James Rhee is an impact entrepreneur, author, investor, lecturer, founder and president of FirePine Group, and former chairman and CEO of Ashley Stewart. He is a graduate of Harvard College and Harvard Law School, where he was an editor of the Harvard Law Review. Listen to the full interview or read the exerpts.
Bob: This is the story of an unlikely friendship between a first-generation Asian American private equity investor and a predominantly black female employee group founded in 1991 who placed their mutual trust in each other, learned from each other and then proceeded to quietly shock the world.
Ashley Stewart is the brand we’re talking about and these stores primarily serve plus sized women within the urban communities, women who are often overlooked by other brands.
Now James, I understand when you became CEO in 2013 as they were headed for a second bankruptcy that you made one rule. What was that?
James: I said to everyone that they had to be kind.
Bob: Now what does that mean?
James: Yes. I think kind is a word...and I know you know this. I wrote about it in the “Harvard Business Review” in 2015. To some, skepticism, from certain business readers but to me, kindness is an action. It’s an action where you are asking for zero reciprocity. It’s an action that literally brings out the best in a person in their quest to be their best person in the humanity sense.
And it’s very different. People often confuse it these days because all of a sudden, it’s kind of in vogue and people use it loosely and they use it to be synonymous with things like nice and/or agreeable. Kindness is a very different thing. I think kindness is much more closely related to a concept like love. I think with love you have to love someone generally that you know but kindness you can bestow on strangers. I think that’s a very key difference.
Bob: I love that idea. It’s not reciprocal, that it’s an attitude you have going into it, not...it’s kind of that old idea of putting the wood in the fire first instead of most of us thinking, “Well, I’ll be kind to them after the fire gives me heat. Then I’ll do it.” You’re saying, “No, it’s the attitude I have going into it.”
James: Yes, and you’re asking for nothing in return. It’s just something that you’re making an investment that is a one-way investment just because it’s right.
Bob: Well, you said with Ashley Stewart...we’re going to start off with Ashley Stewart because that’s the one I met you at NRF. I’ve been trying to get this man on my podcast for a number of years and he’s so busy and you’ll learn that as we go through this but you said you were the least likely person to run this company and yet, on a shoestring you became the success story of the year for brick-and-mortar retailers.
So, can you share a few of those highlights and what it was about because it wasn’t just, “Oh, we created an open floor plan and suddenly we got a new website and everything got better.” It was a strategic plan from the outside. And whatever you can share with us...I know our listeners are hearing an awful lot about brick and mortars having a tough time. I think certainly this is a brand that was having a tough time. Second bankruptcy, they were headed for and yet, you walk in the door. The least likely guy to run it.
James: Yes, I think that it’s a long story but I’ll try to, for your listeners, do it in two ways. So yes. Was I the least likely guy? I guess so in many ways. So, it’s not just from a race perspective or gender perspective but up until 2013, I hadn’t had a W2 in retail since bussing tables. I’m a Boston based investor.
I have a long history of investing in soulful brands, both in high growth, venture and in distrust. So, what was the magic combination? I guess number one, from a very human standpoint we...I wanted to do it. I really felt like the employee base and the customer base were...I don’t know. They were well deserving and/or great leaders. I think it’s pretty well publicized.
I’ve said how they reminded me of my mother. But I think great leaders in society tend to do a lot of things for others and they generally never get credit for nor do they ask. And I admire a lot of the way that the customers were. They do a lot. They never get any credit. So that was number one I think just from the...
Bob: I want to add onto that because you were actually on the board of Ashley Stewart and I think you said, “This brand deserves a chance, that they hadn’t been treated right.” Wasn’t that kind of what...and then you resigned the board and then decide, “I’m going to help them.”
James: Sure. I resigned from the board. I think I also just resigned from my identity as a Boston private equity guy for what was supposed to be six months. I just disappeared. And it was just one of these things. I was 42 at the time. I wasn’t a young man, I wasn’t an old man but my dad was dying. My dad died subsequently.
I just started thinking a lot about life, about legacy and what I learned not having grown up with a whole lot of money but I spent a lot of... two decades being sort of like king of the world. Tall buildings, managing billions of dollars of money, moving...just really becoming a student in astro systems. And you realize that there are a lot of systems that are hurting a lot of very ordinary, innocent but heroic people.
And I think this was 2013. I mean, we’re in 2020. I think a lot of my predictions...I think people are more sympathetic to some of my predictions now. But this country, without going too much into the demise and crushing of the middle class, it has made life very difficult for a lot of very hardworking people. And one of those hardworking people happens to be a group that I view as perhaps even more other than most. Women, plus size, black, moderate income. I think that’s a lot of othering that goes on. And yes.
And so that was one thing that my intent was...just like the Elvis Costello song at the last lyrics in “Alison” when he says, “My aim is true.” My aim was true. I just thought it was going to be six months. I said to myself, “I don’t want this thing to utterly liquidate.” If I can figure out how to hold off the lawyers and the accountants because I’m an experienced deal guy, that maybe I could figure out a way to prop it up enough that someone might keep it operating somehow. That was the goal. There was nothing beyond that. I was supposed to go home. I came in August in 2013. I was supposed to go home in March, 2014.
I don’t know. I think the second thing...before we go over the narrative but other than just being a human being and meeting people for...at that level and being a human being and saying, “How are we going to do this together? What are we going to do? Everyone’s trying to crush you.” And I think it was very important that I didn’t go in as private equity James or CEO James or lawyer James. I just came in as James. And I actually think in retrospect that was the most important thing about just being a good listener and I think that’s what leaders do. You lead from behind.
Bob: I want to get in there also that it’s important to notice it’s not like you didn’t show up with no systems and we’ll get into some of your background as well but your experience...you had systems that you were able to bring to that that not only recaptured that brand but also was able to bring it to a new level. I mean, you’d been teaching this and you had been studying this for a long time. It’s not like, “Oh, this guy didn’t deserve it at all. He’s just some guy.” You were the right man at the right time and saw the opportunity but you were able to bring these systems to bear.
James: Yes. I think that that’s right. I mean, Soledad O’Brien teased me. She said if I could come up with a name of a tagline for this story, it would’ve been “They never saw him coming.” So, for me, when I look back at my background...I studied people in college.
Massive movements of money and race and economics, big, sweeping design thinking oriented studies about humanity and tendencies. I taught high school and coached football and baseball. I went to law school to be a public defender which in some ways I am. It’s just not in a courtroom. And then yes. I’ve managed a lot of money but the money that I’ve managed, it hasn’t been boring money.
I do crazy...not so crazy. I do crazy, though, inflection point investing. High growth, high turnaround, massive distress, crazy suspension of disbelief, thinking. And so yes.
The case in point, I think the first deal I did as a private equity guy I was 29-30 years old and my firm carved out the Meow Mix cat food brand. Ironically, also in Secaucus, New Jersey. And literally the only thing we bought for $160 million from Nestle Purina was the name Meow Mix, the list of ingredients. Two of those Meow Mix mobiles that go up and down 5th Avenue, those marketing mobiles. That’s what we bought.
And I think we closed the deal a few weeks after 9/11. And then we bought it. And we closed the deal late January. I had 4 months to basically help set up a brand-new company, hire 46 people, figure out how to make it, what the cost was. There was no PNL because it was just a brand. I literally learned, “Oh, this much gluten, this much for packaging, X cents per pound for this.”
Called up Acosta. Dealt with the 3PLs, all the trucking routes. Called up the customer. Literally, I had to synthesize an operational structure and PNL from scratch. And so that’s one of the things. It ended up being a huge success. I think we sold it for a kajillion dollars 18 months later.
But that’s what I do. I think if people ask me what kind of investor are you, whether it’s for people, brands, companies, organizations, not for profits, countries. I see things that are very difficult to see or I make tangible intangible things. So, I see intangible greatness in people, in students and in my football players and the CEOs that I’ve coached.
Obviously, in the employees and customers at Ashley Stewart. Just to see the inherent greatness in somebody or something and then rather than coming in which a lot of people do and say, “I’m going to change you. I know better. I’m going to change you.”
I don’t do it that way. I’m like, “Well, my name is James. I think I see this. Do you see it? Because it’s awesome. And there’s some not so awesome stuff too but let’s just both see all of it because I’ve got not awesome stuff too but let’s just be honest with each other.”
And then once you can see the soul of something like that, yes. And then I have the tools to amplify it. I’m financially...I think I’m pretty good and I’m a good lawyer.
Bob: I think we can all acknowledge that you’re probably pretty good at that.
James: Yes. But the key thing is those are tools. Finance, law, marketing algorithms, those are tools. But if you’re selling a load of crap, marketing algorithms don’t work for you in the long run. It gets very expensive.
Customer acquisition gets expensive, being consistent with your own BS stories or...well, you know, you make up stuff. It gets very tiresome to try to remember all the makeup made up stuff you did. But I find truth in people and I really relish in making what seems ordinary, extraordinary. It just gives me a lot of joy to see people excel.
Bob: Well, it does and I wanted to go back. I still want to get that Ashley Stewart story for our listeners because it’s pretty amazing. You founded FirePine Group back in 2009. This was before Ashley Stewart. And the symbol of the pinecone and the fire and surviving was kind of an apt metaphor for your investing and the way you look at businesses. Can you share that with us?
James: Yes. So, a fire pine is a special type of pine cone that, on its surface, it looks inert because it never allows the seeds to come out. And however, when there’s a fire and everything burns to the ground, the wax that had been encasing these seeds that made it inert during regular times, it actually... it’s what saves the seeds so that these seeds are the ones that sprout new forests.
And so, for me, it’s a metaphor on a lot of levels. I don’t judge anything. It sounds trite but I don’t judge anything by its cover whether that’s... you can say that on a race basis, gender, people. I don’t care what you resume looks like. Now apply that to companies.
I can rip apart Gap and...I get it but I do my own analyses. I say, “Oh, I think that everyone tries to...” if they shape information in a certain way, I just sort of say, “I got how you’ve shaped it. Rest of the world. Now let me do it my way.” And I’m like, “Oh, I think there’s arbitrage here. You don’t see it.” I see it because I’m cutting the numbers differently, I’m seeing people differently. I’m unleashing greatness in people differently.
I think generally speaking, as much as it sounds scary, fire pine, I think those who know me...it’s a loving intensity. Like I really root for people like a high school teacher but I also don’t...kindness doesn’t suffer fools either. It is, “Do you really want the truth? You really want to do what it takes to be your best self?” Then I’ve got you. I’m your best coach, best friend but if you don’t want to do that, it’s okay. Then we shouldn’t work together.
Bob: But how many people could answer that, my friend? “Yes, I want the truth, I want the truth.” “Oh, you mean the whole truth and nothing...” “Wait. I don’t know if I wanted that, honest.”
James: I think that’s why I’m on this podcast, why we’re friends. I think you do and I think that’s why you’re so good at what you do. I think a lot of times when you...I think that Morgan Stanley did one, a podcast with Carla Harris. It was called trust in transformation or something like that but transformation does not have to be violent nor does it have to be confrontational.
I found that the way I like to do things, it’s like that old Aesop’s fables when the wind and the sun are competing about who can make the man take off his jacket. The wind blows and the man holds the jacket firmer but the sun just...sun radiates and the guy takes off his jacket. So, the way that I try to transform people and companies is through a lot of just steady, purposeful sun. But it’s not weak.
Bob: No, and I don’t get that from you. I think, as you said, your way of retail management coaching is to say, “You’re not living up to your best.” It’s kind of like you expect them to show up and be their best and you’re not going to let them get away with it because it wouldn’t be good for them to get away with it. And I appreciate that.
Let’s go back to Ashley Stewart. Let’s find that little bit of a quick history of...I know the stories of you having to say that there’s no Wi-Fi there and that it’s kind of been long pushed away but the kernel was when you really discovered who that customer was and then you did cut a corporate.
I think corporate employees, there were people who didn’t want to go your way and you may not have replaced them. So how does somebody get to that point when you’re approaching with kindness but knowing that there is going to be an end of the road for a certain amount of people?
James: Yes. Well, it was...it’s a fun...it was a maelstrom. You have to picture lawyers and restructuring people and a lot of your listeners are probably going through this probably scared because they’re not deal guys. Unfortunately, that’s part of my life as a private equity investor.
I know the lawyers and accountants and the process. But I knew the process. But yes. They were there. The consultants, they were restructuring people and the bankruptcy attorneys. They’re all running around and...but I was there to basically keep calm and say, “Don’t bother these people. I know what’s going on and so you can bother me.”
And yes. Picture hiring a police officer to protect employees because they were worried about filing for bankruptcy a second time because they hadn’t been paying bills and they were worried about being shot by vendors. How about that? Picture me selling scrap metal to make payroll. While all of this is happening with no computers and Wi-Fi, by the way, so all of this is happening and I’m away from my family and I’m alone and I talked about kindness.
And I tried to get people to see what was really happening, that this brand wasn’t...there was another asset to it that you couldn’t see which were just relationships and the feeling of belonging, a feeling of trust amongst employees and customers. And I really thought it was a metaphor for a lot of things, right, that about America. I think that America at its best has been that. I feel like we’re losing our grip on that a bit. Communal accountability.
Bob: Empathy for somebody else, being able to acknowledge that...it’s fascinating to me is the Ashley Stewart story is one about it coming organically up from who they were, that you didn’t come in and suddenly put something on top of it. You just said, “We’ve got to get this other stuff out of the way so that they can rise.”
That’s a very different attitude, right?
James: Yes, and a lot of the stuff that gets in the way are the things that we call organizational structure. We call systems. So I got...that’s exactly right, Bob. I got rid of a lot of just stuff that was clamping down on the spirit of...and the ethos of the brand. And I used to call it controlled anarchy. And I let this woman be herself in all its glory. And in a lot of ways, it’s a real commentary now...I get a lot of these calls now. They’re like, “Oh, my gosh.” Before Black Girl Magic and Black Lives Matter...this was seven years ago.
I just said, “Listen. I don’t like...I don’t think that you are being presented correctly in media because the women that I’m meeting here, you’re a great leader and that you’re...” I don’t see that in regular media. They’re not seeing this about the friendship and the generosity and stories of resilience and...it’s the best friend you could ever have.
And we became that over the last seven years too but anyway, so yes. I just got rid of a lot of this. I had to protect this little ember from the systems, legal systems, accounting systems, all these systems that I was a master of domain of these systems. Literally, flip back to being an immigrant’s child and saying, “No. These systems, these aren’t right.”
And then prove to everyone within the company and try to get them to see, “No, no, no, no, no, no. You’re this. I don’t care what people tell you in everyday life. You’re this. And I think that if you’re this, then all of you together are this and I don’t care that it’s a corporate entity. It’s just a vehicle. It’s just one vehicle.”
And then people started really seeing and believing and obviously, that’s not easy to do. But a lot of that was I think inherent to my leadership style too. I don’t talk a lot. A lot of this stuff comes out now but I tend to just do. I say it once and then I do. I act. I don’t talk and pontificate a whole lot nor do I admire that quality in other people either. So just do it, then. If you’re so smart or if you’re so...then do it. Let me see you do it. Let me see you get people to do it and to believe you.
Bob: Is that why you guys moved your headquarters where you all rented U-Hauls and you all just went and did it?
James: Oh, my gosh. We moved the entire...you have to picture us after we...we moved the entire HQ. I think there were 115 physical servers at that time propped up on shoe boxes and stuff. We moved it in a weekend and I told everyone during that time, “Listen, I want you to burn everything. Leave it.” Because it was a failure. The corporate entity failure, 22 years of futility. I said, “The only thing I want you to bring is your spirit, the things that we’re talking about what’s best in you and the brand and the customers and bring your laptop because we can’t afford to buy any more of those. Bring that too.”
And that was it. And that was... for six months, I just listened a lot and I got to know a lot of people very intimately and you’re right. Not everyone made it. And it was okay. And I never...I’ve kept that philosophy forever.
It was like that in my private equity days too. There’s no good guy or bad guy. It’s more like this is the culture of what we’re trying to do. This is why we’re doing it. If it’s not for you, if you don’t feel the spark, if you don’t feel the spirit, just go find another job. It’s not a problem. I don’t want to make a big deal of it. Let me help you find another job. It’s that.
And we had a real purpose to what we were doing, a core group of us and it was really...actually, as hard as it was, it was the best when no one knew what we were doing because it was just us and we were doing it for no other reason to just try to do our best against a lot of odds and we all really liked each other. And it was a...it’s a little bit of Butch Cassidy and Sundance Kid except you don’t get shot at the end by the militia or Thelma and Louise when you drive off...
Bob: That’s good.
James: Yes, Thelma and Louise when you drive off the cliff but we didn’t fall. We built a bridge and the car kept going. But it was in that spirit and so you had to really slit your wrists together and just trusting each other and... By the way, just so...I just wanted all your listeners to know...I want you to know in 2014 spring, when I was begging for money to back this plan that me, this very well wired private equity guy, I got exactly zero people to back me. None. Like the whole world. And I have a long track record of doing this in a lot of companies. This isn’t the only one.
Bob: So, what was that about? Because your numbers, I’m sure, were there. You painted the picture right. Did they just not believe in the target market? They didn’t believe that brick and mortar was possible or the perennial...retail’s a perennial stepchild anyway.
James: It was half and half. It was, “The company’s never made money, James. Company doesn’t even have...just got Wi-Fi. What are you talking about, this tech strategy that you have? What are you talking about, this open-source organizational strategy? What is that? What are you talking about, the fact that you’re betting on massive loneliness and disintermediation of the organization and that agile organizations that are at one societal and corporate at the same time will win? What’s that all mean, James?”
And then some of the rejections...it’s not all of them but some of them were decidedly...those are the ones that got under my skin more. They had misogynistic, racist undertones that, “Oh, we don’t understand them.” What do you mean them? “Oh, we don’t understand them.” I was like, “Oh, okay.” Like, “Oh, that’s not for us. She’s not...they’re not for us.” And I’m like, “Oh, okay.” And remember, these are all people...I live in a lot of worlds. This is the world I know, private equity. That’s the world I still am in too. And so some of those comments didn’t sit well by me obviously. Gave me extra motivation.
So, in the end of the day, I got the money. I called in chips. I had to wait till everyone said no because at that point, I was a CEO so you have comforts. And then once everyone said no, I had a gut check moment. I had to look in the mirror and say, “Okay. In my heart, I’m right. Is my brain right too? Am I willing to really put my money where my mouth is?”
And it was both. I had made a commitment to these ladies. They trusted me for six months. I didn’t want to let them down and I believed in them. I believed that they would be there and that they would be there for me too. And I for them. And I felt like I was right as an investor, like I was right about the future of the world, about the future of race, future of retail, future of a lot of these things and that I was very confident in the mathematical and marketing equations I wrote. That was just more truth. I wrote them.
And so yes. I showed up at a bank with a wad of money in my hand and say, “You’re not freaking liquidating this company.” And so there you go.
Bob: See, I have to believe you were the pioneer in conscious capitalism. Weren’t you? I mean, it may not have penciled out but you knew it was about something more than these stores. But that idea of doing better, isn’t that part and parcel of what made America great was that we said, “Lifting one boat lifts us all up.”
And we seem to have moved into this other place where if your boat goes up, that means it takes from me. And I think you’re exactly the opposite which is why it was successful and ultimately, in 2021 when we’re trying to get our ideas back, we’re trying to bring our economy back after this raging pandemic, why wouldn’t someone embrace that instead of this mean cut or punitive way we look at employees and customers and to have the balls to just go for it, man?
James: Yes, or even employees or fellow citizens. We’ve become a very narcissistic people and I think that...look, human beings, the way our brains are wired, we’re wired in two ways. One way is a really incredibly gracious, generous way. Any one of us seeing someone trapped in a burning building have the synapses to go into that building to save somebody that you don’t know. We all have it.
We also all have an awful set of genes and neurons that desperately try to create others so that you feel good and that you destroy others. It’s been like that for...that’s human nature. And I refuse to believe that...let me just say this. I don’t want to live a life personally or I think our country’s better than what we’ve shown. And that cuts across all political lines, all races, all these things. I mean, and I’m not all for...I’m also a capitalist too.
So, the conclusions that I’ve made with Ashley Stewart and for my whole life, I’ve never had a for profit and then a not-for-profit side to James. I try to do one way. So why not try to make money for constituencies including shareholders, including myself in for profit by trying to create positive externalities for society while doing so?
I don’t want to be part of a business where I make a lot of money by destroying people or by selling stuff that is deceptive, that makes people feel insecure, that provides false information, that...and for God’s sakes, that prays on children. I would never want to be part of a business like that as an investor or as a board member, as a consultant, CEO, advisor. I just...that’s shame.
Bob: in this time of unrest, it’s easier to go that way that it will always be harder to go to that spirit of hope. I mean, I come from a long line of preachers so maybe I just start off from you have to have the hope in the future and you have to believe in that. But let’s face it. We’ve seen in the last several years how fear and anger can be corralled into a very potent tight laser whereas when you’re talking about we can lift all these other people up, it’s really dependent on more people than just yourself to see that vision. Right? I mean, that’s what you did with Ashley Stewart.
James: Well, here’s the good news. I posted recently on Instagram this very silly photo of me sitting up on stage at the big show, January, 2016. I was sitting there up with I think Terry Lundgren was the CEO of Macy’s at the time and Greg Foran was the CEO of U.S. Walmart.
So, this is me in the big show, opening keynote, 5,000 people. And I just talked about this. Trust about the future of the world, about where it was going and that you could be perfect in exact collar size and cuts and slits and forms but if you’re not getting the macro strategy correct, forget it. You’re dead.
And there was just a gasp in the audience because...but a lot of people in that audience, they came up to me and they were like, “You’re right. You’re right. And we’re glad that someone’s saying this, that...” And in the meantime, that was early ’16, but things accelerated as the capital markets got more furious and companies like Amazon at all got access to infinite amounts of capital, infinite amounts of currency for compensation.
Look what’s happened. You have an entire industry, namely old-school retail that just got literally another industry rose up and took chair. And it didn’t have to be like that. It didn’t. And it’s still not too late for some. For some, maybe but it’s not too late.
But anyway, so during that time, starting from that coming out party, I was overwhelmed by how gracious so many people were in trying to help me and help my team and help the employee base do what we did. And it was individuals because individuals always make the difference. Individuals deliver systems, individuals deliver companies. And I always challenge people when they say it’s too hard, the systems. I’m like, “Last I checked, individuals write the systems.” So, I don’t believe in that.
Bob: One thing. Well, I think that’s the story of your life, though, my friend. Here you are. You graduate Harvard. All your buddies are going off to BVA or Disney or something and what do you do? I’m going to go teach school, high school. What the hell does that make sense? And then you go through and you’re nurturing these people, you’re investing in different companies but you’re also teaching at Duke and MIT and you want to be that generous person.
And I don’t know if you’ve crafted this individual because I always think of myself, I kind of crafted myself. I don’t think I was always this guy from where I was as a little kid. I think there is an element that we say, “This is who I want to become.” And I think our strength in the world is for us to show that to other people that it doesn’t have to be this way.
And so many people are afraid of thinking big like you did. I mean, do you think that you’re born with it or it can be learned or is it a matter of hearing guys like you who’ve done it that inspire us to just say, “Why not?”
James: Well, I don’t think...there’s an English expression that I just learned. It’s called a collywobble which...it means this meandering...it’s a verb. To collywobble through London means you walk aimlessly and you’re meandering but to the outside, it looks meandering but in your own heart, you know what the end purpose is. So, I think my life has been a bit of a collywobble.
I know what my purpose is. I knew it young. I really do care for people a great deal. I really do. And I always have. And I think there was a certain amount of time when you’re in your high testosterone alpha 30s and on G5s managing billions of dollars of money. It’s hard to...this may not be the coolest attribute to have. But I think 37 was a key year for me when I just quit a very prestigious job in Boston to just do my own thing because I wanted to run my own money, do it my own way.
I think I had the courage at that point to just try to just be that person. Why wouldn’t I be that person? I think being that type of person but also being able to wield money, wield legal documents, why is that bad?
Bob: Because we’ve been taught in every film you’ve ever seen that it’s bad. We all know the Mister Potters of “Wonderful Life,” we all know if someone’s trying to kill the world, the guy has money. The images of someone like you in a Marvel Comics just isn’t going to happen, my friend.
James: Yes, but Mister Potter in “Wonderful Life,” that’s a great...it’s great that you brought that up because in a lot of ways... I’ve watched that movie I don’t know how many times. At the end, I always get choked up because I think in a lot of ways for me, that Ashley Stewart moment when everyone else... I was forsaken by everyone else other than a small group at home office, a large group of black women and a handful of my friends who gave me money to buy the company at a bankruptcy. That was my Jimmy Stewart moment.
It really was. And it was...I’ll never forget it, actually and I’ll always be very grateful to the employees who believed in me when... even though I failed actually until a desperation me saying, “I’m right.”
But that moment...yes, it was “It’s a Wonderful Life” and in that movie, Jimmy Stewart prevails and he may not have the most money, he may not have the most anything but I think when you look at his balance sheet, he had the most friends, most good will and most positive influence. And that is the nature of what I do as an investor.
I help companies create those massive long tailed Jimmy Stewart positive system dynamics. That’s what I do. I back it with money. I help them structure the org correctly, their marketing campaigns, their culture. I coach the CEO and say, “Hey, I get the rest of the boards on you for the quarterly results but I’ve got your back. I get what you’re trying to do and you’re thinking five, six, seven years from now. Right? I hear you. I see both.”
So, I tend to play that role a lot in saying, “I know what reality is.” But I’m a long-term investor. I’m not Warren Buffett but I think investment style that’s more my style, I like to be part of long-haul things. I don’t know. Yes, that’s what I’m teaching. That’s the nature of what I teach at MIT and at Duke Law School. These are deconstructed principles I teach. And at MIT, I’m helping teach their organizational system dynamics or organizational dynamics. It’s the intangible things. How do you unleash it?
And I think these days, what’s happening post George Floyd, post...we’re still in the virus and we have an existential crisis about humanity. And as you know, retail is just a secondary, tertiary output of how humanity interacts. It’s not a driver of humanity. It’s just a reflection.
In this environment, there’s a lot of eurekas going on where people are saying...and these are leaders of large companies saying to me...in many different industries saying, “Oh. Ashley Stewart? That’s a paradigm for what we’re talking about right now. ESG. Race. Diversity. Safe places. Profitability. Massive tech revolution without killing brick and mortar jobs. How did you do it?”
And I have this whole thing. It’s a lot of this...it’s a combination. It’s what I’m teaching. It’s a mixture of org studies, neuro science, accounting, marketing theory, all these things. But I always start by saying, “I’m not going to teach you the math until we talk about the why.” Why? Why do you want to do this?
And I tell CEOs, I’m like, “You understand you have so much responsibility. It’s a lot of pressure. There are a lot of jobs and there are a lot of families on these razor thin...it’s razor thin. Right? The safety net.” And that’s one of the challenges I think that this retail industry has...it really has to really look in the mirror and face. It’s these quality jobs. It’s hard. It’s a really hard balance. And I think we all have to really think about that.
And my first job was washing dishes at Red Lobster. I think it was $3.35 an hour on Route 347 near Smith Haven Mall on Long Island and I needed to make money because we didn’t grow up...there wasn’t a lot of extra money in the Rhee household so I needed money to take girls to friendlies and then to buy records at Sam Goodies. I needed money.
Bob: Yes, but there’s always a story behind the story. That’s what you’re saying is there’s an ultimate why for all of it. Why does it happen? It’s not that we’re carrying the dress, it’s not that we got the widget. Ultimately, this is doing something to bring somebody value in their life.
And I was just wondering does this fall back with your dad? Didn’t he dedicate his life to kids and to making the world a better place? I mean, you had that example growing up, right?
James: Yes, both parents. So, my parents were...I always used to tell my wife, I’m like, “I wonder why I’m such an entrepreneur.” And my wife says, “You’re dumb. Your parents immigrated here. They ripped up every credential they had in 1966. They came here with nothing. They had a...” My dad had a medical degree, my mom was a nurse. So they were both in the caregiving industry.
And I grew up around this my whole life, that my dad was a pediatrician and he...when he died, so in 2015, that was crazy, to see the letters he got. Thousands and thousands of letters from his patients, from the families saying...and I read them all. “You gave us care when we had no insurance. When my husband lost his job, you never charged us.”
My dad would come home very late and he’d be tired. He was exhausted. He did that. And when they started getting more complicated with the billing, with Medicaid and computer systems, my dad was...my dad thought Apple would not succeed because it didn’t come with instructions. My dad was not a very tech savvy guy.
But I grew up watching that. And my mom was like that too. My mom ended up going back to...she was a housewife and raised us but then she got...she renewed her nursing degree in English which was a big deal because her English was not good. And she actually worked at a Veterans’ Home because she wanted to help take care of the Korean veterans who fought in the Korean War.
So I just grew around that and we were, as a family, very focused on trying to do what was right, trying to take care of other people and yes. I miss both of them. So my dad died really when I started Ashley Stewart and my mother died when I left. And there’s a real symmetry to what happened. It’s almost like a story. But I’ll tell you, I’m getting over my mother’s death still. It’s not an easy thing. My dad’s been gone for a long time because he effectively died many, many years before he died because of Parkinson’s. I mean, it just took him away.
support they gave me when they showed up at my dad’s wake, my mother’s wake...the flowers and it was like national grieving when my mother passed away in September 2019. It was national grieving because the women, they felt like they knew her. They understood after seven years when I said, “My mom. You know my mom.”
And so yes. I think people who knew me could feel it. If they went to some of the shows that we put on, the events, it wasn’t like...it was more just a celebration of the human spirit. It’s that feeling when you watch Rudy being carried off at the end of “Rudy”.
Bob: Well, it’s interesting to me. I mean, you’ve done that with a smaller company and you have success with turning around struggling retailers so why not run a Gap or Macy’s or Victoria’s Secret? I mean, I think you said you go to boring businesses because you want to. Is that in the cards or is that like, “Oh, I’ve done that already.”
James: I spent a lot of time since I left Ashley Stewart just being free for the first time in a long time. There was a lot on my shoulders. And I miss people as individuals. But I’ve just been thinking. And so for me, I got over...I realized that I’m in an interesting position to maybe do some broader systemic things for our little country that we call the United States. I am kind of embracing the fact that maybe I’m this accidental...I told you this. Accidental begrudging public figure. I don’t know what’s happened but I kind of...I guess I am.
And I just want to be a part of the solution. So, what does that mean? So, I’m teaching. So, I teach at MIT, I teach at Duke. I’m teaching a lot of CEOs. But it’s not consulting. It’s teaching. Just like in that sort of way. And then working with people. I don’t really feel like I have a lot of non friends. I’m like, “Come work with me. Let’s do this together.”
I am on the board of these big not for profit industry wide efforts like the 1,300 signatories to the CEO action for racial equity that...so it’s the CEO David Taylor and Tim Ryan and I joined the board of Conscious Capitalism which is another form of thinking, a coalition of CEOs and companies. And I’m still on that board of JPMorgan Chase, Advancing Black Pathways. So in terms of financial systems, it’s how do you create more equity in the capital system like making money, making margin?
So, I think that that’s my role. I’m kind of a middle flywheel to a lot of different entities and organizations. It’s nice to be independent because I can...I’m not restricted in some ways to...and then you’ll see some announcements coming up in the next couple of months that are kind of pretty big announcements. And then the other thing that I’m doing is I’m writing this book that...here’s my fruitless plug to all of you. Go sign up for it, redhelicopter.com because...
Bob: I was just going to ask you about Red Helicopter. Why the image of the...was that you spinning the red helicopter, by the way, in the...
James: No, I wish. There will be one day. Yes, I’m creating a master curriculum that trains leaders. So, whether it’s the stuff I did at Duke or MIT or all these things, it’s the way that I approach change. So, it’s those classes on...it’s all interwoven, by the way. It’s like mathematical neuropsychology, organizational behavior, marketing dynamics, legal ethics, Aristotle, Plato, Thoreau, Buddhism curriculum. Trying to get people to suspend disbelief because one of the things in our society is that we all get programed to only think a certain way. And it leads...
Bob: Well, then we tell ourselves a reason. We put a whole story behind that that makes us go like, “And that’s why I’m right and you aren’t.” It’s that story behind it whereas the story you’re telling is one of inclusion and bringing people together. So, it would seem to me a guy like you who can synthesize that and make it...you can do this too. It’s going to have a lot of traction.
James: Yes, I think what it really pushing is intellectual curiosity and humility. I think most great scientists know in art, there are no...very few certainties. You’re always trying to disprove yourself in science. So, I apply that to business. It doesn’t...just to be naturally curios, to just say, “Oh, what I did yesterday doesn’t work and that’s cool.” It’s more of a positive thing like looking at people and saying, “Oh, you think you can only do this? I think you can do these three things. I’m going to show you can do these things.”
Bob: But see, that lands in such a different place, my friend, because suddenly... even you just saying that, you can...listeners, I’m sure your shoulders just went up a little bit and you’re like, “Really? We’re all little kids at that moment.” We’re like, “Really? You believe in me?” Because we don’t hear that. We haven’t felt that in a long time.
James: And it’s sad. It’s sad.
Bob: It is sad.
James: It’s sad that leaders are like that. That’s part of my whole thing about leadership is like, “Come on.” If you think about...if anything, I hope people realize from Ashley Stewart why it was so important...if you read what I wrote in the “Harvard Business Review” piece, I just said my name is James. There were no credentials. I’m James. I don’t know what I’m doing. I’m probably the least qualified person to do this.
I hope that as you get to know me, you’ll see that I know some things and that I can help pull it all together but you’re right. I don’t know. I can’t wait to learn. I would love for you to teach me. And let’s just take a walk. It’s like the end of the movie “Wedding Crashers” when it’s like, “I’m not asking you to get married. You want to just take a walk?”
And that to me was...people say what’s one of the most important things. That first interaction I had with people in the field and in the home office but particularly the field. I also said something like, “I’ll never know the stores as well as you. I trust you. And hopefully, you’ll trust me. But I’m not going to ask for your trust in words. Just watch.” And it was that.
But a lot of these things, people have to want. I think you know this. The tried-and-true way of saying, “Okay. I’m going to go into my Merry Poppins bag. I’m going to do the same damn things.” It ain’t going to work. It just won’t.
Bob: Well, plus, it discredits all the people who are there, I think, in a way that is so fundamental. You obviously don’t know how or you’d be doing it. And trying to pick up that trust seems to be much harder than where you just meet them at the mat and say, “I’m your new running buddy. Let’s go do hurdles.” It’s that simple. I mean, instead of, “Oh, I’m going to tell you what to do. You need to eat more and...let’s just go do running.”
We see moments, I think, when brands come out and can get above that cynicism. But as a unified way to say, “But I’m teaching it so that more people do it.” I think you were the right guy at the right time, man. I think it’s what millennials are waiting for. I think it’s Gen Z. I think we’re all waiting to say, “What else could I do? But I need someone to believe in me first.”
And that may sound a little shallow but most of us are in the way that we plant the bush and then we go after with hedge clippers and say, “Why aren’t those damn employees working?” Well, you’ve cut off all of the spirit. Their personality stopped at the door. You should be putting fertilizer on there. You should be trying to say, “How do we get more sun on this situation?” But that’s not how most of us instinctively were taught. Does that make sense?
James: Yes, it’s command and control leadership. You can’t do that. And it never really has worked. It’s worked for large, bureaucratic organizations that are content with growing at GDP and just surviving and you sort of punch in the clock and you do your years as the CEO and you leave.
Look, we are in an inflection point as a country, as an economy. The retail industry is at a massive inflection point. It has been for a while. It’s why I set up that big show. I just said...I would look to the audience. I said, “We had zero money, zero track record of success, zero everything. If we can do it, you can do it. But what does that mean? You have to be able to...” It’s the classic you have to be able to walk away from things that are successful now that you know won’t be a year or two from now. It’s very hard to do that. I get it. But you have to.
And for me, as an equity guy, most of my life I didn’t have W2 income. I made money as an investor. I owned. And so, it’s a real owner mindset. You have to...I think a lot of family owned or personally owned small business...look at the fight they’re putting in right now during the COVID environment. They’re fighting for their lives. It’s hard and I want to help all of them, believe me.
But that sort of novelty, that sort of entrepreneurship, that only comes when you have a real sense of ownership. And to me, as for giving advice to CEOs of large companies, yes, they don’t own multibillion dollar companies but the thing I often suggest to them is that what you do own, you do own a responsibility to try to realize that your employee base, they’re really having a hard time right now.
And it’s not just the money. Human beings have so many different forms. We’ve deconstructed everything to think capital. People think financial capital. There’s others. A lot of my life has been a successful unleashing social capital, using financial capital and then just leadership.
But we translate compensation to just money. But ask anybody...if you actually took the time to ask people not in some random survey that people send out from HR but like a real conversation what is it you most desire as what makes a good employer a good employer. They’ll tell you the same things. Trust.
Bob: I was going to say trust is number one.
James: Honest freedom. To have some self-determination, to feel like you’re making an impact, that you’re not being watched with the cameras and if you happen to need an extra day of leave because your daughter’s sick, you can take the day. That all boils down to trust in humanity to realize that good employees will not take advantage of the system. They won’t make it long term.
If you can come to grips that we are taught in this country that reason from the Greeks is a superior brain function but that emotion is weak and negative whereas real neuroscientists know emotions are every bit as much of your brain matter as core rational thinking. If you can really suspend disbelief and realize that we were taught a lot of things in school and in society because our brains function in a way that they can’t help but compartmentalize things and simplify things into like AB-AB, right, AB.
Bob: Well, and decide what’s a man, that’s a man. That’s a woman.
James: Man, woman, AB.
Bob: She does this, he does that.
James: Black, white. Just left side, right side brain which is also a fallacy. Where my view...I think it’s helped that I’m this Asian American guy, born here who had only white friends in Long Island and that is married to a white woman that ran a black woman’s company.
My whole life is this massive United Colors of Benetton. I’ve had so many different “jobs.” I don’t view them as jobs. I view them more as experiences. My whole life is like one big color of...I don’t know. Beige just sounds weird. Is it like a...
Bob: Yes, no. You’re not beige, my friend. There’s a big rainbow. I don’t know what it is because that rainbow doesn’t quite work but...
James: I’m color, right. So you know how in a prism the seven colors come out but the primary color we all see without a prism is white light. I see all seven of them at the same time maybe. And saying, “Yes, why not? Why can’t that be indigo and that one be orange and...that’s cool.”
And then, “Oh, my gosh. We’re going to mix orange and indigo together.” And voila. We’ve got a brand-new brand. Or voila, you’ve been stuck in this job forever and you know what? You’re going to kill it in this job. It’s going to be awesome for you.
That’s how I’ve tried to live my life and it’s been rewarding on a personal basis. I always delight in seeing people. It makes me happy.
Bob: It’s all about people.
James: You can change people’s mindsets and behaviors and you can make them better. But not change them. You can make them better by having faith in them. And then once they have faith, then investing in them because there are skillsets.
You should learn certain things, math and...you have to learn some things but if you feel insecure and people are telling you you suck, you can learn. You can. Or you don’t want to. And I think in our country...now this is the high school teacher talking now. We’ve got a country I think that tells a lot of young people that they suck. Or it makes them stupid.
Bob: Well, let’s be honest, we have a lot of social media that says you suck because you’re not this person. So, there’s a comparison. You can’t get away from it. At least in my world when I was growing up in the...and I’m definitely older than you but when I grew up, you didn’t have all that stuff.
It was really...you could be more the mind over matter because you didn’t know somebody else was doing X or Y or Z. But if you still had that North Star that it’s about empathy, it’s about compassion, it’s about holding myself higher, then I think you end up finding the way forward.
I saw you speaking at Davos this week. So, tell me is this the message that’s going to resonate with them? Is this the same message you’re going to take or...
James: It is. I think a lot of the things I’m doing now...people ask me about future of work, future of society and future of organizations because those are all just organizations. Future of countries and...it’s one big organization. I am.
Because I am very optimistic about... and realistic about how people are wired. It’s never going to be all unicorns and rainbows. But I am. I’m talking to them about these sorts of things and the correct measurements that take a little bit longer to measure.
Bob: Which is why you threw out all the organizational stuff because you knew that. You just said, “This doesn’t work.”
James: It’s a circle. It’s circles and not lines and most companies should be built like that too, versus lines.
Bob: And open to opportunity. I think that’s the other thing you get from you is there’s so much more than we’re capable of and that we’re looking for. And I think you see that and I think we feel that just talking to you here. You’ve been really gracious with your time, James. I mean, any final thoughts about having success in retail or life?
James: Yes. I think that my advice would be this. And all of this will be in my redhelicopter.com book. It’s a real...going to be a very readable book about lessons on very complex things but making it very easy to grasp, use tangible things so that you can implement them in your life.
I think the theme of the book though is we are all grappling with...not to sound overly Buddhist, our own insignificance. And there’s a lot of suffering. I think we all as grownups know life is incredibly hard. Really hard. They don’t tell you that when you’re growing up.
And the only way you get through life and the fact that we’re all insignificant, you have these very micro relationships with people. And you muddle through it. That really is the only thing, to sort of put some purpose and some...so I would say to everyone just don’t forget that. And obviously, there’s a lot that can come from that statement.
Would you please try to be modest and more empathetic and patient with people right now? There are very few things that are more important than trying to alleviate the suffering of a fellow human being, let alone coworker. So, to me, that’s one.
Number two, a source of a lot of angst in companies, in society, in people’s lives and the hallmark of lives and companies and brands that buck this trend is that there’s a lack of self-determination, that people feel trapped, that they feel like they’re basically in prison. Hours, they can’t make enough money to retire when they want to, they can’t...the vacation times are regulated, leave time.
It’s so regimented and great companies, leaders and brands will create cultures and then systems that allow people to have the dignity and teach them what self-determination means because with agency comes accountability too. You can’t just be given agency. You then have to be accountable. You have to understand with that comes responsibility and if you breach it, then you can’t work here. You breach common trust. But people have to learn what that means, to have agency. And if you can create a system that does that...
Bob: But isn’t that scary? If you haven’t had that modeled for you, if you don’t know what that is? It’s almost like we’re taking off the lines on the road and the guardrails. There’s certain amount of human nature, wouldn’t you think, that gets pretty scared of that. But I could go off the road. But I don’t know what I’m...right? How do you get somebody up to that?
James: Yes, and that is a great point and so from a company perspective...I answer in two ways. From a leadership perspective...because there are a lot of your listeners who are...they manage somebody. You have to give agency with training wheels. There’s a way to do it where...listen. It’s in the smallest of things. You don’t have an extra day of paid leave or unpaid. I know you need some extra flexibility here. Just use it wisely, okay? There’s agency.
But the second thing is you’re right. You know what the biggest problem is in this country? No one wants to invest in people in the most important way. Our education system sucks. We spend all this money and teachers get underpaid. We all know that. And the testing’s off, is not correct.
They’re measuring...there’s massive bias in testing. We expect the...the only asset that does not depreciate in a human being is your education. Only thing. That’s what a lot of the Civil Rights leaders used to say. You can’t take that away from you. You can’t take your brain away from you.
And so what we have is a society where we’re underinvesting in people of all races, by the way. And particularly, 99% of socioeconomic classes. Let’s be very blunt about that too. I’m a product of a public school system on Long Island, a very proud one. And I’m not sure if I would get that education today. I’m not sure if that’s true.
Bob: I’m sure that I would not get the education I had in Toledo, Ohio. I mean, I had a resource room in 1964 where we’d go watch little filmstrips on our own if we did enough good things. All sorts of unlimited books. So for a guy like me who is naturally curios, great. To me...oh, everyone gets this, right? And then you realize no, you’re in the one percent, dude. No one got that.
And you suddenly say like my friend Sheila Kuehl who ran for California senator I think or representative, and I was at a fundraiser for her many years ago, and she said, “It all starts at birth. Oh, it’s a girl.” And you’re like, “Oh, my God.”
And you suddenly realize that there is a different world out there that unless I’m willing to be in that other person’s shoes, unless I’m willing to say there are other things going on here, I think, again, we tell ourselves a story that I’m right and that’s just not what we’re seeing and certainly not your experience, certainly not the women’s experience that you have made a difference in Secaucus.
James: Yes, and so I think private sector employers, until we sort of think about and fix our public education system, there is more onus on private sector employers to reinvest in their employees. I would be a big proponent if I was on Capitol Hill of making retraining, reskilling doubly deductible for companies. I’m making that up. So that sure, if you can prove that you invested in people and they earned more and learned a different skill, you get a tax credit.
So that’s what my passion is and that’s the work I’m doing on the CEO action. It’s really on an education subcommittee. That’s why I’m teaching at the schools I’m teaching at and when I can share the other big news, maybe you’ll share it with your listeners.
They’ll understand what I’m doing and the puzzle pieces will come into play. And I want to make an impact on younger people, education because as I get older, I don’t think there’s a bigger payback on investment than investing in kids.
Bob: I’ve said long ago, all I care about is education system. Unless we get this fixed, we’re doomed. Unless we have empathy when those kids learn how to put a shot in my body or whatever it’s got to be, unless we have a way to rebuild the gossamer threads of community which I think retail is what builds it because it’s that one moment of kindness when you walk in the door that I model that, “Oh, there’s hope for society.” Without that, if it’s all going to be an online world where we’re just rats to the cheese and then click and buy, I don’t think there’s hope for us.
So, at what point are you able to say, “Look, I can’t fix everything. Is this what education is for you? Is this what it’s about?” But for anyone that comes in contact with you, a guy that says, “I think we should do a podcast,” four years ago. Somebody who’s on Instagram and says, “Can you help me?” And investor who might be listening today. Is that it? Your personal brand, your personal connection is what...that’s all you can look at at this point?
James: I think that’s the most I can do and that’s what Red Helicopter is, that’s why I’m picking the boards that I’m on, it’s why I’m picking the podcasts that I’m on is that you try to maximize impact by spinning as many flywheels as possible and picking your partners and friends wisely who maybe share some similar thoughts and hopes and that maybe by doing that you can ignite more flywheels together.
Bob: And again, this book is coming out when do you think?
James: I think I end up talking...this is new for me too. new experiences like writing a book? I’m like, “Okay, sure. I’ll try that.” So I think I’m talking to publishers in April. And then I hope to get it out within that year or within the year. And I’m going to...I can’t wait because I want a lot of my retail friends to read it because I think it’ll help them just think about their own businesses and reinventing their businesses. But I’m going to donate...I don’t know. Do you know how many scholarships I’m going to fund with the proceeds from this book?
Bob: How many?
James: A lot. I think it’s going to be awesome because a lot of the organizations where I teach...I’ve spoken to a lot of companies, I train people and I always have done it for free. They’ve been very gracious. People are like, “Oh, we’ll buy thousands of advanced copies of this.”
I think that I can raise a lot of money. And that would be awesome to be able to do that. And then I’m an investor so when I give someone a scholarship, I’m literally... it’s like that email I got from my student. I made an investment and I’m going to watch. I’m going to watch.
Bob: That’s the best. That’s the best, my friend. You’ve been gracious with your time today. Now one more time, how can they find out more about you and your work you’re doing?
James: Okay. So you can go to LinkedIn which is my only dorky social media. I’m now on Instagram and Twitter, iamjamesrhee. And I’m verified, Bob which apparently...
Bob: I saw the checkmark, my friend.
James: That’s kind of cool. I don’t know why because I never use them, but iamjamesrhee. And then on redhelicopter.com, you can sign up for information about when I announce the book, I’ll send you an email and saying, “It’s go time.” And then on that site over time you’ll see lessons.
I’m going to start just some interesting metaphors and lessons and maybe build a little community on that site that people can sort of share ideas in a safe way. I’m trying to just get new generation leadership, just a new style where you’re not killing people, it’s not toxic, you’re not...I think that you can do well financially but you can maybe share a little bit more than people are. That’s it.
Bob: That’s the best, my friend. Well, thanks very much for your time today. I really appreciated our call.
James: Yes, it was fun. It’s always fun when we speak.
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