Quote of the week

Over the past year, the frontier AI labs have moved strongly into education. OpenAI built a tutor mode for ChatGPT, made a free version for teachers through 2027, and released a tool to measure whether student AI use improves or erodes how people actually learn. Google and Anthropic are pushing into the same space.

For the companies that already sell software to schools and employers, that raises a question: Is a chatbot a threat to these businesses or a tailwind? Three of them reported in the past week, and all th…

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Below are the short remarks I gave at the ceremony last month.

Tonight I want to talk about inspirations.

I’m going to take you back to 1970 in a small town in the hills of North Louisiana, a town called Ruston. I was five years old, walking across the Louisiana Tech University campus with my dad, who was a professor there. Ahead of us is this monstrous 16-story building that has just been constructed. That was a big deal at the time, because the next-tallest building in Ruston, Louisiana, was three stories. For us, it was like the Empire State Building going up in our town.

I said, “Dad, what’s that?”

And he said, “Well, these two brothers from Tallulah, Louisiana”—a town even smaller than Ruston—“went to Louisiana Tech, made a bunch of money in the computer software business in Dallas, and donated money to build that building.” Those two gentlemen were Sam and Charles Wyly, who some of you may have known. If you’re interested in entrepreneurship, you ought to read their stories, because they had some great ones, and they were important in the US economy. That moment of hearing about them was my first inspiration. It was the spark that told me, Maybe some kid growing up in a small town in North Louisiana can be in the computer business. Who knew! It was mostly a mainframe business at the time, in the beginning stages, much like AI is now.

Later, in high school, I met a couple of entrepreneurs. We didn’t use that word in those days, but these were people who started and bought and sold small businesses. I learned that, hey, that’s another thing a person can do. I don’t have to go be a university professor like my dad wanted me to be. I could actually start my own business if I wanted to.

Then, years later, I came to Austin with my wife, who’s the brains of the operation. I’m not being humble there. She’s a 4.0 PhD in electrical engineering, a distinguished engineer from the University of Texas. In Austin, there was more inspiration. There was Michael Dell, who was already well on his way to becoming Michael Dell. That showed me you could build a world-class company right here. Then we got involved in the Austin Software Council.1

I moved out to Bastrop the other day and as I was packing everything, I came across a set of notes from a Software Council symposium in the year 2000. This was my chance to learn about how to do a software company. Back then, there weren’t a bunch of books and internet resources on that. You had to talk to people. You had to go to meetings.

There were some hugely inspiring people at that event. There was Ellen Wood from vcfo presenting on how to finance a business. And there was Mike Maples from Microsoft telling us how to build software. And many more in that vein.

From there, we got my company, NetQoS, funded, which was based on my wife’s work. Unfortunately, we didn’t get the funding from Austin Ventures—you passed on that one! But a company out of New York funded us, led by a guy by the name of Tom Greig, who had run the DLJ’s investment banking practice on Wall Street. And they invested $11 million in us in June of 2000.

For those of you who remember the business climate in June of 2000, it wasn’t great. The internet bubble was starting to burst. Then 9/11 hit and all heck broke loose. I remember going to a Fortune 500 CIO who had a billion-dollar budget and pitching him our product. He said, “Joel, that’s the best product I’ve ever seen from a startup, but if it costs a dollar, I can’t buy it.” That’s when I realized, Damn. This is tough. I didn’t know what to do.

By the time of our board meeting in September 2002, we had $3 million in the bank. I was ready to tell the board that if it was my money, I’d take it and go home. I knew we had a great product and a great team, but we couldn’t sell anything. So I walked into the board meeting, and as the first item on the agenda, I told them exactly that: “If it was my money, I’d take it and go home.” Tom Greig looks me in the eyes and says, “We have a checkbook. If you need more money, let me know.” If it had gone otherwise, I wouldn’t be standing here today. I still get emotional about that today. Tom and the other people in that room inspired me.

Then as we got Austin Technology Council going, there was a lot of camaraderie and inspiration among the Austin Tech CEOs. It seemed like every CEO in Austin that was in technology, right? People like Mark McClain, Rod Favaron, Larry Warnock, Jan Ryan. We had Joe Liemandt, who brought so much talent to Austin. And people like Josh Baer, who’s done so much to create startups.

Then, being in the networking business, Bob Metcalfe was my hero. I mean, he invented Ethernet, founded 3Com, and was a tennis player for the Beavers, just in case you didn’t know that.

All these people offered so much. They were all willing to talk, willing to share what they knew. They were willing to open doors and give you time. Those of us who have been around a long time understand that the most valuable thing we have is time. Those people were willing to give it.

My hope is that 20 years from now, standing here, someone might say, “There was this old guy named Joel Trammell who inspired me to do something.” Whatever that is, that’s the legacy that matters.

Thank you to the Austin Technology Council and Thom [Singer] for doing this. It’s a great event and I’m honored to be part of it.

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Imagine you just recruited a most unusual new employee.

He graduated top of his class, with separate degrees in computer science, finance, marketing, operations, HR, law, accounting, and a dozen other disciplines. He’s a true prodigy. He can write code, build financial models, draft legal briefs, run a marketing campaign, and analyze your supply chain. And he can do it all in the same afternoon.

You’re thrilled to have him on the team, aren’t you?

Well, before you give him a raise, realize that he also has a couple of drawbacks. See if these change your mind about him.

First, he struggles to retain the basic details of your business. Those he does learn, he forgets quickly. Despite his vast skill set and oceanic knowledge base, he needs to be reminded frequently what his role is. And he doesn’t hang around the watercooler, so he doesn’t pick up the company-specific cultural and institutional intelligence your other employees do.

This unusual employee has another weak point: He has zero initiative. If you ask him to do something specific, he’ll knock it out of the park. But you have to poke him every time you need him to act. You can bounce ideas off him, but he’ll never come to you with one of his own.

How do you feel about this employee now?

As you may have guessed, this employee’s name is AI, and he’s already at work in your company. Given those two big weaknesses, is it any wonder that lots of leaders are still using AI as little more than a glorified search engine?

If you want to turn your strange-but-brilliant new hire into an actually productive contributor to the business, you must ensure it has the context and the initiative you would expect from a human employee.

Providing the Context

How does any new employee gain enough context to be successful in your organization?

Typically, you put them to work and let the organization do the teaching. Over weeks and months, the employee absorbs things that were never written down anywhere:

• How decisions actually get made (vs. the power structure reflected in the org chart)

• Which customers are the most critical (vs. merely being the largest or loudest)

• What the CEO really cares about (vs. what they say in all-hands meetings)

• What behaviors are rewarded by the company culture (and which aren’t)

This context-building occurs mainly through osmosis. The employee watches and learns. Everyone they interact with in the organization teaches them something new. The accumulated context of your specific business is what transforms general competence into organizational effectiveness.

Unfortunately, AI can’t absorb context by osmosis. It can’t overhear the hallway conversation, pick up on body language in a meeting, or intuit from a CEO’s reaction that a certain topic is off-limits.

So, your first step is to ensure that AI at your company understands the context of your business. That means providing it with foundational documents that clarify:

• The company’s mission, vision, values, strategy, and founding purpose

• Its competitive positioning and primary rivals/threats

• Its cultural priorities and non-negotiables

• Its brand and all internal lingo and definitions (what does a “good deal” mean, for example?)

• Personality types and behavioral styles of all employees it works with

This means writing down many things that usually wouldn’t be written down, the stuff you would expect a human employee to pick up naturally. You might just find that this practice clarifies some things in your mind, too. Think of it as onboarding for one of the most consequential hires you’ll ever make.

After onboarding, this context must become a living intelligence layer. As brilliant as your AI system is, it’s not going to be great at picking up the nuances that matter. You have to be explicit and intentionally steer it with the latest context.

Sparking Initiative

The second drawback in your strange new employee is passivity. AI is anything but a self-starter. Your best employees do more than complete the assignments you hand them. Ideally, they see broken things and fix them. They think about your business throughout the day, and when they have an idea, they bring it to you. Or they simply implement it on their own.

AI, by contrast, waits to be asked. It executes, but it doesn’t originate, at least not without thoughtful, systematic design.

Like the context problem, this one is solvable. Instead of treating AI as a faster answer machine, you can architect workflows that prompt the AI to act on its own. For example, you can configure it to:

• Scan the competitive environment on a regular basis, reporting when it finds something novel

• Proactively surface at-risk goals inside the company

• Spot consequential engagements on your calendar on its own, and present a brief and agenda 24 hours before it happens

As the models’ memories grow (as with the newly released Fable 5), the capacity to mimic initiative will grow. Your AI system must above all understand the operating rhythm of your business and the types of insights you value - that’s a part of giving it context. Only then can it do more than run off and complete the individual tasks you give it.

Will you ever train AI to have the drive of a superstar employee? Not likely. But when you combine AI’s inbuilt proficiency with a rhythm of proactive operations, you work around its inherent laziness.

The Operating Loop

Once these proactive workflows are in place, the system surfaces an insight, you act on it, your action generates new data, and the system gets smarter as a result. The value compounds week over week. The AI you’re working with six months from now will understand your business in a way no freshly installed tool ever could.

This is also why context and initiative, which look like two separate configuration projects, turn out to flow from the same source. When your operating rhythm is structured well, both emerge from it naturally. You run your week, and the system learns from the rhythm itself.

The companies getting real value from AI today have one thing in common: They built the operating rhythm to put those tools to work. Ultimately, the question worth asking is less “What can AI do?” and more “What do I need to tell AI, and how do I need to structure its role, for it to add real strategic value?”

When you get this right, AI is no longer the omni-talented, highly credentialed employee whose results never live up to the hype. Instead, you get a tool that meaningfully contributes to the highest goals of the business.

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Quote of the week

One hundred years ago, the 1920s were roaring despite the fact that the beer, wine, and spirits industry was technically illegal. The speakeasies were packed and bootleggers were making a pretty penny.

Flash-forward to today, and we have an inside-out version of that situation. Alcohol is legal, abundantly advertised, but Americans are less interested in the stuff than ever. A Gallup poll released last August found that only 54% of Americans say they drink, a record low in Gallup’s data going back to 1939. Young adults, once the heaviest drinkers, now report drinking at rates below middle-aged and older Americans. The spirits category p…

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Most leadership development focuses on the “how” question. And for good reason: for most leaders, including executives, the “what” of the job is relatively clear. A sales VP knows the objective is to close more deals. A CFO knows the goal is to strengthen the balance sheet. A head of product knows she needs to ship features customers will pay for.

The hard part of these jobs is figuring out how to get there. How do we improve our close rate? How do we reduce our cash burn? How do we prioritize the roadmap?

The CEO Job Is Figuring Out What to Do

But the CEO role is fundamentally different, and most people don’t realize it until they’re sitting in the chair. When you become a CEO, the “how” problems are still there, but you’ve got a bigger fish to fry first: “what” to do in the first place.

This might seem like an absurd thing to say, since CEOs have infinite things to…

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Quote of the week

Phil has a point. It’s nice to be selling a relatively mandatory good, like car parts and maintenance, in a tough economy. Things like car parts and maintenance are inelastic, or at least only elastic to the point that something snaps. You either fix your car now… or deal with a bigger repair bill later.

In addition to hearing more from AutoZone’s CEO, we’ll also check in this week with a couple of other CEOs whose product is decidedly elastic, namely clothes and electronics. We’ll see that despite that, the US consumer is still showing up in those stores, for now.

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I talk to a lot of CEOs. Ask a hundred CEOs what got them to the top, and you will hear a hundred different stories.

But one trait does show up again and again: an unshakeable belief in their own judgment.

Call it confidence, ego, self-reliance, or even vision, but it’s the single most common characteristic in people who reach the CEO seat. Every time I teach a CEO Masterclass, I chuckle when we place them on the DISC Wheel, because they’re all clustered in the D quadrant. That’s D for Dominance, and despite the fact that D-type people make up only around 9% of the population, they make up somewhere north of 70% of CEOs in my experience. That relates closely to the classic self-assurance of the CEO.

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Quotes of the Week

Since the war with Iran shut the Strait of Hormuz in late February, the price of oil has been the central fact of the American economy. (Though relief may be on the way?) The national average for gasoline hit $4.55 a gallon on Friday, up more than half since the fighting started and the most expensive pre-holiday fill-up since 2022.

This week the shock reaches the checkout line. Three large discount retailers each held earnings calls this week, and the spike at the pump is affect each of them in significant but different ways. There are also some interesting views in these three on which strata of the…

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Today is the start of this month’s CEO Masterclass. That’s three days of learning and discussion with a small cohort outside Austin. It’s going to be fun, and you’re invited to join us for an upcoming session.

There’s a conversation happening in boardrooms across the world right now, and it goes something like this:

AI is here. It works. Deploy it fast, reduce headcount, improve margins. Shareholders will be pleased. This is the future!

I’ve sat in enough board meetings to understand that when a powerful new cost lever appears, fiduciaries feel obligated to pull it.

But I want to make the case that this instinct, applied reflexively, is dangerous. It feels like the best way to keep up with your rivals, but it’s short-term thinking. And it can very easily backfire.

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Quotes of the Week

As we covered in last week’s edition, hyperscaler capex for 2026 is tracking around $725 billion, up 77% from last year. The Philadelphia Semiconductor Index is up roughly 65% this year. Memory chipmaker Micron is up over 750% in 12 months. As many have noted, it’s feeling a little like 1999.

This week’s earnings calls give us three vantage points on that spending. Applied Materials is the largest US maker of the equipment that builds the chips. Figma is a design software company nine months into a difficult run as a public company, trying to convince in…

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A new Harris/Dataiku poll of 900 CEOs finds that 80% of CEOs believe their job will be at risk by the end of 2026 if their AI strategy fails.

No doubt this is why you see lots of drastic measures taken by chief executives. Many are facing growing pressure from the board and investors to get AI right, and the daily barrage of AI headlines keeps the urgency up. Among the common actions we’re seeing are:

1. Mandating AI usage for the team

At places like Amazon, AI-use mandates have led to tokenmaxxing, an example of Goodhart’s law if there ever was one.

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• Q-Day coming faster than expected

• Prophylactic layoffs at a growing company

• Non-human internet traffic to outpace human traffic next year?

• The first investment-grade bond backed by AI data centers

Quote of the week

The spending spree on AI infrastructure has no end in sight.

As of this week, the five largest US hyperscalers (Microsoft, Alphabet, Amazon, and Meta, have committed more than $700B to AI infrastructure in 2026 alone. Less covered than this spending itself is the army of smaller, more specialized companies that rent out GPUs, build the chips, and run the networks the hyperscalers depend on in the era of AI.

Three of them reported this week, and each one is doing something striking to secure their place in the game. CoreWeave, an AI-focused cloud provider, is borrowing tens of billions of dollars at investment-grade rates to build data centers years before a the hoped-for payoff arrives. IonQ, a quantum computing company, is letting gross margins compress as it spends its way into a chip foundry acquisition. And Cloudflare, which runs much of the internet's network layer, laid off 20% of its workforce on the same day it reported its strongest customer additions in years.

Let’s hear what these CEOs had to say to investors and analysts.

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When an experienced CFO takes a new job, they bring their entire playbook with them.

At this CFO’s new company, they’re working with a different set of accounts, maybe in a different industry, and they need to get up to speed on things like how their new employer recognizes revenue. But 90% of the job — the core CFO stuff like building the forecast, managing a close, etc. — translates from one job to another.

Most executive roles are similar in that regard. CFOs, CMOs, CHROs, etc. all have models of how their role creates value, and that model can move from company to company.

In other words, functional expertise is portable.

CEOs don’t have that luxury. Every time they step into a new role, they are essentially starting over. There are two related reasons this is the case:

1. Most CEOs just don’t have a good model. There are models for how to do the enterprise CEO job, with elements that do translate between companies. The model I built, CEO-S, is designed to give CEOs that playbook other e…

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On Friday, Exxon, Chevron, and ConocoPhillips reported first-quarter earnings within hours of each other, all speaking into the same disrupted market. Here’s what they said.

Exxon Mobil (XOM)

Q1 2026 Earnings Call

Results: solid, with earnings per share of $1.16 beating estimates by $0.15 on revenue of $85.1 billion, though net income fell 45% year over year.

Exxon is the largest US oil and gas company by revenue, pr…

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These bank CEOs face a bundle of issues. War in the Middle East has pushed oil above $100 a barrel. The IMF has cut its global growth forecast. Analysts are pressing every bank for more disclosure on its lending to private credit funds.

Nevertheless, all three CEOs below described their pipelines as healthy, though each is, wisely, making defensive moves anyway. Here’s what they said.

Huntington Bancshares (HBAN)

Q1 2026 Earnings Call

Results: solid, with adjusted EPS of $0.37 up 9% year over year and revenue of $2.59 billion

Huntington is a regional bank holding company headquartered in Columbus, Ohio, with about $285 billion in assets. It is in the middle of integrating two recent acquisitions, Veritex and Cadence, that brought 6,000 employe…

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The launch has put the financial industry on edge. In the three earnings calls we cover this week, analysts asked each big Wall Street CEO some version of the same question: Is AI a threat to your business model, a benefit, or both?

Let’s hear what they had to say.

Morgan Stanley (MS)

Q1 FY2026 Earnings Call

Results: strong, with record revenue of $20.6 billion (up 16%), record EPS of $3.43, and return on tangible common equity of 27.1%

Morgan Stanley has $9 trillion in client assets across its wealth and investment management businesses, advises corporations on mergers and capital raising, and trades stocks and bonds for institutional clients worldwide. In 2020, it acquired E*TRADE, giving it a direct retail channel alongside its financial adviser network.

Takeaways from the call:

Morgan Stanley has beta access to Anthropic’s most advanced AI model

Chairman and CEO Ted Pick confirmed on the call that Morgan Stanley has been given access to Claude Mythos Preview.

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Some jingles stay with us forever. One that has been coming to mind lately for me is “Who You Gonna Call?”

Today, running a company can feel as scary as the specter-strewn buildings and streets of Manhattan in Ghostbusters.

CEO tenures are shrinking.

71% of CEOs feel imposter syndrome.

AI is eating the world and making the future very hard to predict.

And failed CEOs are pushed to the side for “more time with family.”

Who are YOU gonna call?

If you’re struggling with an issue in your role as CEO, who can you dial?

• Consultants are expensive. They have a mercenary feel a lot of the time. They aren’t embedded in your company. It’s easy to end up after a yearlong seven-figure engagement feeling set back even further than you started.

• CEO coaches can be great. Truly. I recommend CEOs be in a coaching relationship. But the coach is best for holding the CEO accountable to specific development goals, building concrete leadership skills. If you’re spiraling and the company needs help now, a CEO coach …

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