CKBlog: Standards

Tuesday, May 02, 2017

My Father & I had Breakfast with Meg Whitman this Morning

by Steve Haberstroh, Partner

Sure, there were several hundred other people in the room having breakfast with her. But details people, details.

I was fortunate to have been invited to a breakfast discussion featuring Meg Whitman this morning by a good friend of mine who is an Estate Planning Attorney at Day Pitney. Her firm was one of the sponsors for this fundraising event which benefits a great non-profit called Family Centers. The organization helps support programs for lower income families, including education, in Fairfield County, CT (

The discussion at our intimate breakfast centered on Meg’s advice regarding leadership (yes, we’re on a first-name basis). She covered many aspects of her successful career and gave useful anecdotes and feedback on how to run a world-class organization, regardless of its size.
I basically listened, took notes, and even raised my hand once. I wasn’t called upon but I am sure that Meg was very impressed that I demonstrated great leadership by being the first person to raise my hand during Q&A.

Meg has had an amazing career. She graduated from Princeton with an economics degree (only the fourth Princeton class to have included women), earned her MBA at Harvard Business School, and spent her first years working at Proctor & Gamble, Bain & Company, DreamWorks, Disney, and Hasbro. Eventually, she took the CEO job at a little-known start-up called eBay and led the company from $4 million in revenue to $8 billion in revenue when she left. She then ran for (and lost) the election for Governor of California and is now the President and CEO of Hewlett Packard Enterprise as well as Chairwoman of HP Inc. Oh, and she ran for President in the 2016 Election. Impressive.

I’d like to share my take-aways and will end with the one I found most profound.

To demonstrate the last point, she referenced her first project when she joined Procter & Gamble. Recall that she graduated from Princeton and was coming off her MBA at Harvard. Not too shabby. She arrived at P&G confident, proud and excited to help provide value to the organization. Upon arrival, she was greeted with her first project: To develop the optimal size for the hole on shampoo bottles. Profound.

What she first considered a practical joke has become a life-long lesson in business. She says what she learned from this project has been a driving force in everything she does. As it turns out, a larger hole is better for the company as it means the users end up pouring more shampoo than is necessary when bathing. This results in higher shampoo sales and potentially higher profits for the company. But studies also showed that customers prefer a smaller hole as they are better able to control the amount they wish to use while bathing. Meg was left with the question, “Do I recommend what appears to be better for the company’s bottom line? Or do we pursue what the customers want?” Her boss’ response? “Always do what is best for the customer.” Smaller hole it is!

This anecdote really resonated with me. And I wasn’t alone. Most of the crowd was nodding as if to say, “makes total sense.” Turns out acting in the client/customer’s best interest is a universal theme in business. Meg has used this principle as she worked her way through consumer brands, toy companies, auction sites, in politics, and even today as the President and CEO of technology behemoth Hewlett Packard Enterprise Company. Profound indeed.

While this may be a universal theme, it doesn’t mean it is always easy in practice. In my industry, there are almost daily reports of brokers illegally churning accounts (more commissions), selling inappropriate high-commission products to unsophisticated investors, or not disclosing conflicts of interests when giving “advice.” Temptation is high. You tell me how someone is paid, and I will tell you how they act.

I learned this first-hand while employed at a large wire-house/broker dealer coming out of college. My base salary (which wasn’t really a salary because if I did not produce enough commissions, I owed my “salary” back to the company) was less than $20k per year. My potential pay was based almost solely on my ability to produce commissions. There was a constant internal struggle between selling what paid me most versus what made most sense for clients. That business model may work for some, but it is usually at the expense of the client.

I’m in a very different place today. And I can thank both the experience I had at my previous firm as well as my father for founding CastleKeep. He started the firm from scratch 17 years ago with a very simple and focused business plan: to build a world-class wealth management firm by always doing what is right for the client. It’s the foundation which guides us every day. And it’s not just because it is included in our mission statement. In fact, as an SEC Registered Investment Advisor, we operate under the Fiduciary Standard, which requires us to always put client interests ahead of our own. What Meg learned at Proctor & Gamble many years ago is the mandate by which we operate every day.

CastleKeep has a long way to go before it is the size of Hewlett Packard. And I am decades of breakfasts away from amassing even one-hundredth of the experience or wisdom of my good friend, Meg. Hopefully, the fact that CastleKeep and I share Meg’s principle of always putting clients’ interests first gives us a fighting chance. After all, even Disney started from a little mouse.