Motley Fool Hidden Gems Investing - Motley Fool Money: 12.27.2013

Episode Date: December 23, 2013

On this week's show, we revisit two of our favorite interviews.  Best-selling author Dan Pink talks about his latest book, "To Sell is Human: The Surprising Truth About Moving Others."  And Panera Bread founder and CEO Ron Shaich serves up some insights on the restaurant business. Learn more about your ad choices. Visit megaphone.fm/adchoices

Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siyaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out. Somehow things usually get worse before they get better. Apparently, that's how I roll.

So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. everybody needs money that's why they call it money from fool global headquarters this is motley fool money welcome to motley fool money i'm chris hill on this week's holiday special we revisit two of our favorite interviews later on best-selling author Dan Pink talks about the business of selling, but we kick things off with Motley Fool co-founder and CEO Tom Gardner's conversation with Ron Shaik, the founder and CEO of Panera Bread. We're here in Austin, Texas with the founder and CEO of Panera Bread, Motley Fool Investment

in Stock Advisor and Supernova. And we're here with Ron Shaik. And Ron, thanks so much for spending some time with us. Thank you, Tom. Always one of our good friends. What's the difference in the vision at Panera today than in the 1990s. When you look at, I mean, it was, I know you're quoted in one place going, no one would buy my stock in the 90s. I couldn't get anyone to even think. Five years. Yeah. I mean, I know there were spinoffs, right? But I mean, the performance of Panera stock from the mid 90s to 99, that was not a good period for you. Well, we went public in 91 and I guess if you take it 91 to 99 when I spun off all the other businesses the stock essentially during that period of time had gone up gone down but was ultimately flat for those

nine years and I think it's up I don't know what it is 40 fold from 99 to 2013. Unbelievable one of the one of the greatest stock performances over a 15-year period in American history. Yeah so it's had quite the run. Yeah. But I would say to you... Were you laying the foundation and people just didn't know in the 90s

or there was a really big shift that you earned a wake-up call for investors? Well, I would say to you this way. I would say to you, ultimately in 99, we made a bet. And we made a bet

on a vision for how this corporate entity was going to compete. And in 1998, we had four divisions. We had the Au Bon Pen stores, Au Bon Pen International, a manufacturing division, and we also owned Panera Bread.

At that time, Panera Bread was 180 stores. It was clear to me, as somebody who had been around a while, that Panera had the potential to be a nationally dominant brand. For every 100 guys that tell you that something could be nationally dominant, one ever makes it. And I know it. I could see it. I could feel it.

It had stable numbers. They were consistent. And I was struggling with how do you unlock that? And, you know, in a multi-branded company with professional managers running these four divisions. And around 1998, somebody said to me, you know, Ron, what would you do if Panera owned the other three divisions, as opposed to Au Bon Pain owning the namesake of the company, owning the divisions? How would you think about it? And that paradigm change allowed me to say, well, if I really, you know, if I really look at it, this is the gem.

This is really where there's an extraordinary value. We have to protect it. And if we're going to protect it, what we've got to do is we've got to make sure it has all the financial resources it needs, all the human capital. And what that ultimately led me to conclude is if we were going to fuel this thing the way it needed to be fueled, it needed us personally to go down there and run it. It needed all the financial capital. It led us to decide to sell every other division but the Panera division.

Total focus. Total focus. We sold everything else, ended up with 180. And at that time, it was a really tough decision. This was the third largest division. It was, you know, the board members had signed up to be in the old ball pen business. It meant selling people that I'd grown up with, you know, because they were non-competes. They went with it.

They all came back eventually. But it was very emotionally difficult. In the end, we ended up with 180 stores and a couple and a bunch of cash. How quickly did you know that was the right decision? I mean, you may have said you knew it in the moment that it was happening. but how long after was it like, wow, okay, this was, I feel the energy? I think most of business, most of life actually, is you know the right thing to do, you have a sense of it,

but until it's actually played out, you don't have the wherewithal or credibility to claim that. And so anytime I've made a leap of faith or I've tried to create into a future that's just playing out, I've known it's right, I intellectually know it. But you've got to go through it, and there's a certain tension that exists until it manifests itself. And so there was a huge leap of faith, and in 1999, we ended up with that Panera division, and we took it from there. Capital allocation question.

Why franchise at all? I love following the restaurant business. I see what's happening to two-income households and what's happening around the world. And it's a great long-term growth business. And what I'll say is a lot of people think, restaurants, they all fail. I'm not going to buy them. And that opens an opportunity for those of us who are willing to really dig deep into the great restaurant businesses that are out there. But I'm always interested in what the dynamic on that decision is.

It's about 50-50 at Panera, is that right? Yes, it is. And I know you've bought some franchises back. Tom, let me ask you a question. Yeah. Good, I like this. All right, Tom, let me ask you a question. I'm going to keep your expectations low, Ron.

All right, Tom, let me ask you a question. Do you advocate for your investors' asset allocation? Yes. You do? Why? Why do you argue for balancing equity with debt? Okay, well, I believe that diversification will get you through different times in different ways. So that helps you. Now, what I'll say is there are investors who would sit there and say,

no, I pretty much put all my eggs in one basket and I washed that basket really closely. I believe what you're saying is... Well, I haven't said it yet, but I'm asking you. I think most modern investors would argue for some form of asset allocation. And we believe that company stores are phenomenal when you're in a very hot market. They're phenomenal when comp stores' sales are great. On the other hand, we think having franchise stores are also superb when the market is slower growth and there's more challenges. So we believe in asset allocation.

Think of our company stores as investing in equity, and think of our franchise stores as investing in debt. We like a healthy mix of it, and I think that we're trying to deliver for investors results over the medium and long term with some stability. And I think we're far better to do that when we operate with a mixed system than if we were to operate solely with company-owned stores or solely with franchise stores. And I think most companies actually end up getting there. And, you know, to be in a complete company store system, if there's a burp, the investor is going to have a real stomachache. Gotcha. Okay. So 1,800 stores or so.

Yes. Locations, restaurants. Just shy of that. Have you published a number of how many locations you think you have in the U.S.? You know, Tom, for as far back as I go talking to investors, I've never published a number. Yep. I think that's great. And I don't because I don't really know what the answer is.

At one time, if you'd asked me, I would have thought 500 stores. I would have thought it was 1,000 or 1,500 or 2,000. The reality is it doesn't matter what that number is. Who knows? I don't have to know until I get there. What I need to know is I have enough growth to feed the monster in a reasonable way over the next three years. So we sit down every three months. We look forward three years, and we make sure we have enough development territory ahead of us.

And we continue to learn. That's what business is about, continuing to learn. We continue to learn, and we continue to adjust, quite frankly, what our potential is. And do you continue to think, I know you think market by market, we're not going to be going international and global. You know my strategy. You know exactly. Listen, I've heard my line. I'll give it to you.

There is no such thing as an international strategy. All there are are markets. Yeah. Yeah. So Canada is, in a way, you're expressing that's your next market. We're there. Yeah. We're moving out. Yeah. And how is that? When was the first Canada Panera Bread opened? Sometime in the last couple of years, we opened the first one in Canada. And we're quite pleased with the reaction we get.

I mean, I think that it's going through a curve very similar to what we saw when we moved to California, which is you have to build up a critical awareness. More importantly than that, you have to touch people. and you have to build a relationship in which you're both building frequency and you're being able to bring in new customers. And we're going through that curve in Canada. I want to hear a little bit for our members that don't know about Panera Cares and about the journey that you just took with food stamps.

A little bit about those two. Yeah, well, you know, Panera is, let me start. I'll root them all together. Part of Panera's success has been because we have built community centers. Panera is our community centers across America. I mean, something in the order of a third of our business is rooted in people who come in for a place just to sit and talk, catch their breath, be with others. If you look at our business, you'll see Bible study classes. You'll see mother's knitting classes.

You'll see book clubs. This is a place to talk and connect. And because we bake fresh every day in every cafe and because we're invested in that community, we got very invested in issues of supporting the food banks and the like. Every night we would deliver any excess bread we had from that day, because we'd bake fresh every day, to these food shelters. Got us involved in hunger issues. And as you get more and more involved in it, you begin to learn about it. You find out that one in four American, one in four children in this country, one in six Americans, at some point in the last year didn't know where a meal was coming from.

We're not talking about a few people. We're talking about 48 million Americans in this country. And as we began to learn it, we began to figure, try to think about it. well, how do we help make a difference in it? And over the last four or five years, we've gotten up to a level where we're giving somewhere in the range of $100 million to $150 million a year in product or cash to these organizations, major supporters. But I felt in some ways that it wasn't fully what we wanted to do.

I wanted to find opportunities in which we could do more than just pack our bread that had not been sold that day in black plastic bags and let it go out the back door. I wanted to find something more than just writing a check. And what I wanted to try to do was figure out how we put our own arms and legs, our own backs against the problem. Because it wasn't simply about the gift,

it was only our own relationship with it. And it led me to something called the community care movement, community cafe movement. And I don't know, four years ago, the height of the recession, I was at home one night watching NBC nightly news. They're talking about a cafe in Denver that had been formed that had no set prices. If you had a few extra bucks in your pocket, you left more.

If you had a little less, you left less. And if you had nothing, you left nothing. And the idea was the community would support this and support each other. And it was about paying it forward and taking advantage of it when you had the need. And I thought it was a fascinating idea. I heard the story of this cafe, heard they had spent 10 years getting it going. And I looked at my wife that evening. I said, heck, we open two cafes a week somewhere in this country.

We've got 80,000 associates. We've got equipment that you couldn't imagine. We know how to do this. This is the kind of thing we should do. And she looked at me and said, well, if it's the kind of thing you should do, then you better do it. And I thought to myself, wow, she's serious. I better do it. And I began to think about doing it.

It became an interesting thing for me. Could you do it? Could we actually create a cafe where there are no prices? And what was the nature of humanity? My original vision was we'd start out with just baked goods and coffee. But I started to go and visit these food shelters, and I began to work in them. And one of the things that really struck me, because I'm always looking for what the pattern is, is just the amount of pain people that are in these basically soup kitchens are.

Everyone around you is in pain. Everybody's walking around with their head down, facing their shoes. And I began to think to myself, well, heck, if we really want to do something here, what we're about is not just feeding people, not just filling their belly, but giving them an experience that had dignity to it, that uplifted them. And I said, if you're going to do that, you want to have an experience that people are willing to pay for. You don't want to go to the lowest common denominator. You want to go to the highest one.

That led me to say, well, if we're going to do that, we've got to do more than baked goods and coffee. We've got to do real food. If we're going to do real food, we know a place that does that. It's called Panera. It's got the antibiotic-free chicken. It's got the salad. the organic elements, we said, let's do the full Panera menu. And if we said, if we're really going to do that, let's put the Panera name on it.

And let's see if we can find a community cafe where we had no set prices, that people were actually willing to pay for and donate, pay it forward. At the same time, we were allowing those that had the need to pay less. People thought I was nuts. But anyways, I decided I would go for it. I'd open one of them. What's the risk? We'll try it.

Where was the first one? Clayton, Missouri. Fascinating cafe. One of our original 15 stores, two blocks from where I used to live when I was in St. Louis. And it was an eclectic neighborhood. You had the county jail across the street. You had people that were panhandling in front of the store. And you had million-dollar townhouses down the street.

And it was an opera. You need both. You need to support it. At any rate, decided to take a shot at it. Opened the first one. I ran it for three weeks myself because I wanted to experience it. And here's the amazing thing. It actually worked.

You know, 60% of people left the suggested donation, 20% less, 20% left, a lot less. We've since gone on to now open five of them. We opened our first, as I said, in Clayton, Missouri, our second in Detroit, our third in Portland, Oregon, our fourth in Chicago, Tom. Is there a way for your customers or for people to contribute to Panera Cares? Yes, yes. You just go to www.paneracares.com and you're able to contribute right on the website. Most recently, we've gotten, you know, and by the way, here's the interesting thing. We're going to serve a million people this year in these cafes of shared responsibility.

And the really interesting test, and it's a statement to the rest of the world, for all those folks that say that most Americans really aren't good people, that they're going to game it, figure out how to take advantage of it, the proof in Panera Cares, well, there are people who try to beat you, but the truth of the matter is, most people are fundamentally good. More in a moment. This is Motley Fool Money. welcome back to motley fool money i'm chris hill motley fool ceo tom gardner recently sat down with ron shake the founder and ceo of panera bread here's more of their conversation we love we

love our long-term ceos at our great businesses so what do you think 60 with 65 70 you know you know we don't know i guess we don't know we don't know i think this i've just recommitted to being CEO. I think that Panera's got a number of younger executives that are quite powerful in their own right. And I think that my interest is less in the title and more in continuing to be able to feel like, A, I can make a difference for the constituencies of Panera and that I can feel meaning in my own life. And we'll continue to work that through and figure out the best way approach it as we have in the past. How do you invest? And what would you look for if you were investing in a restaurant chain? What are some of the factors that you think align around greatness?

You said you love to find patterns. That's how I invest. Yeah. Well, I will tell you, I look for how the management thinks and who they are. And I think we have become increasingly short-term in so many of the ways we think about management. I think we have become increasingly short-term in the way we invest. And I think that when you do that, you take the bulk, the majority of the really powerful things off the table. When I'm really thinking about this quarter, I'm really not building competitive advantage. And so my whole focus is in medium and long term. My own perspective is to invest in people as opposed to the individual circumstances that exist. I'm not investing in information. I'm investing in capabilities and where that

business is going. And I will say to you this, for me, because I'm still so heavily invested in Panera, it's a large part of my own personal net worth. And by the way, it's been the best performing part of my entire portfolio. I've taken the rest of my money. I've let it be professionally managed. And it's managed basically to ensure that my family and future generations are able to have what they want. And allows you to focus all the time professionally on Panera. Well, you can see, Ron, why our mandate with the portfolio that I run is a minimum five-year hold. And I've said to our members, actually, I would love to make that a minimum 10-year hold. I don't want to scare anyone away to think that, hey, if I'm not willing to hold for 120 months every investment I make.

But what ends up happening is if you start to look at businesses differently and find what are the factors that align around that company that comes public in 91 all the way through, one of them, core one, is the founder is the CEO. If you look at founder-run public companies, most founders have already made enough money by the time their company goes public to not be working for money anymore. So why are they there? It's not to say that there aren't some incompetent and occasionally fraudulent founder CEOs. And ego-driven. And ego-driven.

But what you end up with are managing that asset as if it's their only asset for the next 100 years. That's a Buffett principle. They are mastering that field with passion. And by the nature, a founder leader often has a longer time frame because they're thinking... They've earned the right to think that way, too, in a marketplace like Jeff Bezos.

Oh, sure. And they're not thinking just simply what's going to maximize the next quarter. And the fascinating thing is when you maximize the next quarter, you take most of what is going to add value off the table. Right on. Ron Shaik, Panera Bread, thank you very much. Thank you, Tom. Coming up, Dan Pink on the business of selling. This is Motley Fool Money.

welcome back to motley fool money i'm chris hill caveat mtor the latin phrase we probably learned when we were younger let the buyer beware but my guest this week says it is time for sellers to beware as well dan pink is a best-selling author of such books as drive and a whole new mind. His latest is To Sell is Human, The Surprising Truth About Moving Others. And he joins me in studio. Dan, thanks for being here. Chris, it's great to be back here at The Fool. Why do sellers need to beware these days? Again, I took Latin in high school. That was probably the first Latin phrase I learned. Sure, sure. But now you have to know caveat venditor,

which is let the seller beware. And the reason for that is information. Let's go back to the reason why we have the principle of buyer beware. The principle is because of asymmetries in information. In other words, for a very long time, sellers always had a huge information advantage over buyers. They knew a lot more about what they were selling, and as a consequence, they could rip people off. Not only that, but buyers often didn't have many choices, didn't have a way to talk back. And so in that kind of world, a world of information asymmetry where the seller has all the advantages, the buyer's on notice. Buyer beware. But today, what's happened is that that information asymmetry that defined the sales relationship is ending.

It's much more close. It's closer to information parity in many things, whether you're buying a car, whether you're buying a house, whether you're selling yourself for a job, whether you are trying to recruit somebody for a job. And so we now have a world where buyers have lots of information, as much as sellers in many cases, lots of choices and lots of ways to talk back. And that's a world where now the sellers are on notice. Seller beware. So when I hear you talk and I read your book, first and foremost, I do think about those two industries that you mentioned, housing, the whole notion of buying a home, and in particular, car buying, where there's just so much more information online. Are those one and 1A in terms of industries that have been

fundamentally changed over time? And if not, what else is sort of on the short list of being affected by this new parity? Well, I think that most industries are being affected by this new parity. I think that what makes cars interesting is how much we associate car salesmen, usually men, with the whole ethic of sales. One of the things that I did in this book was I asked people, when you think of sales or selling, what's the first picture that comes to mind? And in overwhelming, almost terrifying numbers, people pictured a guy in a suit selling a car. But cars are a great, great example in a relatively short time. You know, 20 years ago, if you went to buy a Toyota Camry, Toyota Camry dealer would know a lot more about Toyotas, a lot more about Camrys

than you ever could. Buyer beware. But now, in a remarkable way, you go into that Toyota dealership and you can arguably know as much about Toyotas, as much about Camrys as that dealer. You can go and say, I know what every dealer in St. Louis is charging for Camrys. I interviewed a car dealer in Washington, D.C., who said that when she first started selling cars in the mid-1980s, the factory invoice price of the car, that is the physical document, what the car dealership paid for it, that was locked in a safe. The car dealers, honestly, the car dealers, the car salespeople weren't allowed to see it. Now, you know, your Aunt Gladys in Glen Burnie can walk into a car dealer knowing the invoice price of the car. And so I think that in many ways,

We associate sales so much with cars and the process of buying cars and the changes in information and information symmetry from information asymmetry is really profound there. It's true in housing. But, you know, it's also true in, you know, like selling yourself for a job. You know, I could put my resume out 20 years ago and they would say, oh, this looks pretty good. Now I put my resume out. You can go online and check it out. Dan, did you win the Heisman Trophy in 1984? No. Oh, that must be a typo. Or even if you're trying to recruit somebody for a job. I think a lot of employers are just waking up to this. If I'm working at the Acme Insurance Company, and I'm trying to, 20 years ago, 15 years ago, I was trying to recruit somebody for a job. I say, hey, Chris, come and work for us. We've got a great culture, very collegial atmosphere, opportunities for professional development, top-of-the-line salaries.

You're like, well, that sounds awesome. Now, you're not going to take that job. That is, I'm not going to sell that job to you effectively because I know that you can check it out on something like Glassdoor.com, which is a website where people who work inside of a company tell what it's really like to work there. So you say, I say to you, oh, we got all these great things here at Acme Insurance Company. And you say, wait a second. Glassdoor says you guys all hate each other. Glassdoor says the senior management stinks.

Glassdoor says you pay less than the median in this industry. And so even then, the sellers of selling, I'm trying to sell this job to you, the sellers are unnoticed. And on the flip side, you have a company like LinkedIn, which is not just people putting their resume, but they are able to get recommendations, put their full employment history on there as well. So it seems like it cuts both ways, at least in the employment industry and the hiring industry. Sure. I mean, I think that most employers, when they're looking to hire somebody, somebody comes in for an interview or something like that, they check out the LinkedIn profile. And that becomes a source of, I mean, that whole phenomenon is quite interesting.

But what it means is that we've gone from a world of information asymmetry to a world of information parity. And what that does is, and I think the consequences of this are important, is it forces people to the high road. A world of seller beware is very different from a world of buyer beware. You can't be as much of a sleazebag. You've got to take the high road. You can take the low road, but it's not going to take you very far because you're going to get found out. You're listening to Motley Fool Money, talking with bestselling author Dan Pink. His new book is To Sell is Human, The Surprising Truth About Moving Others.

One of the things you do in the book is you debunk some of the myths about selling. And I wanted to touch on a couple of them, one of which is that extroverts make the best salespeople. That seems to go right along with the whole notion of sort of the outgoing car salesman in the bad soup jacket. Yeah, well, this is a really, really interesting topic. I mean, what the research shows is that extroverts are more likely to go into sales jobs. Extroverts are more likely to get hired in sales jobs. Extroverts are more likely to get promoted in sales jobs. What's curious here is that when scholars have looked at the link between the quality of extroversion and sales performance,

not who gets hired or who gets promoted, but who sells stuff, the correlation is basically zero. And so Adam Grant at the University of Pennsylvania's Wharton School has done some really, really interesting piece of research where basically what he did is he measured the introversion, extroversion scores of a software sales force. Then they want to insult stuff. So we know who the introverts are. We know who the extroverts are. We know their sales numbers. And what he found is that strong introverts, not surprisingly, are not very good salespeople.

They don't assert themselves. They're too quiet. But strong extroverts are only a tiny bit better. And the people who – because they talk too much, listen too little, come on too strong. and the people who really tend to flourish are the people in the middle, what the psychological literature calls ambiverts, not a word that a lot of us know about. Our discussion of introversion and extroversion, I think, is too binary. And ambiverts are people who are somewhat introverted, somewhat extroverted. They're not strongly one way or another. And what Adam Grant's research

has shown is that there is an ambivert advantage in sales, not an extrovert advantage, an ambivert advantage in sales because people who are in the middle, these ambiverts, are more attuned. They know when to talk. They know when to listen. They know when to push. They know when to hold back. They know when to speak up. They know when to shut up. And I think that's the good news in all of this, I think for a lot of us, is that most of us are ambiverts. And so the idea that you have to be this kind of slick, super gregarious, glad-handing person to be effective in sales is just flatly not true. What you really want to do, since you're probably an ambivert is just to be a little bit more like yourself. One of the other myths you touch on

is the notion that the ABCs of selling stands for always be closing. This was a little bittersweet for me because it touches on one of my favorite movies, Glenn Gary, Glenn Ross, where Alec Baldwin has the amazing speech at the beginning where he's speaking to the other guys in the real estate office and he touches on this ABC, always be closing. And of course, you know, the killer line being coffee is for closers. But through your research, you're saying, no, no, no. It's not all about always be closing. No, but I think that always be closing is good advice for certain circumstances. It's actually not bad. I mean, forget about leaving aside some of the ickiness factor of it. But if you're in an environment where buyers don't have many choices, don't have

much information, don't have a way to talk back, always be closing, that kind of relentless, aggressive predator approach is actually not a bad strategy. But we don't live in that world. And so I was able to look at the social science of how people are moved, how people are persuaded, how people talk, how people make decisions. And what it shows you is a handful, three particular qualities that are necessary to be effective in selling in this world of seller beware. And they are the new ABCs, attunement, buoyancy, and clarity. A, attunement. B, buoyancy. you see clarity, a two-minute perspective taking. Can I see your point of view, not just my point of view? Understand things through your eyes, not just my eyes. Buoyancy. There's a lot of

rejection. One salesman called it an ocean of rejection. How do you stay afloat in that ocean of rejection? Really interesting research on how we can become more buoyant to stay afloat in that ocean of rejection. And finally, there's clarity. We live in a world awash in information, so having access to information doesn't matter so much. What matters is being able to make sense of it, curate it, distill it, apply your expertise to it. And also, I mean, there's so much information out there that if somebody knows precisely what their problem is, they can find the solution. So this idea that problem solving is the most important sales skill, I think, is outdated. The most important skill today, I think, is problem finding. Can you identify problems

people don't realize that they have? Surface latent problems. Look down the road and identify my perspective problems. And so it's really those qualities, attunement, buoyancy, and clarity that seem to be the foundational qualities for being successful. Again, whether you're selling a car, whether you're selling a house, whether you're selling yourself for a job, whether you're selling your idea. Coming up more with bestselling author Dan Pink. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with bestselling author Dan Pink. His new book is To Sell is Human, The Surprising Truth About Moving Others.

What surprised you the most when you were working on this book? It was a bunch of things. One of the questions that I asked, and I expected to get an answer, and actually one of the things I was trying to do is I said, you always hear that there are some people who could sell anything. You could sell – Igloos to Eskimos. You got it.

It always involves Eskimos somehow. Ice makers to Eskimos. Yeah. And I believed that. I said, okay – and one of the things that I tried to do was say, okay, if this is the case, what are the components of that person? Like what does that person do that the rest of us can learn from? And what's interesting is I started interviewing salespeople. They all rejected the claim.

They all said, no, I don't believe that there's some people who can sell anything. That selling women's undergarments is the same as selling wholesale seafood, which is the same as selling aircraft parts. And I think this represents something of a change. It used to be that in a world where buyers had no information, that the salesperson was kind of like a party planner, sort of a gregarious convener of things. But all the salespeople said those days are long gone. Basically, right now is that if you want to be effective at selling aircraft parts, you've got to know a heck of a lot about aircraft parts. You've got to know a heck of a lot about aircraft, or otherwise you're useless.

And in order to know a heck of a lot about aircraft and aircraft parts, you kind of have to be interested in aircraft and aircraft parts. And you have to be willing to develop an expertise. And people just aren't capable of developing expertise in wholesale seafood and in aircraft parts and in men's clothing. What got you interested in the topic in the first place? What made you want to write this book? Was it a late-night viewing of Glengarry Glen Ross?

Well, I wrote another book called Drive about the science of motivation that suggested that certain kinds of motivators, particularly these contingent motivators, if you do this, then you get that. I like to call it an if-then motivator, aren't effective for a lot of workplace tasks. and I realized that sales was sales commissions were the quintessential kind of if then motivator but then what's interesting is on the basis of that book I started hearing from some companies um literally all over the world um that said this book is pretty interesting but let me tell you what I did and they described eliminating commissions for sales people and seeing sales go up. Very counterintuitive.

And not just one, but I'm thinking of a company in Baltimore, a public company in Phoenix, a software startup in Cambridge, UK. Lots of companies taking this alternative approach. And what I realized is that in nearly two decades of writing about business, I'd never written much about sales. And I found it to be a really endlessly fascinating topic,

And I found the coverage of it so bad that, I mean, just so horrific in many cases that I said, let's write a book about, I wanted to write a book about sales that actually took it seriously. I think it's actually a serious enterprise. I think the people who do it are really sharp. I think the people who do it at some level are also really courageous, more courageous than a lot of us because they go out there and they get rejected every single day. And most of us don't have the guts to do that. And so I wanted to sort of take sales seriously and write a book about sales at some level for people who would never read a book about sales. Before we wrap up with a round of buy, sell, or hold, I would be moronic if I did not ask you one thing that I and our listeners could do to be better in the next week, in the next month, or year. What's something I can do to be better at selling?

Oh, gosh. I mean, fortunately, I mean, as you know, Chris, the book has 70 or so tools and tips and takeaways to do that. I guess one of my favorite exercises, for those of you who are working inside of companies, and I like exercises that are cheap and actionable, is the empty chair exercise. It's actually started at Sears, popularized by Amazon. So at Amazon.com, Jeff Bezos, the founder, will have meetings, meetings of the software people and the marketing people and so forth. And at every meeting, they will keep at the meeting a chair empty. And that chair, empty chair, represents the most important person in the room who's not in the room, which is the customer. And I like this technique.

It's a really it's a technique of attunement, which I talked about. a technique to attune yourself to the customer. So you're always taking the customer's point of view. And that empty chair forces you to say, what would the customer think? We're going to change price? What would the customer think of this? We're going to change operations in some ways?

What would the customer think of this? So I like that one a lot too. There's also a whole chapter on pitching, which I love. And one of the things that's helped me is some of the research showing that we don't pitch enough with questions. We tend to pitch too much with statements. and pitching in the form of a question can be very, very effective in certain times.

So without going into all the research, the takeaway for your listeners is that when the facts are very much on your side, pitching with questions is extremely effective because it forces the person to whom you're pitching. The person, if you do a question, people will think about the question. It will elicit a more active response. They'll think through it. they'll chew on things a little bit more and they'll come up with their own reason for agreeing with you and one which is really important much more powerful absolutely and sort of one of the sort of the meta takeaway is that and it's true for motivation as well is that when we think about

motivation when we think about persuading people we have to stop thinking about it or think about much less as something that one person does to another and think about it more in the way of something that people do for themselves it's very true of motivation uh and it's also true of persuasion, selling, and influence. So the more that I can understand where you're coming from and create the conditions and the context to help you understand things better, if you

reach your own, if you come up with my position on your own, if you have your own reasons for agreeing with me, you believe more deeply and adhere to them more strongly. Alright, we will wrap up. Doesn't that make sense, Chris? Wait a minute, hold on. Let me go

on the journey and arrive at the conclusion. Yes, it does. We'll wrap up with a round of Buy, Sell, or Hold. Buy, Sell, or Hold, the future of Groupon. Run. Yeah, Buy, Sell, Hold, or Run. It's the fourth option. No, no, no, no.

I actually am on the record of, I'm a little bit premature. I was on the record of predicting that Groupon would be out of business by 2013. At some companies, this has become the new water cooler. Buy, Sell, or Hold, beer fridges in the workplace. The concept of beer fridges in the workplace? I'm a buy. Because I believe in autonomy. So if people want to drink beer on the job, within reason, that's probably a good thing. And there's a lot of evidence showing that when people have informal, inadvertent contact in the workplace, a lot of ideas come out, a lot of innovations happen, and so why not

You can lubricate that with a good India pale ale. Pretty much everyone I work with will be thrilled with your answer. And finally, Facebook was the IPO of 2012, and some say this could be the IPO of 2014. Buy, sell, or hold Twitter? I'm going to hold, because I'm not sure how Twitter's making money. I haven't seen a really good, compelling business model for a really good, compelling argument for how Twitter's making money. And I say this as someone who loves Twitter. I say this as someone who tweets a lot.

And I say this also as someone who has never given Twitter a dime. So if they can figure it out and there's some smart people working there, God bless them. But right now, I'm a hold. You can join the quarter million people who follow Dan Pink on Twitter. You can also pick up his book, To Sell is Human, The Surprising Truth About Moving Others. A lot of great stuff in there. Dan, thanks for being here. It's been a pleasure.

That's going to do it for this week's Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.