704: Strauss Zelnick - The Leader Who Greenlit Dirty Dancing, Owns Grand Theft Auto, Loves Being Coached, and Might be the Fittest CEO Alive

The Learning Leader Show With Ryan Hawk

In this episode of The Learning Leader Show, host Ryan Hawk interviews Strauss Zelnick, CEO of Take-Two Interactive and founder of ZMC private equity.

Key takeaways

The most successful leaders consistently have a coach who provides objective accountability and truth-telling.
Discipline in fitness and daily routines enhances mental clarity, decision-making, and leadership effectiveness.

Main topics

Leadership through coaching
The role of discipline in high performance

Notable quotes

"All the greats have a coach. I'm one of the most disciplined humans alive, but I still need a coach."

"Bad news doesn't get better with age. You've got to address it now."

Conclusion

Strauss Zelnick exemplifies how sustained excellence in leadership comes not from innate talent

Transcript preview

Speaker 1 (0:00) If you're a fan of the show, you've probably heard me talk a lot about our Learning Leader Circle. We open it up one time per year for applications. We create one new group per year. That time is now. LearningLeaderCircle.com is where you apply, where you could learn a lot more. What it is, is a group of roughly 12-ish people. It's thoughtfully curated with get-after-it people who are doers, the 8s and 9s who want to be 10s. I love reading the applications and having the Zoom interviews to curate the next group. It's one of my favorite things to do. And it's even better once we get the group formed and started. So if you want to surround yourself with people who are going to hold you accountable, you're going to do work together with them, others who had this learning leader ethos who are always becoming, never arriving, then you should apply for our Learning Leader Circle. Go to learningleadercircle.com. Speaker 1 (1:00) Welcome to the Learning Leader Show presented by Insight Global. I am your host, Ryan Hoff. Thank you so much for being here. Go to learningleader.com for show notes of this and all podcast episodes. Go to learningleader.com. Now, on to tonight's featured leader. Strauss Zelnick is the CEO of Take-Two Interactive, the company... behind Grand Theft Auto, NBA 2K, and some of the most successful franchises in the history of entertainment. He simultaneously runs ZMC, the private equity firm he founded in 2001. Before all of that, he was president of 20th Century Fox at age 32, CEO of BMG Entertainment, one of the world's largest music companies, and Strauss the executive who greenlit Dirty Dancing. He is widely known as one of the most disciplined executives in the world, in business and in life. During our conversation, we discuss at age 68, Strauss is known as America's fittest CEO. He shares the importance of his two-a-day workout sessions and why they make him a better husband, dad, and CEO. Then we discuss why he's always had a coach and will always have a coach. This seems to be a commonality among the most effective leaders in the world. They all have a coach. Then Strauss leads 14,000 people as the CEO of multiple companies. He shares how he does it, how he delegates, and why he doesn't believe in formal cookie-cutter one-on-ones. with this direct report. We talk about that and so much more. Ladies and gentlemen, please enjoy my conversation with Strauss Zelnick. Is this story true? When you were five years old, you announced that you wanted to run a movie studio. Is that true? I think so. I know I've told the story. It's at least what I recollect. Five years old. What made you want to run a movie studio at such a young age? I don't know. I probably thought it was glamorous. Why a Speaker 2 (3:18) five-year-old cared about something being glamorous? Separate question. I don't know that I can even answer that. Speaker 1 (3:23) So then what was it like a few years later when you actually did it? Speaker 2 (3:28) Well, it wasn't a few, but... Wow. That's a whole bunch of stuff that happened in between. Look, I was blessed. I got out of school when I was 26. I went to work in the entertainment business in the very best job I could get, which was international television distribution, which is like running a movie studio is here, international television distribution is out of frame over here. But it was the only job I could get. And I worked hard. I did well. And that led to a promotion early. And that led to being recruited to work in a pretty senior capacity at what was then the largest independent motion picture company, Vestron. And then pretty quickly thereafter, I became president of that company. And then as luck would have it, the first picture I greenlit was a huge hit. And that led to my getting recruited to be president of 20th Century Fox when I was 32. So it was pretty quick. trajectory from graduating to being president of a major film studio much quicker than I had expected. And what was it like? Obviously, it was incredibly scary because I had the presence of mind to understand that I was thrilled that I got the job, but I knew I wasn't remotely qualified to be in that position yet. To say that I was learning on the job is a gross understatement. I was learning on the job. Speaker 1 (4:49) Don't you find as you keep progressing within your career that Sometimes you look out and see people and you're like, oh, they've got it all figured out. And then you meet them and talk to them. You're like, actually, they're kind of figuring it out as they go too. And that in a way can be inspiring when you learn that other people are kind of figuring things out as they go. Speaker 2 (5:07) I don't know. I suppose that would be a healthy way to look at it, but I never really did. I mean, I think I was more likely to be in awe of the people that I met along the way. They were generally speaking. much older and much more qualified. I'm a learner and I was always interested in learning from those people and I was unafraid to ask questions even if they were dumb. But I know it was not my way to sort of look at someone and see all of their own insecurities, especially because the entertainment business in those days was still pretty rough and tumble business. And unlike today, we're... Traditional film and television has been highly compromised and sort of relegated to the sidelines in the entertainment business in those days. Being inside a major entertainment company, of which there were five at that time, I mean, that was a very, very big deal. And the place was populated with names that were constantly in the business and even consumer press. Totally different than today. No one possibly could name the head of any major film studio today. Speaker 1 (6:15) The film you greenlit was a dirty dancing, right? Pretty dancing. Yeah. Okay. Take me back to that time when you're thinking about making that decision. What, what into it? Oh gosh. It's a great story actually, because Speaker 2 (6:26) remember I don't, I'm not responsible for creative choices at any of the businesses that I'm in. Uh, there was a great team at Vastron that was there before I joined the company and the team that was put together by Austin first, who was the CEO. I was the chief operating officer. And the motion picture division was headed up by a woman named Ruth Vitale. And then she sort of had two co-production heads, Mitchell Canold and Stephen Ruther. It was their project, obviously, Dirty Ants, We Were Making a Lot of Movies. We were a high volume shop and we were making low budget movies. And so they bring this project in to be green lit. And this was a very significant project for them. It was a five and a half million dollar budget. Now this is a long time ago, but even then that wasn't very much money. And I remember the Greenlight meeting well because they came in with the director who had previously been a choreographer. This is his first directorial project, Emil Artelino, and the writer and producer. And they proceeded, and Emil was a lovely, lovely person. I just met him in this meeting. But he was so scared that he couldn't speak. And so the team collectively had a pitch. The project and Greenlight meetings, you know, generally speaking, are not pitch meetings, but we were we didn't really know we were doing a restaurant. So it was in this instance, kind of a pitch meeting for me. And the pitch was, look, this motion picture is going to change the way women dress. It's going to have, you know, music that is going to be incredibly successful at a huge award winning soundtrack. This picture is going to win an Oscar and it's going to. change the way young women look and feel in society. And I'm listening to all this and I'm inexperienced, but I'm like, this is all complete bullshit. Like, none of this is going to happen. But like I was greenlighting stuff every day, right? Because we were making 50 projects a year. This is in the heyday of home entertainment. We were a volume company. So I thought all of that was untrue. And greenlit the picture. Oh, and incidentally, I wasn't even a fan. I didn't like the script. I thought it was a little hokey. It wasn't for me. But it doesn't matter. I supported the team. The team really believed in it. And this is the story of my career, which is I supported the creative team responsible for making these decisions. I believed in their process and I believed in them. And I did not trust my own judgment. As it turns out, that was very wise because I don't exercise direct creative judgment. I seem to be a really good judge of talent, creative talent, executive talent. I don't try to be a judge of the products themselves. Anyhow, I greenlight the picture and it turns out it's the biggest independent hit of all time to that date. Stayed in that position until Blair Witch Project came along. It had an award-winning soundtrack. It won an Oscar and it changed the way young women dressed and comported themselves for a period of time. It did all the things they promised in the greenlight meeting. I mean, that's never happened, I don't think, in history before or since. Speaker 1 (9:31) How did that impact you as a decision maker moving forward, seeing the success of that movie? Speaker 2 (9:36) It didn't really. I mean, my process remained the same, which is hire the most talented people on earth and then encourage them to pursue their passions and then support them through thick and thin. I Speaker 1 (9:50) think that could be a portable lesson for any leader. It's proven to be exactly that, Speaker 2 (9:55) yeah. Speaker 1 (9:55) Yeah, yeah. So for any leader, I'm curious to get inside that. kind of your ethos, your mindset, your process of finding, hiring, supporting, training, very skilled, highly talented people. But what is that like to find great people? Can you take me inside the interview process or even the process as a whole of acquiring very, very skilled people and supporting them to do their best work? Speaker 2 (10:23) Well, remember, sometimes I haven't been the one hiring them. I mean, the story I just told you, Austin had hired these people. I do think perhaps I have some ability to bring out the best in talented people in addition to hiring them. My hiring process, I think, looks like everyone else's. This is not like I magically run into someone in the street and say, oh my God, you're so talented, come work at one of my enterprises. So we care about people's experience and background, and then we go through a normal interview process. We do today also use rigorous assessment tools. Because I think that that doesn't substitute for interviewing, but it certainly does enhance it. But in my case, it's been true that I've often encountered people inside the enterprises that I've come to because I've moved from company to company and then I bought a bunch of companies. So it is not true that I've always been the person recruiting the talent. The history of my career, in fact, more frequently has been I've been the person responsible for leading and encouraging. those talented people to do their best work, whether I recruited them or not. Speaker 1 (11:28) How do you do that? Well, Speaker 2 (11:30) first, Speaker 1 (11:31) you Speaker 2 (11:32) have to agree on a common mission and the mission has to be ambitious, but achievable. Second, you have to outline a strategy that's simple and clear and straightforward that people can sign up for. And third, you have to establish a common culture. Speaker 1 (11:47) Then Speaker 2 (11:47) you have to make sure all your financial incentives are aligned with that. So your financial incentives have to be aligned with the mission, the strategy, and the culture. If you say the words over here, like, you know, we want to be the best entertainment company on earth, and your incentives are over there, like, I don't know, we'll pay people without regard to how we perform, they're going to follow the money and you're going to get a bad result. In all of the enterprises in which I've worked, we've aligned the two. So at Take-Two, for example, People are compensated depending on where they fit inside the company, either basically primarily the stock because we want to align the incentives of our colleagues with the goals of our shareholders, or if they sit in an organization where they really can't have any influence over where the stock is likely to go, then we have profit sharing plans so that we align interests and they're trying to increase profits. How do they increase profits? Generate more revenue and spend less money. increase the revenue to decrease the cost the companies that i think do the worst job of aligning interests are the ones where compensation is discretionary and the discretion is held in the hands of the ceo because what that does if you think about it is promote a culture where everyone's just trying to please the ceo and people think that the way you please other people is to like compliment them or tell them what they want to hear and i'm really averse to compliments And I'm really averse to being told what people think I want to hear. I want people to go build value. And I don't care what they say to me along the way. They can not Speaker 1 (13:26) say anything along the way. It would be nice to be polite. And we do believe in Speaker 2 (13:30) being kind. But I just want performance. So we have to align the words with the dollar signs to get the result we want. And very specifically at Take-Two, our mission. is to be the number one entertainment company on earth. That's a really, really ambitious mission. We're on a pure play basis. According to market cap, we're within the top five today, which is pretty great, but we're not even close to the number one player, which is Netflix. But nonetheless, our mission is to be the number one entertainment company. Everyone can sign up for that, ambitious as it is. If you're in the top five and you want to be number one, okay, we can try. The strategy has always been be the most creative, be the most innovative, be the most efficient. We say the words in every internal and external communication.