Humble Exits

Jack Welch allegedly passed a note across the table to Jerry Seinfeld. “$5 million per show” it said. Extending Seinfeld for a 10th season would have earned Jerry $110 million.

He declined. He was done with the show.

That someone could quit when the show was doing so well baffled critics. But to Jerry, it was kind of the point. The book Seinfeldia writes:

Seinfeld noted that there was only one way to find out where the show’s true peak was—by hitting the downturn, something that didn’t interest him.

Jerry told the New York Times: ‘‘I wanted to end the show on the same kind of peak we’ve been doing it on for years. I wanted the end to be from a point of strength.”

It’s hard to overstate how rare this is.

Leaving on top is, I think, something all of us aspire to, in one form or another. But it’s hard because those who make it to the top tend to be grinders, optimists, relentlessly dedicated to what they do. They made it far because they looked past the challenges competitors didn’t want to face and just kept plowing ahead. So the ability to wake up one day and say, “No more, I’m out,” is polar opposite to their prevailing skillset.

It’s not hard to imagine a world where Seinfeld – dewy-eyed from money and fame – kept the show going for years, past the point where the audience lost interest and was forced into a sad, wistful, end. A lot of stuff ends that way.

Companies end that way. Careers end that way. Investment strategies end that way.

There are skills that help at one stage but backfire at another. Relentless dedication and optimism to something undergoing structural change is one of them.

Why did Seinfeld turn down the money? Well, he was already rich. But part of the reason he quit, he later said, was because the show was based on recreating real events from his and Larry David’s normal life. And they put so much time into the show that they were running out of material, because it had been so long since they’d experienced a normal life. Watching people order at a deli. Or what happens when you board a plane. Building comedy around mundane observations didn’t work when they had no time to observe.

There are many similar examples in business and investing:

In each case it’s the actual success – not bad luck, not a mistake, not unfortunate timing – that sets up the potential downfall.

Quitting – or adjusting, or changing paths – on top is so hard, because no one knows where the top is. But if there’s any reliable way to sense when it’s approaching, it’s when your success pushes you away from doing things that had been fundamental to that success. This is so obvious. But it’s elusive because success has a tendency of blinding you to both what caused it and how those causes have changed over time.

One of the neat things about Seinfeld is that it was one of the most successful shows of all time, run by people who understood how fragile success can be. Every season, from the first to the last, brought a conversation of, “Are we sure we can do this again? Do we still have what it takes? Is the recipe for success still valid?” One day they woke up and said, “No.” That humility solidified their legacy.

The point here is the value of embracing humility in the face of success. It is so rare. But it’s when it should be embraced the most. This is something everyone in business, investing, careers, life, etc. can and should learn from, especially as the economy and almost every investment market booms.

The topic of getting rich vs. staying rich is undervalued because the former can be driven by luck, but the latter is almost pure strategy and tactics.