Legendary investor Carl Icahn once walked through a company he had just taken control of and tried to understand what entire departments actually did, but he couldn’t figure it out. So he fired them all at once.
The founder and controlling shareholder of Icahn Enterprises (NASDAQ:IEP) used the story to explain how deeply inefficient some companies can be, and why activist investors like him step in to make drastic changes.
After buying into the business, Icahn said he tried to understand how it operated. He spent days going floor by floor, talking to employees and taking notes. But something didn’t add up.
“[I] go back home, take a look at my yellow pad, I can’t figure out what the hell they do,” he said at the New York Times’ DealBook conference in 2015.
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The confusion only grew. Executives told him the work was too “arcane” to understand. Consultants were brought in and paid a hefty fee to explain it. Their conclusion? They couldn’t explain it either.
“You’ve been square with us, Mr. Icahn. You seem like a good guy, so I’m going to tell you something,” Icahn recalled what the consultants told him. “We don’t know what they do either.”
That was enough.
He reached out to an operations leader in St. Louis to get a clearer picture. The answer was straightforward.
“Get rid of all of them tomorrow,” the executive told him.
Icahn did exactly that. He shut down 12 floors of staff in one move. What surprised him most wasn’t the backlash; it was the lack of it.
“It was like out of a science fiction movie. It was like they never existed,” he said, adding that he didn’t get complaints, calls, or disruptions to the business.
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For Icahn, the story reflects a broader issue he sees across corporate America.
He argued that many businesses are weighed down by inefficiency, weak leadership, and boards that don’t challenge management. In his view, activism isn’t more than chasing quick profits; it’s about stepping in where accountability is missing.
“There are many companies in the country that are very well-run, but many are terribly run,” he said at the DealBook conference. “You have people that run companies that aren’t bad people, but shouldn’t be running the companies, they’re way over their heads, or they have different agendas.”