Bite: Delivering Alpha with Kindness, The Red Helicopter Way w/ James Rhee

Sarah Chen-Spellings (Intro):

Oof. I can't believe it's already Q2. Spring has sprung and yes, for many of us we witness the total solar eclipse. Wasn't that something?

Now all this energy shift has made me reflective, and I couldn't think of a better conversation to help me and you dig deep, as we reflect and reset for this year, than this one with my friend James Rhee, who is an investor operator turned author who is, yes, celebrating his book launch by HarperCollins this week. So make sure you go out there and get your hands on the Red Helicopter.

In this conversation, we talked about money, reality, true alpha and transformation -- leveraging kindness. This as he saw in his tenure as the unlikely “least qualified CEO” of Ashley Stewart, a popular plus size clothing brand serving and employing predominantly black women, where he invented the company from the brink of bankruptcy, with what he argues was a recipe of kindness that not just shocked the world but truly transformed the company. So much so it was captured by the Harvard Business Review.

His key message in his book, kindness creates real value. We all know it now. You can learn how ahead of your full read. Here are some key takeaways from my conversation with James late last year when we were in Boston together to get you excited. Strap on in.

1/ You don't make money with just zeros and ones.

Now, this one hit different. You don't create societal change with zeros and ones hiding behind your laptop, behind numbers, behind financial projections. You as a leader create new paradigms.

Sarah Chen-Spellings:

So you were six weeks away from liquidation and you decided you didn't like the way these black women were being spoken about. And so you're faced with this challenge where you decide okay, let's give this one final chance.

And you know the people, you know the women who are running the stores and yet financially it's not working. There were crazy insurance, workers comp claims that were crazy premiums. There were all sorts of incidents that were causing the business to not be profitable in the way it should.

Let's talk about your first 90 days, right? The CEO strategy what did you do then?

James Rhee:

First 90 days, I laid out how intense it was, right? So like the entire world's coming to kill this company, right? We know how the financial systems work, structuring works; the advisors are coming.

It's all coming And I’m holding them off like this and saying, you know who I am. This isn't some random CEO. Like I'm a repeat player in the world's largest capital markets. You're not going to do it. So that's one conversation that's happening.

The second conversation that's happening is to everyone else who works within the company and saying, this is true.

I said, I am James. I know I may be the least qualified person to run this company. But I'm the only one who showed up, and I get it. Look at my face. I understand. But maybe if you get to know me, you'll understand that when I say that I know more about this than you think. You remind me so much of my mom.

Like, I, but that's all I said. And said, you will be kind here. We will be mathematically correct. And if any of you, anybody, is disparaging toward this woman. If you lie, cheat, or steal, and you hurt this company, I will personally prosecute you.

So just like Meow Mix, there's a brand called Ashley Stewart. The ethos, what was the ethos? To me, it was friendship. It was dignity. It was a safe place.

Forget the clothes. That's the product, right? Was that feeling that it creates for people. I then had to do all the mathematical legal things and marketing and media. To just make sure the company promoted and advanced that product. So the clothes had to be sexier.

Right? The clothes had to be not like... Frumpy. It was sexy clothes for curvy women. I said, why are you so shy about... The clothes you're picking are so basic. Like, keyholes. Let's go. Let's be confident, right?

And then on a technology side, I replatformed the entire e-commerce site in 60 days. We put up demandware. And I had to put Wi Fi in the corporate office. So, all streams of work were happening at the same time, and in one calligraphy stroke.

And if anything did not advance the cause of this woman, it was cut. And that included people. And I told people that. I said, if you don't believe in what I'm doing, if you don't want to spend time in the stores and meet the women that you're serving, you can't work here.

You don't create societal change with zeros and ones. You create a new paradigms.

2/ Kindness is one of the things you never have to hedge. It's never wrong to be kind.

While some argue that some leaders lead effectively with intimidation and abrasiveness is part of their genius thing Steve Jobs, Carly Fiorina, Rupert Murdoch; James prefers a different way.

He believes in being kind but firm. Kindness, according to him, is often overlooked, but actually makes up the most valuable asset in business, in ventures and in life. As James said, kindness creates goodwill and goodwill. That's an asset, isn't it?

Sarah Chen-Spellings:

I'm grateful that we've come to this point because in essence, what we're talking about here, which is your big theme that has emerged is goodwill and that there's value to goodwill.

So of course, our listeners know what is goodwill. It is decided by the purchaser, that gap between the purchase price and the actual value, right?

James Rhee:

Kindness creates goodwill.

That's the way commerce works. The best deals in the world are things done on handshakes.

I'm a lawyer, so I can say this too, but legally, lawyers get in the way. It's friction costs. There's trust. So I have tried to live my life in every aspect of my life. There's a lot of trust. I don't work with people I don't trust.

If I have to document it, we're not doing it.

Sarah Chen-Spellings:

Yeah. So this vision of putting a tangible value to goodwill, came about from the story that your experiences with Ashley Stewart where at the end I can still remember as you were telling me the story as well. When your dad passed away. And yet, and you expected no one to show up.

I didn't want anyone to show up.

Sarah Chen-Spellings:

And you didn't tell them either.

James Rhee:

I didn't tell them.

Sarah Chen-Spellings:

The people, the employees in Ashley Stewart and yet. Tell us what happened.

James Rhee:

Yeah, my dad died, and big tough James, two years into this very difficult reinvention. It wasn't a turnaround, it was like a reinvention. And I had a week upon weeks. Dad dies, daughter's in the hospital, and I was tired.

I didn't tell anyone. I told my assistant to not tell anyone, just to lie and tell people I was on vacation. And I was commuting back and forth from Boston. Ashley Stewart was headquartered in caucus, New Jersey. And I didn't wanna be a burden, even though I think I'm a pretty renaissance, forward-thinking leader in terms of servant leader, but still like, yeah, okay.

I'm, I don't need help. James doesn't need help. Tough James, right? Bruce Springsteen. James, I got it. So I didn't ask for help and in my personal life, I asked for a lot of help professionally, but not here. I was like, I got it. And I needed help. And so I didn't ask. And then what happened is that people all showed up at my dad's wake.

And you have to picture the wake. It's a bunch of like sports coats, Korean primary care physicians. And then his college immigrant, high school immigrant friends. A few Jewish doctors from Long Island and that's it. And then in walked my whole office, home office, which looked like the United Colors of Benetton, right?

It just naturally, it was that way. We had like 15 languages. Our potluck parties were ridiculous, right? The food was ridiculous. But when I really started, got very emotional, just like heaving, crying, actually was when the women, all black women from the front line retail locations, they came and they carpooled to come.

They hugged my Korean mother and said, oh, Mrs. Rhee, you know, your son talks about you a lot. And we just want you to know, we think you did a good job with your son.

 And then they came to me and said, there’s a woman named Cherry. She held my hand and she said, Mr. James, you didn't think we'd come here for you?

And I cried. And it was that moment, this happened, I was 44. It was freedom. Full freedom.

3/ Don’t underestimate the power of appreciating the quiet leaders.

It's easy for us to be enthralled by the charismatic leader who sells the big vision, the big dream. Heck, we know it's important and venture to have a leader who others want to follow. But let's not discount the quiet leaders in the background.

Quiet leaders like James's mother and the women from Ashley Stewart. They are the ones who never get credit. And partly because they never asked for it. In recognizing them, you built loyalty.

James Rhee:

Who is the most important leader? Or maybe that I tried to emulate?

And I think, you know, what my answer is going to be is it's my mother. A lot of the work I'm doing I promised her to in my eulogy to her.

She was a great leader and she was firm, resolute. She allowed me to fail. She kicked my you know what, when I was not good to other people, when I had success at the expense of other people.

My mother was very, very tough on me and she was generous. But she was also like relentless. My mother lived through what she did.

My mom was so thoughtful that toward the end of her life, she went back and renewed her nursing license to take care of the veterans of the Korean War that saved her country when she was a little girl. That's how thoughtful my mother was.

I always want to talk about my mother, and like a lot of the women of Ashley Stewart, they shared a lot of these qualities to their quiet leaders.

They'd never get credit. And so my whole job at Ashley Stewart, I gave them credit. I told the entire world about them.

4/ “I'm more proud of the way we did it than what the result was.”

Saving Ashley Stewart from the brink of bankruptcy, James gave credit to his vision in investing on women.

Sarah Chen-Spellings:

So let me ask you this question: Ashley Stewart was a couple of years ago, and yet the calls that you were getting from Jamie Dimon to be on the JP Morgan board and things like that for the Black Pathways and all these things, the calls came only recently.

And of course, we're going through a moment in America. Why do you think why now?

Why is all of this happening years later? And where are we in America?

James Rhee:

I'm going to answer that. And the first part will sound slightly immodest, but I have to say it, I'm going to put my investor hat on.

I've lived the world that people are living through now. I bet on it. 10 to 12 years ago I was right. I think about 2010, 11, 12, 13, I was saying things like, I'm worried about social dissolution tension.

I'm betting on investing in women. There's not enough capital there. Why wouldn't I want to put money? Then there there's more arbitrage, not just fairness and justice, but also like as an investor, why wouldn't I want to invest here then?

And I just want everyone to know I rarely say this, but the financial results were absurd. We were right, the world was wrong, and we showed the world there was value here and IRAs were absurd.

Triple digits. Everyone made a ton of money and my investors made a ton of money and they deserved it because they had trust. They had faith. And I'm more proud of the way we did it than what the result was.

5/ The scarcity mindset and why the richest aren’t always the happiest.

Sarah Chen-Spellings:

Why those that are more privileged come from the scarcity mindset and the way in which that has influence the work you now do with families. You had already this impact lens long before impact investing was a thing, arguably.

What needs to shift in the mind of investors who always, and I think you're absolutely right, people feel like they don't have enough. I work with some of the richest families and they're unhappy. Why?

James Rhee:

Because number one, part of this is historical. The world is flooded with so much financial currency, not off the gold standard. It's all, we're printing money right now.

That money is so cheap that people have sort of gravitated toward money and forgotten that there's a whole other form of currency called social currency, right? Like neighborhoods and democracy.

And we have gotten confused that the economy is, you want a good economy because you want a really stable and positive country. I don't think it's the other way around. I think the economy serves the country. I'm pretty sure that's sort of how things should work.

Number three, families. Yes, I've been managing family money for a long time and I stumbled on the conclusion as well - why? Because families care about their legacy, their reputations, but they don't you don't just make money any way.

And there are certain families they've been rightfully embarrassed. They have had their names removed from museums. It's not okay to make money like selling opioid to vulnerable people. I don't want to make my money that way. I don't want to stick my children with that legacy that their dad did that. Families get it.

I think that what's happened is that we've become so anonymous that sometimes when you are anonymous, like on social media, but even liquid capital markets, when your name is not stuck to something that you can sort of say, oh, I didn't know.

And that's why I think one of the things, as much as there's some things about crypto that concerns me, what I do like about blockchain.

I do like the fact that there's real accountability for their transactions. And so I've really tried to hold people and myself like, you're accountable for how you deploy your capital, time, personal capital or money.

I have a lot of friends who have so much money they're not happy and they call me and tell me they're not happy, in tears, not happy.

And they say to me that like, you're so freeing. They’ve much more money than I do, right? They much more like a title or whatever. Yeah, I am free. I'm free because I'm very confident in my relationships with people and I'm free because I know who I am, which means what I'm good at, what I'm bad at.

And I think that's what's enabling me to think about it. I'm in a lot of different worlds. At MIT and Harvard, we were with Mayor Wu and you know how we’re in PBS filming my class next year; and I'm on Brené Brown which is skewed more toward I think, white women. And then Simon Sinek and these are more dudes, right? It's the same person.

Closing Remark

Sarah Chen-Spellings:

And with that, these are just some of the amazing lessons you’ll learn from James Rhee and as always, I’d encourage you to tune into our full conversation, which still makes me tear up each time I tune into it.

And yes don’t forget to order your copy of the red helicopter and you can find the links in the show notes.

Until the next time, keep leading with kindness.