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Jon Huntsman's Moral Compass
Life lessons for entrepreneurs from his new book.
Anyone with a link to Wharton knows the name Jon Huntsman. He is, after all, the namesake of the school's new state-of-the-art building and a big benefactor. Investors know Huntsman, too. The company that he founded, Huntsman Corp., a Utah-based chemical conglomerate, had sales last year of $11.4 billion. A lot of sick Utahans know him, too. Huntsman has given more than $200 million for cancer care and research at the University of Utah. He has said he'll give away all of his billions before he dies.
Huntsman wasn't born rich. He grew up in Idaho, the son of a schoolteacher. He attended Wharton on scholarship and hatched his fortune out of eggs — or rather egg containers. He dreamed up plastic containers for eggs after working for his uncle, who sold his eggs in old-fashioned, less protective cardboard. Eventually, Huntsman left to start his own container company. It created polystyrene "clamshell" boxes for McDonalds' Big Macs. In 1976, Huntsman sold the firm and then, a few years later, started another. Thirty-five years and many mergers later, it's one of the world's biggest chemical makers.
Like anyone, Huntsman has known hard times. He beat prostate and mouth cancer. And his company nearly went bankrupt in 2001 when its cyclical industry slumped. Lawyers, business associates and friends urged Huntsman to cut his losses by declaring bankruptcy. He wouldn't. He felt honor-bound not to. He arranged emergency financing, and his long-private company went public earlier this year so those investors could cash out some of their money.
Honor and ethics matter a lot to Huntsman, so much, in fact, that he chose to write a book for Wharton School Publishing about the topics called, Winners Never Cheat: Everyday Values We Learned as Children (but May Have Forgotten). He discussed his new book in a recent conversation with Get It Started.
Q: What about your career as an entrepreneur? Is it harder for entrepreneurs to be ethical? In early days, especially, you're always fighting just to keep the doors open.
A: I don't think one environment is necessarily more conducive than another to ethics. When one starts a business and is trying to make payroll, if there's ever a time when ethics are required, it's then. You'll be recognized far more if you're ethical. Your conduct then can make or break you.
Q: How does a CEO-founder communicate his ethics to employees and to outsiders if he decides to hire them for top positions?
A: I've brought in individuals in the no. 2 and 3 spots at Huntsman, and I've gone through a pattern of teaching on ethics. Their values have to mimic our family's values or they have to change. There's a short fuse in a family business when you bring in people. You're dealing with debt as opposed to equity so you don't have a lot of room for mistakes. You have to have people who conduct themselves along the lines you've established. One of the chapters in the book is the three Rs of leadership — risk, responsibility and reliability. Those are taught very early to anyone who comes in at any level at Huntsman. Keeping your word is very important. If we promise to deliver a product in two days and it gets there in five, we'll lose that account. They have to know that, when we say two days, we mean it.
Q: Huntsman Corp. went public in February. What advice would you give entrepreneurs worried about taking firms public while keeping their ethical bearings?
A: I do think there are many large companies where the individual is forgotten about or where the individual training in ethics isn't as acute as in a private company. In a private company, everything you do reflects back on the person whose name is on the door. For 35 years, I've told our employees that. I've told them that they're an extension of my own family, that they're representing a name, a family and an ethic. In some large public corporations, I never quite got the feeling that they had this type of unity and spirit.
Q: What do you make of entrepreneurs who launch a company with the idea of selling out just a few years down the road?
A: That's ethically neutral. Many individuals start businesses to sell them. Nine of 10 businesses don't make it through the first five years. And the further you go out, the fewer make it. If you go out to 50 years, you find few companies that are still privately held.
Q: What about tough times. How do aspiring entrepreneurs hew to their moral compass then?
A: The only thing that matters is that they're true to themselves and that they adhere to a set of principles that are far more important than whether they're successful in their business. As an entrepreneur going through tough times, you have to put your heart and mind at peace — maybe through prayer, maybe through telling yourself that you're giving your best and you're not going to cheat, maybe by reaching out to someone for guidance. You also have to deal with the banks as straightforwardly as possible. Banks like to see someone who's willing to resolve a situation and just needs a little help, rather than someone who's unrealistic. I've had situations in which I've been right on the edge of the cliff, but people believed in me because they knew I was telling the truth. People want to deal with someone who's honest.
Q: You're a devout Mormon. Does a person need to be religious to be ethical?
A: I've thought about that a lot, and I don't think so. It helps establish a basis, but I don't think it's a requirement. It helped in my case. But many good people aren't particularly religious.
Q: Has our business culture gotten less ethical or are we lately just undergoing a temporary spasm of scandal?
A: Clearly as a culture and an economy, we've become far more concerned with the possession of wealth. Hedge funds, for example, are under enormous pressure to perform, and many of them will perform at any cost. They're really in the gambling business, not the investment business. And we've had a proliferation of gambling and lotteries. Gambling is now a way of life in America. Poker is all over TV. The lottery mentality of making a million overnight has also affected people. So you've got this combination of Wall Street greed, with the hedge funds, combined with lotteries and gambling. I think that has caused a dramatic change.
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