10. What Can Puzzles, Onions, & Kids Teach Us During Change? with Tassos Economou

Global Chairman of the Board for Young Presidents’ Organization (YPO), Tassos Economou, joins us on the season two premiere of HiPERleadership. In this episode, Tassos shares how child-like curiosity, peeling back layers, and synthesis help him solve tough problems.

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David Morris  00:09

Welcome to season two of the HiPER Leadership Podcast. I am your host, David Morris, CEO and Founder of HiPER Solutions. At HiPER Solutions, our mission is to bring positive change to the world. Leaders today are faced with unprecedented change, and yet even the best leaders have had to toss out their standard playbook and think outside the box. It was with this in mind that we started the HiPER Leadership podcast earlier this year in 2020. In Season One, we brought to you the key attributes that make someone uniquely wired to drive breakthrough change and showcase their success and struggles so you, our listeners, can more quickly identify your next game-changing leader and set them up for success. In season two, we're excited to bring you more stories that will inspire and activate. Stories of incredible missions, painful upsets, and remarkable rebounds that propel people forward. Today, my guest is Tassos Economou. Hi, Tassos.

Tassos Economou  01:13

Hello, David.

David Morris  01:14

So Tassos, you're in Monaco today.

Tassos Economou  01:17

That is correct.

David Morris  01:18

Tassos is the newly elected chairman of Young Presidents’ Organization, also known as YPO. For those of you who are unfamiliar with the organization, YPO is a global leadership community of Chief Executives driven by the shared belief that the world needs better leaders. 29,000 YPO members around the globe make a difference in lives, businesses, and the world. Tassos has been a longtime YPO member; [he] joined in 2005. Over the years, Tassos has been both a founder and an investor across many industries, and perhaps most importantly, is driven by making a positive impact in the world. And I'd love to jump right into your story about this pattern around synthesis. Was it almost 20 years ago, vodka in Russia? Tell me about it.

Tassos Economou  02:11

Yeah, it almost sounds like trying to sell ice to the Eskimos, it was indeed the 90s. And just to frame things a little bit for the audience: It's the time where the Soviet Union has collapsed, a whole unknown world is rising, and that is creating a lot of uncertainty for people. And the currency is fluctuating violently. And usually, it is fluctuating violently in the direction of constant devaluation. The devaluations were huge from basically a couple of days. In those times and in that environment, the decision was made to establish a joint venture with what is today Diageo, to market their products, more specifically Smirnoff vodka. So, an American vodka in the motherland of vodka. Kind of an audacious goal. And I think when we were going ahead to do that is where synthesis comes into play. Most people just [were] sure of the fact that you want to sell American vodka in the country that makes vodka, you're never going to succeed. But what we were able to see is kind of like you have a big puzzle, and you have pieces of the puzzle as to what people need. The first thing that we noticed is, indeed it is American vodka, but after decades of communist oppression, Western goods are viewed sympathetically, simply because they're so novel, they were never there. And they are to a degree aspirational. That is one thing. The second thing of the puzzle, which I think is really the secret sauce and what many did not see, is the fact that we created the currency. And how did we do that and why? What we saw is, if your main currency, the ruble, is fluctuating so much, it loses its main function, which is a medium of exchange, it's pretty much like Bitcoin in our days right? It fluctuates so much; it is very hard to price transactions using Bitcoin, right? You need a fiat currency or a currency that's more stable. With that in mind, we said okay, let us peg the price of a bottle of vodka at 17 US dollars and keep it fixed. Which means that whether or not the currency is fluctuating, if you hold a physical bottle of vodka, at any given day, you will always have the equivalent of $17. If the exchange rate let's say goes from one to one [to one to two] in two days, then that same bottle that bought 17 rubles two days ago is now buying 34. Because the actual absolute amount was relatively small, it was divisible. Right? So, if you wanted to buy some bread and vegetables, you could, it wasn't something that was worth $1,000, which would make it very hard to break. With that in mind, we were able to create that stability and really take, and this is the exceptional thing, the market share from about 5% to the mid 90s, within about a year and a half.

David Morris  05:36

Wow. What even prompted you out of all the businesses you could be doing at that point to like, get into this vodka and Russia? I just think it's so intriguing. Ice to the Eskimo example, why vodka to Russia? Was it just like an opportunity from Smirnoff that presented itself? Where did the idea come from?

Tassos Economou  05:56

Well, like everything in life, there's more than one thing that come[s] together or stars that align. My father had been very active in the Soviet Union. Originally in the oil market, he broke the Soviet monopoly, he built nine refineries. As the Soviet Union was breaking up. He was very close on the ground and able to ascertain opportunities. This came to us, I think, from a tangent, which was that Smirnoff at the time was having some perhaps legal issues with the heirs of Smirnoff because Smirnoff was originally Russian, in the beginning of the 20th century, when the revolution happened. Because of our presence at the time in Russia, they contacted my father, and then little by little it led to this joint venture in this opportunity for us.

David Morris  06:49

So, the opportunity presents itself, but what do they say: Luck is opportunity combined with preparedness. So, the opportunity presented itself? First of all, who is we? Who did you sort of have around the table? And what was the fundamental challenge that you needed to figure out where all of a sudden, you discovered this ability to do synthesis?

Tassos Economou  07:14

The problem was, what we were trying to crack is, how do you get into a market that is well established? Because vodka has been there and had been thriving for years. And how can you basically import American goods and have them distributed and placed in a country that is vast, it is the largest country on the planet? When you're thinking distribution and, how can I get that across the country, you have to start thinking outside the box, because the logistics are huge, the complexity is immense. And that is where we started iterating, with what people need, and what would really be meaningful to them. And it wasn't just about, and this is the interesting thing about the puzzle, it stopped being about just satisfying the need to drink. And it also became about satisfying the need to transact. I think this was the aha moment, if I may say, where you move from just one function, to satisfying yet another need. And I am blessed to have a great mentor in my father, who took hours, and I remember discussing and thinking and trying to find ways of doing that. And there's nothing better than being in a table with a group of smarter people than you. And bringing together a novel ideas and synthesizing things that really crack the market.

David Morris  08:47

You start out with arguably a commodity, something that they're consuming a lot of in Russia already with vodka, you have a challenge that Smirnoff is depending on your team to figure out how to win in this market, you start to think about other dimensions of what the customer may want. And it seems like this kind of value of exchange creating this currency, per se, was the divergent thought. Just curious how that even emerged that this whole currency or exchange of value or consistency of price, where that kind of surfaced?

Tassos Economou  09:22

It’s from multiple stimuli. And that's why I think in synthesis, it is so important that as a person you are humble. And there's a reason as we say, well, you have two ears and one mouth because you really need to listen. In Russia in those days, if you just look around, you see people are basically struggling. It is very hard for them to maintain basic living because every time they get paid, the currency just loses value. In the beginning, what we start[ed] seeing is people starting to buy as much tomatoes as they can, right, to have something to barter. Once we start seeing this in everyday life, that there's a barter economy, you're like, Okay, the problem with tomatoes is that they're perishable. Now, you may have stalled the devaluation for two, three days, right, but if you can’t sell it, then it perishes and then your currency goes to zero, we had to find something that maintains value, and actually has got a long duration. So pretty much vodka, you can keep, and it will, it will stay good for almost an indefinite amount of time, right? Even arguably more than paper money that, over time, wears. It was bringing the need, the consumption of vodka, something that everybody wanted to have something of, it wasn't like you were coming in and you were saying I have this novel iron that is great for shirts, and only a sub-segment of the people. But it was a good that was used by everybody. So, it was understood, it was seen, and bringing the puzzle together of combining all these things and saying, Ah, maybe we could use vodka. And then what we need to do is kind of fix the price. Because if a price oscillates, then it doesn't help how we brought it together. It's all about synthesizing.

David Morris  11:15

So, as you were sitting there, and you came up with a $17 price point, what was sort of a comparable, a non-branded alternative costing at that time?

Tassos Economou  11:26

We would go from a few dollars, from the local alternatives, to perhaps mid-teens for competition and brands that we would know in the West, we came in at the time, you didn't have the super-premium vodkas. So, we were kind of priced there at the top range of products at the time.

David Morris  11:48

As you synthesized other factors and got to understand consumer demand, was there a sense for what they were willing to pay this premium for? Were there other aspects that supported the premium price?

Tassos Economou  12:00

The product was premium, but I think primarily what the value was is once, everybody accepts that what they're holding has called a certain value, then what that value is, is not as important. You're moving away, and this I think was the genius, you move away from a price of a product. And now you have a currency, right? And that step away from what is the value of the product into what I'm holding is currency, is I think the real transformation, it could have been 15, it could have been 20. The importance was the ability of it to be everywhere to be divisible, and to have a steady value in hard currency in US dollars.

David Morris  12:46

When you got involved, what were the revenues? And when you ultimately exited, what were they?

Tassos Economou  12:52

Probably single digit millions to more than $300 million.

David Morris  12:56

And how long? 

Tassos Economou  12:58

In a year and a half.

David Morris  12:59

And then how long after did you exit?

Tassos Economou  13:02

I think it was around three years later.

David Morris  13:06

At what point was currency the intent, if at all? Or did it just become the byproduct, when you look back at it?

Tassos Economou  13:13

I think the currency ended up being the secret sauce. It started off as a byproduct. And for us, because we were there to sell vodka, it was a byproduct for the consumer, I think it ended up being as important if not more important than having good quality vodka to consume. The interesting thing here is, when you think about trying to do something transformative or bringing an amazing idea, you really have to think what is it that your customer wants, right? Versus what it is that you need, because if you can deliver that to the customer, you are able to charge a premium.

David Morris  13:56

Getting back again to this currency component. Do you remember the moment where either you had the aha, that this is a currency versus somebody who just told you it was customer-wise? Do you remember that penny-drop moment?

Tassos Economou  14:12

I do I do. And it's kind of interesting. I don't know if you see Russia kind of on a map. You have Moscow which is very close to Europe. And then really on the other side of Asia close to Alaska in the US, you have Vladivostok, we really started selling vodka in in Moscow. Suddenly, we started getting calls and seeing our products in Vladivostok though we had no distribution. And it was at that moment that we really understood that what we have created is not really a product, because you'd need advertising, you'd need distribution. But now we have a currency that is finding itself literally at the other end of the vastest country at a time when you did not have the prevalence of internet or the way of communicating in social media. That was the aha moment where we realized that, wow, we've created something much bigger than just a product selling initiative.

David Morris  15:11

Remarkable. Now, building on synthesis, and really getting more into this mindset, where did this concept of creating currency repeat itself in your future chapters?

Tassos Economou  15:23

So, the interesting thing is, it was not manifested in currency. But it was the same thought process, right? And what I find critically important in synthesis is, imagine you have a huge wall, and you have pieces, right, you're collecting pieces of a puzzle, and you don't know what the puzzle is going to look like. But you have pieces. And as you start getting more and more pieces, you are able to combine them in novel ways. The thinking was always again, learning from that, that when I want to do something, I really need to focus and see what my consumer wants, how can I deliver that to him, right? We've used this in, in business going forward, whether it was your thing or aviation, in basically creating novel products, by combining knowledge from other industries, and just bringing them together in a very novel product in that specific industry.

David Morris  16:26 

And our collaboration with YPO. You have an interpersonal style that's very adaptable, you get along with a lot of types of people. But, it's really when we get below the surface that we see that integrative thinking that you've maxed out, taking a lot of data in, blue-sky iterating, etc. And when we were talking a couple weeks ago, this concept of synthesis really emerged. I'm curious, what's going on in your mind on a day-to-day basis, with the synthesis, is it like all different things, like managing family and work and your YPO role? Let's not be easy, because it's just constant ideas trying to come together. And it can be a little lonely, right? Because you're by yourself when a lot of synthesis happens. What are your reactions to all that?

Tassos Economou  17:12

It's rather interesting, but I like to say, part of my success or a large reason for my success, is I feel that I have the mind of a three-year-old. And the reason I say that is, for those that have children, if they go back to when they were three, there is one three letter word that is constantly on their lips, no matter what you're talking about. And that word is “Why” I am extremely curious; I love learning, right? And I don't mind what industry, I am very curious to understand how what they're doing works, why they're doing it this way, any innovations. For me, the fascination is it's just a data point, or the way I like to look at it is, literally, my mind is like a huge canvas. And I'm a collector of pieces of puzzles, and I just collect them, never knowing how or if I'm going to use them, but they're there. And then when a situation presents itself, you have this amazing canvas of so many pieces, and you're like, “Okay, let me start combining them this way. See what goes out? Hmm, I don't like that. Let's go back. Let's do it another way.” In this, I actually find a fascinating challenge, because you're trying to create, but I feel blessed because through this curiosity, you really have a lot of ideas, simply because you're listening. And I find it fascinating. We, at times, think of ourselves in isolation in our ivory towers with our infinite wisdom, having aha moments and solving things. Whereas actually, I find that, many times people on the ground actually have better solutions. It's just the question of you listening attentively and probing and asking the right questions. And also having the ability to take things you've learned, let's say from drinks, into aviation into your thing, or into shipping.

David Morris  19:20

Really the hallmark of a HiPER leader: It's a consistent pattern of inconsistency. And this whole variety and novelty and newness. You're down in the trenches collecting information, through your curiosity, through why, etc. When you go into synthesis, how have you evolved over time, Tassos, from synthesizing on your own, through your teams? Because you have a lot of different teams. And there's some best practices on how you get the team together to do the synthesis after the information is collected.

Tassos Economou  19:54

Absolutely, and this is, I think, where YPO has been extremely helpful to me. What happens in in any business, and we often neglect to realize just how important it is, is, by having the hire and fire power over people, you are kind of like an absolute ruler where you decide what happens. And I find that at times, people, therefore, say we’re going to do this this way. And they don't spend enough time to actually allow for the fostering of ideas. And, in YPO, because simply you are one amongst equal, and everybody is successful, and everybody has tremendous things to offer. You can only lead by basically bringing the common thinking and opinion with you. And, what that has led me to do in businesses is to say, okay, instead of telling people what to do, I go back to perhaps the Socratic method of just asking questions, it is all about posing the question saying, “We have this issue, what would you suggest?” And if it's going nowhere, you pose it, “Should we be thinking of...” right? And, by creating that environment where you have to have absolute safety, people absolutely need to know that there are no dumb ideas, we are brainstorming, they are protected, everything is okay. And by actually allowing them to iterate, I find that the synthesis has been so far better than when it's done in isolation, because then you get a multiplier effect of many canvases of many puzzles, and the more diverse your team is, the more diverse and the more different pieces of the puzzle you have, hence, actually, the more novel the idea is going to end up being.

David Morris  21:54

The power again of the question. So, this is sort of a two-part question. In your role now as chairman of YPO, what is sort of the biggest challenge that you are in the process of collecting information or synthesizing? Then number two, how are you doing this in a more remote world right now? Is it sufficient to be doing calls and zooming? Or have you come up with any tactics that are good best practice in a more distant world?

Tassos Economou  22:26

This is an excellent question. And I think the second part is, is mostly I guess, a rhetorical question, because any successful CEO who's been on those endless zoom calls, I'm sure is feeling like me, zoomed out, and they're like, “Oh, my God, not more of this, please.” So yes, there is a definite issue and complexity when it comes to this virtual or more virtual world. Let me start by saying that, for us, the real focus is, “How can we deliver more member value by taking the content that we have and curating it better for our members?” With renewal rates of, you know, close to 95% in years of crisis, it is clear that members find the value. But that bestows on us a great responsibility to make sure that we continue to deliver, in giving them what they need, in terms of crisis. And what we are piloting doing is obviously using more interactive platforms, we're also piloting the use of hybrid models, because the reality is, with Corona, it's going to be around for longer than people might have expected. And we need to get used to living with it. Hence, what we are seeing is, you may want to use virtual, but at the same time, use a hybrid model where perhaps, instead of having 1000 people on a zoom screen, you may group people into groups of 50 to 150, depending on rules and regulations per jurisdiction and country. And get those five to 10 groups to just meet together over zoom. So, you get the physical contact, and at the same time, the ability to connect on an international level at the grand scale.

David Morris  24:20

Fascinating. Well, definitely a work in progress. Very excited to regroup with you at the end of your Chairman term on the output. And then final part here, Tassos, given that you're involved in a variety of ventures, I'm curious, as a board member, as an owner, as an investor, as you think about our audience: Private Equity Partners, family offices, etc., what guidance do you have for when they're interviewing a CEO candidate to validate that they in fact have this ability to do synthesis? Any interview questions or other good tactics to really ensure that their hire has this, and anything to watch out for in terms of people that may seem like they do synthesis, but they really don't.

Tassos Economou  25:09

Actually, there's quite a few. The beauty is, it's quite simple things, and common sens[ical], right? So, the first thing is, for somebody to be able to synthesize, they need to be generally curious. If you keep probing and asking questions on many topics, or asking them what their interests are, and finding the four or five things they say they're interesting and keep probing, you actually see if they have what I call the three-year-old mentality of the ‘Why’. Are they curious? By asking them about ‘Oh, you read a book? Yeah. Okay. What was it about? And what was interesting about it, and do you play tennis? Ah, what do you like about tennis? Or, I'm a swimmer? Yes. And where do you go swimming? And why? And why do you use these suits? You know, why do you prefer to go to the sea instead of a pool, and so on.’ If indeed a person is curious, they will have a lot to tell you. But the other thing that sadly, you cannot see, unless you're either on a zoom call, or physically meeting is what I call the sparkle in the eye, the energy, or how deep or how excited they are, and how genuinely curious, so that for me would be the first thing. The second thing is, you're basically looking for a trait of somebody who's able to listen. And interestingly, in an interview, you know, you can give some information, or you can say things you're looking for in the beginning, and kind of probe by towards the end and see if they listen, right? You can come back. And I know there’s stress and some people may feel not at ease always, but a genuinely curious person, if you start the interview with an interesting story, if they're curious, they kind of pick up on it, and you can come back and see if indeed they were listening. So, storytelling in the beginning and checking the curiosity, I guess, in the end, and the beauty here is, I'm not going to offer specifics because every case is different. But every CEO has got their own story or something that is important or related to the business. And all you need to do is probe towards the end and see how much they were listening. And then the other thing and I'll close with that, that [what] you are trying to determine is whether somebody is comfortable, or is willing to be bold in an idea. And this you can do either by going back, and everybody wants to present themselves, obviously, in a better light in an interview and they will give you achievements, right? Everybody asks about what your achievements were. And I like to probe and go a little bit deeper and say, “Okay, these were your achievements, you're proud.” And ask why. And I have what I call the onion effect, where I like to probe five times, and I say, “What did you do that?” They give me an answer, and I say “Yes, but why?” And usually at about the fifth asking of the why is where you can really see if the person is willing to take risks and be bold, and try things that were out of comfort. And I think this is key in synthesis.

David Morris  28:15

That's really, really actionable. And the other thing is, it's just sustainable. Because it seems to me that just through that question, why, whether you're interviewing somebody, whether you're managing a team, whether you're collecting the information, asking why and building upon it, keeps everything interesting and allows you the energy to keep going.

Tassos Economou  28:36

I agree. And quite frankly, we need to have fun in business. And I mean that. I think at times we get bogged down into the everyday routine, and we forget that life goes by very quickly. You need to enjoy what you're doing. You need to bring in the smile. And you know, when people are happier, they produce better and keep asking why and doing novel things is something that is really enjoyable. And if this atmosphere is created, it makes for a lot of fun.

David Morris  29:07

Thank you for joining me, Tassos, and for being such an inspiration.

Tassos Economou  29:12

Thank you for having me, David. It's always a pleasure.

David Morris  29:17

And to our HiPER Leadership listeners, thank you for your continued support and feedback. Stay tuned this season for incredible stories across the board. If you haven't already done so please subscribe to the HiPER Leadership podcast on Apple podcasts. And if you have a big bet program, a game change, visit our website to learn more about how we help develop and optimize teams for big change.