The Lesson of Reader’s Digest

J Philip Faranda December 27, 2010

I love my bossReader’s Digest has a huge world headquarters in nearby Chappaqua, New York. I should say HAD a huge headquarters. The company quietly left the campus this past week to smaller digs in Manhattan. This represents the fall of a local giant, and the final exit of a company that was a Westchester institution. To work at Reader’s Digest was special; it was one of the companies that made Westchester County unique. And now it is gone. You can still subscribe to the publication, mind you, but the Reader’s Digest I grew up with is dead. 

You really should read the article to get an appreciation of how Roy and Lila Wallace ran their own privately held firm  from 1922 until they passed away in the 1980’s. It was a special place that took amazing care of the employees and was loyal to an editorial vision that worked incredibly well. And it was hugely profitable. Amazingly profitable. By the time I was born in 1967 the Reader’s Digest Association had a world headquarters that was like a college campus. 

In 1990, after the Wallaces had both died, the company went public. 

And the suits came in and ruined everything. The thing about running any successful business in my experience is that those who truly own the enterprise are not slaves to the quarterly profit. I myself have lost battles in order to win the war. You can’t measure success in quarterly statements. Sometimes that makes you burn the axe handle. But that is just what the MBAs who came in the 1990’s did, and by 2005 the black ink was gone. The company hasn’t made a profit since 2005, and it went from being the sole tenant of their own wholly owned campus to a minor tenant that just got out of their lease with a bankruptcy filing. 

Like I said, read the article- it tells the tale of bad decisions, short sighted moves and strategies antithetical to the core vision of the Wallaces better than I could condense it. That is is ironic, because condensing great stories was what the Digest did. 

The lesson: those that own their own firm take the best care of it. In 2005, after busting my posterior working for others for 16 years, some of whom I adored, others that I abhorred, I opened my own firm. I can tell you firsthand that I have never worked so hard, martialed as much creativity, or been more resourceful than when I held the rudder in my own hands. This company is my baby. Having ownership makes the buck stop at my desk. I am accountable for solutions. I navigate obstacles. I have to plan and execute. And there is no safety net. When what I do succeeds, it is as sweet as it gets. When I fail, I get up again and attack, because it is all me and no one will do it for me. 

Most real estate licensees are 1099 independent contractors, and that is ownership that a w-2 employee seldom grasps. And some of us take the plunge and run our own firms, building our brand and practice on the mere capital of our good name, our good work, and our vision. That is not something to dismiss lightly. Those of us who are succeeding in this environment aren’t doing so because we’re lucky, as much as the fact that we are on to something. If I speak, it might be worth a listen. I am sure the suits at Reader’s Digest would sure love to get a little advice from the Wallaces. 

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