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

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Welcome to the Learning Leaders Show presented by Insight Global. I am your host, Ryan Hawk. 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 2-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 his direct reports. 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 5 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.

5 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 5-year-old cared about something being glamorous, a separate question. I don't know that I can even answer that.

So then what was it like, you know, a few years later when you actually did it?

Well, it wasn't a few, but Well, that's a whole bunch of stuff that happened in between. Look, I, I was blessed, you know. I, um, 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 if running a movie studio is here, international television distribution's out of frame over here. But it was the only job I could get, and I did, I did, 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 a 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.

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.

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. 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 a pretty rough and tumble business. And unlike today, where 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 5 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.

The film you greenlit, was it Dirty Dancing, right?

Dirty Dancing. Yeah.

Okay. Take me back to that time when you're thinking about making that decision. What went into it?

Oh gosh, it's a great story actually, because remember, I don't, I'm not responsible for creative choices in any of the businesses that I'm in. There was a great team at Vestron that was there before I joined the company. 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 2 co-production heads, Mitchell Cannold and Stephen Ruther. It was their project, obviously, Dirty Dancing, not mine. 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 greenlit. And this was a very significant project for them. It was a $5.5 million 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 previously had been a choreographer. This is his first directorial project, Emile Artolino, and the writer and producer. And they proceeded. And Emile was a lovely, lovely person. I had just met him in this meeting.

But he was so scared that he couldn't speak. And so the team collectively had to pitch the project. And Greenlight meetings, you know, generally speaking, are not pitch meetings. But we were— we didn't really know what we were doing at Vestron. 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, you know, I'm inexperienced, but I'm like, this is all complete bullshit. Like, of course 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 are 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, you know, was a little hokey.

It wasn't for me, but doesn't matter. I supported the team. The team really believed in it. And this, 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 and— 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.

How did that impact you as a decision maker moving forward, seeing the success of that movie?

It didn't really. I mean, I, 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 think that could be a portable lesson for any leader.

It's proven to be exactly that. Yeah. 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?

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.

How do you do that well?

Well, first you have to agree on a, 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. Then 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 to 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, you know, 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. So increase the revenue, decrease the costs. 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. I mean, they can not say anything along the way. It'd be nice to be polite and we do believe in 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 5 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 could sign up for that, ambitious as it is. If you're in the top 5 and you want to be number one, okay, like 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, and we make decisions in service of that strategy. Consistent with that strategy. And our culture is work as a team, seek excellence in everything you do, be kind. And then the comp is if the stock goes up, you get paid. We make money, you get paid. If the stock goes down, you don't. If we don't make money, you don't.

How do you define what number one is?

Oh, market cap, public company market cap. Super easy. Our market cap today is hovering around $50 billion. I think Netflix is around $400 billion. We've got a lot of work to do.

Why does that matter?

Oh, it doesn't, except it doesn't really, except that we are a public company and ultimately the job of a public company is to create value for its shareholders. How you do that is, you know, of primary importance. What we wake up doing every day is trying to create the very best entertainment on earth. That's our day-to-day job. Yeah. We do that successfully, we can succeed in our mission.

Let's say you become number one. I don't know when, but let's say it happens. Then what?

Well, I'll worry about that when the time comes.

I am just curious about this idea because it seems like I love, like, your, your, your, how clear you are on the, on the mission and the values to bring those out, how it seems like you've aligned really well on your comp structure and all that stuff. But this comparison with others, because sometimes it's like that can be the thief of joy, that can be not a fun way to go about living life. I get it from a business perspective. I vividly remember the first job I ever had as a sales rep, our CEO saying our goal is to be number 1 by the end of the decade. And that was like, you know, 7 years away and we were a distant number 2. And so, yeah, I'm just wondering this comparison thing, is that— what is it that says like, we got to go beat Netflix? Is that just a good rallying cry for the troops or what's that all about?

I think it's both. I mean, yeah, it's a good rallying cry, but again, the mission of a public company, whether you like it or not, is to create value for the shareholders. If you don't want to do that, then you can't be a public company. Then you have to be something else. And for example, if I owned 100% of the shares of this company and it were like a lifestyle business, then I could decide.

Yeah.

And no shame in that, but that's not the structure of our company.

Yeah.

There are companies that are different, plenty of them. For example, you know, there are family businesses where the mission of the business may be a social mission.

Yeah.

Great. Or the mission of the business may be, We need to make a certain amount of money to support our family. We're good with that. And after that, we're not focused on anything else. That's also fine. So I'm not making a value judgment about other people's approaches.

Yeah.

But we are a public company. If you're going to be a public company, you have an obligation to create value for your shareholders. So when we acquired Zynga, for example, in 2022, 65% of the consideration was stock, which meant that we were able to do an accretive transaction for our shareholders that benefited Zynga shareholders as well. But that's a deal we simply couldn't have done had we been a privately held company. No way.

As you have the leader, how much pressure do you feel?

It's not really, I don't tend to experience pressure. I mean, I love what I do. I feel blessed that I'm able to do it. I do the very best job that I can. If there's something looming that's really terrible, I can of course feel stressed, but that's atypical for me. Particularly because I've done so many turnarounds and I've had the experience of what real stress and pressure feels like. And once your company, like Take-Two today with a very, very strong balance sheet, plenty of cash, a great P&L generating loads of operating income on a pretty regular basis, you know, with some variability, but We've been a profitable company since 2011, I believe, year in, year out. And that was coming from a pretty terrible situation when we took over the business in '07. Well, that's not a super stressful experience. I also understand that some of the challenges are part of the game, and especially given the job I do, because I believe in delegation with information and I encourage my colleagues to do their jobs. So if stuff ends up on my desk, it's not like the happy stuff. Happy stuff doesn't show up on my desk.

That got done outside of my office. If it was coming, it's on my desk, imagine it's probably like not so good or super complex.

So what's your process to delegate with information? What does that look like in practice? What does it look and sound like?

So in practice, we have a weekly senior management meeting where everyone responsible for running a group plus senior corporate staff get together in a room and we go around the table and share everything that's going on and then share the problems and challenges that we face. And because we do it every week, people are pretty well caught up. So you can get through that meeting in roughly an hour. And it also means I don't have to do one-on-ones. So it's very efficient because the rule is, look, we don't have any limitations of what we discuss in that meeting. If it's going on in your business, you bring it to that room. And if someone, for example, who's new to the company, like pulled me aside at the end of the meeting and said, I don't really want to mention this in the meeting, I just want to talk to you about it. I'm like, is it personal? If it's personal, we could talk about it one-on-one. If it's about business, back in the room, everyone's got to know. So the politics diminish greatly. Still a big business. So of course there's some politics, but rather limited politics given the scale of the organization because everyone has the information.

And if there is a conflict, It becomes clear in that meeting that there's something we need to sort out. Now, maybe we won't sort it out in that meeting, but at least I kind of know the lay of the land and so does everyone else. So we don't have a situation where something material is going on in the organization over here and someone over here isn't aware. Everyone's always aware of everything. It's also immensely efficient. So I coach and mentor a lot of people, including a bunch of CEOs. And I remember a young CEO I was speaking to a few years ago and he He looked terrible. And I said, and it was a growth business and he was drinking from a fire hose. And I said, what's going on? He said, well, I'm sleeping like 4 hours a night. I said, why? He said, well, I'm working so hard. I was like, okay, I imagine you're working hard, but what's keeping you so busy? I couldn't really get there. Finally I said to him, do you have one-on-one meetings with your direct reports? And he said, yeah, with all of them. I said, how many direct reports do you have?

He said, 20. I said, how many hours a week are you spending on one-on-one meetings? He said, 20. I said, it's like, that's like half a normal work week. How about this? How about trying it my way? Have one 1-hour meeting with 20 people. And he did that and cut 19 hours out of his work week.

I believe— does Jensen Huang at NVIDIA do that as well? I thought I saw him on a podcast talk about that.

I think he does something similar, but he didn't learn it from me.

Interesting. Well, it seems like that's more of a thing. So on the flip side of that, When I've talked to CEOs who've crushed it, and then you talk to the people that maybe work in their organizations, they say, I, I feel like he genuinely cares for me and, you know, has a deep care for the people that work for them. And so not doing one-on-ones could be a thing that says, well, you know, he doesn't do one-on-ones though. I don't know. So how do you show your people that you genuinely care for them and you're there for them and, and you want the best for them as actual humans, not just to make sure the shareholders are taken care of?

Well, I didn't say I didn't spend time with people. What I avoid doing is having that, you know, cookie cutter weekly or biweekly, you know, which hammers 20 hours on your calendar. Exactly. But I spend a lot of time with all of my colleagues and, you know, we'll have meals together, we travel together because I try to go out and see a lot of my offices. So if I go visit a divisional, and by definition our offices are divisional, we don't really have corporate offices outside of New York. So I'll be with executives on those trips. So I have time with executives that are— that's one-on-one. It's just not a cookie-cutter one-on-one update meeting.

One of the other things I noticed, this just from connecting with you, you're known as America's fittest CEO. You do 2-a-days, you're training all the time. You look great. Not ashamed to say that. You do. Talk to me about though, I'm a believer in this too, 7 days a week in the gym. Like, I got to punish my body. I think it helps me mentally to be better. For as a husband, as a dad, and certainly in my work. I'd love to hear your philosophy and mentality about being America's fittest CEO and all the workouts that you do.

So I'm sure I'm not America's fittest CEO, but it's very flattering that anyone could use those words. I even know people who are CEOs who are substantially fitter than I, like Willie Walker, who's one of my best friends, and he's the CEO of Walker Dunlop, and he's an amazing cyclist, which I'm not. I like cycling, but he's an amazing cyclist. He will tell people we cycle together, and I'm like, I'm not really— when we're on a cycling trip, I'm not even sure we're in the same county. He's so far ahead of me on the road. But anyway, I love fitness. That's true. And it is my avocation. And I do train a lot of people and I train with a group of people regularly. I was training with them this morning. But for me, it's more something I'm super passionate about. And I do believe that it's a form of taking care of oneself that shows up in a lot of other parts of your life. So among other things, like if you look your best, I think it's a sign of respect for others and respect for yourself. If you look sloppy and terribly out of shape, it's harder to lead people, I think.

And the other piece is feeling your best. You know, I feel great. I feel great. I was up this morning at 4:45. I was in the gym with my team working out at 6:45. I'll be in the gym later on today and I feel really, really good. That means I can show up with energy and with a smile on my face. I'm not feeling, you know, sort of bleary-eyed and rough around the edges.

How important when you're thinking, like looking at other leaders to hire or promote, it has to play a role. How much of a role does it play that they work out, that they look good, that you can tell that they're energized from taking care of themselves from a fitness perspective?

Oh, thank God I don't do that. I mean, I hire, I hope, the best and the brightest and the most creative.

It has to play a little bit of a role though, doesn't it? We're human beings.

I mean, if they roll into my office like hungover with their clothing askew, that would be problematic. But I, no, I, I'm really careful actually about not holding people to a standard, a personal standard to which I hold myself. Everyone's entitled to be on their own journey. And I don't want clones of myself. Yeah, that would be horrifying. I think it's important for people to be healthy. And if you have someone who's unhealthy, they're not gonna be as effective for you. But no, there's no obligation to like come work out with me to work at one of the businesses. Although during the pandemic I did lead group workouts on Zoom, you know, like 250 people at times joining the workouts, which was amazing. It was great.

Wow.

And actually it really was great for culture and camaraderie. So I enjoy it, but people can show up for themselves in an array of ways. And by the way, someone who is really engaged in fitness and I think reasonably expert in fitness, remember, if you walk 30 minutes, 5 days a week, all the evidence shows that that's really good for your fitness.

Mm-hmm.

That isn't state of the art because I think you should do some weight-bearing exercise, especially as you age. But if all you did was 30 minutes a day of walking, 5 days a week, you'd be in pretty good shape. So someone who does that is not going to like show up in my office for a discussion and explain to me that they're like fitness freak. But that doesn't mean they are not showing up for themselves. They really are.

Actually, I read about— you said there's no AI slop involved with making one of the Grand Theft Auto games. It's handcrafted building by building, street by street. And that you think that's the right move here. I'd love to hear more of your overall philosophy on AI and the importance of things still being handcrafted, as you've said before.

Well, things are handcrafted in the video game business currently with obviously technology. Everything we do is created in a computer. And broadly, what is being described as AI today is a wonderful technological step forward. And naturally, we will avail ourselves of all those tools and technologies. What we're not doing is using someone else's model and pushing a button and saying, create this thing for us. That's what we're not doing. And I don't expect we'll ever do that. But will our creative teams use state-of-the-art tools to do great work and to be more efficient doing that great work? Absolutely.

The job of CEO, I would imagine, and from others I've talked to, at times can be lonely because so few people understand what you do or what you're going through. Even if they think they do, they don't. So I'm curious what you do to make it less lonely, what you do to surround yourself maybe with other CEOs. Are you part of groups? Do you meet with others? Do you have conversations formally, informally? What do you do to make sure that you are having good, rich dialogue with others who maybe have a similar role to you?

My first boss was a man named Brian McGrath, a very senior executive at Columbia Pictures. Great guy, taught me a lot of stuff. And I remember one day he said to me, Strauss, it's lonely at the top. It's lonelier at the bottom. The truth is, no, I don't feel lonely at all. I feel blessed, very blessed to be in the job that I'm in. And I have wonderful family and kids and a new daughter-in-law and loads and loads of friends and all the people I train with and 14,000 colleagues here at Take-Two. No, I'm pretty well inundated with people. I do have some close friends who are similarly situated who I can talk to about some of the challenges that I face at times. And I do have mentors who I do rely upon, one in particular who is my go-to person when I'm in a situation I'm having difficulty parsing. And I also have a business coach who's great. That helps. But no, I don't feel lonely or misunderstood or I mean, I think it's just an incredible blessing to do this job. I'm very grateful for it.

What do those conversations with your business coach sound like?

I don't know. I was, I had something I really needed to deal with and I don't mind confrontation when I have to have it, but I don't like love leaning into confrontation. And this was something that required a confrontation and I was avoiding it. And I said, and he said to me, I understand what you're waiting for. You gotta go do this. It's causing you stress. And I was like, well, the person I have to speak to is gonna be really, really upset. And he said, so what? That's all he said. So what? You know, handle yourself appropriately, be kind, do what you have to do. And, you know, you can deal with the consequences. It's okay. You can get through it.

Yeah.

It was very helpful advice. I know it sounds exceedingly straightforward, but that, it was really useful.

When you confronted them, what happened?

Yeah, they were really upset, but, you know, we got to the other side of it, and it was better not to have it sitting out there.

Yeah, like bad news doesn't get better with age, right? You got to just go do the thing. I love coaching. My background's in sports, and so like every single repetition in practice and certainly in games as a quarterback was graded, and so you got feedback. And now I crave it. I don't get it as much as I used to, and it's like I kind of miss it. So it's so interesting that the highest performers, the people who are Crushing it, they almost all have a coach. They almost all have outside counsel or people that they'll listen to. And then the ones though who are not crushing it, who are not doing that well, they're like, I don't need a coach. It's bizarre, the dichotomy of the ones who choose to sign up and pay for a coach versus the ones who don't. And it's like the ones who you would look at and think, Strauss doesn't need a coach, he's crushing it, he has for a long time. And yet you do. I just love to hear your mentality on coaching and the importance of having a person who will maybe push you or keep you in check or hold you accountable.

The value of coaching, the overall philosophy of that would be cool to hear you talk about that.

Well, I mean, I'll throw it right back into athletics, man. I think we can agree Tom Brady is an amazing athlete, but would he have performed as well if there were no coach on his team? Or if the coach were lousy. A great coach is objective and encouraging and smart and experienced. I'd like to believe that I have some talent at what I do, and I've had coaches along the way who've warned me off roadblocks or obstacles and encouraged me in other ways. And it's been immensely helpful. I had a coach for many years named Gloria Henn, And she coached me from 30 until she retired. She was amazing, amazing at unlocking roadblocks that maybe I didn't see or maybe I didn't know how to unlock. So I'm with you actually. The people who are most effective are the people who typically are the most open-minded and self-critical. Not always. I mean, I think there are examples of people who aren't particularly open-minded or self-critical who are just so talented that they succeed despite that. For example, I didn't know him, but I think that's who Steve Jobs was. I don't sense that he was particularly self-critical from everything I've read.

And I'm not sure how open-minded he was, but I think he was pretty open-minded. But he certainly was not self-critical. And I'd be loath to believe he had a coach, but he was immensely talented. The guy was a genius at marketing technology. I'm not a genius at doing anything. I got a good workmanlike intellect and I work hard and directed. And I, and I think I've become very good at leading super talented people to do their best work, but I have to be aware of my limitations. So I need that coaching. I need that help.

One of the things, uh, when it comes to the business world and coaching that I've seen to be effective, the great ones, what they do— I want to hear what you think Gloria and your current coach do for you— is they are really, really good at asking an initial question listening and asking an even better follow-up question to get you potentially to go somewhere that you would not have gone without them. And so if you analyze, like, what did they actually do? They didn't really give me any advice. They just kind of asked me some questions. And then Strauss is a smart guy. He'll figure it out. But my role as the mentor/coach is to be that person who cares enough to ask good questions, listens, asks even better follow-up questions, which then leads him down to the path to then coming up with his own solution. Which was in there, but I had to help him get it out. That's what I feel like great coaches do. Is that in your experience, or is there something else that great coaches do in addition to that?

You just described the Socratic method, and I actually think that that method works really well in leading day to day. And that's a method I try to use as a part of my— when I was younger, I believed I was the smartest guy in the room. Thankfully, I've abandoned that belief, and therefore I just had to give people the answer. And by the way, you know, I am reasonably intelligent, so that can actually work, but it also pissed people off and, you know, caused them to be disengaged. And I learned that the method you just described, the Socratic method, is much, much more effective. But actually, with regard to my coaches, no. As a matter of fact, I tell them the story and I want advice, direct advice.

Really?

Part of that is that I am very self-critical and I'm very open-minded. I want them to say to me, You have that wrong. You are missing that. And Gloria would say, you're missing this. This is right there in front of you. And you know, I got— I have great advice from actually someone else who wasn't a coach, a friend and recruiter by trade. And I was in a situation that I just wasn't succeeding at. And she said, you know, sometimes you're really good with the words, but you're really bad with the music. And I said, what? She's like, you get the facts right and you you know the answers, you don't read a room all that well, and you need to start reading the room better and interacting with people more effectively. Using that analogy, you know, you got the words right, you got the music wrong, was immensely effective. She was not using the Socratic method. She was giving me direct advice. As it happened, she used, you know, a colorful approach to that that worked for me. But my coaches and my mentors have, generally speaking, said to me, don't do that, do that.

And I like that. And I reserve the right to make my own decision. So when I coach people, I say to them, look, just remember, this is only one person's advice. You have to follow your own path. You have to make your own decision. And if the decision were clear and obvious, we wouldn't be having a conversation. So I'm giving you the best advice I possibly can give you. You still have to make the call. I can be wrong.

Let's say you go back to Harvard, to teach and the class is titled CEO 101.

I do that sort of thing. So, okay. That's—

You do?

I do. Yeah. I go back to—

When you go back to Harvard, what do you teach?

Well, usually Harvard Business School uses a case method, so they've done a bunch of cases on businesses that I've run over the years, probably 12 or 14 of them. So I'll participate in a class around that. But I also, I go to MIT Sloan once a year actually to talk about, it's not called CEO 101, but it might as well be.

Okay. So what's part of the syllabus there? What are you teaching? You know, you could high level and we can maybe we'll drill down, but I'm just curious, what's a part of that class?

At Sloan, the class is called Corporations at the Crossroads. And what the professors want you to cover is really difficult sort of decision points and how you navigate them. And I do it through a, actually through a Socratic method, through a Q&A. I ask the students a lot of questions. I show up with questions in addition to being asked questions.

What do you ask them?

Well, I start by asking them why they're there in the class that day. Like, it's an elective, so why are they there? What do they hope to get out of it? That's jarring and surprising to them because their speakers never do that.

Really?

And I, yeah, I, I'm like, what do you hope to get out of this class? And I'll go around, you know, people raise their hands and I'll get 10 or 20 answers and that gives me guidance for what to do in the session. You know, I believe that if you want to engage an audience, you have to be of service to the audience. I learned that one the hard way too.

How so?

I was president of Estron, the new president of Estron long ago. I was 31 years old or something like that. I was really young and very inexperienced. And I consider myself a good communicator. Definitely. I'm, I am a good writer and I had to give a speech to a bunch of like home entertainment retailers. I know it sounds scintillating, an after-dinner speech. And so I wrote a speech I was very proud of. It was very eloquent, certainly grammatical. And I stood up at the podium after dinner and I delivered the speech and I walked out. I was really proud of myself. At the end of it, my boss Austin First, who was CEO, pulls me aside. He said, you're just a terrible speaker. I was so offended and surprised. And he said, you need, obviously need training. So I went and got 2 days of media training. And I learned that you can't tell the audience what you want to talk to them about. You gotta speak to them about what they care about. And I learned you can't deliver a written speech unless you're president of the United States. The rest of us should be speaking either because they know stuff or at worst use notes.

And it's even better if you could do a Q&A format. And then I learned you be yourself and inject your personality into it. And then I learned from my wife, you gotta try to make people laugh if you can. 'Cause I was too serious. I had to learn how to communicate. And, you know, with the, my starting point, pretty much anytime I'm in a public speaking situation is to figure out what that audience wants to talk about. Not what I want to talk about, what they want to talk about. Think about it. The most annoying thing For an audience member is when you're sitting there getting bombarded with someone's message over and over again, especially when it's like a Q&A and someone says, ask you a question, and they go back to their talking points. I mean, you want to shoot yourself. What I aim to do is to be of service to the audience. That's how I start.

Wow. How did it feel when he told you that was terrible and you thought it was good?

I mean, clearly I, on the one hand, I was upset. On the other hand, I was amused. Like, it's really funny, right?

Wait, why was it bad? Like, what did you do that was bad?

I delivered a boring speech.

Did you just read it off of your notes or something?

Yeah, yeah, absolutely. Read it off my notes. I was very proud of what I'd written very much.

I love that you have this humility to be like, yeah, this was something I needed to get better at and now I have.

Yeah. I don't know. Arrogance is the enemy of continued success.

Is it hard not to get a little arrogant now?

No, of course this is true. As you, as you age, you realize, you know, less, not more.

Some people do.

Well, I certainly do. And look, I'm— I don't mean to be falsely modest, but I have, I have a lot of experiences and I, I am proud that I do certain things very effectively and say otherwise would be stupid. Like, what would I say? Like, oh, I'm just bumbling through my job. Come on. I mean, that— I don't believe that. And that would be silly to try to convey that. I'm certainly not bumbling through my job, but I'm learning all the time and I surround myself with people who can help me learn. And I remain curious and I remain very open-minded. One of the things that my team will say about me is that I have strongly held opinions and I'm quite happy to share them. And equally, I'm very open-minded. And if I'm presented with facts or analysis or thoughts that are at odds with my strongly held views, my mind will be open and I will change my views. I'm not a person who's like, I made the decision, that's my call. We're just like, we're all going. Bad things happen when you do that. I am absolutely willing to change course when there's a reason to change course.

You know, as I've gotten older and more experienced, I believe I've gotten better. And the only reason I've gotten better is that I'm highly open-minded and I'm a learner. I've always been a learner. And I really do surround myself with young, ambitious, thoughtful, wide-eyed, People, many of whom are totally full of shit, but doesn't mean I can't learn from them.

How so?

Look, I mean, I've been totally embedded with all things AI in the past few years. Who hasn't?

Yeah.

And a good 50% of everything you're hearing is, is utter crap. Totally untrue. Never gonna happen. But in order to be the best at what we do, technology influences every single thing we do in the entertainment business, specifically in a video game company. I better be fully immersed. So I show up completely open-minded. I do the research. I learn as much as I can. I talk to a zillion people. I spend time with the 18-year-old entrepreneurs who are working in tech, something most people who do what I do at my age don't do. And then I have to arrive at conclusions. And it is true that those conclusions have a far-reaching influence on what this company does. And I've had to do that over and over again. So roll the clock back when the only thing people were talking about wasn't AI, it was VR and metaverses. And my competitors devoted hundreds of millions of dollars of capital to VR development. And I did all the research and I've been around the entertainment business a long time. I was like, this is just not going to be a thing for our business. Just not. And I said, so what we're going to do is despite the fact that's all anyone wants to talk about, you can go look at analyst calls.

I've been asked over and over and over again about The metaverse and VR. I said, look, we're going to do enough work around here so that if VR explodes into something huge in the video game business, we're ready to pursue it. We did a bunch of experimentation. I said, well, we're not devoting capital to this. We got every single VR project we did here, we got paid for and made a margin on every single one of them. Lost zero money when it turns out that there, oh, there is no such thing as the metaverse. Oops. No one wants it. VR entertainment. And, you know, that's just the state of play. So it was my job to make that call. How did I make the call? I did the homework myself by being open-minded and being in touch with people all ages and stages in the business. And then I made the decision in a way that preserved this enterprise's ability to succeed. Even if I were wrong, I didn't make a decision that slammed the door on my being wrong. I had to make a decision based on what I thought. I left all kinds of escape hatches open if I turned out to be wrong.

Is it surprising that Mark Zuckerberg could have been so incredibly wrong about that? I mean, spent, I don't know, untold billions of dollars and it was just like, are you kidding me? I mean, is that surprising?

Well, it wasn't surprising to me at the time. And, you know, I was frankly, without being impolite, And I have enormous respect for Mark Zuckerberg, to be clear.

Exactly the same.

And maybe he was wrong once, like I've been wrong a thousand times, to be clear. So I'm not going to be critical, but I, no, I thought, I thought his strategy around VR was incorrect. And I said so at the time.

This mentality, creatively risk-forward and financially risk-averse. This feels accurate to what we just talked about. How does that work?

Well, I mean, it works by making sure 2 things happen as quickly as possible after I take over a business. And because I've done so many turnarounds, it wasn't always possible to do it quickly. But what it really means is make sure you have a solid, exceedingly well-funded balance sheet and a highly profitable core business so that you can take enormous creative risk. And in the event you're wrong, which you will be now and then, you can live to play another day. And what you can't do in the entertainment business is run a thinly capitalized business on the one hand and take huge creative risk on the other hand. Those 2 things don't go together. It's sort of like if you can't afford to lose, you don't play the game. One of the reasons, for example, Carl Icahn was able to win over and over and over again is A, he's a really good poker player, and B, he had a huge stack of chips. So he knew in poker you're going to lose sometimes, even if you're really, really good. Really, really good. So you better have a lot of chips so that you can play another day.

And that's what he did over and over and over again. And it's how he looked at the world. So when things went against Carl, and I know Carl well, you know, he didn't sit around moaning about it. He went on to the next game. And you have to be that way in entertainment. So I'm really proud of the hit ratio of my businesses. We've always had the highest hit ratio of any team within the business in which we operated. But it's a hit ratio, like for a reason. What does that mean? There are losses. So Take-Two has a really high hit ratio and we have flops now and then. Thank God, not very frequently. It's been quite a while since we've had one, but we've had 'em. And, you know, when I was in the movie business, a well-run studio in those days had a 30% hit ratio, which is to say 70% of what you did broke even or lost money. 70%. So you better be like wired to understand creatively lots of stuff is going to go against you. And if you believe that and you understand that, which I did, and you, the humility, if you're aware of that, then you have to finance your business accordingly.

There was a competitor to ours years ago, and I, in a moment that was perhaps not very diplomatic, predicted that they would go bankrupt. In 6 months. And the reason I knew they'd go bankrupt is they had a release schedule coming up, but they weren't capitalized well enough to market the titles effectively unless everything went perfectly. And I knew everything wouldn't go perfectly. So I unintentionally publicly said that they would go bankrupt in 6 months. I got scolded for it quite properly, and they went bankrupt in 8 months. So I was off a few months. Yeah.

I mean, a leader's job, you cannot win a game if you're not in the game. You know, you've gotta stay in the game.

So one of the things I had to promise to investors around here after we turned around Take-Two was that I would take meaningful creative risk, but I would never take bankruptcy risk. And that's what this company does. Like, we're not ever going BK under my leadership. That's not happening. We might have some failed projects, But we'll always be there to live to play another day.

I'm curious, uh, one more question before we run, Strauss. Let's fast forward exactly one year from today, and you're surrounded by people you love, whether it's, uh, professionally or personally or both, and you guys are popping bottles, you're spraying them all over each other, you're celebrating like crazy. I'm curious, what are you guys celebrating?

I'm, I'm saying the words creates, uh, great fear, but I would say we'd be celebrating one or more huge hits because we're in the business of making hits. So the only way to lighten that though is a truth, which is we don't really spend a lot of time congratulating each other. We understand the nature of this business is to get up every morning and do it again and again and again. My father-in-law used to say about, you know, he was a very, very successful entrepreneur. He said anytime someone congratulated him on something that had gone well, he'd say, oh, that's yesterday's headlines. And one way to look at it, is it, oh, that's, you know, it's overly modest. The other way to look at it is it's actually the truth. It's yesterday's headlines. We don't high-five endlessly around here when things go well, although we certainly do show sincere appreciation for people's great work. I try really hard to do that. I'm sure I fall short. I don't think a leader can ever show sufficient appreciation for other people's work, but I try really hard to. We really avoid the, you know, Who's better than us?

You know, kind of party. Because the minute you engage in that, you know, you've lost the thread. This is a really, really hard business. We want to be at the very top of this business. We only want to make hits. We want to make the best entertainment properties on earth. We want to surprise and engage all of our consumers over and over and over again. The only way we can do it is by staying super hungry, super aggressive, super humble. super ambitious and to do it over and over and over again. And yeah, we'll let other people do the big celebrations for us. We're, you know, you know, we do the next day, we get back to work on the next big project.

I'm just gonna say, it seems like a commonality among those who have sustained excellence over time is what do they do the next day? They get up and they go to work. We may celebrate a little bit here and there, but like, it's actually an area a lot of people think, I'm not really good at that. And that seems to be a theme amongst Excellent. It's interesting to me. I really appreciate this, Charles. Thanks so much for being here. Is there anywhere you want to send people to learn more about what you guys do online?

We're easy to find, so probably not. Thank you so much. Really appreciate it.

Thanks so much. I'd love to continue our dialogue as we both progress, man. This is great.

Pleasure.

Awesome. Thank you, man.

Be well.

It is the end of the Podcast Club. Thank you for being a member of the End of the Podcast Club. If you are, send me a note, ryan@learningleader.com, let me know what you learned from this great conversation with Strauss Zelnick. A few takeaways from my notes. What's a commonality among the best? One of them, they all have a coach. Strauss is one of the most disciplined humans on the planet, and yet he still needs a coach. All the greats Value coaching. That's a person who tells them the truth, holds them accountable, and helps them make decisions when there is no easy choice. One of the commonalities of leaders who sustain excellence over an extended period of time, they all have a coach. Speaking of that, Strauss had a confrontation he was avoiding, and his coach told him, hey, you got to stop Avoiding it and address it directly. As we talked about, bad news doesn't get better with age. So there's probably something all of us right now are avoiding. We hope it goes away. Well, we know it won't. So let's take action on this. Think about the person you need to have a conversation with or a situation that needs addressed.

And immediately after this podcast, have the conversation, address that situation. Right now. And then I'm super inspired by his fitness routine. 68 years old, looks amazing, works out every day. He knows that taking care of himself first is the ultimate way to lead others. All of us, we all only get one body, and if that stops working, then we're done, right? So it's on all of us to do whatever we can to get stronger every day, especially as we age. And you can see that the discipline, energy, the clarity, that standard he holds himself to physically, that bleeds into every decision he makes. Once again, I'm going to say thank you so much for continuing to spread the message and telling a friend or two, hey, you should listen to this episode of The Learning Leaders Show with Strauss Zelnick. I think he'll help you become a more effective leader because you continue to do that and you also go to Spotify. Apple Podcasts, you subscribe to the show, you rate it hopefully 5 stars, you write a thoughtful review. By doing all of that, you are giving me the opportunity to do what I love on a daily basis, and for that I will forever be grateful.

Thank you so, so much. Talk to you soon. Can't wait.