When fam­i­lies run the busi­ness, writes El­iz­a­beth Spiers, in­com­pe­tence is no sur­prise

The Washington Post Sunday - - OUTLOOK - Twit­ter: @es­piers El­iz­a­beth Spiers was the found­ing edi­tor of Gawker and the edi­tor in chief of the New York Ob­server.

In my early 20s, I worked for a hedge fund man­ager as an an­a­lyst, per­form­ing due dili­gence on com­pa­nies he was con­sid­er­ing for in­vest­ment. I vis­ited a wide range of busi­nesses — storage area net­work com­pa­nies, broad­band providers, med­i­cal-de­vice man­u­fac­tur­ers and less tech-ori­ented ven­tures, in­clud­ing one whose only prod­ucts were couches and chairs that con­verted into beds. Some­times the com­pa­nies were in­ter­est­ing and in­no­va­tive, and some­times they were com­plete dis­as­ters. The dis­as­ters had many of the same mark­ers: poor per­for­mance, murky fi­nan­cials and, at least once, a su­per­car of Ital­ian ex­trac­tion leased by man­age­ment in the park­ing lot.

One other trend stood out: If my boss told me that I’d be look­ing at a “fam­ily run” com­pany, there would prob­a­bly be ad­di­tional red flags. These didn’t al­ways emerge, but when they did, they were con­sis­tent. Se­nior man­agers would be woe­fully un­qual­i­fied or in­com­pe­tent or both, and in­evitably re­lated to the chief ex­ec­u­tive. Cer­tain em­ploy­ees, also re­lated to the CEO, would be re­garded as un-fire­able. Their ex­ces­sive com­pen­sa­tion (it was al­ways ex­ces­sive) would in no way be tied to per­for­mance. Suc­ces­sion plans would con­sist of el­e­vat­ing and in­stalling rel­a­tives in un­earned po­si­tions de­signed pri­mar­ily to sat­isfy the founder’s fan­tasies of cre­at­ing a dy­nasty.

I en­coun­tered those same dy­nam­ics years later when, as edi­tor in chief of the New York Ob­server, I as­signed and edited sto­ries about com­mer­cial real es­tate in the city. New York real es­tate is very dy­nas­tic and in­su­lar; a few fam­i­lies have run the largest com­pa­nies over the course of sev­eral gen­er­a­tions. One of them is the fam­ily of Jared Kush­ner, then the Ob­server’s owner and now a se­nior White House ad­viser and son-in-law to Pres­i­dent

Trump. Another, of course, is Trump’s. Both Kush­ner and Trump are se­cond-gen­er­a­tion ex­ec­u­tives in their fam­ily busi­nesses (I would use the word “were” here, but nei­ther of them have com­pletely di­vested them­selves), and Trump’s chil­dren are third-gen­er­a­tion.

So when the Trump fam­ily busi­ness be­came run­ning the United States of Amer­ica, nat­u­rally, the head of the house­hold could not re­sist in­stalling his near­est and dear­est in po­si­tions of se­nior man­age­ment. Kush­ner and Ivanka Trump were given ad­viser po­si­tions and West Wing of­fices; Don­ald Trump Jr. and his brother Eric were left to nom­i­nally run the Trump Or­ga­ni­za­tion. And if I were con­duct­ing due dili­gence on ei­ther op­er­a­tion to­day — the United States or Trump’s busi­ness — I wouldn’t rec­om­mend get­ting in­volved. The con­tro­versy this past week prompted by Trump Jr.’s dis­clo­sure that he met with a Rus­sian lawyer to ob­tain dirt on Hil­lary Clin­ton as part of the Rus­sian gov­ern­ment’s sup­port for Trump may have over­shad­owed the con­tro­versy the pre­vi­ous week prompted by Trump’s de­ci­sion to let Ivanka rep­re­sent the United States at a Group of 20 meet­ing. But they’re symp­toms of the same un­der­ly­ing dys­func­tion: The un­earned power Trump’s chil­dren wield sim­ply be­cause they’re his chil­dren.

When Kush­ner and Ivanka Trump first ar­rived in the White House, their pres­ence was greeted with a tiny bit of hope on the part of lib­er­als and anti-Trump Repub­li­cans that the two might be able to mod­er­ate the pres­i­dent’s worst im­pulses. They were go­ing to per­suade him to pri­or­i­tize cli­mate change, ad­vance pro­gres­sive work­place rules for women and fam­i­lies, and de­fend gay rights. But so far there’s no con­crete ev­i­dence that they’ve got­ten any­thing done ex­cept to ac­com­pany Trump in meetings when con­ve­nient, ex­ploit the of­fice for ac­cess to peo­ple they wouldn’t meet oth­er­wise and pose for photo ops.

Trump has made it no se­cret that he views Ivanka as a po­ten­tial suc­ces­sor of sorts — he once sug­gested he could name her as his run­ning mate. So al­though it was wildly in­ap­pro­pri­ate, it’s not the least bit sur­pris­ing that both of them thought it was fine for her to sit in for Dad at the G-20 sum­mit. The con­clave was not, of course, a Take Your Daugh­ter to Work event. But for some­one who re­cently claimed to “stay out of pol­i­tics,” Ivanka didn’t seem to have any ob­jec­tion to be­ing slot­ted into a po­si­tion with very big po­lit­i­cal stakes. In her mind, ap­par­ently, it was hers to take. Sim­i­larly, her hus­band seems to feel qual­i­fied, de­spite a lack of any­thing re­sem­bling rel­e­vant ex­pe­ri­ence or ex­per­tise, to as­sume the man­tle of di­rec­tor in charge of ev­ery­thing the pres­i­dent doesn’t un­der­stand or wants to del­e­gate or that Kush­ner would sim­ply like to run.

Kush­ner’s ap­point­ment(s) are al­ready back­fir­ing, though, in part be­cause last year, he took part in meetings with a num­ber of Rus­sian op­er­a­tives and ne­glected to men­tion them on cru­cial se­cu­rity forms — in­clud­ing Trump Jr.’s meet­ing.

That meet­ing with Rus­sian lawyer Natalia Ve­sel­nit­skaya was a prod­uct of Trump Jr.’s own li­cense to take charge of any­thing his fam­ily’s name touches. Like all his sib­lings and his brother-in-law, Trump Jr. had no ex­pe­ri­ence work­ing in pol­i­tics be­fore last year, but that didn’t stop him from meet­ing with sketchy op­er­a­tives and drag­ging the os­ten­si­ble pro­fes­sion­als, such as cam­paign man­ager Paul Manafort, into them.

This past week, af­ter news of the meet­ing burst into the open, the pres­i­dent first of­fered a head-scratch­ing de­fense of his son, ap­plaud­ing Jr.’s trans­parency (some­thing Trump has never val­ued in any in­car­na­tion) and tepidly re­fer­ring to him as “a high-qual­ity per­son,” a des­ig­na­tion am­bigu­ously lo­cated on the pres­i­dent’s usual scale of “loser” to “tremen­dous,” and not ex­actly the term of en­dear­ment you’d ex­pect from a pro­tec­tive par­ent. Trump also pleaded ig­no­rance of the meet­ing in ques­tion, which strains credulity even more than it prob­a­bly strains the fam­ily bonds. Asked about it at a news conference in Paris on Thurs­day, he stuck with the gen­eral line that his name­sake hadn’t done any­thing wrong: “I have a son who’s a great young man. He’s a fine per­son. He took a meet­ing with a lawyer from Rus­sia. It lasted for a very short pe­riod, and noth­ing came of the meet­ing. And I think it’s a meet­ing that most peo­ple in pol­i­tics prob­a­bly would have taken.”

The one up­side that may have ap­pealed to the CEOs of all those fam­ily-owned cor­po­ra­tions — and, ap­par­ently, the head of our newly fam­ily-owned fed­eral gov­ern­ment — is that putting oth­er­wise un­qual­i­fied rel­a­tives into po­si­tions of power does buy a cer­tain amount of blind loy­alty. Maybe Trump’s mo­ti­va­tion for hav­ing Kush­ner and Ivanka in the White House with him was not that he ever in­tended to rely on them as ad­vis­ers (there’s no ev­i­dence that they’ve ever been able to sway him on pol­icy), but rather that they pro­vide some psy­cho­log­i­cal com­fort, in the sense that he can trust them not to stab him in the back.

The dys­func­tion of Trump’s nepo­tis­tic im­pulses goes hand in hand with his fam­ily’s odd no­tion of loy­alty. It’s a sen­ti­ment that runs only one way: Ev­ery­one in the fam­ily de­mands loy­alty, but none of them nec­es­sar­ily ex­pects to re­cip­ro­cate it, es­pe­cially to any­one out­side the fam­ily. (I in­clude Kush­ner here, who once told me that a pre­de­ces­sor of mine was some­one he ad­mired be­cause he was a “loyal guy,” ne­glect­ing to men­tion that the “loyal guy” was some­one he had fired.) This view is ev­i­dently shared by Trump Jr., who in 2012 tweeted the fol­low­ing: “At din­ner w our greenskeeper who missed his sis­ter’s wed­ding 2 work (luv loy­alty 2 us) ‘No big deal hope­fully she’ll have another some­day’ ;)”

Ul­ti­mately, the mess Trump and his ad­min­is­tra­tion have landed in was an ob­vi­ous con­se­quence of this most dis­as­trous of fam­ily-run en­ter­prises. Peo­ple re­lated to the pres­i­dent were put in se­nior po­si­tions, once again, de­spite hav­ing no be­ing woe­fully un­qual­i­fied or in­com­pe­tent or both. They were, and are, re­garded as un-fire­able and not held to nor­mal per­for­mance stan­dards. And much of this is driven by the fam­ily pa­tri­arch’s fan­tasies of dy­nasty.

All of the red flags are there; not even fam­ily wins out. And cer­tainly not the coun­try. The only real loy­alty Trump has ever had is to him­self.


Don­ald Trump Jr. lis­tens to his fa­ther’s speech at the Lin­coln Me­mo­rial be­fore the in­au­gu­ra­tion in Jan­uary. He and brother Eric took over his fa­ther’s role in the fam­ily busi­ness.

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