Substance over form
Michael K. Shaub, October 24th, 2011
Rich Kinder is a living parable. Fifteen years ago he was denied the job he really wanted—CEO of Enron. Instead, he was passed over for a financial engineering wunderkind, Jeff Skilling, who famously went on to crash and burn the seventh largest U.S. company. Kinder went his own way, purchasing a modest pipeline operation that Enron no longer valued because of the “sleepy” nature of the business. To Enron’s executives, there were better ways to make money, and they were the ones smart enough to leave the old ways behind and create new and better markets. Jeff Skilling is serving 24 years in prison; Rich Kinder, on the other hand, is reportedly the richest person in Houston.
Kinder took that modest pipeline and transformed it through a series of acquisitions into what is now Kinder Morgan, Inc., which just announced that it would purchase El Paso Corp. for $21.1 billion, creating what would be the fourth largest American energy company. It is a company with the potential to dominate the movement of natural gas across the U.S., particularly from the rapidly developing shale formations that are transforming the face of the energy industry. Speculation that those formations may hold 100 years’ worth of natural gas has led to an explosion of capital investment, despite depressed prices for natural gas. And Kinder Morgan will essentially charge for the transport of this gas, regardless of energy prices.
One can imagine the disappointment that accompanied Kinder’s denial of the Enron CEO job by Ken Lay, someone he had known since their days at the University of Missouri. There was no way he could know what he was being protected from, but he did not go quietly into retirement or rest on his laurels. Kinder knew pipelines, and Enron’s roots were as a pipeline company. He knew what he had to offer, and he knew there was real value in that business, regardless of whether Ken Lay valued it or not. And he went on to take his company private, then IPO it again, while maintaining a massive personal stake. Forbes estimated his net worth this past March at $7.4 billion.
Here at Mays Business School, we do a good job of preparing our students for success. What is much harder to do is to prepare students to fail, to fall short of goals, to finish second when only winning seems important. The character that comes from remaining true to who you are in the face of obstacles, of unfair decisions, of shortsightedness on the part of others, is only developed through painful transformations. Sometimes unfairness and failures make the wheels come off of lives that seem to be doing just fine. Other times, these injustices fuel future successes.
But it is important for me to remind my students that they always get to choose their response to circumstances, even if they do not get to choose the circumstances themselves. It is easier to complain than it is to get better. And there are always sympathetic ears ready to help us wallow in our misery. But that path is a dead end.
When we send students out from this place, they are works in progress. What they are made of can only be revealed by time and experience. They can protest in parks if they are unemployed, or they can improve their resumes and knock on doors. They can leave when they are passed over for a promotion, or they can use that motivation to chart a different course, perhaps one they had not thought of before.
I meet very few students who expect to go out of here and fail. And those who have failed are too seldom invited back to our classrooms to tell their stories. The irony is that the very seeds of our success often dwell in the rotting fruit of our failures. The opportunity to become someone they have never imagined comes when the barriers in their planned paths are insurmountable.
There is more than irony in Rich Kinder’s story. There is the sweet fragrance of justice, of the end result being beyond all expectations. In the end, Rich Kinder’s bio is a demonstration of the victory of substance over form. And in a world that glorifies vacuous entertainers and makes people rich who have not really created anything, it is nice to see someone succeed who stuck to basics, thought long-term, and connected with other people of substance. Whether the Justice Department allows the acquisition or not, I have no doubt that Rich Kinder will continue to overcome obstacles.
What I hope to learn from him is how to turn my biggest disappointments into greater opportunities. Is anyone out there with me in wanting to learn how?