Culture is the fundamental pillar in the success of any business. In this episode, Steve Farber chats with Hector Fernandez, CEO of Aristocrat Gaming, to discuss the three priorities of the company that allowed them to leapfrog beyond their competitors even during the pandemic. Love is not just a concept, it’s a practice and its positive impact on an organization is evident. Tune in as he shares his philosophy on what great leadership looks like and how transparency, communication, and trust can permeate. Hector also talks about his early beginnings as a son of an immigrant family and how he made it in business doing what he loves every day. Don’t miss out on this episode and be inspired by the success that can come out of practicing love in business.
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Our People, Our Customers, Our Business: The Three Priorities of Aristocrat Gaming With Hector Fernandez
Welcome to another episode. My guest is Hector Fernandez who is the CEO of Aristocrat Gaming. By background, Hector is an accountant, a CPA, has an MBA and more importantly, he is an unbelievably extreme leader, as we call him around these parts. He is a practitioner of love as a business practice. This is the way that we found each other. That has been his approach as a leader. He has done some incredible things at Aristocrat Gaming, which is a high-level company that produces video-based casino games that appear in casinos all around the world. It might seem to you that casino business and love in business is a bit of a non-sequitur, but we’ll discover that it at least is not where Hector Fernandez is concerned. Hector, welcome to the show.
Thank you, Steve. It’s such a pleasure and joy to be here.
Thank you. The pleasure is mine. Let’s start with the lay of the land. Aristocrat Gaming, of which you’re the CEO, is part of the company Aristocrat. Give us the high level as to how all that fits together and then we’ll focus on the gaming aspect of it.
Our roots are based in Australia. The company started off as an Australian-based company. It’s still publicly traded there and started in the manufacturing of slot products. For a lot of those that are reading that may not know, Australia is the highest per capita gambler in the world. It was a good place to start because Australians enjoy gaming. The company itself has been around for over 60 years. Over that period of time, it has diversified.
Now, we run three different business units. We have a business unit that’s RMG or Real Money Gaming. It’s a nascent business unit and something we started at the beginning of 2022. We have a second business unit that’s digital-based. Under that digital umbrella, we make games on your phone, tablets and PC. Those are anywhere from social casino games where you can play casino products with coins, not real money, or an adventure game like a raid, which is a more hardcore adventure game. You progress and spend multiple hours playing that game. The company has looked at the business and said, “What are our core competencies, core strengths and core values?” It takes it from there as it expands into other parts of the business.
In terms of employees, is gaming the biggest part of the company?
Yes. We have roughly about 7,000 employees globally. The gaming division is shy of 4,000.
Is the corporate office based in Las Vegas?
Our corporate office is in Sydney, Australia. Our corporate headquarters in the US is in Las Vegas.
You came out with your MBA background at USC. When you were in that MBA program and thinking ahead to the career that you wanted to carve out for yourself, were you thinking about gaming?
I was born in Guatemala City, which is a beautiful place but with limited opportunities. It’s a third-world country. My parents had decided that for us to get ahead in life, we need to come to the US. I won’t date myself but this was back in the ‘80s. I moved to the US when I was about a year old. We were very poor like a typical immigrant family with the big American dream.
I grew up in East LA, so not the best part of town. I went to the public school there. An interesting thing was I didn’t learn English until I was about five years old. We spoke Spanish at home. My parents didn’t speak English. That was the first time in my life when I realized, “I’m different.” As I showed up at school, I had no idea what anybody else was saying. That’s where this concept of love started with me in my experience.
Language is a very important communication tool, but when you have that barrier, humans have this ability to transcend language, whether it’s social cues or even simple things like smiling. That’s where that journey started for me. I attended this public school up until about third grade. The principal talked to my mom.
The other interesting thing at that point as well was we served as translators. Imagine the principal is talking to your parents but you’re translating what the principal says. It gives you a lot of social liberty relative to how well you want to translate the message. The principal talked to my mom and said, “The reality is it is very difficult. If you want your kids to be successful in life, it was difficult to do that through the East LA public schools.” It’s not impossible, just very difficult. It’s more difficult because you’re surrounded by other outside influences.
She said, “Your kids are very intelligent and have a lot of potentials. There’s this program for underrepresented minorities to attend these very fancy private schools. I think you should apply,” and so my mom did. I have two older sisters. We helped my mom fill out this application and they accepted us. If you think about pivotal moments in your life, that is a pivotal moment in my life that changed the trajectory of where I am now. I always tell this about my mom. With the decision she made to leave her foreign country to come to a new country and the unknown, she changed generations. We were all very excited, but I did have to take three public buses to get there.Be willing to work harder than everybody else, to give it your all, to fail, and ultimately love what you do. Click To Tweet
What grade was this?
It would have been fourth grade.
There’s one little piece in that so far that I want to clarify. When you first showed up at school, you didn’t speak English?
At kindergarten, yes.
In this fourth-grade conversation, you’re the translator. Over those first few years, it sounds like you learned English fast. That is not unusual at that age.
It’s not if you’re committed to doing it. One of the things that my mom did well is she made us speak English at home as well, even though she didn’t understand the vast majority of it.
You’re in fourth grade and getting on several public buses to get to the school.
That’s when I fell in love with education. It’s easy when you get dropped off at school, you’re grumpy and you walk into class. It’s a lot of work to take three public buses to get there. I showed up and I was different. I looked, talked and dressed differently. Even though we wore a uniform, I didn’t have fancy shoes. I realized that I had to work a lot harder. In the third-grade class, I was the number one student in the public school. In this fourth-grade experience, I was the last student in the class. I didn’t have the same pedigree.
It’s little things like even going home and the words that you hear at home form a lot of your vocabulary. I didn’t have that, but I would always tell myself my vocabulary is twice as big because I speak two languages. It was a very humbling experience. I remember this one episode where I had forgotten my homework, and my mom had taken three public buses to bring my homework. I told my teacher, “I forgot my homework.” She’s like, “You didn’t do your homework.” I was like, “No, I did my homework. I just forgot it.” My mom shows up. There were no cell phones back then so I didn’t know she was coming. In front of my entire class, my teacher made me thank her in Spanish.
In fourth grade, all you want to do is fit in. The last thing you want to do is be different. That was a very humbling experience for me as well. In those little pivotal moments in your life, you accept, “I am different but can I make this different a positive thing instead of a negative thing?” That was another important thing. I struggled in 4th and 5th grade. I was not a stellar student by any stretch of the imagination, but I worked hard. When I graduated eighth grade, I didn’t win the best student but I won the most improved student. That award probably has meant more to me than anything else I’ve won since.
That is something we take for granted. For awards that we give out at that age, we think, “It’s a nice thing to do,” but it had that impact that you still see how valuable it was to this day.
It was the first glimpse of if I work harder, commit and worry less about what everybody else thinks, I could be the best version of myself. At the end of the day, people forget that. People are always looking and saying, “I want to be that person.” We all have role models. “I want to be more like that person.” What you should be trying to do is be the best version of yourself. That award was a physical representation of me being the best version of myself. I wasn’t the valedictorian in eighth grade, but I was the most improved student in middle school.
I was very fortunate. I went to a very prestigious prep school and did well there. I had gotten the footing underneath me. I wasn’t the valedictorian, but I knew there was no way I was going to be valedictorian. All I could do was be the best version of myself. I went to Claremont McKenna. I found a small Liberal Arts school in California with phenomenal education. I showed up there and was like, “I’m smart. I got into this great school.”
It’s a humbling experience because you’re surrounded by national merit scholar winners, valedictorians, and these incredible minds. All of a sudden, you start from scratch again. In a weird way, life is a little bit that way. It’s starting from scratch and having the resilience, tenacity and ability. My mom passed away but she used to tell me, “You’re the life you’ve built. You’ve done it by scratching the dirt with your nails.” She used to tell me that in Spanish.
Every time I would have a bad day or something difficult happened, I remember that metaphor of physically scratching the dirt with your nails. One of the core values and principles that my mom taught me is tenacity. Be willing to work harder than everybody else. Be willing to give it your all and fail. Ultimately, love what you do. That brings it back. She had this ability to teach me in these very difficult moments to love and appreciate the things that I had been given. Even though I didn’t have the fancy Jordans and she would pick me up in a 1984 Oldsmobile Cutlass Ciera brown that would break down quite a bit while I was in the pickup line, I had gotten an opportunity that most kids with my background had never gotten or would never get.
Where did your sisters end up?If you want to be successful in business, you have to know the language of business. Click To Tweet
My older sister and I got into that first round of private schools. We both went to a school in Pasadena. They couldn’t take all three of us so my middle sister didn’t get into that first round. She had to keep going to public school, but my mom didn’t give up. She kept pursuing it. One or two years later, my middle sister also came to the school with us. All three of us went to this middle school. For high school, they went to an all-girls private school and I went to this prep school.
You gave us this beautiful illustration of how that experience and your mother’s guidance began to shape your priorities and values. Did it manifest the same way in your sisters?
It did in different ways. It’s so fascinating. Sometimes, particularly in the US, success is viewed through a monetary lens and money is an element of it. It’s a smaller element than most people think. My older sister is a very successful head of HR for a grain company in the Pacific Northwest. She is the first female Latina on the executive team. She’s 5’4 but she’s a reckon to deal with. She’s very talented at her job and has raised two amazing boys. We all went to college but my middle sister stayed home for a big chunk to raise her two kids. She just went back to the workforce.
It’s funny because we all have personalities. I hope Karen doesn’t get mad if she reads this, but Karen is your typical middle child. I like to say she’s a Scorpio and her name is Karen. The funny thing is any time we ever need anything done that was hard, Patty who is my oldest sister and I were like, “I don’t know. We’re not so sure. Karen, do you want to call this person? They did something. We need your help.” Karen is like, “I’m all over it.” This concept of happiness and success is different for everybody. In a lot of ways, society in the US measures that financially. At the end of the day, have you gone through life? Have you been happy? Have you loved other people and left this a better place?
When you started into your higher education pursuits, were you one of these kids that always had a clear idea as to what you wanted to do and what you wanted to be in terms of who you are as a human being and the best version of yourself? Some kids know what their career path is going to be from a very early age, which makes the rest of us look like suspects somehow. I was not one of those kids. When did it start to become clear to you what you wanted to focus on as far as your higher education pursuits?
I wanted to be a doctor growing up. Like a very typical immigrant family, you look at professions like lawyers and doctors as the typical thing that you wanted your kids to do. It was the American dream.
Also, Jewish mothers.
I think it’s all immigrant moms. I went to Vermont and had this vision that I was going to be pre-med but I had this doctor in high school. I don’t remember his name but he’s an African-American man. He was a doctor but he ran the hospital. He would only see a handful of patients. I remember talking to him one time, “You went to school all this time to be a doctor but you’re an administrator.” He said, “I’m not an administrator. I try to make all the decisions and tell people what to do.”
It’s these little stories as you look back at your past and I was like, “I want to tell people what to do. That sounds like a good plan.” He explained to me that when you’re a doctor, particularly as health insurance rolled out in the US, it became a very different business and you lost a lot of autonomy. He had gone through med school. He had been a practicing doctor and then gone back and got his MBA, which was how he had made that career transition.
It’s in that moment when I went to college, I was like, “I still want to be a doctor but maybe I want to be more of an administrator.” I took my first Econ class and fell in love with it. I was like, “This is what I was destined to do.” I was destined to be an Econ major. I took my first Accounting class. My Accounting professor at Claremont McKenna said, “Hector, if you want to be successful in business, you have to know the language of business,” which resonated with me.
Remember, I didn’t know the English language when I went to school. I was like, “I want to know the language of business.” That’s how I minored in Accounting. He said, “You can always make a pivot back into a business person but you should start a career in public accounting because that’s where you’ll understand the nuts and bolts of how businesses run, and you get visibility to lots of different industries and companies.” That’s what I did. To answer your question, it has been a journey. I’ve not ever known exactly what I wanted to do for a living but I’ve always listened.
There are a lot of executives out there that have lost the ability to listen because they believe that they have all the answers. The most honest thing that will lead you to success is when you say, “I don’t know the answer and I’m going to listen. We’re going to debate it. I’m going to surround myself with people that are a lot smarter.” Remember my whole life, I’ve been surrounded by people that are a lot smarter than me and that’s okay. It’s a phenomenal thing. One of the principles that we have implemented here as we built out the team is to hire people that are smarter, more competent and have that experience, and then listen.
The advice of listening to others’ ideas and people who are smarter than you is not conventional practice but conventional wisdom. What’s interesting is you use that in reference to yourself and your path. That is how that strikes me. Not being clear on what our direction or purpose is or what we should be doing with our lives is a question that people struggle with, not just when they’re young but for some people, unfortunately, through their whole lives.
More than a sense, there’s full-on anxiety that comes along with it for a lot of people because they feel they should know the answer. What about if you’re in that place where you’re not sure if you can adopt that listening attitude in reference to yourself, engage people in conversation, learn what other people are doing, and listen for those little gems of advice? You were listening. When your teacher and professor said to you to learn the language of business, it meant something to you. He has probably said that to thousands of students over the years. Most people are like, “I don’t want to learn that language.”
I wasn’t the best student either.
I get it. You’re a humble guy but in terms of intelligence and smartness, all that is measured in lots of different ways. You have a level of intelligence that’s very strong on the emotional intelligence side of the equation. It led you ultimately to this place, Aristocrat Gaming. I’m going back to the original question. At what point did you find yourself in this world?Hire people that are smarter, hire people that are more competent, and hire people that have that experience. And then listen. Click To Tweet
The way it worked out is I was working at Western Digital in Orange County where we lived. WD had moved its corporate headquarters to the Bay Area. I had commuted for three years, which I don’t recommend to anybody. It’s not a sustainable lifestyle for sure. They finally said, “We want you to move to the Bay Area.”
The interesting thing about it is outside of my Deloitte job and my P&G job when I had internships at both, those are the only two times that I applied for a job. When WD said, “We would like you to move,” I had been getting calls from executive recruiters but when I’m committed somewhere, I don’t return those calls, which probably is not great advice but it’s how I am.
Given the option that I was potentially going to move to the Bay, I got a call from an executive recruiter who wanted to talk to me about this opportunity. I finally connected with her and she was like, “It’s this company Aristocrat.” I’m like, “I never heard of them.” “They are in gaming.” I’m like, “What do you mean gaming?” She’s like, “They make slot machines, video games and things like that.” I’m like, “I’m not a big gambler.” “It’s in Las Vegas.” Everyone has this idea when you say Vegas that it immediately triggers this neuron response of these fun memories when you get there, and the no fun memories when you realized you’ve forgotten half your stuff there.
I was very skeptical at first. I had been talking to a handful of executive recruiters about other opportunities. There was a biotech opportunity I was talking to. There was another tech opportunity that was in San Jose. I could stay at WD and move to San Jose for this gaming company. I said, “I need to go there with an open mind.” I flew out to Vegas and came to visit the team. I fell in love with the business.
What I’ve realized about the business and the people was we were a technology company that happened to make products for casinos and online. At the fundamental core, we were a technology company. I’m not sure we exactly knew that we were a technology company but we were. We made a piece of hardware and a lot of software. We had a competitive advantage in how we did that. I looked at this opportunity and said, “Talking about being able to put all your skills that you spent a big chunk of your career building to take this business to the next level that was incredibly appealing.” I fell in love with the people. That was the other piece of it.
If I can give some advice to people who are reading, it is that you have to do what you love every day. If you do it for a paycheck or a title, that lasts three months. After three months, you’re pretty unhappy and looking again. I fell in love and then came back to Orange County. I was trying to figure out how do I have my wife fall in love. We’re both very analytical people. She was the valedictorian of her high school. I met her at Claremont McKenna. She graduated third in our class. She was everything that I always was like, “There are people out there.”
You applied the same philosophy. You married somebody smarter than you.
A hundred percent. The key, which I’m always working on, is listening. I will tell you, Steve, 99% of the time, she is correct. I sometimes don’t think it’s 99% of the time but after the fact, data would tell you it is 99% of the time. We had this whole conversation about Vegas and I said, “You need to come to see it.”
Julie Cameron-Doe, who was our CFO at the time, was the Hiring Manager. She did this amazing job. She could have put us on the strip in a super fancy room. She brought us up to Summerlin where the office is located. It’s a suburb of Vegas. She showed us what family life would look like here because she understood that was one of the key requirements. This wasn’t about living by the strip, going to shows and fancy restaurants. She did this phenomenal job of getting us tours at the local schools here. She got us a real estate agent. She met me for coffee. We did this all in three days and Leslie fell in love with it as well.
Sometimes, a lot of people try to show you what something is or is not. You got to almost show people what it can be for you, which is far more important because everyone has a stereotype of what Vegas is. What kind of lifestyle can it be for you and your family? Aristocrat was fourth on the list at the time, and then we started to get a bit serious about it. I joined the company as the CFO in America. I was the finance person. The business was doing very well, but I believe we could take it to the next level.
To give our readers a sense of Aristocrat Gaming, I’ll say that if you’ve ever been in a casino and have ever played the machines, you’ve been on an Aristocrat game. If you go to the website and look at all the games they have, it goes on and on. How many games do you offer? Do you know what the number is?
We have thousands. We’ve been making games for over 60 years. We operate anywhere where gaming is legal from a gaming perspective. It’s a truly global business. The other part I loved about this business is a lot of companies will say they’re global and they’re like, “We have an office in the US and a business in Spain and Canada.” From a digital perspective, we operate anywhere all over the world, anywhere with someone who has access to a phone.
The games we make are tailored to the jurisdiction in a lot of ways. If you’ve been into a casino and played any Buffalo game, that is an Aristocrat game. If you’ve played a game called Lightning Link or Dragon Link, that is one of those once in a generation types of games that invented a whole new mechanic. If you’ve played Golden Spin, you’ve played one of our games.
The other thing that’s become important for us as a business is we used to say, “We make great games. We’re going to play some in a casino, and then we’re going to let the casino operator market the games and manage the casino.” One of the things we’ve changed that I learned at Procter & Gamble is I tell this to people all the time, I’m not a genius by any stretch of the imagination. Smart people replicate great ideas. That’s the reality. Someone who tries to come in and change the world from scratch usually doesn’t work.
I’ve been very fortunate to work at these premier Fortune 50 companies. All of the things that we’ve done at Aristocrat, I’ve taken from the experience I’ve had there. I learned at P&G that you could sell a product to a consumer and form an emotional connection. One of the things that we’re doing from an Aristocrat perspective is we’re building out the brand.
When you walk into a casino, instead of saying, “I want to play Buffalo and we know Aristocrat makes that,” which you may still say, you may say, “If I enjoy Buffalo, I want to play Cash Express because we know that Aristocrat makes that as well.” It’s about building the brand and we call this direct-to-player marketing or having the player drive the demand versus just the casino operator. It’s different things that we’ve done from a business perspective. There’s nothing that we invented. We took everything from other places that have led to success in the business.Smart people replicate great ideas. Click To Tweet
Applying it in the gaming industry, was that different?
It’s different from the standpoint of it’s a highly regulated industry. It’s more regulated than any other industry I’ve ever worked in. I worked in pharma, which is very regulated as well. You have to make sure you understand the rules and regulations because if not, you can get into a lot of trouble. One of our core principles at the company is this concept of responsible gameplay or we call it RG, which is we are in the entertainment technology business. We do not want people to abuse that. We spend quite a bit of money and resources around this concept of responsible gameplay.
I’m a huge Warriors fan and I was watching the Warriors win. There was this clip of Steph Curry when he first entered the league. They asked him, “What do you want your legacy to be?” He’s like, “I want to be a good player and teammate. I want to win, but I want to win in the right way,” which a lot of people forget. I tell my team all the time, “We’re in the business of winning. We want to win, but you want to win in the right way. When you go home and you talk to your kids, walk your dogs, and do any other aspect of your life, you want to feel good about what you did. You don’t want to feel bad.”
This winning and winning in the right way is what drove this concept of love. We’ve always had a great culture at Aristocrat but COVID changed our culture because we came up with this mantra, “Our people, our customers, our business.” It was a mantra that when you read it back, it’s a no-brainer. A lot of people say, “Our customers are number one,” but we redefined that and said, “Our people are number one, our customers are number two, and the business is number three.”
That very simple concept came up in a very terrifying part of our history. If you think of our business at the time when COVID hit on the gaming side of the business, revenue went to zero. It’s outside of bankruptcy. Even in bankruptcy, you’re usually making some money. It’s very rare for the business to go from a very robust business to zero.
People, customers and business, that to you is doing business “the right way.” Was that articulated before you took over the position of CEO or did that come about once you were in that position?
We had a core value for a long time of good business, good citizens. The company has always believed in that, but this concept of love which started with our people, our customers, our business, we had not articulated that before in that order.
How did it come about?
It came about when COVID was with us. We had to make a decision very quickly and everyone went to remote work.
Was that pre-COVID, after COVID or during COVID?
It was during COVID.
Is that when you articulated that for the first time?
Yes. Everyone was leaving the building to go work from home. You’ll hear me talk a lot about things. I feel like human beings can only process three things at a time. Everything we ever do is three things. For any more than three things, they leave that for a textbook. We said, “We have to evaluate what the business impact is and figure out what are the decisions we have to make.” The most important thing which I believe differentiates us is we need to figure out what we’re going to do in recovery.
As COVID was happening, most businesses focused on, “We need to evaluate the impact on the business and figure out the decisions we need to make.” They stop there because no one knew what the future held. I’ve been through some economic shocks as all of us have. One of the things that I learned and stuck with me is companies that invest through the economic downturn and believe in the future of the business usually gain significant shares through that period of time.
It’s hard for people to see because everyone is a little bit in chaos and panic mode. Those are the companies that leapfrog competitors. We spent the vast majority of our time figuring out what would our recovery look like, and what actions we would put in place to make sure we were prepared for the recovery. That is what led us to this principle, “Our people, our customers, our business.” We realized, “We’re going to have to make some short-term decisions here.” Like every business, we had a small layoff, furloughs and pay cuts, but we’re going to do it the right way and over-communicate that.
We developed an app that we use for trade shows to be able to communicate to employees that were furloughed so they could still get news. We pushed news to them every single day. We gave them a huge heads up before we had to furlough them. One of the magical things we did is we were having this debate around our service techs. Our service techs are the ones that install, repair and move machines. It’s the most important external-facing role, even more than a salesperson because they’re there at the casino every single day. As you can imagine, casinos are shut so we had to furlough a big portion of our service techs.You don't get to write the story along the journey. It gets written post those decisions. Do what you love in the service of people who love what you do. Click To Tweet
We were having this conversation internally. “Let’s say a casino opens up. How much time is it going to take for us to unfurlough someone?” We had some internal meetings and they said two weeks. I was like, “What’s happening in two weeks?” They were like, “We will collect their badges, computers, vans and all the equipment. We have to shut down payroll and do all these things.” I said, “Why? They’re our employees.” They’re like, “They are furloughed so technically, they’re not our employees during that period of time.” I said, “They are still our employees.”
They’re like, “How can we do this in less than four hours?” I was like, “Four hours? You told me two weeks. What if we let them keep their badges, trucks and equipment? What if we don’t shut down email access? What if the only thing we shut down is payroll and we continue to pay health benefits?” It’s the other decision we made as a business. They were like, “There’s a lot of legal liability to that.” I was like, “Tell me about that.” “If they drive the truck and get into an accident or they log onto their computer and we’re not paying them.” I said, “We hired and trust these people so that’s what we’re going to do.” It’s not a complex idea. They looked at me like I was insane. That’s what we did.
Who’s the they that you’re talking about? Is it internal staff?
Yes. I was also getting outside counsel opinions. I talked about these small pivotal moments, whether it was showing up to school not knowing the language, taking three buses or accounting is the language of a business. That single decision that we made had massive implications. Here’s why. Number one, we communicated that to our team and we were very transparent about, “This is the liability that we are assuming if you drive the truck again to an accident.” We didn’t leave it up for chance. We said, “This is a liability.”
Number two, “We trust you. We trust that you’re going to do the right thing.” Number three, “As this COVID event unfolds and we’ll see what happens, the second we see first signs of life, we’re going to turn you back on. By the way, we left you all the equipment.” We think about the feeling of someone that’s getting furloughed and you take all the equipment back. There’s this feeling of loss and feeling like, “I may never get this back. We left it all there.”
When we saw signs of life, here’s the interesting thing. About a quarter of our service techs never got furloughed because we gave them a big heads up about what was happening and we kept paying them. There was a furlough date that started and casinos started to open up before that date. Not four hours but within 30 minutes, payroll switched them back on. They can get into their truck. They had their badge and email access. We were the first to mobilize to a casino.
Remember, we wanted to win the right way. We move competitor products. We could have said, “None of our competitors did this. They’re two weeks out,” but we said, “At the end of the day, we’re part of the partnership. It’s a long-term strategic partnership. We’re going to help you move competitor products because we have the physical manpower to do that.” That’s what we did.
When you say move products, what do you mean? Physically move products?
Yes. At the time, a lot of casinos had to redo their layout because of social distancing. They had to move either from long rows of slot machines to circular pots to create spacing or they had to move slot machines 6 feet apart to create spaces.
To be super clear about this. Because of the trust that you extended to your team, you left everything in place other than the payroll. Because you did that, as soon as the casinos opened up again, you were there. Your competitors did not do things the same way. They weren’t there because they had to get their trucks, equipment and badges back to their folks.
Therefore, you were in the casino when your competitors were not. All of the machines had to be moved. You could have said at that point, “That’s not our machine. We’ll move ours. You casino people, that’s your problem.” You didn’t do that. Instead, you said, “You casino people are our partners. It doesn’t matter who made the machines. We’re here so we’re going to help you move them.”
That’s right. Internally, when we’re having this discussion, they’re like, “What are you going to ask in return for that?” “This is a long-term strategic partnership. We’re going to ask for nothing.” They looked at me like, “Are you really a finance person?” This goes against all core principles and values. We asked for nothing. We launched an Aristocrat assist program that also had other benefits to help casinos get up and running.
We got to a casino before it even opened. They would tell us, “We’re going to open in 2 to 3 weeks.” We would get there that day. They hadn’t even unfurlough their people. In a lot of instances, we were the first ones on the casino floor including their people. Guess what happens when the service techs showed up? They were so thankful for how we had treated them and for the transparency, trust and love that we had shown them. They showed our customers that right back.
We have all these amazing pictures. I’ll always remember this for my entire career. There would be pictures of our machines and there would be a competitor machine in between our two machines. Our two machines would be turned on. The competitor machine was turned off. They were using our competitor machines to social distance our machines. That’s a magical moment.
At the moment as you’re making these decisions, what people don’t realize is it’s not like we had thought that three years later, this is what the outcome will be. You have to go back to your core principles and core values, and do what you believe is right. The story gets written. You don’t get to write the story along the journey. It gets written post those decisions.
There’s an old saying that has been attributed to many different people over the years. I don’t know who originally said it. It’s like, “Adversity doesn’t build character. It reveals it.” What happened when your business went to zero in the early days of COVID, it revealed to you who you are and what’s important, “Our people, our customers, our business.” You acted on that basis as opposed to some of your aforementioned competitors, but we also saw it in all kinds of industries.If 40% of the days you dread going to work, you need a new gig. Click To Tweet
It wasn’t, “What do we need to do now to prepare for the recovery?” It was, “What do we need to do to survive today?” It is not a terrible question but it becomes something of terrible consequence when at that moment, the values that you have set are important go right out the window because suddenly it’s inconvenient or it doesn’t make sense on the balance sheet in the traditional way. It’s a great illustration of going back to that groundedness.
I haven’t thought about this for a while but back in the early days of the COVID, I remember telling people in my talks and virtual stuff that I was doing that this is temporary. We don’t know when it’s going to pass but it will pass. Now more than ever, we’ve got to be focusing on what the future we want to create and what we want the future to be like. Let’s start working on that now.
The way you approached that was getting it right down to the tactical side of that question as well, which is brilliant. The culture then at Aristocrat Gaming is a personal thing to you. You’ve used the word love several times but that word doesn’t necessarily show up in your company communication and language or does it?
It does now.
What does that look like?
This is how I came across the book. In the middle of COVID, one of the things we realized was communication was a huge challenge. We have a lot of furloughed people and there was a lot of uncertainty and anxiety as you can imagine. We all felt that. It’s not like any of us didn’t feel that. We started doing these things called office hours or coffee chats. It was one hour with me and the team. I would usually have a guest. It was about downloading information with no script, no slides, and open-ended.
I remember the early days of that when you would get a handful of people. All of a sudden, there were hundreds and hundreds of people that were showing up over these things. No script for an hour to fill that is daunting. We started having these very honest conversations about the struggles, challenges and uncertainty. We started talking about how we cared for each other and how we all felt the same way. To a large degree, we had taken pay cuts. We were all in a very similar situation.
I remember this woman, Sandy, who works for us. She sent me an email and said, “I read this book. Everything that we’re doing at Aristocrat reminds me so much about the book.” I’ve shared this with you. I’m not a huge business book reader but I have read this book. I ordered it and read it. As I was reading it, I was having these a-ha moments like, “These are the things that we have done.” Without reading the book, these are embedded in who we are and what we care about.
I love the book, Love Is Just Damn Good Business, which I fully buy into because it goes into this concept of our people, our customers, our business, but the subheading is equally as powerful, Do What You Love In The Service Of People Who Love What You Do. We use this language of love and we talk about love. Sometimes, we will say, “I love you in a work-appropriate way.” You always have to be mindful of that. It’s more feeling the emotion than even the words.
It’s easy to say you love something or someone like, “I love coffee,” but it’s the actions. It’s the things that you do when no one is looking or when decisions are hard. One of the things that we have found is we haven’t compromised that order of decision-making. In every decision that we’ve had to make since the start of COVID, we’ve used our people, our customers, our business.
We’ve told investors and our customers that. I’ve gone out and told our customers, “You’re number two. You’re not number one.” They’re like, “What?” “Our people are number one. If our people aren’t number one, they won’t treat you in that same way. Therefore, it doesn’t matter if you’re my number one. I don’t see you that often.” It’s an interesting phenomenon that has happened.
I’ve talked to other CEOs that run casinos and sent them the book. It’s this magical thing that people are like, “Yeah.” Here’s why. I was walking into the building. Every single time I walk into the building, I always think that I am a fortunate human being that I get to walk into these beautiful buildings and be part of this team. I love what I do for a living and there are people here that love me. No amount of money, proceeds or title can ever make up for that.
It goes back to that concept where a lot of times people are always searching for what they want to do or don’t know. It’s because they haven’t fallen in love with anything yet. A big issue with social media is you’re constantly reading this fictitious overly dramatize happiness that everyone else is living. As you’re reading it, you’re like, “I’m not that happy. I wish I looked better in a swimsuit or had a nicer car.” It’s this whole “I wish I had” that is ruining everyone’s experience in a lot of ways.
You should love what you have now and love the experiences you get to do now. It’s not something I’ve known my entire life. It’s something that I’ve had more time to reflect on as I’ve gotten older and my kids have gotten older. The journey is far more important than the destination. If you can’t wake up every single day or at least the vast majority of days and look forward to going to work, or if 40% of the days you dread going to work, you need a new gig.
I encourage people even in our organization, “If that’s how you feel, you need a new gig. It’s not because I want you to leave but because you’re not showing up as the best version of yourself. You won’t show up as the best version of yourself until you feel that love, energy and passion, and showing up in these four walls not for yourself, but for everybody else around you that’s depending on you.”
You’ve made it part of your practice as a leader to maintain personal contact with essentially all 4,000 employees. You’ve been able to do it virtually with your fireside chats, town halls and all of that. How concerned are you that this love-based culture at Aristocrat Gaming is dependent on you as a personality? How much of it has become systemic in the way you guys work? Is that a concern for you at all?Our customers will tell us more than what the numbers say. Click To Tweet
It is always a concern because it’s this magical thing we have discovered. It’s what differentiated us. It’s what has driven insane business results.
Can you share what some of those results have been?
We’re an Australian-only publicly traded so we disclosed earnings twice a year. We get the benefit of seeing what our competitors do every quarter. We don’t have to disclose those earnings for six months. For the half, we had the largest half in gaming ever. Think about that. It has been a little bit two years since COVID. When a lot of people said the world was going to come to an end, everything was going to move digitally, the physical casino was maybe not going to exist, and our business went to zero, we delivered the largest half we have ever delivered at the company.
We have gained more share in the last two-plus years than we ever had in that short period of time. We almost spend no time talking about it because of the people and customer element of it. That love and that magical thing we have discovered is the precious fragile thing we worry about. We all have headaches. We have to deal with lots of fun things from a business perspective. We spend very little time talking about numbers or almost none. We look at what the results are for month-end. We do a little bit of analysis. We keep talking to our customers because our customers will tell us more than what the numbers say.
One of the things that we’ve been working hard lately is how do we ingrain this love into the culture? The reality is great leaders leave the place better than they found the place. A poor leader is someone that makes something great, leaves, and then falls apart. If you were going to ask me what keeps me up at night, that is one thing that keeps me up at night. It is making sure that one day, when I retire or go do something else, this place is better than I started and it sustains. It is something a lot of leaders don’t spend a lot of time thinking about.
The very day that I got promoted to this role, one of my first thoughts was, “Who’s going to succeed me in this role?” That’s usually not what you think the very first day. A lot of leaders go into protect mode and say, “I have this job now. I need to protect it from everybody else’s trying to get it.” I buy into the philosophy of creating a sustainable business with succession planning. What you want to do ultimately is work yourself out of a job. That has been my experience my whole career.
Make sure that whatever worked for you while you were there has become part of the DNA of the organization. Every place has a culture, whether you pay attention to it or not. You have built an intentional culture. It will be part of your legacy or not. Make sure that it’s part of your legacy. I wish every leader thought about this.
More than once in my several decades of doing this work, I’ve seen incredible cultures get created around a particular leader and then that leader leaves. Overnight, I’ve seen it crash and burn. The main reason that it happens is because that leader did not think through that eventuality. Ironically, they were great leaders because they created that culture. In retrospect, perhaps they are a little too ego-driven. It’s about, “Look how great I am. I’m a great leader. Look at this great culture I’ve created. See you later. You’re on your own.” It then crashed and burned.
That’s a great perspective for all of us. Through your whole story from when you were that young immigrant student who didn’t speak the language to now, the thread that runs through all of that to me is the curiosity about the world around you, the willingness to hear perspectives from other people, and incorporate that into who you are.
Especially in the context of a worldwide challenge known as COVID, it brought about that reflection. If that was the natural response that most of us had to any challenging scenario, that is to reflect on it and ask, “What can I learn from this? What does this reveal to me? How can this help me be a better version of myself? How can it help us be a better version of this company?” We would all be in a lot better shape.
I think so too. If more people buy into this concept of love and accept who you are and who you’re not, it would make life a lot easier. I was never going to be the valedictorian but to your point, I married one. People would stop chasing what they don’t have and appreciate what they do have. If there’s something they didn’t have that they wanted, then they could create a pathway to work towards that versus saying, “I want that tomorrow.”
The one thing that I would encourage you to do is to think about your language a little bit. You’ve several times referred to this as the concept of love. What you’ve demonstrated is that this is not a concept to you. This is a practice. Your examples about how you’ve dealt with the furloughs and the kind of communication that you have are not conceptual but observable. What an inspiring example of how love is a practice and not a concept through what you’re doing there. It’s a real pleasure to know you. I’m so excited to share your story with the world. One last thing that I’m going to ask you to talk about is your idea for the next twelve hours.
Steve and I have been talking about this concept that I’ve been considering maybe in retirement, although Steve encouraged me every day to write a book. I’m a big believer in this concept of the next twelve hours. When you go home, what your personal life is, what your family life is, and how you feel will either drain your cup or fill your cup.
A lot of corporations don’t do a lot of investigating or ask any questions. There’s this reticence to ask any questions about your personal life. What I have found in my career is the greatest determination of the success of an individual is if you can figure out what their next twelve hours look like. If they go home, are they happy? Therefore, when they wake up in the morning, do they show up happy and full of love because they got a lot of love back at home? There hasn’t been a lot written about that next twelve hours and how you would judge executive performance and executive success. As I told Steve, when I retire, I’m going to write this book, although he keeps telling me to start it now.
From my experience, I have been very fortunate that I married a valedictorian. We didn’t spend a lot of time talking about this, but the single most important thing to me in my life is not my title, my pay, my success or my failures. It’s the fact that I’ve been married to my wife for 21 years. The biggest legacy that I would like to leave behind and hopefully, I’ll live into my 80s and 90s, is the fact that I’ll stay married to my wife for 50-plus years. That’s a testament to good times, bad times, ups and downs, and the move to Vegas. Maybe in the next twenty years, that book will get written.
The idea behind it is that we should be paying attention to the whole human being, not just who they are when they show up at work and leave work, and that’s the end of that, but to give them inspiration, guidance and help in the next twelve hours. We don’t see them when they’re with their families. Also, to treat people as the truth of who they are, which are human beings, and not somebody that is segmented into the working person and the personal life person.Great leaders leave the place better than they found the place. A poor leader is someone that makes something great and then leaves and it falls apart. Click To Tweet
We play different roles and do different things certainly but we’re the same human being with the same DNA, emotions and everything else. If I’m drained in one place, I’m going to be drained in the other and vice versa. It’s a beautiful perspective. As we bring this in for a landing, Hector, what’s a good way for people to reach out to you if they want to learn more about you and the company or if they’re looking for a new career perhaps?
The best way is through LinkedIn. It’s the only social media that I’m on. If you google Hector Fernandez, that would crash the internet, but if you add Aristocrat, usually one of the first things that will pop up is my LinkedIn profile. Feel free to add me and reach out.
Thank you for sharing this amazing story with us, Hector. You’re going to give a lot of inspiration to a lot of people. I appreciate it as well. It’s a pleasure getting to know you and I’m looking forward to more.
You as well, Steve. I appreciate the opportunity
Folks, thanks for reading. Until next time. As Hector would say and me too, do what you love in the service of people who love what you do. See you next time.
About Hector Fernandez
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