Joy, Truth, and Brass Rings

Photo by Illustration by Charlie Davis

Photo by Illustration by Charlie Davis

They’ll be composed, instead, of a series of individual choices, some of which will seem important to you at the time and turn out not to be. Some of which may seem contingent, even accidental. Some that you may not even recognize at the time are choices at all. And yet, someday you too may be asked to stand in front of a group of students and impart your wisdom, and you’ll realize that all along those choices were all there was, and they added up to nothing less than everything.
So, I’d encourage you to think about those choices with a few simple principles in mind:

• Imagine something different
• Work is a joy
• Truth is things as they are
• Let go of the brass ring
• You’re going to be wrong a lot
• Faster alone, but farther together

Imagine Something Different

The first lesson I learned in life was not to be limited by the possibilities that someone else has imagined for you.

In the little town where I grew up in Northern Utah, most of us could not imagine a happier, more satisfying life than the one that we and our parents knew, and as I think back fondly on my childhood, I understand that completely. Others, who thought that they wanted more than a small town could offer, imagined settling in the big city—Salt Lake, maybe even Denver.

But as a young man, I imagined something wholly different from the home that I knew. Not because I was unsatisfied or saw some shortcoming with it, but rather I decided that to become the person who I wanted to be, I would require experience beyond what I knew. I imagined something different. At age eighteen, I got on a plane and went to college in New York City. Something no one could remember anyone in our little town having ever done. My mother later told me that on the day I left, her good friend came over and cried for an hour over my inexplicable decision.

New York in 1976 was at its nadir. It was dirty and dilapidated and dangerous. It was not what those I knew and loved had imagined for me. It was not what they wanted, yet it was a decision that made all the difference in the course of my life because it paved the way for me to continue to consider new possibilities and take risks by considering how life might be different. Never let your life be limited by what someone else imagines for you. So many of us make our choices out of a constriction of vision that we convince ourselves is common sense. What we really want seems so out of reach that we never dare to imagine it. Imagine more than that.

Work Is a Joy

But imagination, without work, is just dreaming. And the second principle that I wanted to share with you today is that work is a joy. Not just the work that you’re currently doing in school. The discovery and intellectual excitement of education can be easy to be joyful about. It was crucial to my own development—studying classics and philosophy at Columbia, then the law at Yale. But I’m talking especially about the world of work beyond school that many of you will soon be entering.

For me, after law school, that was going to work as an associate at the law firm of Davis Polk and Wardwell, almost forty years ago. Davis Polk was a law firm, but it wasn’t just a law firm. It was a symbol. When Tom Wolfe wrote Bonfire of the Vanities, his precisely observed dissection of New York in the 1980s, his avatar of the New York establishment was a man named Pollard Browning, a partner at Davis Polk

Davis Polk—along with a handful of other New York law firms—was then and is now a temple of work. The largest enterprises in the country bring their most complex and consequential problems to these temples and the guiding value is work, crisply and properly done. My day usually began a little after 8 a.m. and usually didn’t end until 10 or 11 at night—and on a busy day, much later.

I found no better expression of what that initial work experience meant than a wonderful letter published in the American Lawyer magazine by Charles Reich about his experience in the 1950s as a young associate of Cravath, Swaine and Moore, a very similar New York law firm. It’s a little bit of a digression, bear with me.

I’m sure, again, that these days most of you have no idea who Charles Reich was, but for a certain type of person who came of age in the early 1970s, his was a talismanic name. He was a brilliant lawyer and legal scholar, a professor at Yale Law School who ended up dropping out and writing a book called The Greening of America, which took America by storm. The book embraced the 1960s counter-culture; it rejected corporations and corporatist institutions like large law firms that smothered free thought and individualism.

It was a surprise when a friend sent a copy of this letter by Charles Reich to me, to afresh law school graduate who was starting out at Cravath. I was prepared for it to be incalculably tedious, a throwback to the flower power of 1960s. So, you can imagine my surprise when instead, it took the form of this hymn to his time on Wall Street, to something wonderful that he found as a young lawyer in New York.

Specifically, what he profoundly recalled was the single-minded focus on work. He describes the almost monastic dedication to work at the firm where billable hours, in those days, were not a major concern, but legal work of the highest quality was. Reich clearly misses this world when he says, “At the time, I had no idea how fragile the experience of good work would turn out to be.

“At another firm where I worked later, partners would invite me to lunch and then tell me about their marital problems, or their ungrateful children, or their existential woes,” he continued. “I’d rather have talked about work. Still later in the academic world, I found that work was often less important than talk. Talk that was often too elegant, too subtle, too amusing, too time consuming.” There is an intense satisfaction—it’s not an exaggeration to call it joy—in doing good work. It’s a key to happiness.

Truth Is Things as They Are

The third principle is that truth is things as they are. By that I mean that real success in achieving your objectives and solving the most intractable problems will require looking through conventional wisdom and facing the facts about the world as they actually are, not as you or others might have assumed or wanted them to be.

An early experience that brought this home to me was work related to a municipal bond default in the 1980s by the Washington Public Power Supply System. The utility had projected a dramatic increase in the demand for power in the 1970s and had undertaken construction of five nuclear power plants, financing them by the issuance of millions of dollars of bonds.ImageEditMove UpMove DownAnchorRemove
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The expected surge in demand did not obtain, and the nuclear plants weren’t built.

Our clients held a significant portion of the bonds to finance this doomed project, but the contracts were designed to protect them. As a young summer associate, second year of law school, not yet even a lawyer, I was handed the safe and boring assignment of compiling the legal authority to support these claims, which everyone at the firm knew were incontestable.

After several weeks of work in the firm’s library, I concluded that no, in fact, our clients were not protected, and would likely lose such a claim and their investment. I wrote this up in a memo and delivered it routinely to the partner who had commissioned it. I was completely clueless as to the explosion within the firm that it would create.

Two days later I was summoned to a conference room to face a cross examination from seven of the firm’s most senior partners. This is not a typical day in the life of a summer intern. I could have been more equivocal and joined the herd of other lawyers who had failed to see the problems created by these contracts, and faced none of the responsibility when they were proved wrong. But I didn’t do that. I held my ground and eventually persuaded those seven partners, and our clients were among a small share of bondholders that were able to limit their losses.

It isn’t always easy to look at things as they actually are. When others see things, perhaps as they want them to be, perhaps as they’ve simply always assumed them to be, it’s easy to join in, with the knowledge that even if you are all eventually proved wrong, it may not mean much for you personally with so many to share the blame. But I can say that making the harder choice and sticking to your guns will give you one less thing to regret. Years later when the firm was considering whether to make me a partner, I was told that several people based their decisions on that memo I had written as a summer associate and defended in the face of their consternation.

Let Go of the Brass Ring

So far I have celebrated ambition, hard work, and pigheadedness. The fourth principle I want to discuss is going to sound less straightforward but has been as important a guiding principle for me as any other. Let go of the brass ring. While it’s important to have goals, sometimes it’s better to set new goals. In reaching for the brass ring, sometimes it’s good to remember that the point about brass is it only looks as if it’s made of gold.

After six years at Davis Polk and the year that I was going to be up for partner, I was recruited to join a team under Treasury Secretary Nicholas Brady that was dealing with the clean up of the savings and loan crisis of the 1980s and other matters. I had done well at Davis Polk. I had every expectation that I would be made a partner, and it would be hard to overstate how unusual it was in the New York of thirty years ago for someone on the cusp of partnership at a New York Law firm to leave for a tour of duty in public service.

Why did I do it? It shouldn’t diminish my appreciation for hard work to say that work can sometimes become a drug, and that the personal ambition and ego tied up in doing a good job can start to rob one of the joy that I have spoken of. Public service seemed like a good way to recapture some of that joy. So I went to Washington, and had the opportunity to work with some interesting and rewarding people to do some interesting and rewarding things. Truly outstanding people, starting with Nick Brady and Jay Powell. I did that for a couple of years and was welcomed back to Davis Polk.

And then eight years later, as a partner, I did it all over again; I walked away from the career that I had built at the firm—as it turned out, permanently. I was the first Davis Polk partner in over fifty years to go to Washington for a presidential appointment. My first assignment was to represent the United States at the International Monetary Fund. I followed that up by serving as Assistant Secretary for International Affairs at the Treasury and then Undersecretary of the Treasury for Domestic Finance. The short version of these eventful years was that I saw and learned about many things that I wouldn’t have experienced as the partner of a major law firm. I emerged from the other side encouraged to do something truly different.

So when I left the Treasury in 2006, I became a private equity investor at the Carlyle group. In the 150-year history of Davis Polk, almost no partner had ever left the firm never to return, and I just had. I let go of that brass ring. And then, I did it again in 2014 when I left Carlyle and returned to Utah to start Cynosure. In keeping with all my other career decisions, it was kind of crazy to leave a place like Carlyle and start a new investment firm at that age. But that’s the only way to achieve new possibilities.

You’re Going to Be Wrong a Lot

The next principle is something that may be hard to grasp now, but it is essential to be successful: recognize that you are going to be wrong a lot.

When I was a young lawyer, I thought the most important thing was to have the right answer. You needed to know the statutes, the legislative history, the annals of the case law. Knowing that answer was something you owed your clients and you owed the firm. But when I became an investor, it quickly became clear that knowing the right answer isn’t nearly enough. The difference between a good investor and a great investor is how one accounts for the fact that even the best analysis of a complex system will often be wrong. Properly managing the risks of being wrong can be the difference between success and very costly failure.

An example of this from the early days of Carlyle was the sale by Marriott of its successful business Caterair, which had a monopoly on in-flight meals served by airlines. Hard to remember, but it used to be when you were sitting in coach, they would actually bring you a meal. And people would compare it and choose airlines on the basis of how good the food was. But that was all about to change just as Carlyle made one of its early investments.

A number of the early partners at Carlyle had close connections at Marriott, and they thought they had the inside scoop on what would be the deal of the century: Caterair. It is now fondly remembered within Carlyle as Craterair because, shortly after purchasing the company, the airlines almost immediately and unanimously stopped serving meals on most of their flights. The company went into bankruptcy, and Carlyle lost almost all the money that it had invested.

In law, decision-making is relatively straightforward. Written rules, legal precedent point the way. It’s possible to draw a decision tree without too many pieces of paper. But in business, in the vastness of the American economy, the systems involved in evaluating a deal are so complex that it’s necessary to map out the consequences of being right and of being wrong, no matter how sure you are.

And when you do that, you find that it’s harder and often more important to protect the downside. One reason it’s hard, of course, is that you have to construct protection, but not so much protection that you eliminate the rewards of possibly being right. More than any other thing I had done, investing required judgment.

And it turns out this latter point has been invaluable to me in my latest return to public service as a member of the Federal Open Market Committee, involved in setting monetary policy to influence a large and complex system, the US economy. Even more than investing, there are things we don’t fully understand about the economy. It calls for moving the levers of monetary policy intelligently but judiciously. It’s important to form a view that you think is right, but every one of us on the FOMC spends a great deal of time acknowledging the possibility that our view may be wrong, and making policy decisions in light of that risk.

One example of this is monetary policy from 2014 to 2018 under then-Chair Janet Yellen. I was outside the Fed for almost all of that period, and like many people, I judged that past experience would have called for raising interest rates a lot sooner and faster than Janet led the Fed to. As it turns out, she was right, and I was wrong. It happens to all of us all the time. And one reason she was right was that Janet was properly managing the considerable downside risk of the economy flipping back into a recession.

Faster Alone, But Farther Together

The final principle that I wanted to end with is that last phrase, “faster alone, but farther together.” I recall it as something I had learned from the Ute Indians, but some digging reveals it may actually have been dreamed up by a temporary hire of the Hallmark greeting card company in 1957. Whatever the source, the point is that in many endeavors, coordination and cooperation can seem unwieldy and slow you down, but it will also bring the most meaningful and sustained success.

One of my mentors, Nick Brady, approached his job as treasury secretary by first saying, “What is it that I have to do?” He fixed on three major focuses. The first was the savings and loans crisis, which had been quite consciously neglected by the Reagan administration because it was going to be a messy and unpopular problem to solve. The second issue was Latin America debt, which had been a problem throughout the 1980s that had never fully been resolved. And the third was the ongoing budget deficit.

The Brady Treasury’s answers to these problems were some of the greatest achievements of the first Bush administration. But Brady did not solve them alone. What he did was to pick his priorities and then pick his team, not determine what he thought individually was going to be the answer to each of those questions.

It would have been faster had he done it alone. Well, maybe not, but certainly he went much farther by realizing that after setting his priorities, his most important choice was in selecting his team. We’re not going to do it alone.

Throughout my career I have found that achieving success has depended as much on choosing the right team as on my own personal effort, however fine I thought that effort was. If you remember only one thing from what I’ve shared with you today, remember this last lesson: faster alone, farther together.

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Address by Randal K. Quarles
Illustrations by Charlie Davis

About the Speaker
Currently serving as vice chair for supervision on the Federal Reserve Board, Randal Keith Quarles is an American private equity investor and government official. Raised in Roy, Utah, Quarles graduated from Columbia University and Yale Law School then began his career in New York City as an associate with Davis Polk & Wardwell. He was founder and head of the Cynosure Group, a private investment firm, and a former partner of the Carlyle Group, one of the world’s largest private equity firms. From August 2001 until October 2006, he held several financial policy posts in the George W. Bush administration, ultimately serving as the Department of the Treasury’s undersecretary for domestic finance. BYU Marriott honored Quarles with the 2019 International Executive of the Year Award. This text is adapted from a 25 October speech given on campus.