Rifkin gives more than five times as much as he gets: on LinkedIn, he has written detailed recommendations for 265 different people. “Adam is off the charts in how much he helps,” says the entrepreneur Raymond Rouf. “He gives a lot more than he receives. It’s part of his mantra to be helpful.”

  Rifkin’s networking style, which exemplifies how givers tend to approach networks, stands in stark contrast to the way that takers and matchers tend to build and extract value from their connections. The fact that Rifkin gives a lot more than he receives is a key point: takers and matchers also give in the context of networks, but they tend to give strategically, with an expected personal return that exceeds or equals their contributions. When takers and matchers network, they tend to focus on who can help them in the near future, and this dictates what, where, and how they give. Their actions tend to exploit a common practice in nearly all societies around the world, in which people typically subscribe to a norm of reciprocity: you scratch my back, I’ll scratch yours. If you help me, I’m indebted to you, and I feel obligated to repay. According to the psychologist Robert Cialdini, people can capitalize on this norm of reciprocity by giving what they want to receive. Instead of just reactively doing favors for the people who have already helped them, takers and matchers often proactively offer favors to people whose help they want in the future.* As networking guru Keith Ferrazzi summarizes in Never Eat Alone, “It’s better to give before you receive.”

  Ken Lay lived by this principle: he had a knack for doing unrequested favors so that important people would feel compelled to respond in kind. When he was kissing up, he went out of his way to rack up credits with powerful people who he could call in later. In 1994, George W. Bush was running for governor of Texas. Bush was an underdog, but just in case, Lay made a donation of $12,500, as did his wife. Once Bush was elected governor, Lay supported one of Bush’s literacy initiatives and ended up writing him two dozen lobbying letters. According to one citizen watchdog leader, Lay commanded “quid pro quo,” helping Bush so that Bush would support utility deregulation. In one letter, Lay subtly hinted at his willingness to continue reciprocating if Bush helped to advance his goals: “let me know what Enron can do to be helpful in not only passing electricity restructuring legislation but also in pursuing the rest of your legislative agenda.”

  Reciprocity is a powerful norm, but it comes with two downsides, both of which contribute to the cau
tiousness with which many of us approach networking. The first downside is that people on the receiving end often feel like they’re being manipulated. Dan Weinstein, a former Olympic speed skater and current marketing consultant at Resource Systems Group, notes that “some of the bigger management consulting firms own box seats at major sporting events. When these firms offer Red Sox tickets to their clients, the clients know that they’re doing so, at least in part, with the hopes of getting something in return.” When favors come with strings attached or implied, the interaction can leave a bad taste, feeling more like a transaction than part of a meaningful relationship. Do you really care about helping me, or are you just trying to create quid pro quo so that you can ask for a favor?

  Apparently, Ken Lay made such an impression on George W. Bush. When Bush was running for governor, he asked Lay to chair one of his finance campaigns. At the time, Lay didn’t think Bush had a chance, so he declined, stating that he was already serving on a business council for the Democratic incumbent, Ann Richards. As a consolation prize, he made his $12,500 donation. Then, toward the end of the campaign, when it looked like Bush had a good chance of winning, Lay quickly made another donation of $12,500. Even though Lay ended up donating more money to Bush than to Richards, his decision to give only when it was strategic left an indelible dent in the relationship. This decision “relegated him forever to the periphery of George W. Bush’s inner circle,” wrote one journalist, citing a dozen insiders who confided that Lay created “a distance between them that was never really bridged.” Bush never invited Lay to stay in the White House, as his father had. When the Enron scandal broke, Lay reached out to a number of political officials for help, but Bush wasn’t one of them—the relationship wasn’t strong enough.