“Learn It. Go!”

By Sacha Zimmerman

Mason Morfit ’93 talks to Head of School Bryan Garman about applying Quaker values to his investment career, how Sidwell Friends made him an intellectual omnivore, and why being a learn-it-all is always better than being a know-it-all.

Long before Mason Morfit challenged Microsoft to rethink its priorities, Sidwell Friends School challenged him with AP Bio. The son of Quakers, one of whom was a diplomat for the US State Department, Morfit grew up in India and Indonesia before arriving at Sidwell Friends in 7th grade. He graduated in ’93, headed to Princeton University, and then moved to the West Coast, where he joined an investment firm called ValueAct Capital. He has been there ever since. Founded in 2000, Morfit says ValueAct has grown “from nothing to over $10 billion in assets” by managing money for endowments, foundations, and pension plans around the world—all with the idea that investors can have a positive voice in the governance and oversight of public companies. It’s called ethical investing, and it was the main topic of discussion when Morfit sat down with Head of School Bryan Garman at Bird Studios in San Francisco. 

This conversation has been edited for length and clarity. 

BG: How did your Sidwell Friends experience shape your work and ethical core?

MM: Some of the benefits of being immersed in a place like Sidwell were not obvious to me until later in life. At the time, I was just trying to hang out with friends, get my work done, get into college. Now, in my career, we invest in companies where we’re arriving as an outsider to the party, as a minority participant without a lot of power, and we have to gain trust about effecting cultural changes. It requires a personal touch that’s consensus-oriented and gentle but also firmly convicted. That’s a good description of Quaker values, too. 

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BG: How does that play out in terms of what you did with Microsoft? 

MM: I still have to pinch myself. It was great being at an iconic company at a really particular point in time, when the leadership of the company passed from Steve Ballmer to Satya Nadella. The issues facing Microsoft were profound. Many felt underlying technology shifts had left the company in the dust, but those shifts were actually opportunities to change, including by abandoning some of the company’s long-held cultural beliefs. It required courage to change both the people involved and some of the company’s organizing principles, such as making everything subservient to Windows.

To get an organization of almost 100,000 people to let go of those paradigms is difficult. Getting there is a journey. It’s not something you can mandate heavy-handedly. It is something you can be a part of if you come in willing to engage and willing to have your mind changed. Satya was very open-minded about embracing things. Satya says that the “learn-it-all” always outperforms the “know-it-all.” I replay that over and over in my mind. Nobody likes a know-it-all, and the know-it-all usually doesn’t get very far because nobody wants to see the know-it-all win. But if you reorient yourself as a learn-it-all, you create win-win situations where you grow and the counterparty grows as well. That’s what we’ve tried to do at my firm, and how I’ve tried to live as a human being and as a professional. 

Microsoft inverted the paradigm from ‘We will win at all costs, we will dominate, we will crush, and we will destroy,’ into ‘We will work together.’”

BG: Moving from being a know-it-all to a learn-it-all is a pretty courageous transformation to make, especially if you’re in the leader seat. What were the key moments that led to that? 

MM: Usually when we come into a company and present some outsider views, those views are threatening to the company’s status quo. They are uncomfortable truths. We generally present these things quietly and respectfully, behind the scenes to the chairman or the CEO, and they either disappear or they get re-filtered and show up gradually. But when I arrived at Microsoft and presented a document of my thoughts from the outside, the first thing they did was put it on the internal intranet for the entire board of directors and senior leadership to see. That was remarkable. I had never seen a company just say: “Let’s put this on the table. Let’s talk about it.” Satya and Microsoft inverted the paradigm from “We will win at all costs, we will dominate, we will crush, and we will destroy,” into “We will work together.” He created a coalition of players in the software ecosystem that used to be at war, and together they thought about the industry as one of cooperation and coexistence rather than Hobbesian competition. 

BG: When you bring these issues to companies as an investor, are they mostly operational issues, or are there also ethical and cultural issues? 

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MM: Companies, countries, and organizations coalesce around certain paradigms, worldviews, and missions. Sometimes they are permanent and evergreen, but often they are helpful and constructive for a period of time, but then they actually become hindrances. Companies go through life cycles. It is often the case that when my firm engages with a company, what is holding them back are their old paradigms. Microsoft’s prioritization of Windows over all else would be one good example. 

Another paradigm is “if you’re not growing, you’re dying.” A lot of times I’ll come into companies that have had this ethos of aggressive growth at all costs that has led them to do a lot of diversifying, and they’re spread way too thin. It isn’t working, it’s distracting everybody, and it can come crashing down. 

Another example is “profit above all.” That paradigm is raising its ugly head everywhere you look. I trace some of that back to an ideological legacy, coming out of the University of Chicago and Milton Friedman, that says the sole purpose of a corporation is shareholder value and profits. If you take that to the extreme, you neglect your employees, your environment, your communities,
and your customers. That can also come crashing down. 

More often than not, these paradigms companies are beholden to are inhibiting their progress. They have to let go. We come from the outside and say: “It’s okay. It’s time to move on from this and reorganize yourself around something different.” 

Do schools go through life cycles? Do schools’ foundational myths or cultural premises—which serve them very well initially—need to change as society or culture changes?

BG: Absolutely. We’re in one of those shifts now. People are examining the best way for students to learn. Is it this model where we instill knowledge in students, as in an AP model, where we’re teaching kids to learn as many facts as they can, or is it a more open model where we want kids to be judged by the quality of their thinking rather than what exactly it is they know from a perspective of content knowledge? You can’t ignore content knowledge of course, because you need some context in which to think. But we are looking at ways to find more time and space for kids to think deeply about what they’re doing, rather than pushing them through a curriculum at light speed. That’s one of the reasons why we decided to lay down the AP curriculum. 

MM: When I was a student at Sidwell, it was a light-speed push. The paradigm was academic achievement, standardized test scores, AP scores, grades, Ivy League schools—at all costs. 

BG: You told me you spent a lot of time in the Georgetown library studying for AP Bio.

MM: The hardest I’ve ever worked in my life was junior year at Sidwell Friends.
I used to go to the Georgetown University library every week and work on my 30-page American Studies papers for Ellis Turner and then AP Bio for Mrs. Fields. It was an unbelievable workload, and it gave me an incredible amount of drive and work ethic. The intensity of the experience was great. But still, it’s interesting that you are re-considering whether it’s the right direction, because I strongly support your efforts. I was set up well after Sidwell because I didn’t have to kill myself just to keep my head above water when I got to college. But I also didn’t deeply, deeply love learning until I got to college. At Princeton, I had the freedom to really dive into things that were super interesting to me and have viscerally intense intellectual experiences.

BG: What was one of those moments? 

MM: My favorite courses were things like Analysis of Capitalism. The Berlin Wall and Soviet Union had crumbled, so a lot of economists were trying to help Yeltsin rebuild the Soviet economy. Economics is basically applying mathematics to psychology. How do you mathematically model how a human being is going to behave? I wrote a paper in college on Mahatma Gandhi’s economic theories. Unlike traditional Western economics, where it’s supply-demand curves and everything is built on the idea that consuming more is better, Gandhi saw a point of diminishing returns. He said that community matters and your fellow man matters. It upends all of the equations and mathematics of economics. That’s an example of the light bulb going on in my head. I credit Sidwell with giving me the ability to think at that higher level. Sidwell also gave me an intense grounding in an ability to push through and learn, which gave me a lot of self-confidence to cover lots of different academic subjects omnivorously.

Sidwell gave me that grounding and the confidence to say, ‘You name it; I can do it.’”

BG: How does that apply to your work?

MM: In 2005, we were looking at investing in a company that made DNA sequencers. To make that investment, I had to really understand the science. I still had my AP Bio books from Mrs. Fields’s class, and I went back and ramped up really quickly. We funded a company called Solexa, which has since merged with Illumina, that has revolutionized the cost of DNA sequencing. We were a small part of that, but it was at a critical moment. When the company was running out of money, we put $8 million into it to keep it alive. Beyond the basic science requirement in college, which for me was like Psych 101, I didn’t have any post-Sidwell science or biology experience, but I had the grounding and the courage to think: “I can get into this. Then I can dive into higher-level expert text and have conversations with people at Cambridge University and at the Broad Institute to learn it.”

For students and professionals of the future, the most important quality is the ability to learn and ramp up on any discipline on the fly. We tell our analysts all the time: “You know nothing about radio frequencies and how walkie-talkies work, but we’re looking to make an investment in a company that does those things for police officers and firefighters. Learn it. Go!” Sidwell gave me that grounding and the confidence to say, “You name it; I can do it.”

BG: It’s also this move from the know-it-all to the learn-it-all. 

MM: Yes. The culture I’m trying to build at ValueAct is learn-it-all—with the courage to go anywhere and do anything. And with a mission that goes beyond making money. Obviously, we have to do that; otherwise we wouldn’t have any clients. But with a willingness to ask questions, we can leave each company better off than we found it, treat people respectfully, and have good intentions. If you do that, it’s remarkable where the world takes you. 

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