WEBVTT - Businessweek Extra - John Byrne

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<v Speaker 1>This is Bloomberg Business Week from Bloomberg Radio. I'm Jason

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<v Speaker 1>Kelly and I'm Carol Masser. Welcome to the Bloomberg Business

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<v Speaker 1>Week Extra. It's our weekly podcast bringing an in depth

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<v Speaker 1>interview you will not hear anywhere else. And Jason, there

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<v Speaker 1>was a lot going on this week and it also includes.

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<v Speaker 1>Just about one week ago, we got news of the

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<v Speaker 1>passing of legendary iconic CEO of General Electric, Jack Welch,

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<v Speaker 1>certainly well known to many of our listeners. That's exactly right,

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<v Speaker 1>and lucky for us, we had an inside track to

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<v Speaker 1>talk to someone who knew him incredibly well, the co

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<v Speaker 1>author of his autobiography, Jack Straight from the Gut. That's

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<v Speaker 1>John Burne. Check it out. Jack Welch, so much talked

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<v Speaker 1>about former chairman and CEO of General Electric. He passed

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<v Speaker 1>away one week ago at the age of eighty four.

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<v Speaker 1>Someone who knew him beyond the headlines that most of

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<v Speaker 1>us read is John Burne. He wrote the book with

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<v Speaker 1>Jack Welch. It's his autobiography. It was entitled Jack Straight

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<v Speaker 1>from the Gut. He spent a lot of time with them,

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<v Speaker 1>more than a thousand hours of full year, a level

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<v Speaker 1>of intimacy really no journalist Cats with a source and

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<v Speaker 1>a friendship that certainly continued. John joins us from San Francisco.

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<v Speaker 1>So I have to say John, first, condolences. I know

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<v Speaker 1>that he was a close friend and mentor, uh and

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<v Speaker 1>someone who gave you a lot of advice over the years, unvarnished.

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<v Speaker 1>What was your first thought when you heard that he

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<v Speaker 1>had passed, Well, there was a sense of sadness. Um.

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<v Speaker 1>He was really a larger than life figure. And I

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<v Speaker 1>know that's almost a cliche, but in his case it

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<v Speaker 1>really fits. He squeezed every precious moment out of every

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<v Speaker 1>minute in his life, uh to get the most out

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<v Speaker 1>of it. He was fun to be with. Uh. He

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<v Speaker 1>could be a very um scary character when he got mad. Uh.

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<v Speaker 1>He was remarkably intense. He Uh. He was wickedly smart. Um.

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<v Speaker 1>And when you were in his orbit, you somehow spell special. Um,

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<v Speaker 1>you didn't feel ordinary anymore. Uh. And that was the

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<v Speaker 1>kind of magic that he had with a lot of people.

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<v Speaker 1>And he was very much a people person, I mean

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<v Speaker 1>he um. And he would go right to it. Well,

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<v Speaker 1>so what what whatever, Wherever there was some something that

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<v Speaker 1>he could provoke, he would provoke it. Before you wrote

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<v Speaker 1>the book with him. UM, and I think two thousand one,

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<v Speaker 1>you actually first got to know him back in and

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<v Speaker 1>you wrote a story for Bloomberg or what was Business

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<v Speaker 1>Week at that time. It became the longest UM cover

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<v Speaker 1>story in the magazine's history. Take us back, that was

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<v Speaker 1>what was your first impression of him? What was the

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<v Speaker 1>first time you met him and sat with him? UM?

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<v Speaker 1>Do you remember that? Sure? Well, contrary to what people think,

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<v Speaker 1>he never sought the limelight. The limelight sought him, and

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<v Speaker 1>it was difficult for him to actually sit down with

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<v Speaker 1>a journalist. UM. It took me a year to gain

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<v Speaker 1>access to do that cover story. So but once he

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<v Speaker 1>opened the door, he completely opened the door. I spent

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<v Speaker 1>four months. I interviewed well over fifty executives in the company.

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<v Speaker 1>I traveled all over the country to different divisions, and

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<v Speaker 1>I interviewed him multiple times. And the story really told,

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<v Speaker 1>UH the sort of narrative of how did this one

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<v Speaker 1>guy have so much influence over this massive global corporation

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<v Speaker 1>with three hundred and fifty thousand employees and a range

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<v Speaker 1>of business that was truly mind boggling, from appliances and

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<v Speaker 1>light bulbs to aircraft engines and UM, the aircraft engines

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<v Speaker 1>and power generation equipment. Um, how does everyone know him

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<v Speaker 1>as Jack? And how does he wield this influence? And

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<v Speaker 1>it really got inside the motivational techniques that he used

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<v Speaker 1>to get performance out of the company. He would do

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<v Speaker 1>these handwritten notes that became prized within uh GE to

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<v Speaker 1>people who really made a difference and uh and those

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<v Speaker 1>things hung in their offices and they were just like

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<v Speaker 1>the amazing, most best honor you could ever get. UH.

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<v Speaker 1>So I got to know whom there. And then as

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<v Speaker 1>he approached his retirement two and a half years later,

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<v Speaker 1>he came to me and asked if I would help

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<v Speaker 1>him write his memoir. Of course, there was no hesitation.

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<v Speaker 1>I agreed to me that experience was like having a

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<v Speaker 1>PhD in management or leadership. I did, in fact, spend

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<v Speaker 1>well over a thousand hours face to face one on

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<v Speaker 1>one with Jack. Uh. It was the most grueling experience

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<v Speaker 1>of my life. We fought a lot over what should

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<v Speaker 1>be included, what shouldn't be included. UH. He was very demanding.

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<v Speaker 1>We went through many, many, many drafts. I can tell

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<v Speaker 1>you some of the chapters went through something like eighteen

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<v Speaker 1>twenty drafts. We'd sit side by side after I would write, uh,

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<v Speaker 1>and to make the manuscript his own. He would go

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<v Speaker 1>over every paragraph, every sentence, every word. We'd fight over

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<v Speaker 1>commas and dashes. So one time, after scribbling all these

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<v Speaker 1>notes all over the pages, UM, he turned to me,

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<v Speaker 1>grabbed my arm, looked me in the eye, and said,

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<v Speaker 1>you're gonna mess this up, aren't you. He used a

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<v Speaker 1>more colorful than mess it up? Okay, but that was Jack. Yeah.

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<v Speaker 1>And so what did you learn about him in that process?

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<v Speaker 1>About him as a human, because again, the intimacy that

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<v Speaker 1>you gain over that many hours and over telling someone's

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<v Speaker 1>life story in that level of detail, what did you

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<v Speaker 1>learn about him? Well? I learned that one of the

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<v Speaker 1>remarkable characteristics that he had was his love for people.

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<v Speaker 1>And while he could be incredibly tough on people, um,

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<v Speaker 1>literally beat them up, he also just as easily could

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<v Speaker 1>come over to them, wrap his arms around them, and

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<v Speaker 1>tell them in the most genuine way possible, I love you, UM.

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<v Speaker 1>And that meant a lot to people. And he rewarded

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<v Speaker 1>people incredibly generously. You know, we often think, uh, in

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<v Speaker 1>Silicon Valley and I'm here in the Bay Area that um,

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<v Speaker 1>these companies are very generous and buy a lot of

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<v Speaker 1>talent with stock options. Well you know, jack us stock

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<v Speaker 1>options very effectively in a big conglomerate made tens of

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<v Speaker 1>thousand people uh millionaires as a result. So if you

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<v Speaker 1>performed and really did well by the company, you did

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<v Speaker 1>well by yourself because he made sure that you were

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<v Speaker 1>generously awarded for your work. So his intense focus on people.

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<v Speaker 1>People were everything to him. He spent an extraordinary amount

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<v Speaker 1>of time teaching at Crotonville Gees Center for Education. UH.

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<v Speaker 1>He spent an unbelievable amount of time in personal reviews

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<v Speaker 1>getting to know all of the top management and leaders

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<v Speaker 1>in the company. He was a meddler. He violated the

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<v Speaker 1>chain of command every single day, sometimes reaching down in

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<v Speaker 1>the organization five layers and having people report to him

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<v Speaker 1>over years, like on a weekly basis, UH if they

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<v Speaker 1>had a particular challenge or problem that they needed to

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<v Speaker 1>solve that he felt was important to the company. And

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<v Speaker 1>by by reaching that far down and violating the chain

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<v Speaker 1>chain of command, he that's how he became Jack to

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<v Speaker 1>to everyone in the company, even though there are three

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<v Speaker 1>hundred fifty thousand employees all over the world. John I

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<v Speaker 1>will say, I have an uncle who worked for a

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<v Speaker 1>general Electric for a long time in Connecticut, would talk

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<v Speaker 1>about I mean, referred to him as Jack and he

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<v Speaker 1>would come to you know, factory floors or plants. Um.

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<v Speaker 1>You know. He was certainly was somebody who was very visible.

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<v Speaker 1>I do wonder I want to go back to the

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<v Speaker 1>process of you writing, because there was somewhere I read,

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<v Speaker 1>you know, Jason mentioned a thousand hours you spent. You

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<v Speaker 1>spent so much time with him, but you were doing things.

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<v Speaker 1>Sometimes it was over pizza and beer, microwave popcorn. Uh,

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<v Speaker 1>sometimes a great bottle of Bordeaux. I do wonder what

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<v Speaker 1>was he like because here's somebody who, when he left

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<v Speaker 1>the job, got an incredible payout. I think of, you know,

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<v Speaker 1>hundreds of millions of dollars, you know, but somebody who

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<v Speaker 1>kind of worked his way up. Um, what kind of

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<v Speaker 1>guy was he? Because he was someone who achieved an

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<v Speaker 1>incredible level of success. But it seems like he also

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<v Speaker 1>found great joy and some very simple things. Uh he did,

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<v Speaker 1>and and the truth is okay. So he's the first

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<v Speaker 1>generation college grad. His dad was a railroad conductor. Uh

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<v Speaker 1>he Jack did have a PhD. Uh and engineering. But

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<v Speaker 1>he was as simple and straightforward as you could ever

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<v Speaker 1>imagine someone Um. He used a lot of colorful language.

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<v Speaker 1>He had a lot of fun with the life. Uh,

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<v Speaker 1>simple things meant a lot to him. I'll tell you

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<v Speaker 1>one story that I remember very vividly. I went to

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<v Speaker 1>his home. He had a vacation home, and then talk

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<v Speaker 1>at a beautiful place. And we went out to a

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<v Speaker 1>charity function for a charity that he was supporting. And

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<v Speaker 1>we came back that night and they had a guesthouse.

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<v Speaker 1>I was staying at the guesthouse. So the moment I

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<v Speaker 1>walked in the guesthouse to phone rings, I pick it

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<v Speaker 1>up and it's Jack and Jack is yelling on the phone. Also,

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<v Speaker 1>he spoke very loud. Uh. He was yelling on the

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<v Speaker 1>phone in his raspy voice. John, John, come outside, Come outside.

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<v Speaker 1>So I walked outside and then he's I see him

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<v Speaker 1>on a deck overlooking the guesthouse, and he's yelling at me.

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<v Speaker 1>Look up, look up, look up. And it is a

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<v Speaker 1>beautiful night. The stars are shining. It's kind of magical.

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<v Speaker 1>And then he shouts, isn't that incredible? So so he's

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<v Speaker 1>that kind of guy, right. I'll tell you another story

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<v Speaker 1>that's um that told me a lot about him, or

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<v Speaker 1>at least reinforced the things that I felt about him.

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<v Speaker 1>You know after he left ge Uh there was a

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<v Speaker 1>big bruhaha. Uh, in part because his second wife filed

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<v Speaker 1>divorce papers, um, and outlined a lot of perks that

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<v Speaker 1>he had that that we're actually quite embarrassing to him.

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<v Speaker 1>But what happened is, Um, this is about six months

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<v Speaker 1>after our book was published, and it was published, incidentally,

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<v Speaker 1>on September eleven. The September eleven was on the bestseller

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<v Speaker 1>list for six months. Um. But here we are, six

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<v Speaker 1>months after the fact. At my weekend home. It's Sunday night,

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<v Speaker 1>something like eight thirty at night, and the phone rings.

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<v Speaker 1>I pick it up. It's Jack, and Jack is telling

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<v Speaker 1>me that in the following morning, the Wall Street Journal

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<v Speaker 1>is going to run a story that's going to report

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<v Speaker 1>that he has a relationship with the editor of the

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<v Speaker 1>Harvard Business Review, and he wanted to let me know

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<v Speaker 1>that that was true, that he loved this woman, and

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<v Speaker 1>that if anyway I felt disappointed or betrayed in him,

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<v Speaker 1>he wanted to apologize to me. And I thought, wow, okay.

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<v Speaker 1>Number one, he didn't have to do that. Number two,

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<v Speaker 1>he was being totally accountable and taking whatever painful consequences

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<v Speaker 1>would result from this story, in this uproar that would

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<v Speaker 1>occur over it. Uh. And he's really incredibly human and

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<v Speaker 1>and loyal to a friend because he didn't want the

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<v Speaker 1>friend to think, um, that he had disappointed him. And

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<v Speaker 1>I think that just tells me so much about the

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<v Speaker 1>quality of this man and how he lived his life.

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<v Speaker 1>And so, John, as you read and hear everything that's

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<v Speaker 1>been written and talked about since Jack's death, what do

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<v Speaker 1>you make of it? What do you make of his legacy?

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<v Speaker 1>Because it's fair to say from a business perspective, it's

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<v Speaker 1>a complicated one, given you know what has happened to

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<v Speaker 1>Ge specifically, and even some of his lieutenants who went

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<v Speaker 1>on to other jobs, some very successfully, uh, some maybe

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<v Speaker 1>not so much, and some questions raised there. What do

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<v Speaker 1>you make of it? As someone who we should point

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<v Speaker 1>out a little brag for us. Uh, you wrote more

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<v Speaker 1>Business Week cover stories than any person in history, so

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<v Speaker 1>you know a thing or two about business. What do

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<v Speaker 1>you make of his business legacy? Here's the truth of

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<v Speaker 1>it is that, Look, anyone who lives a meaningful life,

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<v Speaker 1>anyone who makes a very big difference in this world, um,

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<v Speaker 1>is going to have some flaws or imperfections that the

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<v Speaker 1>media is gonna jump all over so you know you

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<v Speaker 1>can read. Um. There was one piece in the New Yorker,

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<v Speaker 1>for example, that basically said, the reason why there is

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<v Speaker 1>a Bernie Um, a Bernie sand is because of Jack welch.

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<v Speaker 1>Or there's a columnist in the Washington Post who wrote

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<v Speaker 1>about the toxic legacy of Jack Welch. Uh. And when

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<v Speaker 1>they write about these things, what they talk about is

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<v Speaker 1>what they consider to be his focus on the short term,

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<v Speaker 1>his focus on shareholder return as opposed to a broader

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<v Speaker 1>stakeholder theory of how a business should be run. Uh.

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<v Speaker 1>The truth is he was hardly a short term manager

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<v Speaker 1>because for twenty years he was CEO and chairman of

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<v Speaker 1>GE and for twenty years that company performed exceptionally well.

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<v Speaker 1>That is not a short term manager Number one, number

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<v Speaker 1>two in terms of running the company for shareholder wealth. Yes,

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<v Speaker 1>shareholder wealth. Market capitalization was a scorecard for him, an

0:13:48.840 --> 0:13:53.320
<v Speaker 1>important scorecard. And um, it was an important scorecard not

0:13:53.400 --> 0:13:57.439
<v Speaker 1>only for his investors, but also for his employees because

0:13:57.440 --> 0:13:59.400
<v Speaker 1>so many of them had stock options and they were

0:13:59.440 --> 0:14:05.040
<v Speaker 1>rewarded handsomely for the performance of that company. I I

0:14:05.120 --> 0:14:10.040
<v Speaker 1>do not believe that he was merely a person who

0:14:10.240 --> 0:14:14.679
<v Speaker 1>was a shareholder return guy. Uh. If you look at

0:14:14.720 --> 0:14:18.800
<v Speaker 1>how he treated his people, Uh, you wouldn't come away

0:14:18.800 --> 0:14:22.560
<v Speaker 1>with that conclusion. How he treated the suppliers or his customers,

0:14:22.880 --> 0:14:27.320
<v Speaker 1>they were all very important to him. So I'm just

0:14:27.360 --> 0:14:29.640
<v Speaker 1>curious though, too, since you know, I'm not sure how

0:14:29.720 --> 0:14:31.800
<v Speaker 1>much you guys kept in touch. It sounds like you know,

0:14:31.920 --> 0:14:33.800
<v Speaker 1>you were in touch with him, you know, after he

0:14:33.920 --> 0:14:36.600
<v Speaker 1>left the company. Were there any conversations that he had

0:14:36.640 --> 0:14:39.680
<v Speaker 1>maybe like maybe I shouldn't have increased our exposure to

0:14:39.720 --> 0:14:42.960
<v Speaker 1>the financial sector so much because that was certainly incredibly

0:14:43.000 --> 0:14:46.360
<v Speaker 1>problematic after the financial meltdown. I'm just curious if if

0:14:46.400 --> 0:14:48.440
<v Speaker 1>there were anything that he kind of had a rethought

0:14:48.480 --> 0:14:51.880
<v Speaker 1>about after he left, especially because he saw, you know,

0:14:51.920 --> 0:14:56.080
<v Speaker 1>the things that happened. Yeah, I think he would consider

0:14:56.160 --> 0:15:03.080
<v Speaker 1>his greatest single mistake, um, his success sir. And Uh, Look,

0:15:03.120 --> 0:15:05.240
<v Speaker 1>you can't blame Jack for what happened to the company

0:15:05.280 --> 0:15:07.960
<v Speaker 1>after he left. You can blame him for everything that

0:15:08.040 --> 0:15:10.400
<v Speaker 1>happened while he was there for twenty years in the

0:15:10.520 --> 0:15:15.040
<v Speaker 1>in the top job. Um, but I think what happened

0:15:15.080 --> 0:15:19.320
<v Speaker 1>after he left is largely the fault of his successor

0:15:19.680 --> 0:15:23.480
<v Speaker 1>and UM in many choices that were made by Jeff

0:15:23.560 --> 0:15:28.160
<v Speaker 1>m L at GE. So in terms of financial exposure,

0:15:28.600 --> 0:15:32.720
<v Speaker 1>there was an unwritten rule at General Electric that the

0:15:32.760 --> 0:15:37.280
<v Speaker 1>financial assets should never exceed a certain threshold. And that

0:15:37.360 --> 0:15:41.720
<v Speaker 1>belief occurred because the feeling was that if it did

0:15:41.760 --> 0:15:45.000
<v Speaker 1>go beyond a certain level, Wall Street would look at

0:15:45.040 --> 0:15:48.880
<v Speaker 1>GE differently and value GE differently, more as a financial

0:15:48.880 --> 0:15:52.960
<v Speaker 1>company than what it actually was. UH. And the truth

0:15:53.080 --> 0:15:56.240
<v Speaker 1>is that Jeff m. L actually went beyond that threshold

0:15:56.760 --> 0:16:02.040
<v Speaker 1>and increased the company's exposure to the initial markets, so

0:16:02.120 --> 0:16:05.880
<v Speaker 1>that when the Great Recession came UH, it became more

0:16:06.000 --> 0:16:11.240
<v Speaker 1>vulnerable to the shock of that now. Uh. Jack did

0:16:11.280 --> 0:16:15.280
<v Speaker 1>not buy a subprime mortgage company a year before the

0:16:15.440 --> 0:16:18.920
<v Speaker 1>Great Recession occur occurred in one of the biggest in America.

0:16:19.240 --> 0:16:22.640
<v Speaker 1>Jeff and Melt did. So it's you know, it's unfair

0:16:22.680 --> 0:16:27.680
<v Speaker 1>to say, Okay, I'm gonna now judge Jack on how

0:16:27.800 --> 0:16:32.680
<v Speaker 1>GE performed after long after he left. It just doesn't

0:16:32.680 --> 0:16:36.280
<v Speaker 1>make any sense. It really doesn't. There are plenty of

0:16:36.320 --> 0:16:41.760
<v Speaker 1>other things you can blame to right. His acquisition that

0:16:41.840 --> 0:16:45.840
<v Speaker 1>Kidder Peabody was a total mess and and really quite

0:16:45.920 --> 0:16:49.280
<v Speaker 1>dumb and stupid, and he would admit that he if

0:16:49.280 --> 0:16:51.520
<v Speaker 1>he were here today, he would tell you the single

0:16:51.520 --> 0:16:57.160
<v Speaker 1>biggest mistake he made was on a succession. UM. He

0:16:57.240 --> 0:17:00.800
<v Speaker 1>made other mistakes as well that are actually cataloged in

0:17:00.840 --> 0:17:02.080
<v Speaker 1>the book. You know, when we wrote the book, one

0:17:02.120 --> 0:17:04.800
<v Speaker 1>of the things that he didn't want to do he

0:17:04.840 --> 0:17:07.800
<v Speaker 1>didn't want to dish dirt. He didn't want to settle scores,

0:17:08.240 --> 0:17:10.679
<v Speaker 1>and he didn't want to be critical of anyone. And

0:17:10.720 --> 0:17:17.800
<v Speaker 1>actually that became very difficult for me because there's a

0:17:17.840 --> 0:17:22.840
<v Speaker 1>lot of you know, juice, Yeah, in those areas that

0:17:22.920 --> 0:17:27.040
<v Speaker 1>he would not go to. Um. He didn't want the

0:17:27.080 --> 0:17:29.480
<v Speaker 1>book to be preachy. He wanted it to come off

0:17:29.520 --> 0:17:32.359
<v Speaker 1>as if he were sitting at a bar. He was

0:17:32.400 --> 0:17:35.520
<v Speaker 1>having a beer and next to him was a stranger

0:17:35.680 --> 0:17:38.600
<v Speaker 1>who he had just met, and he's telling his story too.

0:17:39.160 --> 0:17:45.040
<v Speaker 1>So there is that informality that real jackness to the book. UM.

0:17:45.080 --> 0:17:48.560
<v Speaker 1>But but he wouldn't go anywhere near being critical of

0:17:48.600 --> 0:17:53.440
<v Speaker 1>other people or dishing dirt. That wasn't his his routine.

0:17:53.560 --> 0:17:55.640
<v Speaker 1>I wish we were at a bar and having some

0:17:55.640 --> 0:17:57.880
<v Speaker 1>trace because I think we could talk to you for hours,

0:17:57.920 --> 0:18:00.360
<v Speaker 1>but but we can't. UM. But thank you so much.

0:18:00.400 --> 0:18:03.760
<v Speaker 1>For giving us some insight that really nobody really had,

0:18:04.119 --> 0:18:06.560
<v Speaker 1>you know, except for you, in terms of who Jack

0:18:06.600 --> 0:18:08.920
<v Speaker 1>Welch was and is thinking. So thank you so much

0:18:08.920 --> 0:18:11.160
<v Speaker 1>for sharing it with us and with the magazine this week.

0:18:11.280 --> 0:18:13.640
<v Speaker 1>Thank you, I really enjoyed that conversation. You've been listening

0:18:13.680 --> 0:18:15.920
<v Speaker 1>to Bloomberg Business Week Extra. Be sure to tune into

0:18:15.920 --> 0:18:18.399
<v Speaker 1>Bloomberg Business Week Radio Live Monday through Friday at two

0:18:18.440 --> 0:18:21.280
<v Speaker 1>pm Wall Street Time on Bloomberg Radio. I'm Carol Masser

0:18:21.359 --> 0:18:23.160
<v Speaker 1>and I'm Jason Kelly. This is Bloomberg