Mark talks with his old friend Carmine Di Sibio (@Carmine_DiSibio) who was part of Mark’s class at Colgate University and went to work for Arthur Young, which became a part of Ernst & Young. He’s worked at EY for over 35 years and is the current CEO and Global Chairman of the company. Today he talks with Mark about his career and business leadership.
- Business accountability and how companies must disclose their ESG (Environment, Society, and Governance)
- Diversity and inclusion and how businesses navigate through the current social climate
- Blockchain and bitcoin and how cryptocurrency is affecting the financial landscape
Listen to this episode to get insight into how a successful business leader navigates through the ever-changing VUCA world.
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Hey folks, this is Mark Divine from the Unbeatable Mind podcast. Welcome back. Thanks so much for joining us. Really appreciate you being here, and I do not take it lightly, so I’m not going to waste your time.
Before I introduce my guest, please refer this to other people, send it on and/or – or both – go rate it at iTunes. It’s very helpful to get those ratings, so other people can find the podcast.
My guest today is actually a really good friend – who was a college fraternity friend of mine – we’ve known each other now for, geez, 40 some-odd years. And we started our careers together – I was at Coopers and Lybrand, he was at Arthur Young.
And guess what? He stayed at that company for 35 years. You’re going to find out more about that. Carmine Di Sibio, chief executive officer of the global Fortune 100 company, I think, actually EY – formerly Ernst and Young.
Super stoked to have you here, Carmine. I have absolutely loved watching your career unfold, most people wouldn’t know this, but you and I started our career together – in the exact same program. You got hired by Ernst and Whinney, right? Was it Ernst and Young at the time?
Carmine: Arthur Young.
Mark: That’s right, Arthur Young. I got hired by Coopers and Lybrand, and we went to NYU together, right? In what they called the MS in accounting program. Pretty silly name, but that’s what they called it.
And I remember thinking back then… so their stated purpose with that was “we’re gonna go hire some liberal arts graduates.” So they had graduates like you and I from Colgate and a couple others. They had people from Williams, Yale, Harvard – all the kind of northeastern institutions.
But none of us had accounting backgrounds. Like, I don’t even think we had an accounting class at Colgate, did we? I never took one…
Carmine: Yeah. No, we did. There was one little class that most people took as seniors – it’s still there today…
Mark: I missed that.
Carmine: When we had it, it was kind of an easy class. Now it’s a hard class for these kids.
Mark: Is it? So funny.
Carmine: At least that’s what they say.
Mark: Well I was an econ major, you were you were a chemistry major, so it made perfect sense for you to go into accounting, right?
And the stated purpose – back to where I was going – this is Arthur Young or Coopers… we’re gonna go recruit from these liberal arts schools and then we’ll teach them accounting by sending them to NYU business school and then they pass the CPA exam – hopefully – which by the way was torturous for me.
And then over time they’ll make a more well-rounded leader, and maybe someday they’ll run the company and I’m thinking, “no, most people are just doing it for the creds. And then they’re going to blast off into investment banking, or trading, or whatever.” Navy seal.
Mark: But no, you proved the model, right? You proved the model…
Carmine: Yeah, I might be the only one that proved the model, which is the problem with the model.
Mark: (laughing) right. The problem with the model. So let’s talk about some of your influences, because you’re a unique person – like, you’ve had one job, right? But you’ve had hundreds of jobs within that one job – but still, you’ve been with one company for what like 30 some-odd years. That’s impressive.
Carmine: 35 years.
Mark: So, I’m just curious about it like how did you get the leadership experience and what were some of the really pivotal moments in your career – both early and mid and maybe later – that allowed you to get the confidence to do what you’re doing right now.
Because, I know you’ve always had the character… and I want to talk about character of a leader a little bit later – but that’s something I saw in you early on. When you were leading the fraternity, right?
I mean, you made great decisions – like let’s not cut out 40 kegs a week – we got to have our beer, right? So good call.
Carmine: I don’t know. Maybe it was.
Mark: We’ll leave that one aside. What were some of those leadership challenges and highs and low points that really helped shaped your ability to lead a global fortune 500 company.
Carmine: Yeah, so Mark… I mean, obviously early on and you know this… when we started, we really had no idea what we were getting ourselves into. Especially since we were coming from a liberal arts school and going into these – at the time – big eight accounting firms. And I think there was actually one bank doing the program too.
We didn’t… at least I didn’t have a real clue in terms of what I was getting into. All I knew was I wanted to get into the business world, and this was a good way to learn a business, but also go to grad school. And I think that was everyone’s mentality.
So early on I would say besides getting the credentials – which was the CPA and an MBA – I think as you know, I really wanted to learn more about financial services. So to me, I really want to focus on learning how financial services works, how investment banks work, how broker dealers work.
And that was kind of the thing that I learned… and the other piece, I would say, is early on I was focused on also learning a real skill. And obviously the schooling helped on that at NYU – but also the work we were doing helped in terms of how things fit together.
And I was able – I don’t remember which clients you were on at Coopers – but I was able to be on some big clients, where I actually got to learn some products and financial services.
But then I was also on smaller clients where I got to learn more of the financial statements overall, and footnotes and that kind of thing.
So at that time, learning some of the basics – and the basics of business and financial statements and so forth was the driver. We didn’t have that kind of technical training in undergrad – when we were at Colgate. Because as you said, we’re at a liberal arts school – which I do believe in the liberal arts education, I do believe it helps later on in your career for sure – but the early piece was really getting more technical training I would say…
And as you know – and you went out to be a navy seal – but a lot of the other people went on going to investment banking, as you said, and all that… because once you had the credentials, many people got paid a lot more money. And so if you remember people were leaving for and this – and I tell kids this today – people are leaving for double, triple, quadruple their compensation, right? Not 10% more or 20% more…
Now kids are leaving for like 15 percent more, and that’s not gonna make a difference in your life in the long term… but back then…
Mark: Did you face one of those inflection points where someone came and offered you 2x or 3x your salary?
Mark: And what was going through your mind then? Like, why did you decide to stay the course?
Carmine: Yeah, so I faced that a few times – I guess, three times – where I was really thinking of leaving, where I had job offers…
And one was before I made partner, so it would have been around 1993-94. I was offered a job at one of the big investment banks. It was four times my compensation. And at the time I was a brand-new senior manager…
And I was, I guess, with EY – because we became EY after Arthur Young – I guess I was with the firm for about eight or nine years. And I was offered a lot more money, it was in at an investment bank…
And I pretty much I told all the partners that I worked for that I was leaving… and then one partner who had left, actually, Mark – who had left, and she left to become the CFO of Payne Webber at the time. Her name was Regina Dolan, and rest her soul, she actually just passed away a few months ago.
And she actually had left. And when she heard that I was leaving, she actually called me and wanted me to go to dinner with her. And when I went to dinner with her, she basically convinced me to not take the job. She thought I’d be crazy to take this job and of course I would say, “but you left.”
And she’s like “yeah, I left as a partner. And I left because it was the one role – she worked on Payne Webber for 17 years – and she was offered the CFO job at Payne Webber. At that time, there were no conflicts… you could do that.
So she’s like, “I left for the one job that I thought would be the great job. You’re leaving for a job that… I’m not saying it’s a bad job, but it’s not the equivalent. And why wouldn’t you stay to make partner….?”
Anyway, so she convinced me out of it. And I stayed. And so that was certainly an inflection point.
And I really owe it to her. She really made a difference – at least in my own mind, as well.
Mark: Yeah, I think this is certainly more true today than it was probably when we were in our early career – that there’s a lot more dialogue and awareness that if you just follow money, it doesn’t often lead to the results that we’re looking for in life. Which is going to be more contentment, and peace of mind.
As well as kind of like really true achievement. Which is through impact, not just lining your pockets or your bank account, or having a big boat.
And so I’m curious, did that moment really help you to kind of cement this idea that you have more of a purpose around staying in the industry, and creating more of a service mindset around what you’re doing? As opposed to just thinking, “well, that wasn’t the right job. Maybe I’ll wait for the next job that is the dream job that pays four times or six times or ten times…”
Carmine: Yeah, it did because once I did not take that job what it did do is it made me say “you know what? I really want to stay here and make partner at EY.” I was told that I had a chance to do that, and so then that basically made me stay.
I made partner a couple years later, and so that was certainly something that I thought about and it really got me off more on the trajectory of staying.
And then there was another time in the early 2000s that I also was thinking of leaving. And it was really around a startup… it was a startup… it was to be the CFO of the startup. And it was part of the dot-com kind of boom, and so it was a little bit of “maybe I can do really well, if this company does really well.”
And looking back, thank god I didn’t leave, because the company didn’t last… it lasted for like a year and a half…
Mark: Man, a lot of people made that mistake, didn’t they?
Carmine: Yeah. And I almost did as well. But I didn’t… to me, everything’s about people and while I thought I liked the company’s prospects and so forth, I had a bit of a question around the CEO. And so that, at the end of the day, made me decide not to take it and I think that was probably an issue, right?
Mark: What is it about the EY culture that you love so much? That allowed you to and made you want to spend 35 years plus at this place.
Carmine: Yeah, so that’s a good question. I think you’re gonna like this answer, because I would say the EY culture and in particular the group that I was in – and I’d like to say, I kind of helped make this culture what it is – and that was the financial services group that I eventually ended up leading – we had a great culture of work hard, play hard.
And it’s a little bit of… I always viewed Colgate a bit of that culture when we were there – where I think kids worked hard – it was not an easy school… and it’s not an easy school today… it’s a very hard school. I have two kids; one who’s still there, one who graduated…
Mark: Colgate prides itself on being super hard academically… when I learn about these other schools where people sail through with like 4.3s – I didn’t even know that you’d get above a 4.0, by the way…
And I’m like “what’s up?” Colgate… like they just literally crushed us academically. (laughing) I mean, I eked out with a whopping like 2.85, thank you very much. I’m surprised that Coopers hired me. But it must have been my good looks.
Carmine: (laughing) it was, it was. And I was a little higher than that, but not much…
But we really have a culture and had a culture in our group in financial services of exactly that. We worked hard – we worked incredibly hard – we did incredibly well. But we also had a good time together.
And not only the partners, but the managers… we were just one good group. And we always viewed it as a family.
And to this day that culture permeates EY in totality. But it’s probably stronger in that group, but it’s obviously a very big group… but it’s probably even stronger in that group.
And I like that culture – bottom line is, I like that culture
You know, in the military – when I was a lieutenant – leadership was one thing, and then when I became a commander it was a whole different thing, and then, had I stayed and gone up into like the Socom level, leadership would have been a completely different thing.
So I’d love to hear your perspectives on the different faces of leadership as it pertains to like different career milestones. Or leading different size units in your industry, or your company. Because that’s really interesting to me.
Because leadership is not one size fits all. There really are many different facets to it.
Carmine: Yeah. And you know, Mark… I think leadership today… in particular, being a CEO today is completely different than what it was let’s say 20 years ago.
Mark: Yeah, I agree.
Carmine: Completely different. And I would say… well before I get to that – the way I view kind of your career trajectory at EY, is you start out broad, and you start out wanting to learn everything you could possibly learn. You start out learning not only EY, but different industries… you learn different functions, you learn how to operate in business in general…
As your career then goes along – and let’s say you become a manager – you do want to develop a more specialized skill. And whether that’s auditing, or whether that’s consulting or learning about the cloud and a lot of different technologies…
But you do want to learn a more specialized skill. And I would say that would be the midpoint of your career – let’s call it five years out of school to 15. And then from there, you want to really come back to being broad – you want to be a partner in the firm, understanding broadly what’s going on in the business world. Understanding how to sell services to clients… and so that’s the way I view the trajectory.
But if we talk more purely about leadership overall – leadership and being a CEO today, it’s completely different because we have to be so accountable to all our stakeholders. If you’re a corporate, not just shareholders.
And that’s true even for us… I mean, I’m accountable to our partners, but I’m also accountable to our employees, I’m accountable around the brand of the firm… I’m accountable to our clients…
And I feel like I’m accountable to society in some way. So that’s very different than 20 years ago…
Mark: That is true, yeah. And I wouldn’t say it’s controversial, but not everyone buys into that… but certainly I believe that in that multi-stakeholder accountability – especially for a company like EY, that has a global impact.
And so I’m kind of curious, like how do we measure that? Like, it’s easy to measure your impact on the bottom line, and gross margin, and share price or partner value. How do we measure the impact on a stakeholder like the environment or sustainability…
So what kind of metrics do you guys put in place? And where are we going with all this? Is my kind of broader question.
Carmine: So on this, I could spend the next five hours…
Mark: (laughing) you’ve probably had a lot of conversations in the last year on this…
Carmine: (laughing) what we’ve been doing… but no, I actually also just did an op-ed on exactly this topic. It’s in fortune magazine, I’ll send it to you…
Mark: Yeah, I’d love to see that…
Carmine: About a year and a half ago, we at EY as well as the other big four – working with Bank of America and the World Economic Forum – actually the international business council of the world economic forum, which is headed by Brian Moynihan the CEO of Bank of America.
Carmine: We took on a project of distilling all these metrics that are out there, by all these different organizations – we call it the alphabet soup of organizations around metrics. And distilled them into 21 ESG core metrics that we think companies should disclose year over year…
Mark: What’s ESG?
Carmine: Environment, society and governance.
Mark: Okay, good.
Carmine: So the environment meaning sustainability and so forth… “society,” which a lot of that is around people. And then governance.
Mark: Got it.
Carmine: And so these metrics we actually divided them into four groups. And it’s “planet,” “people,” prosperity and “principles of governance.” And so each one of those categories has about four or five metrics that you would disclose.
So for the environment, for example, you would disclose your emissions your carbon emissions – it would be one metric. Water usage would be another metric.
And so for people you would disclose how diverse is your leadership team? How diverse is your board? And so things like that.
Mark: And are you comparing this to a standard as well? Or just kind of reporting on yours?
Carmine: (laughing) you know, you truly are an accountant at heart.
Mark: (laughing) thank you very much. That warms my heart.
Carmine: I know. So we put these out and we then have gotten 76 of the largest companies in the world to commit to this disclosure. All voluntary, but we told them that the concept here is you disclose, or you explain.
So, for example, we’re doing this for EY. On water usage, it’s not really what we do. I’m not going to go counting how much many glasses of water you drink or whatever. So that we’re just going to explain that it’s really not relevant to what we’re trying to do.
So we have 76 companies committed to do this starting this reporting season… starting in calendar 21. And we’re hoping to get more. We’ve been talking a lot about these, including on CNBC and things like that. Brian Moynihan’s been talking a lot about it. And all the big four have.
And so, this was our start to really get the conversation going on how do you measure things like that. This is a way to measure. A way to look at metrics. And we’re hoping that the actual standard setters and regulators would take this as the building blocks for whatever they’re going to do.
Carmine: And we know we’re not there yet. And obviously today there’s divided regulators – there’s the IFRS, which is mostly European… and there’s US gap which is the sec in the US.
We’re hoping that on these metrics, we could have a global standard around them. And we’re hoping that they’re broad across these different categories.
What’s happening more recently is everyone’s really focused on climate and sustainability, but maybe not focused on the other pieces of this.
Mark: Right. And they all kind of interlock as you know.
Carmine: Yeah, but that’s what we’re doing.
Mark: Right. That’s interesting. A couple thoughts come to mind. One) is it seems like it would have to be industry specific – for instance, I know one of the metrics for you guys is net zero carbon impact, right? It’s a lot easier for a service company like EY to commit to something like that, than it is for shell oil, let’s just say, you know what I mean?
Mark: So I’m just curious how do we kind of make this relevant across all these disparate industries? Where it’s really hard for someone like an industrial concern to get to net zero carbon in any kind of normal time frame, anyways.
Carmine: Yeah, so the way the metrics are set up – I totally agree with you – these are not industry specific. There are other metrics that get to industry specific. These are more broad.
But then when you’re evaluating – and it’s not net zero – like we do emit carbon and maybe we’ll disclose a net zero number – and shell would disclose a huge number. But the idea is comparing it from year over year. And are you making progress year over year?
Mark: That makes sense.
Carmine: It’s not a one-time… “oh, and that person’s better than the other person,” because obviously that’s going to be… shell’s not going to be evaluated against EY. It’s going to be evaluated against British Petroleum, Saudi Aramco and so forth.
So I think we wanted to make sure that the beginning building blocks were broad. Similar to accounting standards back the early 1900s. They started broad and then eventually they got more specific.
Mark: So, I’ll ask the whole question again – aside from obviously doing these things because they’re the right thing to do, is there evidence that it actually has a positive effect on shareholder value, partner value, return on investment as well?
Carmine: There is. There’s a lot of evidence and in fact I’m part of an organization – the acronym is FCLT – focus capital for the long term – they’ve done a lot of research around this in terms of stock price and how companies do better when they’re focused on the long term. And when they’re focused around all these categories.
And the evidence is overwhelming in terms of how well companies do in the long term. Now if you look at stock price in a day, that’s not necessarily true. But if you look at it over the long term, the evidence is there.
Carmine: That’s interesting.
Let’s get specific about leading in your specific culture – of EY. How are you handling diversity and inclusion? Like how do you build a culture that’s going to be resilient for the future? Specifically, also coming through what we’ve just experienced with the pandemic. And changes in patterns of work.
Like you’re sitting in your bedroom upstairs – it’s the new global headquarters for e and y. (laughing)
So let’s talk about that. Like, how do we build a high-performance team, or nurture a high performing team, while also pushing for neurodiversity and inclusion and racial equity and all these things that society is kind of demanding of a corporate CEO?
Carmine: Well, let me let me start with diversity, inclusiveness – we’ve had a long history of just really being focused on diversity. And it really started 20 years ago with some of our leaders back then, who were really focused on it before others. And we’ve continued that leadership in the entire area.
So what do we do that’s a little different? First of all, we have people who are very focused on our culture being inclusive. We have professors that we hire – we feel like they’re part of our firm now – from different schools that are very focused in this area.
And over time, we’ve developed different processes to help ourselves around diversity, inclusiveness…
So, I’ll give you an example. We have a succession planning process – the top 500 roles at EY globally go through this process. The process really entails every role having a slate of candidates that could take the role. So for your role, or my role, we’d have a slate.
The slate’s between four and seven people, generally. And we put this in place about seven years ago, and you might say, “well, okay, what does that do?”
Well, what it does is it gives us visibility to the up-and-coming leaders that could potentially get that role, whatever that role is.
But then we implemented some rules. We said, “okay, of the slate – two have to be women.” And we call it “two in the pool.” And so research has said that if you only have one who’s a woman, the chances of the woman getting selected for the role is almost negligible.
Carmine: Once you have two, the chances are astronomically higher.
Mark: Why is that, by the way? Do you know?
Carmine: No, I don’t… so this is some of the research that’s been done by some of the professors – I guess it’s…
Mark: One of those weird psychological behavior things…
Carmine: Well maybe. And it’s probably statistics I mean you got 100 percent more of a candidate pool. But so, what that’s helped from a gender perspective that has helped get us – over time – get us women in senior roles. And now as we promote – 30% of our new promotee partners are women.
Carmine: 33% of our global board are women.
But then you get into the other pieces of diversity in terms of just ethnicity and racial and everything else… so we haven’t had those rules for just diversity in terms of LGBT and so forth.
So now we are talking about putting… and maybe each slate has to have not only the gender piece, but also has to have a piece around people of color or sexual preference and so forth…
So these are all processes that you could put into your organization that would help. But then we also, Mark… we also have groups – we have task forces around the world – when the George Floyd situation happened, we created a global task force around racial equity.
And if I showed you the picture of the task force – it’s about 30 of our partners around the world – and some are in leadership positions, some are line partners doing their job…
But the picture is incredibly global. And it’s not just people of color – it’s a broad group of people and from different countries.
But they all have worked together, to figure out “what else does EY need to do because of the racial inequities that are going on out there? Is there anything else we need to do?”
And they actually have created 10 recommendations – a lot of them have to do with our processes, that I mentioned before – that are going to our global board in May for approval.
So being transparent on the subject, being open on the subject has been incredibly valuable…
Mark: Honestly, that sounds like a really powerful model for others to follow – including the governmental level. Because this issue gets so polarized, because people won’t get together and actually talk about it. With the intention of perspective taking and making.
And so I think this is critically important for leaders, is to learn the skill of being able to take someone else’s perspective and to really understand where they’re coming from. And then to have an important probing dialogue about it. And then with transparency and humility, try to seek solutions that really satisfy all parties.
Some of that’s a little compromise, some of it is like solutions that come out of that process, that neither side has thought about, right?
Carmine: And Mark, what we’ve done – and you’re going to laugh at this – but what we’ve done, because we’ve been at this for literally 20 years, and we have some good processes, obviously – what we’ve done now is we’ve created these processes and so forth to help our clients.
So we have a whole service around our people advisory services business that’s focused around helping our clients in terms of DNI. And in fact, our global head of DNI – Karen Twanite – she’s now spending half her time internally, and half her time externally, helping clients around this subject as well.
Mark: Oh, that makes sense. We call it “eating your own dog food.” Your clients want to know that you’re doing the work on yourself first…
Carmine: Exactly right.
Mark: And how’s that going for you?
Carmine: That’s become more and more prevalent actually. Even in technologies that we use – or people we want to partner with – the first question we get – we’re trying to sell something to a client – is “do you use it?”
Are you eating your own dog food? That’s exactly right.
Mark: Oh man, this subject is so interesting to me… and people get seized up with what’s going on in our culture right now.
And I know you and I share – I think – an optimism that is probably not shared by a lot of other people. Like, when I look to the future, and I see all the technological changes happening. And I see the growth of human consciousness, which I think is what this whole struggle that we’re going through right now with kind of racial equity and inclusiveness – really is awareness. People becoming more aware, more conscious…
And some of that’s driven by technology, but it’s also – I think – driven by just the evolution of consciousness – let’s call it that – from my perspective.
So I’m very optimistic about the future. But then, when you look at the news media and kind of the way this is being played out, it just seems the opposite – like freaking disaster – politics is a gridlock nightmare, we have super non-inclusive theories that are being promoted around the world – not around the world – especially in America…
That are even threatening to like people like France. I mean, they’re saying no. “no, we’re not going to go there. What’s happening in America?”
Like, who would have thunk? How do you navigate above that noise and not get sucked into political positions? Like, I’ll just say critical race theory or things that just may not be inclusive in and of themselves.
Carmine: Yeah, so that’s an excellent question, and it’s a tough one. And to date I would say up until the last year or couple of years I’ll say, we’ve done a good job at basically navigating that and staying either above the fray or however you want to… whatever words you want to use.
I would say in the last year and a half to two years, it’s become almost impossible… and so, because you have the employees screaming one thing. You have your clients screaming one thing – and I will tell you a situation that I was in the last couple weeks that was a very difficult situation. And that is the voter rights issue.
Mark: Oh, I was just going to bring that up. Because that was kind of my next thing is like you have companies are literally pulling out of Georgia, and I’m thinking “well, half the people are going to think you’re great for doing that, the other half people are not going to think you’re great for doing this. So why would you do it?”
Carmine: Right, exactly. So on that – and I’ve done research on this and so forth – so some of these laws… I think the Georgia law that the governor put in place was just a flash point. And I think there are things in that law that I think created a flash point.
And then there are things that in my view that are normal things – showing an id to vote, making sure that you’re a legitimate vote, I think everyone would agree with.
The fact you can’t have water on a line, to me, was a flash point. But that’s just one example – I mean, it’s so misunderstood… so the law that they would be putting into Georgia is actually less restrictive than the laws we have in new jersey.
Mark: Right, so it’s being used in a manipulative way. So my question then is why wouldn’t – let’s just call out delta – why wouldn’t the delta CEO kind of do the research on this and say, “you know what? There’s truth that’s not being told here.” Before just throwing out… jumping on the sword or whatever you want to call it. It’s curious to me.
Carmine: Yeah, I think what happens is I think people get caught up in the moment and they… and I think Ed Bastian at Delta was trying to do the right thing. But I think looking back – I haven’t asked him this – but looking back, it might be something where he probably wished he had done something different. I’m not sure.
But I will tell you, this is a tough one, because this one you’re gonna have – as you said – half the people think one thing, half the people think another. And it’s not well understood.
And so we – for example – we were very much behind the statement that was made by the business roundtable which is all around fair and equitable elections. Making sure that one person gets one vote and so forth.
And then we also did sign Ken Frazier’s and his statement that a lot of companies signed, just around fairness.
Mark: And the united states has one of the most aggressive transfer systems at the federal, state, local level. And when you account for all that – income inequality is only like three or four times in this country.
And so we rank pretty high on income equality, when you take into account all the transfer payments. That’s never really talked about much when this subject comes up.
Carmine: Mark, in that study did it get let’s say… how has that moved over the course of time? Over the last 30 or 40 years?
Mark: I think it’s gotten… I actually can’t quote, but it hasn’t changed that much. I think it showed that income equality has actually gotten better. But again, you have to kind of parse out what we’re actually talking about. Because the income and inequality of the top let’s say one to five percent has grown massively. Especially in the past year.
But when it comes to everybody else – the bottom 95 percent – it’s actually gotten less because there’s been more and more transfer payments going into the bottom like 25 to 30 percent, but the middle class – and this is one of the reasons that they’ve shown that trump got elected – but the middle class has been dealing with declining purchasing power and an increasing tax base both from federal, state and all the nickel and dime taxes… gas tax and whatever…
And so the middle has gotten squeezed. The bottom is okay, because again, there’s a lot of transfer payments. And I have people even in my family – not my family back in New York – but my wife’s family her father and her now her brother were living on the system. And they’re living actually fairly well, you know what I mean? Through transfer payments.
And so I think we do really well in this country with the welfare system and social security and food stamps in the millions of different ways… once you learn how to tap into all that.
But it’s the middle class that has gotten kind of crushed. The purchasing power of the dollar is like 90 percent less than it was when we were running around campus at Colgate. Which is crazy, right?
Carmine: Yeah, I think… well, I haven’t read the study that you read in terms of the transfer payments. That is interesting.
I do think over some time though we have lost – or certainly lost to the middle class, I couldn’t agree more with that – but I think companies from a company perspective – and this is actually my op-ed – but if you go back to the ‘50s and ‘60s, right? And you look at what companies did in the ‘50s and ‘60s – companies created cities, they created the infrastructure, they created the schools… they took care of all their employees.
They did everything that people talk about now around ESG and everything else. And I mean, think about it… Flint, Michigan was created by general motors… I mean, Eastman Kodak and Rochester, New York… I mean, Coca-Cola in Atlanta, Georgia…
In this country, but it’s true in Europe too… fiat in Torino, Italy… I mean, there’s… so, at that point things were booming and everyone was taken care of. And it was the companies that were that were doing it.
Then in the ‘70s, Milton Friedman wrote this thesis that companies should only be focused on making profit, and that did spur a change. And if you look at the ‘80s and even some of the ‘90s – the corporate raiders came in, and cost cutting, cost cutting, cost cutting.
You had CEOs like “chainsaw” Al and people like that – they were the big CEOs then, people who could cost cut, cost cut… and everything changed.
And then over the course of the next 20 years from that, or so, you ended up with inequality. Because you ended up with people doing very menial service jobs. And then more of the elite… I think that was a driver around…
Now the middle class – if you go back to the middle class – a lot of the middle class were workers – were workers in these companies that made a good wage, and so forth…
So that’s why the minimum wage is always so controversial, but I do believe that that we did go down a path where there were people left out. And I think we’re trying to bring that back in now. In terms of some of the things that are going on.
And I think people have awoken to that. In terms of doing better for all their employees, creating more jobs… and this is the part where some of the programs and the transfer payments as you call them uh go counter to this…
And I think some of this you’ve seen in the pandemic where people haven’t wanted to go back to work, because they’re getting checks for doing nothing.
Mark: Exactly, so it’s a blow back… sorry about that – we have a little time lag here, so I didn’t mean to cut you off… but yeah you see that with social security – you can’t really earn anything if you’re on social security, or else they take your social security away. Or if you’re on welfare…
And so these programs kind of end up creating ceilings to these class levels, right? And that’s an unfortunate consequence of a good intentioned policy.
Let’s talk about something that’s happening in technology that you guys are all obviously involved in – but blockchain. Both the decentralized blockchain, and the Bitcoin cryptocurrency – and how that affects…
What’s the discussion from your perspective at the WEF and whatnot? And then also, the blockchain as a technology, especially in the financial industry and others, for taking out the middleman. And how this could transform the landscape. What’s your perspective?
Carmine: So we have a whole practice around blockchain. And advising clients around blockchain. Helping clients value Bitcoin, but also really understanding the ledger itself better and how do you create value from it?
So, number one we’re big fans of the public blockchain. And we think that that’s really where things are going. We think that’s where we’d like for things to go.
So we’re big believers around the technology. Bitcoin’s a bit of a different story – that’s something that we haven’t really gotten involved in. We are involved in it in terms of our clients – and even in terms of audits around our clients.
And today, it’s a little bit easier… but going back a few years, we literally would have people looking for the token… and we had clients where it’d be in like, the CFO’s safe… things like that.
Mark: (laughing) that’s hilarious.
Carmine: Yeah, but… so we obviously have to prove that it exists, and we have to obviously prove the value that we’ve been doing…
Mark: But I’m curious how you do that? They have to give you the wallet keys? Or the audits or the wallet keys? And they have to verify that the Bitcoin or whatever is in there?
Mark: That’s fascinating.
That seems kind of risky, right? Cause anyone who has access to the private wallet key, has access to the Bitcoin, basically.
Carmine: Yes. But I mean, we do get access like that in physical situations as well…
Mark: That’s true.
Carmine: Yeah, exactly.
There’s some interesting companies out there – there’s a company called Circle – yes, so that’s an interesting. I mean, they think that that they will be a crypto-financial services company. But their whole idea is around coin, and the actual Coinbase being based on a particular currency. So us dollar.
Mark: Right, right.
Carmine: And so I do think you’re going to get more of that. Where countries will develop crypto-currencies – it’ll have nothing to do with Bitcoin, it’ll be based on their…
Mark: China’s already developed their digital yuan, and I know the central banks around the world are looking at CBDs – central bank digital currencies and whatnot. And it is fascinating, and I think the conversation is just beginning. And you’ll see probably more companies like tesla or micro-strategies putting some of the treasury in Bitcoin.
Because there’s only so long before inflation starts to tick up with the money printing that’s been going on. I think it’s hubris to think anything else.
Carmine: So you view Bitcoin as an anti-inflation hedge.
Mark: I do. Yeah, I’ll publicly state that. I think it’s actually a good one – it shouldn’t be the only one – but gold’s another good one, and obviously there’s other strategies too. But Bitcoin’s I think past the Rubicon line in terms of its durability. It’s going to stick around.
And I think it’s also passed the line in terms of any government… I mean, some governments around the world are starting to try to outlaw it. Like what’s happening in India…
Carmine: But how do you think, Mark – if every country develops its own digital currency, where does that leave Bitcoin?
Mark: I don’t think Bitcoin is ever really going to be used as a currency, Carmine. I don’t think it’s good for transactions. It’s too slow, it’s too expensive, there’s too much energy used – I truly think it’s strictly a store of value. It’s digital gold, basically.
Carmine: Okay, yeah.
Mark: That’s why Elon Musk has put a billion and a half into it. Just one place to put it that’s not the us dollar. Because they’re looking out in 10 years, US dollar might be down here, and Bitcoin might be up here – it just makes good sense…
Carmine: So if you view Bitcoin that way, you must view NFTs that way also.
Mark: I’m not certain about NFTs. I think that’s a huge bubble, right? I don’t think Bitcoin per se is a bubble. Although it goes through those booms and bust. And to understand NFTs, you have to like really be a futurist, and to really believe… and I don’t disbelieve this… just you and I are like old school… I’m not kind of person who’s going to put a virtual headset on and go to a virtual art show in descent land, right?
I’m like, “no, I kind of prefer this physical reality.” But I read this the other day that people are spending a half a million dollars for real estate in these virtual worlds. Just like they’re spending millions of dollars on virtual art. And someday they’re going to have a virtual showroom in the virtual world to show their virtual art. (laughing) it’s a strange world we live in my friend.
Carmine: That’s true. That is true.
Mark: And EY is going to have virtual auditors in there auditing this stuff…
Carmine: (laughing) that’ll be beyond my time, for sure.
Mark: We gotta wrap up soon, but how long is a CEO “tour” so to speak? Like in the military, we always knew that “hey, we’re in this job for 18 months,” or two and a half years. What does it look like for you? What’s your longevity?
Carmine: Well we have particular terms – so I have a four-year term as CEO, and I guess it could go beyond that, but we have set terms. But I think your typical CEO out there – this varies – but I think I read somewhere it’s about five or six years people would last as CEOs…
Mark: And what happens next for you, right? Do they put you out to pasture with a watch? Or do you stick around?
Carmine: Yeah, pretty much. I’ll be hanging around with you.
Mark: All right. I’m looking for a CEO, Carmine, by the way – so if you want another job for a startup come work for me.
Carmine: Yeah. It’s kind of funny, because obviously my predecessor Mark Weinberg, I’m very good friends with. And so he’s obviously retired – he’s on three big boards and he’s doing a lot of entrepreneurial things. And investing…
And so like he feels liberated. He makes fun of me every time. He feels liberated. He’s not getting up at 5 a.m. on a Monday morning and he’s having fun.
So there’s life after this. And I’m not sure if I’m going to go on boards, maybe. But I will get involved in some of the entrepreneurial aspects in terms of some of the startup companies and so forth. I have a passion for that, and a lot of friends in that as well.
Mark: Yeah, I love that too. What in particular are you interested in the entrepreneurial space? Like if you could start a business today in an industry, what would you do?
Carmine: Well, I think what I would be more interested in is around tech. And some of the emerging tech. And the intersection of tech with consumers. And with corporates, I would say.
So I think I would have value, because obviously I understand a lot of companies out there and so forth. And also, I do understand a good amount about technology as well.
So it would be interesting
Mark: Well and the startup in a sense… it’s different, but there’s got some of the same drivers as an EY. And it’s the people that are the most important. And you’re an excellent people person in terms of your ability to motivate and to understand.
And I think that’s one of your real talents… I mean, I’ve known you for a long time, but you’re a very graceful man. And you really lead with your heart.
I don’t know, must be your Italian heritage, right? You’re a very happy and very loving human being – I appreciate that.
Carmine: (laughing) it’s true! Thank you for that.
Mark: That’s the most important aspect of leadership, is your character, right? And I try to teach that, I try to teach people to get into their heart. It’s hard to teach someone who’s been locked in their head their entire life to get into their heart. But yeah…
Carmine: Thank you. That means a lot to me, coming from you, Mark. It’s just amazing… you think of the time we spent when we were I guess 19-20 years old, where we are today… it’s been a long journey, but generally a good journey.
We’ve had different journeys – yours is probably more exciting than mine, but it’s great to be here and just talking about it. It’s one of the things that… going back to our school… one of the greatest things about our school is the fact that people make lifetime friends there. And that’s exactly what we are.
Mark: Yeah, that’s one of the benefits of a great liberal arts education, I think. And I thank you for wearing the SEALFIT shirt – flying the colors…
Carmine: Yeah, yeah. I got the medium SEALFIT shirt…
Mark: You’re looking burly there, Carm. You’re looking burly. Thanks so much for your time. It’s been awesome…
Carmine: It’s great spending time with you.
Mark: Thank you. Likewise. And tell your team thanks for letting me do this for the hour.
Carmine: Yeah, it’s fine. That’s fine – they might have to edit… Do you edit this?
Mark: I don’t think we had any f-bombs or anything like that, but if you need anything edited out let me know. I’ll do it.
Good to see you, my friend.
Carmine: Good to see you.
Mark: You take care. All right folks that’s it. That was my good friend Carmine Di Sibio, chief executive officer of EY global Fortune 500 company. What a neat guy.
Thanks for listening, hope you found that interesting and valuable. And stay focused and be unbeatable and be authentic. Lead from the heart.
We’ll see you next time. This is Mark Divine with Unbeatable Mind.