Speaker 1: Welcome, Welcome, Welcome back to the Bob Left Steps podcast.
Speaker 1: My guest today is David Gillis, author of the new
Speaker 1: book The Man Who Broke Capitalism, all about Jack Welch
Speaker 1: and how he ruined the economy and more so. David,
Speaker 1: good to have you on the podcast. Why did you
Speaker 1: decide to write the book. I've been a business reporter
Speaker 1: for more than ten years now, and I'm always looking
Speaker 1: for those big stories that can sort of help explain
Speaker 1: and synthesize how we got here in the world we
Speaker 1: live in. And I'll tell you the details of how
Speaker 1: I arrived on Jack as a subject. But when I
Speaker 1: arrived there, when I really realized, when it sort of
Speaker 1: clicked for me about two years ago, that this was
Speaker 1: an individual. This was a story that was one of
Speaker 1: those meta narratives that Christopher iised some of these big
Speaker 1: transformative forces at work in the economy. It was sort
Speaker 1: of a lay up for me to go after it
Speaker 1: as a real target for the book. Okay, how come
Speaker 1: the rest of the business press missed this for decades?
Speaker 1: Oh man, that's one of the big questions, and I
Speaker 1: tried to address some of that in the book. I
Speaker 1: think it's important to remember that at first, they didn't
Speaker 1: necessarily miss it. In those first couple of years after
Speaker 1: Welch took over in the early nineteen eighties we're now
Speaker 1: talking about, he was dubbed neutron Jack. People saw the
Speaker 1: mass layoffs, people saw the factory closures, and they realized
Speaker 1: that this was a man who was unleashing a destabilizing
Speaker 1: force on the American economy, and they called him out
Speaker 1: for it rightly, and he got very unflattering press on
Speaker 1: sixty Minutes Newsweek dubbed him neutron Jack, and it was
Speaker 1: a pretty rough news cycle for him, if you will.
Speaker 1: But then here's what happened, and we got to acknowledge
Speaker 1: this because it's part of the complex and difficult conversation.
Speaker 1: All of the stuff he did started to work, and
Speaker 1: it all worked in delivering g E record short term profits,
Speaker 1: record short relatively short term and we should have a
Speaker 1: discussion about how we measure time horizons here. But for
Speaker 1: most of his twenty years as CEO of g E,
Speaker 1: the stock kept going up, and as long as the
Speaker 1: stock kept going up, sort of irregardless of the human
Speaker 1: cost on the ground, people were cheering along because that
Speaker 1: was the world that we all had decided, more or less,
Speaker 1: we wanted to live in one in which we were
Speaker 1: going to measure success and the health of the American
Speaker 1: economy by the market capitalization of America's biggest companies. And
Speaker 1: what he did was find a formula towards keep g
Speaker 1: IS stock moving up. It's sort of inexorably for twenty years.
Speaker 1: And so during that time it became very hard for
Speaker 1: the business press to sort of see through and look
Speaker 1: past all that and really evaluate the consequences of what
Speaker 1: was going on. I don't want to say that I'm brilliant,
Speaker 1: but certainly by time we hit the end of the nineties,
Speaker 1: it was clear to me that he was cooking the books.
Speaker 1: I mean cooking the books. Would say there's illegality, I
Speaker 1: want to go that far, that he was manipulating the books,
Speaker 1: but that was not in the business press. There was
Speaker 1: very little of it. And I'm reminded here of the
Speaker 1: financial crisis in two thousand and eight, when everyone said, like, wait,
Speaker 1: these sub prime mortgages were a bad thing after all,
Speaker 1: Like where was the scrutiny right that that, like hyper
Speaker 1: uh financialization and like collaterized that obligations might be a
Speaker 1: problem uh, that there was very little recognition of uh
Speaker 1: of of some of those issues by the business press
Speaker 1: in the immediate months preceding the absolute implosion. And similarly
Speaker 1: that you're absolutely right to say that there was inadequate
Speaker 1: scrutiny of ges earnings. I think in the ES in particular.
Speaker 1: Now things were different. Then, the whole culture of Wall
Speaker 1: Street and corporate America was focused on much less transparency.
Speaker 1: This was before the Sarbanes Oxley Act, before the big
Speaker 1: scandals of the early two thousands, when Enron, World, Calm
Speaker 1: and Tycho collapse, leading to a much greater degree of
Speaker 1: oversight by the federal government. That said, Uh, you're entirely
Speaker 1: correct to say that for something like almost eighty quarters
Speaker 1: in a row, g e meet or beat analysts, expectations
Speaker 1: and anyone. You don't have to be a genius to
Speaker 1: understand that something is going on for that to happen.
Speaker 1: Something fishy is going on for a company to meet
Speaker 1: or beat for eighty quarters in a row, because that
Speaker 1: just doesn't happen, right that that's like against the laws
Speaker 1: of nature. So you talk about the change in regulations,
Speaker 1: this is your beat, and we know we had regulations.
Speaker 1: And then Trump undercut regulations. So to what degree, uh,
Speaker 1: do these corporations have to report now? To what degree
Speaker 1: it is different from the nineties I'm talking about presently? Yeah,
Speaker 1: that I would say, on balance, there is more granular
Speaker 1: level of reporting happening by major corporations today. There is
Speaker 1: certainly more accountability when it comes to the boards, and
Speaker 1: that was a big part of those early regulations. Um.
Speaker 1: If you know, if boards are signing off on truly
Speaker 1: cooked books, it doesn't get easy for for them to
Speaker 1: escape accountability. It's also the case that there are very
Speaker 1: few companies that are employing the same kinds of financial
Speaker 1: shenanigans that g E was up to. And there are
Speaker 1: very few companies that have anything close to UH an
Speaker 1: entity as complex as ge Capital was in the ninet
Speaker 1: nineties and early two thousand's um not to mention something
Speaker 1: like that paired alongside a massive, sprawling industrial business. So
Speaker 1: the comps get a little tricky right now. And it's
Speaker 1: also the case that when companies do engage in some
Speaker 1: of these shenanigans, the SEC has gotten better I think
Speaker 1: at calling them out and dinging them, you know, they
Speaker 1: and they ultimately caught up with in two thousand nine,
Speaker 1: the then CEO, Jeff M. L. Jack, Welch's chosen successor,
Speaker 1: settled these sweeping accounting fraud charges with the SEC that
Speaker 1: mostly covered the period from roughly I think two thousand
Speaker 1: three to two thousand five or so, just after Whils retired.
Speaker 1: But in the settlement and in the news release and
Speaker 1: all the remarks that the SEC made at the time
Speaker 1: of that settlement, they pointed to what sure looked like
Speaker 1: decades of impropriety. And we won't know right because we
Speaker 1: we there isn't the forensic accounting from the eighties and nineties,
Speaker 1: but they made the point that it sure looked like
Speaker 1: GE had been up to this sort of stuff, which
Speaker 1: they ultimately, you know, settled with the SEC for for
Speaker 1: years and years and years. In the newspaper today, there's
Speaker 1: a story about how the institutions, the professionals really didn't
Speaker 1: lose money on crypto. It was the retail investor. Anybody
Speaker 1: who's been exposed to one of these public companies know
Speaker 1: the knows that the CFO plays a huge role. And
Speaker 1: I can give specific examples from my own exposure of
Speaker 1: people who are literally shipping product changing to make the
Speaker 1: numbers look good. Okay, so that whatever they are, there
Speaker 1: is some fudge space. I'm not saying you can take
Speaker 1: a company to lose a hundred million and now makes
Speaker 1: a hundred million. But the public doesn't seem to understand this.
Speaker 1: So to what degree have you encountered this in your reporting?
Speaker 1: Listen on the crypto front, I think what we're seeing
Speaker 1: is the popping of a speculative bubble, and it's very
Speaker 1: hard to know when you know, when people stop buying
Speaker 1: two lips, just how how far the bottom is going
Speaker 1: to fall out from under people. I think the critical
Speaker 1: first point you made is one that is a through
Speaker 1: line of the reporting in this book as well, which
Speaker 1: is that the people in charge rarely face consequences, and
Speaker 1: and that the men, and they're almost always men who
Speaker 1: have the most power in this economy and the most
Speaker 1: money in this economy are usually going to do just fine.
Speaker 1: There is very very little accountability for corporate mouthfeasance in
Speaker 1: this country, and there is a grand tradition in America
Speaker 1: of true impunity, even for the worst offenders and even
Speaker 1: for those who unleashed the most damage on society at large.
Speaker 1: So it doesn't surprise me at all that we're starting
Speaker 1: to see the same patterns play out in crypto and
Speaker 1: and F. T. S Um and my book, frankly is
Speaker 1: a recitation of like hundreds and hundreds examples of how
Speaker 1: Jack Welch and his cronies played the same game at
Speaker 1: major public companies for the better part of four decades.
Speaker 1: Let's go to the present day. So within the last
Speaker 1: six months, stock market has gone down, but let's focus
Speaker 1: on Netflix. Netflix reports essentially a flat quarter, loses seventy
Speaker 1: of the stock value. Let's be very clear, almost all
Speaker 1: of that decline is based on scuttle button analysts, this
Speaker 1: and that, very little to do with the underlying business.
Speaker 1: There might be question the underlying business, but you know,
Speaker 1: a drop of seventy and then of course a lot
Speaker 1: of other things have dropped simultane you know, later than that, etcetera.
Speaker 1: So to what degree is the street disconnected from businesses?
Speaker 1: And as long as they're making money, they don't really
Speaker 1: care what the hell you're doing? Uh? Well, who who
Speaker 1: is the day? And that last part of the question,
Speaker 1: the street or the business? I would say Wall Street
Speaker 1: meaning investors. I'll just make it a general investment community. Yeah,
Speaker 1: I mean, there's this is the subject of many you know, dissertations, Bob.
Speaker 1: I think when we talk about a story like Netflix, right,
Speaker 1: like that stock was obviously inflated because it was one
Speaker 1: of these pandemic stocks. And when the world moved online
Speaker 1: and everyone started spending twelve hours a day on their computers,
Speaker 1: um netfolks, shoure looked like a goodbye. And so, to
Speaker 1: answer one of the parts of that question more directly, like,
Speaker 1: there's of course a huge disconnect between the stock market
Speaker 1: and the fundamentals of any business. Um. You know that
Speaker 1: the stock is sort of a proxy for people's confidence
Speaker 1: in future earnings, Like we know this um in terms
Speaker 1: of the street and what they believe. I think that's it.
Speaker 1: That's a harder question for me to answer. I'm not
Speaker 1: an analyst, and you know, many analysts are gonna pour
Speaker 1: money into companies that are you know, are are going
Speaker 1: to invest heavily in companies that aren't making money. We
Speaker 1: see that all the time with big, unprofitable tech companies.
Speaker 1: And it's also the case conversely that there are plenty
Speaker 1: of companies that have um you know, very respectable, reliable,
Speaker 1: maybe even growing, though perhaps not terribly quickly, profits that
Speaker 1: one could say are are tremendously undervalued. I think to
Speaker 1: to sort of comment on anyone's stock is is difficult,
Speaker 1: especially at the moment we're seeing a major market correction,
Speaker 1: and there's so many other global forces at work from
Speaker 1: the supply chain at Ukraine. Um So I would just
Speaker 1: say that in any few months, sort of reading too
Speaker 1: much into the movement of a particular stock is sort
Speaker 1: of an exercise and potential folly. But if you look
Speaker 1: at the long chart of g E, I think you
Speaker 1: really do see the story that I tell in my
Speaker 1: book played out quite quite viscerally, which is that for
Speaker 1: twenty years Jack Welch essentially used this combination of downsize
Speaker 1: and deal making and financialization to inflate the valuation of
Speaker 1: GEES stock, and that as soon as those games stopped
Speaker 1: working for some combination of reasons that we can get into,
Speaker 1: the stock fell apart and never recovered. And it was
Speaker 1: just last year, of course, at the curren CEO Larry
Speaker 1: Colp said that they were going to split the company
Speaker 1: up forever. Okay, let's go back to the narrative. Paint
Speaker 1: the picture of what's happening with g E and how
Speaker 1: Jack gets the gig and what are the financial conditions, compensation,
Speaker 1: show us what's going on when he comes on as CEO. Yeah.
Speaker 1: Jack took over g E in n and before that. Uh,
Speaker 1: it's really hard to overstate what an integral company General
Speaker 1: Electric was to the American economy. This was the company
Speaker 1: that was founded by Thomas Edison that you know, introduced
Speaker 1: or popularized everything from the radio to the dishwasher, to
Speaker 1: the refrigerator, to the jet engine, to the laser to
Speaker 1: the damn plastic the guys who landed on the moon
Speaker 1: were we're in other visors. Um GE was essentially deeply
Speaker 1: integrated and someone would say synonymous with the American economy
Speaker 1: for all for much of the twenties entry and that
Speaker 1: was the company that he inherited in nineteen. Now for
Speaker 1: those years, for that ten years or so before he
Speaker 1: took over, the stock had mostly been flat. You know,
Speaker 1: the economy as a whole was experiencing stag inflation sort
Speaker 1: of combination of stagnant uh stagnant growth and inflation that
Speaker 1: was making for a really rough run for investors. And
Speaker 1: Welch comes to the job with this real single minded
Speaker 1: focus towards reversing that trend and making g E not
Speaker 1: only engine of profits, but really, in his mind it
Speaker 1: had the potential to be the most valuable company in
Speaker 1: the world, and he set about doing that um But
Speaker 1: the CEO he took over from could not have been
Speaker 1: more different the guy who preceded him, Regg Jones. He
Speaker 1: was this sort of genteel Englishman. He lived quite modestly
Speaker 1: relative to certainly the way Jack would one day run
Speaker 1: run the company. As a CEO, he made you know,
Speaker 1: a respectable sum a million dollars or so, maybe more
Speaker 1: a couple million dollars by the end of his tenure,
Speaker 1: but not tens or hundreds of millions of dollars. And
Speaker 1: so Jack comes in and is about the opposite in
Speaker 1: every way. He is brash, impulsive, He is argumentative, whereas
Speaker 1: Regg Jones had been cerebrill and deliberative and from you know, cordial.
Speaker 1: Welch is completely unafraid to throw tradition out the window.
Speaker 1: Whereas Jones had been very respectful of gees legacy, and
Speaker 1: whereas Regg Jones really focused on making ge UH an
Speaker 1: excellent version of the company it already was when he
Speaker 1: took over in the early seventies or eight sixties, Welch
Speaker 1: comes to the job with almost like an a completely
Speaker 1: um immoral is not the right word. What's the word um?
Speaker 1: With no real allegiance to gees traditional businesses of lighting
Speaker 1: and power systems and transportation. You know, he'll make the
Speaker 1: most of those businesses, but at the end of the day,
Speaker 1: he's much more interested in things like media and finance
Speaker 1: and all sorts of finance UM too, and sees those
Speaker 1: new industries as the real future for General Electric. And
Speaker 1: he identifies all that all everything I just described is
Speaker 1: pretty clear within the first year or so that Welch
Speaker 1: takes over, and then he makes good on it. He
Speaker 1: spent the next twenty years sort of executing on that plan.
Speaker 1: Let's go back a chapter. Who is this guy? You
Speaker 1: read the book and it's reference that he has short
Speaker 1: man syndrome. The other thing is when you work in
Speaker 1: a giant corporation, yes you have to deliver, but relationships
Speaker 1: and getting along but one of the key elements. So
Speaker 1: let's start out with who is this guy and how
Speaker 1: does he end up? G Yeah, we'll tell that to
Speaker 1: Jack Wellips that you need to be nice to your colleagues.
Speaker 1: I think he would have disagreed with you. At the
Speaker 1: top it's a different game. He was. He was an
Speaker 1: argument at of s ob from the get go. All right,
Speaker 1: So who was this guy? Jack Bats was the only
Speaker 1: son of a poor family who grew up in the
Speaker 1: suburbs of Boston. His mom was a homemaker, his father
Speaker 1: was a unionized rail conductor on the local UH commuter
Speaker 1: train system. Welch was as you said, short, uh, muscular, feisty, argumentative.
Speaker 1: He grew up he had a chip on his soldier
Speaker 1: from an early age. He said, I grew up with
Speaker 1: my nose pressed up against the glass. He was poor
Speaker 1: and he knew it, and he did not like it.
Speaker 1: His parents were Irish, hathlic His mother made him an
Speaker 1: ultra boy, but also instilled in him a real competitive street.
Speaker 1: Made him learned how to play poker as a kid
Speaker 1: by using his own allowance money, so right away at
Speaker 1: this visceral sense of winning and losing. Um, he was
Speaker 1: incredibly smart. And I always mentioned that because there's no
Speaker 1: there's no way that he could have done all the
Speaker 1: things he did without having an absolutely, absolutely um you know,
Speaker 1: keen sense not only in strategy and intuition, but he
Speaker 1: was also just you know, brilliant ability to hold and
Speaker 1: synthesize great deals of information. He was smarter than a
Speaker 1: lot of the people he worked with, and he knew it,
Speaker 1: and even early in his career when he hadn't proved anything, uh,
Speaker 1: that pisted him off as well. He went to college
Speaker 1: and then was the youngest person ever to graduate with
Speaker 1: a PhD from University of Champagne in Illinois. Graduated with
Speaker 1: a PhD in chemical engineering I believe it was, and
Speaker 1: his first job was a g e um. First year
Speaker 1: in he threatens to quit because he gets a one
Speaker 1: thou dollar raise, just like the other people in his group,
Speaker 1: but he thinks he deserves more, so he almost he
Speaker 1: threatens to quit. He finally talks his boss's boss into
Speaker 1: giving him a little more money, uh, and he agrees
Speaker 1: to stay. And then it's sort of off to the races.
Speaker 1: They start moving him up pretty swiftly, and he rises
Speaker 1: through the ranks at GE for you know, better part
Speaker 1: of twenty odd years, twenty five years before he's ultimately
Speaker 1: made CEO. Why does he get moved up the ranks
Speaker 1: and it's just despite his edgy personality or somehow does
Speaker 1: that help him? And how does he get chosen at CEO? Yeah?
Speaker 1: It certainly seemed to help him. You know, ge was
Speaker 1: a deferential culture. It was in line with much of
Speaker 1: corporate America where there weren't a lot of very hard
Speaker 1: edge is um. But the fact that he was so
Speaker 1: different and that he was willing to essentially fire people
Speaker 1: to improve the profitability of a group, that he was
Speaker 1: willing to push his executives and his team members to
Speaker 1: go harder, to work faster, to take chances with volatile processes,
Speaker 1: and which in one case resulted in the of blowing
Speaker 1: up of a factory that he was very proud of
Speaker 1: in in his own way, this set him apart. And
Speaker 1: so at that moment, after a decorative stagflation, just just
Speaker 1: just just slow down for one second. Define for those
Speaker 1: who were not as sophisticated and informed as you, what
Speaker 1: do you mean by him blowing up a factory. Yeah,
Speaker 1: this is a relatively well well documented incident. Somewhat earlier
Speaker 1: in his career. He's running a factory in Massachusetts. They're
Speaker 1: trying to come up with a new product. There's a
Speaker 1: real pressure from the folks up to op or down
Speaker 1: in Fairfield as it were, at headquarters, to get this
Speaker 1: right and to make a profitable new plastic A S
Speaker 1: A P and get it to market. They were having
Speaker 1: trouble doing it, but Welch, you know, had his team
Speaker 1: pushing as hard as they possibly could, and in the
Speaker 1: end that meant experimenting with some very highly volatile processes
Speaker 1: and solutions that probably hadn't been fully vetted from a
Speaker 1: safety perspective. And one day he's sitting there in his
Speaker 1: office overlooking Plastics Avenue in Massachusetts and boom, the whole
Speaker 1: plant blows up and there's a massive explosion the building,
Speaker 1: the roof of the building is blown off. Miraculously, no
Speaker 1: one has hurt, no one is seriously injured, no one
Speaker 1: has killed uh. And yet it was sort of one
Speaker 1: of these early anecdotes that that demonstrated just how potentially
Speaker 1: volatile this man was, how how explosive he could be
Speaker 1: as a manager. He's called to Fairfield to headquarters the
Speaker 1: next day as to drive a hundred miles or so
Speaker 1: and explain himself to the to the higher ups at headquarters,
Speaker 1: and essentially they gave him a pass. And that, to me,
Speaker 1: I think, really was one of those moments where he
Speaker 1: suddenly realized that he could get away with it, and
Speaker 1: even if he pushed people. Even if he was taking chances,
Speaker 1: even if he caused some real destruction, there weren't immediate consequences,
Speaker 1: and that I have to believe embolded him. Going forward.
Speaker 1: How do you actually get the Giga CEO? There was
Speaker 1: a process, as there always is. Regg Jones himself requested
Speaker 1: that Jack b included in the in the vetting process,
Speaker 1: and then um, they made they made the the potential
Speaker 1: candidates to succeed Red Shans write a series of memos
Speaker 1: to a series of interviews. Uh. And in one of
Speaker 1: those memos, Welch outlines this vision for a much more aggressive,
Speaker 1: much more competitive, much more ruthless, frankly version of g E,
Speaker 1: one that would compete in a different way in the
Speaker 1: nineteen eighties. And uh, you know Jones and the board
Speaker 1: they bought into that vision, and he got the gig
Speaker 1: and he was he was young, he was a shock candidate.
Speaker 1: And uh, I think I'm quote, I think I'm gonna
Speaker 1: get this quote right when when when it was announced
Speaker 1: the Wall Street Journal said that g E had replaced
Speaker 1: a legend with a live wire. So we know, via
Speaker 1: ge capital and so many other things, that Jack was
Speaker 1: really into financialization. The average person was not aware of
Speaker 1: the extreme depth of financialization on Wall Street until the
Speaker 1: two thousand and eight crash, But even for years before that,
Speaker 1: people had commented that Wall Street no longer build things,
Speaker 1: It was the business of money that was their business.
Speaker 1: To what degree was Jack responsible for that and how
Speaker 1: did he get into that vertical of capital. I would
Speaker 1: hesitate to put the whole transformation of Wall Street on
Speaker 1: Welch's feet. I lay a lot of blame at his
Speaker 1: feet for a lot of different issues. I think Wall
Speaker 1: Street was going to be changing during the nineteen eighties
Speaker 1: almost no matter what. Where I think welch Is influence
Speaker 1: really connected Wall Street with corporate America. Was the degree
Speaker 1: to which he made Ge adopt a lot of the
Speaker 1: worst aspects of banks and other global financial institutions. And
Speaker 1: we then saw many other companies following suit and doing
Speaker 1: some of the same things. In terms of how exact
Speaker 1: he did it, it all started with this little unit
Speaker 1: called GE Capital um. GE had a finance arm for
Speaker 1: decades and decades during the nineteenth century and excuse me,
Speaker 1: during the twentieth century, and it was mainly used as
Speaker 1: a way to help corporations and even individuals finance their
Speaker 1: purchase of ge products and services. If you couldn't pay
Speaker 1: for uh, you know, your refrigerator outright, it was basic
Speaker 1: lending arm. They could they pay, charge a little interest
Speaker 1: and you could pay it in installments. Welch saw the
Speaker 1: potential of taking that arm and turning it into what
Speaker 1: was essentially an unregulated bank and ran with it. And
Speaker 1: he saw it from the get go. He's in one
Speaker 1: of those memos I mentioned that he wrote to Red Jones.
Speaker 1: He said there was no where at the company where
Speaker 1: quantum change, I believe was the phrase he used, was
Speaker 1: needed more than in finance, because he understood in this
Speaker 1: kernel of a little business unit, there was the potential
Speaker 1: to create what would ultimately be a six hundred billion
Speaker 1: dollar pool of capital that stretched from everything from least
Speaker 1: satellites to tie auto loans to commercial real estate debt. Okay,
Speaker 1: so tell my audience how we ended up using the
Speaker 1: capital to ensure that he met his quarterly targets. G
Speaker 1: E by the time he was done, had an army
Speaker 1: of financial analysts and experts who literally at the end
Speaker 1: of every quarter. So you're after report earnings to Wall
Speaker 1: Street on call it March one. By mid February. You've
Speaker 1: got hundreds of not thousands, of people running the numbers
Speaker 1: and saying, we told them we were gonna make I'm
Speaker 1: gonna make it up here million dollars in profit for
Speaker 1: the quarter. It looks like we're going to be coming
Speaker 1: in closer to three eighteen million dollars. We need that
Speaker 1: seven million dollars. Well, then, with such an enormous operation
Speaker 1: like ge capital at your disposal, you've got any number
Speaker 1: of ways to find that extra seven million dollars in profit.
Speaker 1: You could do anything from sell of division or sell
Speaker 1: a portfolio of credit card pones. You could perhaps even
Speaker 1: lay people off and take a tax right off. You know,
Speaker 1: there were absolutely infinite ways that g E found to
Speaker 1: essentially use this enormous financial harm to UH, as you said,
Speaker 1: massage the numbers quarter after quarter. And it was that
Speaker 1: sort of creative accounting, if you will, that allowed g
Speaker 1: E to hit meter beat for eighty quarters some odd
Speaker 1: in a row. Okay, was there any way this could
Speaker 1: have worked? Or was it always a time bone? There
Speaker 1: was always going to be a reckoning at some level,
Speaker 1: because it wasn't just about the degree to which ge
Speaker 1: stock might have been overinflated. Because of the prominence of
Speaker 1: G Capital. The other thing that was happening during the
Speaker 1: eighties and nineties was that g was under investing in
Speaker 1: research and development, They were fundamentally transforming their relationship with
Speaker 1: their employees, they were buying and merging their way into
Speaker 1: dozens of other industries, and so a reckoning was going
Speaker 1: to take place without a doubt. The question that animates me,
Speaker 1: and which you know it's it's a counter factual, so
Speaker 1: we're not going to have a clear answer to is
Speaker 1: what would have happened if somewhere along the way, be
Speaker 1: it the nineties or the early two thous even after
Speaker 1: Jack left and Jeff Emmott had a couple of chances
Speaker 1: to reset the company, It would have happened if there
Speaker 1: was a serious effort made to wind down GE Capital,
Speaker 1: to double down on American manufacturing, to make kick ass
Speaker 1: products and services, and do it in a way that
Speaker 1: would have positioned g E to become the number one manufacturer,
Speaker 1: the number one industrial company for the twenty one century.
Speaker 1: They did it right. They had done it for the
Speaker 1: twentieth century, and there's nothing to say that they couldn't
Speaker 1: have done it for the twenty first century, except they
Speaker 1: chose not to write. They chose to go and buy portfolios,
Speaker 1: some pride mortgages. In two thousand five, they chose to
Speaker 1: under invest in R and D. For the longest time,
Speaker 1: the culture ossified and people and I talked about this
Speaker 1: in the book. You know, people were afraid to take chances.
Speaker 1: There was no willingness to spend and really invest in
Speaker 1: sort of blue sky initiatives that might have positioned g
Speaker 1: E to become a leader and say autonomous vehicles or
Speaker 1: three D printing or any number of other things that
Speaker 1: are gonna be a big part of the economy going forward,
Speaker 1: and that they weren't in yet. But they had the resources,
Speaker 1: and they had the smart They still have tons of
Speaker 1: smart engineers at that company, but they weren't willing to
Speaker 1: do it. Okay, GEE ultimately buys INNBC. Everybody is aware
Speaker 1: of it because David Letterman is making jokes all the time.
Speaker 1: Was this purely an ego play to get into media
Speaker 1: and have that power and rub shoulders with the stars
Speaker 1: or at one point was this scene as a good
Speaker 1: business Well. G E acquired NBC through its acquisition of
Speaker 1: r c A, which was another diversified conglomerate in the
Speaker 1: nineteen eighties, and there's no doubt about it. Ge uh
Speaker 1: debt and Jack, Well, it's definitely liked being a media mogul. Um.
Speaker 1: He relished in his ability to sort of rub shoulders
Speaker 1: with movie stars and even at times, you know, do
Speaker 1: his small part to try and influence coverage of the press. Um.
Speaker 1: But what to the ear of your question, was it
Speaker 1: seen as a good business move? Sure? Right, if we
Speaker 1: accept that Jack Welch's mandate was to make GE the
Speaker 1: biggest company in the world, Um, the acquisition of r
Speaker 1: C a fulfill help fulfill that mandate. You know, he
Speaker 1: also wanted to be number one and number two in
Speaker 1: every industry. And I believe the combination of the r
Speaker 1: C A business with the g E t V set business, uh,
Speaker 1: you know made the g E t V business sort
Speaker 1: of number one or number two in the world. So
Speaker 1: in those sort of rudimentary ways in which he evaluated
Speaker 1: his strategy and focused on trying to figure out how
Speaker 1: to make g E bigger and more profitable at the time, Yeah,
Speaker 1: that was actually a relative I would say that was
Speaker 1: one of the sounder moves. Yeah, it did take them
Speaker 1: into the media business where they hadn't been, but there
Speaker 1: were some underlying fundamental industrial plays as part of that big,
Speaker 1: mega deal in I think it was that that certainly
Speaker 1: made some sense. Okay. Parallel to this story is the
Speaker 1: term or actually two terms of Ronald Reagani is president,
Speaker 1: needless to say, took over from Jimmy Carter after the
Speaker 1: Iran hostage crisis and incredible inflation. But that's when income
Speaker 1: inequality started, That's when corporate taxes started to fall. To
Speaker 1: what degree was Jack Welch ge helped by this Reaganism
Speaker 1: or to what degree are they really separate? Jack would
Speaker 1: have done this no matter what, gotten away with it. Oh,
Speaker 1: I think they are deeply in mesh. These are symbiotic stories,
Speaker 1: and I allude to Reaganism and Reagan several times throughout
Speaker 1: the book because you're absolutely right that it was some
Speaker 1: of the deregulation during the Reagan administration that enabled some
Speaker 1: of gees or most outrageous shenanigans. For example, even that
Speaker 1: um that was it. Even the r c A deal
Speaker 1: I think was enabled by a rough boxing of antitrust
Speaker 1: statutes by the Reagan administration. There was some weird cause
Speaker 1: from earlier in the twenty century that expressly prohibited g
Speaker 1: E and r c A from linking up, but that was,
Speaker 1: you know, very communiently removed just before the deal. And
Speaker 1: then you look at things like stock buy backs, which
Speaker 1: GE and Welch became absolute pioneers in um. For decades,
Speaker 1: stock buybacks had essentially been illegal because it's effectively a
Speaker 1: company manipulated in its own stock price. Under Reagan and
Speaker 1: his you know, absolute army of financial representatives who took
Speaker 1: over major regulatory posts in the government, that statute was
Speaker 1: essentially eliminated, and all of a sudden, it was okay
Speaker 1: for companies to start buying back their own stock. And
Speaker 1: you mentioned inequality and corporate taxes. We can talk about those,
Speaker 1: but it's important to note that another one of those
Speaker 1: trend lines that sort of starts right around the time
Speaker 1: Watch takes over and has continued innobated to today is
Speaker 1: the use of corporate profits for stock buybacks and dividends.
Speaker 1: And and the money used to be going two employees,
Speaker 1: the money used to be going to R and D
Speaker 1: and CAPEX, the money is now going back to investors
Speaker 1: in the form of buy backs. Well, there's a lot
Speaker 1: of blowback about that. We can debate whether we're gonna
Speaker 1: get any change, I'm not optimistic. But something you referenced
Speaker 1: earlier was the purchase and sale of assets. Now you know,
Speaker 1: this really becomes bad under Immelt in your book, but
Speaker 1: it seemed like they were buying stuff just to make
Speaker 1: the numbers look good without a doubt. I mean, that
Speaker 1: was some of that, um you know, those sort of
Speaker 1: lab sminute adjustments the GE capital would make every quarter.
Speaker 1: And and I have quotes in the book from people
Speaker 1: who worked at GE happening They're like, yeah, you know,
Speaker 1: sometimes we needed a little more earnings by the end
Speaker 1: of the year, and so we would go buy a
Speaker 1: company that had some earnings and then they were our earnings, right,
Speaker 1: And so that was a part of this absolute infatuation
Speaker 1: with deal making that well Chad In in his twenty
Speaker 1: years as CEO, he conducted something like one thousand mergers
Speaker 1: and acquisitions. It was this unbelievably torrid pace of deal making,
Speaker 1: which here's another one began during the whild chair and
Speaker 1: has really never abated, and it's led to the consolidation
Speaker 1: of American industries. It's less to more market concentration, and
Speaker 1: plenty of academics who have done the work more so
Speaker 1: than I have have pointed out that that market concentration,
Speaker 1: that consolidation has led to an enormous amount of pain
Speaker 1: for consumers in the form of higher prices and reduced
Speaker 1: competition and ultimately reduced innovation for our country. Okay, let's
Speaker 1: talk about a little closer with our feet on the ground. There.
Speaker 1: He's worth. He owns his companies, and he's constantly laying
Speaker 1: people off and closing companies. And there's a social cost
Speaker 1: with people. Also, if they need people, they hire contractors.
Speaker 1: Is this something that he pioneers or is he the
Speaker 1: first one who blows it up? It's just this evidence
Speaker 1: of what everybody was doing. No, he was one of
Speaker 1: the first, and and time and again. And this is, Bob,
Speaker 1: one of the things that struck me and gave me
Speaker 1: the conviction to really keep going when I started looking
Speaker 1: into this. He was the first time and dime and
Speaker 1: dime again. He was the guy that essentially was the
Speaker 1: progenitor of so many of these absolutely deletarious trends that
Speaker 1: now seem like as fundamental to us as the weather
Speaker 1: and the rising and setting of the sun, but are
Speaker 1: actually just choices that rich executives made in the nineteen
Speaker 1: eighties that we're all still living with. So when it
Speaker 1: comes to outsourcing and offshore in ye, had there been
Speaker 1: a little outsourcing and offshoreing in the years before that,
Speaker 1: sure was well the first one to get on top
Speaker 1: of a mountain and screen that this was the way
Speaker 1: to do business. And was he the first to take
Speaker 1: a major American employer and absolutely reshape it and make
Speaker 1: it dependent not on what was essentially lifetime employees who
Speaker 1: grew up inside that company and could expect to retire them,
Speaker 1: but bring in this new, more transactional relationship with its
Speaker 1: employees and state publicly that if he could, he would
Speaker 1: put every factory on a barge so it would float
Speaker 1: around the world and inner national waters, changing favorable exchange
Speaker 1: rates and good anti you know, regulatory policies, and that
Speaker 1: if he could, he wanted to make every job that
Speaker 1: he could get to be done outside ge done outside ge.
Speaker 1: If you could hire people at printing presses to print
Speaker 1: his stuff printed, if you can fire food service workers
Speaker 1: to work in his cafeteria, do it. And that's why
Speaker 1: even today is an employee of the New York Times Company.
Speaker 1: When I walk into the New York Times building, the
Speaker 1: first person I see every morning does not work for
Speaker 1: The New York Times. They are security guards who are
Speaker 1: hired by a contractor, and I can only hope that
Speaker 1: they enjoy fair wages and good benefits. But I don't
Speaker 1: think it's a stretch to believe that it's not what
Speaker 1: The New York Times offers his journalists and other people
Speaker 1: on the payroll. Okay. The other thing Jack is famous
Speaker 1: for is the ten percent firing, the ten percent at
Speaker 1: the bottom. This was lauded unbelievably. Okay, and you wrote
Speaker 1: a book about mindfulness, not that I'm exactly sure what
Speaker 1: that means. But was this good for business? Was there
Speaker 1: an ultimate cost in dissatisfaction and competition amongst the employees?
Speaker 1: And how does mindfulness fit into the whole corporate structure?
Speaker 1: M hm, Well, you're referring to stack ranking, which is
Speaker 1: the process that Welch innovated pioneered of telling managers to
Speaker 1: sort their employees into the top A, B and C players.
Speaker 1: A players of your workforce, they're the best. The B
Speaker 1: players are the mediocre, middle those you know in the middle,
Speaker 1: and the bottom is the ten percent the C players.
Speaker 1: And what said your ten players? Your ten percent those
Speaker 1: c players every year they gotta go um. That was
Speaker 1: one of these sort of cold hearted management techniques that
Speaker 1: Welch pioneered and became popular at GE. But because GE
Speaker 1: was so influential, everyone else started to do it, and
Speaker 1: it really caught hold in corporate America and it continues
Speaker 1: to this day. It was popular under Steve Balmer at
Speaker 1: Microsoft for the longest time, and companies like we Work
Speaker 1: and Uber have been using stack ranking even recently. So
Speaker 1: yet again, here we have this sort of signature, weird,
Speaker 1: sort of ruthless innovation by Welch about firing temper cent
Speaker 1: of his workforce every year, something he started doing in
Speaker 1: the nineteen eighties, still around with us forty years later.
Speaker 1: This is the guy that broke capitalism. That's why I
Speaker 1: called it that. Okay, just throw in the mindful news part.
Speaker 1: How should people be operating? Because another point you make
Speaker 1: in the book is this, you know, UH, as a
Speaker 1: result of the stack ranking, it reduces UH cooperative working.
Speaker 1: They're all sorts of costs that people don't see right
Speaker 1: on the surface. So how should these companies be run? Listen,
Speaker 1: I I'm not a management expert and I've never been
Speaker 1: a CEO. And I'm the first to admit that. So
Speaker 1: I can't tell a company exactly how to run. What
Speaker 1: I can say is that when I look at CEOs
Speaker 1: who are able to steward their companies in the long
Speaker 1: term and create real value not only for their top investors,
Speaker 1: the hedge funds that might own twelve of the stock
Speaker 1: or whatever, but for all the different constituents that they serve,
Speaker 1: from their employees, to their communities, to the you know,
Speaker 1: people down their supply chain, and yes, of course their investors. Uh.
Speaker 1: I see CEOs that operate in a fundamentally different way.
Speaker 1: They are not mercenaries looking to cut costs wherever they can.
Speaker 1: They are not you know, sort of these cold eyed
Speaker 1: um you know being counters who simply focus on the
Speaker 1: numbers to the exclusion of all other considerations. They are
Speaker 1: men and women who take a much more holistic view
Speaker 1: of their responsibilities as business leaders and bring to mind
Speaker 1: the nuances of all of that complex set of responsibilities
Speaker 1: that they have when making decisions about hiring and firing,
Speaker 1: about investment, about strategy, and what companies they what kind
Speaker 1: of companies they want to run, and what company is
Speaker 1: they want to buy and sell. So I can't sit
Speaker 1: here and give you a short answer to how to
Speaker 1: run a company. What I can say is, in the
Speaker 1: long run, the Jack Walsh playbook usually leads to ruin. Okay,
Speaker 1: just because I'm interested. You know, they would have these
Speaker 1: retreats at their campus, not the Fairfield campus, but a
Speaker 1: separate campus, and other companies have replicated this is this
Speaker 1: just basically an old boys network? What really goes on there?
Speaker 1: Is there any benefit? I think a lot of people
Speaker 1: who went there would say there's lots of benefit. Um,
Speaker 1: this was you're referring to a place colloquially known as Crotonville,
Speaker 1: which was the g E Management Development Center. I think
Speaker 1: I got that right in Croton on Hudson, a small
Speaker 1: village just north of New York City, and it was
Speaker 1: one of the first of its kind sort of offsite
Speaker 1: retreat centers executive learning centers. Uh. And as you said,
Speaker 1: it was replicated by many other big American companies, including me.
Speaker 1: I'm going to forget them all, but had Hotchi, IBM, Bowie, etcetera.
Speaker 1: All sort of saw what che did and made it
Speaker 1: and over the years it served many different purposes. Welch
Speaker 1: wasn't the one who who pioneered it. He sort of
Speaker 1: revived it and brought it back when he took over,
Speaker 1: but it was it was extant for much of the
Speaker 1: twentieth century and served as a place where GE leaders
Speaker 1: would go and essentially go to in house business school.
Speaker 1: This is where they could go brush up on strategy
Speaker 1: learned from their colleagues, take classes on this, that or
Speaker 1: the other. You know, how to dodge taxes? Um. I
Speaker 1: don't know exactly what the curriculum was under Welch, but
Speaker 1: it was clear that this was an effort by him
Speaker 1: and his executive team to create a system where they
Speaker 1: could drive their values, drive their vision, drive their tactics
Speaker 1: deep down into the organization. And by all accounts, it
Speaker 1: was very successful. Um so was it old boys club? Yeah?
Speaker 1: I'm sure there were elements of that. You put enough
Speaker 1: well paid executives at an off site and inevitably there's
Speaker 1: gonna be some uh, some antics, and I document some
Speaker 1: of those in the book. But but I think the
Speaker 1: more interesting thing to me is the degree to which
Speaker 1: they really formalized the um. The teaching formalized the training
Speaker 1: of the Jackbosh worldview for so many thousands of g
Speaker 1: E employees who worked there. Okay, let's talk about the
Speaker 1: big one from the street level executive compensation. I did
Speaker 1: not grow up in a poor environment, but you were
Speaker 1: rich if you drove a Cadillac. Okay, maybe I grew
Speaker 1: up next to Westport, Connecticut. I think I saw Ferrari
Speaker 1: once in my whole life until I moved to Los Angeles.
Speaker 1: So you have these incredible paid packages which go on
Speaker 1: to today. Now, one of the things these companies or
Speaker 1: these boards say, if we don't pay this amount of money,
Speaker 1: somebody else will to what the we? Is Jack responsible
Speaker 1: for this incredible run up in executive compensation? Yeah, here's
Speaker 1: another one where I think I'll put a little of
Speaker 1: the blame in his feet, but certainly not all of it. UM,
Speaker 1: no doubt about it. He was one of the first
Speaker 1: CEOs in the nineteen eighties and nineteen nineties to start
Speaker 1: getting these gargantuan pay packages. And it's important to remember
Speaker 1: that he was not an inventor, he was not a founder.
Speaker 1: He is a people manager. Um. He was. He was
Speaker 1: paid to run this company, uh, and he was rewarded
Speaker 1: as if he were a king for it. He made
Speaker 1: first tens of millions of dollars and hundreds of millions
Speaker 1: of dollars. By the end of his career, his net
Speaker 1: worth was approaching a billion dollars. He was on the
Speaker 1: Ford four hundred list of the richest Americans arrive at
Speaker 1: the time. Uh, and so was he emblematic of it? Absolutely?
Speaker 1: Was his board complicit? And do they deserve a ton
Speaker 1: of the blame? Absolutely? Was it probably gonna happen in
Speaker 1: any case? I think, so this is this is one
Speaker 1: where the there were enough other people who saw the opportunity.
Speaker 1: My sense is that, um, it's hard for me to
Speaker 1: see sort of a an alternate history where we don't
Speaker 1: have executive compensation that's just wildly out of control in
Speaker 1: the way that it is today. Um, because you know,
Speaker 1: that's and it's like the American story to me, this
Speaker 1: is where just the nature of who we are as
Speaker 1: a country and our you know, the absence of guardrails
Speaker 1: on on the economy and on capitalism that we seem
Speaker 1: to love so much, it takes us to these truly
Speaker 1: unhealthy extremes and and basically people say, you know, we're
Speaker 1: not going to do anything about it, and and so
Speaker 1: what Yeah, So that that's sort of how I think
Speaker 1: about Welch in the executive compensation. Was he a main driver? Yes?
Speaker 1: Was he solely responsible? I want to be careful there.
Speaker 1: Oh okay. One big element of the book is how
Speaker 1: his disciples go on to blow up these companies across America.
Speaker 1: So he's so successful, other boards want some of this magic.
Speaker 1: These employees that are now CEOs replicate the paradigm, and
Speaker 1: the companies do incredibly poorly. Tell us about that. Even
Speaker 1: before Jack was born, GE was seen as the training
Speaker 1: ground for other executives around corporate America. It had this
Speaker 1: long and distinguished history throughout the twentieth century of being
Speaker 1: the place where other CEOs were taught how to do
Speaker 1: their business, which is to say that when another company
Speaker 1: wanted to hire their next CEO, they looked to GE.
Speaker 1: The thinking was that g E executives were just head
Speaker 1: and shoulders above the rest of the competition. And for
Speaker 1: that reason, people already before Jack wanted to hire from
Speaker 1: g when they needed a new boss. Under Welch, that
Speaker 1: was taken to a wild extreme. And that is because
Speaker 1: in part Jack Welch was so successful during his run
Speaker 1: in generating stock value, and so when other CEOs and
Speaker 1: boards said we need a new CEO. They thought that
Speaker 1: people who worked for Welch might have the Midas touch,
Speaker 1: that if they were able to be a part of
Speaker 1: Welch's machine making so much money for GE shareholders, maybe
Speaker 1: they could do it at all these other companies. And
Speaker 1: as a result, I don't I don't have a specific count,
Speaker 1: and I don't know that anyone does, because there were, frankly,
Speaker 1: so many over so many years. But there are dozens
Speaker 1: and dozens and dozens, probably more than sixty individuals who
Speaker 1: worked directly for Welch and then went on to run
Speaker 1: other US public companies. And while I don't have a
Speaker 1: completely exhaustive list because I don't know again that one
Speaker 1: is available, what I can say with certainty is that
Speaker 1: almost in every case, the same story repeated itself, ad infinitum.
Speaker 1: The CEO was hired by a new company from a
Speaker 1: position at g E. They were giving a multimillion dollar
Speaker 1: pay package that ensured them a gilded retirement no matter
Speaker 1: what happened to that company. They put to work the
Speaker 1: Jackwelt style of management, downsizing deal making, often diving into
Speaker 1: finance in many cases, and then within months, sometimes it
Speaker 1: was sometimes it was quarters, maybe it was a year
Speaker 1: or two in a few cases, but relatively quickly. All
Speaker 1: these bad decisions would catch up with them and with
Speaker 1: the company, and the CEOs almost always left the company's
Speaker 1: worse off than they inherited them. The CEOs did get
Speaker 1: their pay package, but many were forced to resign or
Speaker 1: step down early, and then the companies had to reset
Speaker 1: because it was proven that well, yeah, Jack was able
Speaker 1: to do it for twenty years at g E. The
Speaker 1: strategy just simply does not work, not only in the
Speaker 1: long term, but but oftentimes in the short term too. Okay,
Speaker 1: let's talk specifically about Boeing. So Boeing is a legendary
Speaker 1: American company. They hire a new g disciple, which I
Speaker 1: was not aware of the time, and move the headquarters
Speaker 1: to Chicago. That's like the Dodgers having their front office
Speaker 1: in New York. It just makes no sense. So walk
Speaker 1: us through what happened there, how that guy got the job,
Speaker 1: and why the board was so complicit. Yeah, besides Ge itself,
Speaker 1: there's no company that was more directly shaped by Welch
Speaker 1: than Bowing. It began in n when Bowing merged with
Speaker 1: McDonald Douglas, another fading American aircraft manufacturer and As part
Speaker 1: of that deal, they got this guy named Harry stone
Speaker 1: Cipher who had worked with Jack under uh at Ge
Speaker 1: and then was running McDonald douglas and then joins Bowing
Speaker 1: as part of the merger as a president, not CEO
Speaker 1: at the time, but as president. But because he had
Speaker 1: so much stock in McDonald douglas, all of a sudden
Speaker 1: he's the biggest stock owner at the company. And this
Speaker 1: guy who's just the president of the company was the
Speaker 1: CEO of a subsidiary now that was merged into Bowing.
Speaker 1: He has the most stock, and all of a sudden
Speaker 1: he starts throwing his weight around inside Bowing, and over
Speaker 1: the next several years he becomes CEO and makes, as
Speaker 1: you said, this fateful decision to move Bowing headquarters from Seattle,
Speaker 1: birthplace of commercial aviation in the country, to Chicago. And
Speaker 1: why do they do it? For tax breaks? You know,
Speaker 1: as you said, I love them, I love the Dodgers
Speaker 1: metaphor uh and and it was it had nothing to
Speaker 1: do with running a good business and everything to do
Speaker 1: with making a profit. And in fact, Stonesife for himself
Speaker 1: said this in two thousand four, he gave an interview
Speaker 1: where he said, and some people say I'm not running
Speaker 1: Bowing like an engineering company, and that's right. I'm trying
Speaker 1: to run up like a business people expect to make money.
Speaker 1: It's not an engineering firm. Something to that effect. And
Speaker 1: it was this admission that the Bowing that everyone knew
Speaker 1: and respected, which is a company that was defined by
Speaker 1: quality aeronautical engineering, was not long for this world. But
Speaker 1: he was just the first. Harry Stonesifer was the first
Speaker 1: of three CEOs who worked directly for Welch who have
Speaker 1: run Bowing over the last twenty years, and I've really
Speaker 1: overseen its declined as a great American company. After stone
Speaker 1: Cipher was fired in two thousand five for having an
Speaker 1: affair with the subordinate. The guy that they tapped to
Speaker 1: replace him as Jim McNerney, another Welsh disciple who was
Speaker 1: actually one of the runner ups after Jeff mmel to
Speaker 1: take over Welch's job. Jim McNerney takes over Bowing after
Speaker 1: running three M for a few years and keeps on
Speaker 1: with this sort of implementation of the Jack Welch playbook.
Speaker 1: He looks at what they do uh and how they're
Speaker 1: going to build their next plane, the seven, and he
Speaker 1: makes two absolutely pivotal decisions. He says, we don't want
Speaker 1: to build it in Seattle because there's too much union
Speaker 1: labor there. So they open up a new manufacturing facility
Speaker 1: in Charleston, where there's not as much unionized labor and
Speaker 1: where there's no history of aviation manufacturing. And so, guess what,
Speaker 1: there's all these problems on those planes, something I documented
Speaker 1: on the front page of the paper. And the other
Speaker 1: thing he does is start to embrace outsourcing. Is Jack
Speaker 1: Welch love outsourcing? And so where is Boeing historically manufactured
Speaker 1: something like two thirds of the parts on any given
Speaker 1: airplane and outsource the other third. The ratio has flipped
Speaker 1: under McNerney, and all of a sudden, they're outsourcing two
Speaker 1: thirds of the parts on their own plane and only
Speaker 1: building a third of it themselves. And they lose control
Speaker 1: of quality, that lose control of timing. And then McNerney
Speaker 1: makes the what I think is the most fateful decision
Speaker 1: in two thousand and eleven, he's about to lose a
Speaker 1: big order of seven thirty seven's to America to air Bus,
Speaker 1: his chief rival, two American airlines, and he tells American Airlines,
Speaker 1: you know what, give us another week. We got a
Speaker 1: decision to make. They decide to redesign the seven thirty
Speaker 1: seven one more time, rather than create a new airplane
Speaker 1: which would have taken them longer, which would have made
Speaker 1: would have which would have meant that they would have
Speaker 1: lost out this critical order to air Bus. And he says,
Speaker 1: we will redesign the seven thirty seven one more time,
Speaker 1: and that point becomes the seven thirty seven packs, which
Speaker 1: of course crashed twice in five months, killing three sex people,
Speaker 1: something I spent a year of my life reporting on.
Speaker 1: McNerney is finally replaced by a man named Dennis Muhlenberg.
Speaker 1: Muhlenberg oversees the two crashes, the period around the two crashes,
Speaker 1: and when Muhlllemberg is finally fired because it's completely inept
Speaker 1: in managing Bowing through a crisis, he's replaced by Dave Calhoun,
Speaker 1: yet another Welch disciple, a guy who, at the age
Speaker 1: of forty two was considered a potential successor to Welch
Speaker 1: because he was such a likeness of the young Welch himself,
Speaker 1: and who to this day is the CEO of the
Speaker 1: Boeing Company. Okay, how did you end up on the
Speaker 1: Bowing beat? I walked into the newsroom one morning in
Speaker 1: I guess it was March of two thousand nineteen, having
Speaker 1: never written about the airline industry before, but sitting next
Speaker 1: to the woman who had been covering airlines for US,
Speaker 1: but who happened to be on vacation that day. And
Speaker 1: when the business editor of the New York Times wandered
Speaker 1: over to our desk, she said, Julie's gone, David, what
Speaker 1: are you doing right now? And I said the only
Speaker 1: right answer, which is I don't know what am I
Speaker 1: doing right now? You tell me, boss, And she said,
Speaker 1: called Bowing because another plane had just crashed. And that
Speaker 1: was how I began covering it. Um one of the
Speaker 1: things we can do as reporters, um is learned pretty quickly.
Speaker 1: And so the next year of my life was a
Speaker 1: UM I was going to use a poor metaphor there,
Speaker 1: but but but an accelerated learning period of trying to
Speaker 1: understand the airline industry and UM getting, you know, ultimately
Speaker 1: pretty deeply sourced inside the Bowing company, you know, Boeing
Speaker 1: obfuscated and denied responsibility. Trump seemed to be on their
Speaker 1: team to what did we were you in the press
Speaker 1: responsible for opening this story and shining light on the facts.
Speaker 1: And what was it like being right? You know, they're
Speaker 1: on the point of a story. Well, I mean, we
Speaker 1: broke a ton of important critical stories in the Bowing coverage.
Speaker 1: So did the Wall Street Journal, so did the Seattle Times. Uh,
Speaker 1: there was a huge amount of media interest, and there's
Speaker 1: no doubt that some of the revelations that the Times,
Speaker 1: the Journal in the Seattle Times were responsible in helping
Speaker 1: uncover tremendously helped shape the narrative and um ultimately exposed
Speaker 1: what had actually happened. It's also true that the House
Speaker 1: Transportation and Infrastructure Committee took this very seriously and devoted
Speaker 1: a huge amount of federal legislative investigative muscle to this story.
Speaker 1: And as a result, we're able to obtain I gotta
Speaker 1: believe millions and millions of pages of Bowing documents, of
Speaker 1: which many hundreds or maybe a few thousand were ultimately
Speaker 1: made public and earns about the crashes. Um, So there
Speaker 1: were there were a lot of eyes on Bowing after
Speaker 1: the second crash, of course. Uh. And I want to
Speaker 1: respect the work we did and our competitors did, but
Speaker 1: but I don't think it's fair to say that the
Speaker 1: press alone was responsible for uncovering, you know, the true
Speaker 1: and full story of what happened inside Boeing. Now is
Speaker 1: your role, in your role as a reporter for The
Speaker 1: New York's Times on this beat? To what degree was
Speaker 1: reporting based on accumulating and reading these documents as opposed
Speaker 1: to getting on the phone sending emails asking people questions.
Speaker 1: Is this for Bowing or for the book for Boeing? Oh,
Speaker 1: it was a mix. I mean, we we had a
Speaker 1: spreadsheet and I think I can talk about this publicly,
Speaker 1: but there was a team of reporters working on It
Speaker 1: wasn't just me, and we as a team had a
Speaker 1: shared Google doc that, by the end of our year
Speaker 1: on this story had the names of more than a
Speaker 1: thousand people who we had contacted. And so there was
Speaker 1: a lot of cold calling. There was knocking on doors,
Speaker 1: There were handwritten letters that were sent. Uh, there were
Speaker 1: you know, innumerable LinkedIn messages and Twitter dems. We we
Speaker 1: worked real hard to talk to as many people as
Speaker 1: we could, and we ultimately got you know, many many
Speaker 1: important voices on the record. Um who who for? You know,
Speaker 1: A variety of reasons initially didn't want to go on
Speaker 1: the record, and and that was pivotal reporting that did shape,
Speaker 1: um beyond, sort of the arc of the investigation itself. Definitely,
Speaker 1: I think I can say with confidence affected personnel decisions
Speaker 1: at Boeing. It was, you know, just the day after
Speaker 1: I published a story on the front page of The
Speaker 1: New York Times with the CEO of Southwest Airlines essentially
Speaker 1: bad mouthing bowing and its leadership, that Dennis Muhgenberg was fired. Uh.
Speaker 1: And those kind of things matter. Um Uh, those kind
Speaker 1: of stories definitely, as you know, get noticed inside a
Speaker 1: big company. Um. So we talked again. You know, I
Speaker 1: personally talked to hundreds of people. With my colleagues, we
Speaker 1: talked to more than a thousand people, and we read
Speaker 1: I don't know how many, you know, thousands of pages
Speaker 1: of airline manuals and documents along the way. Okay, I
Speaker 1: want to drill down really to where the rubber meets
Speaker 1: the road. People are more sophisticated now than they used
Speaker 1: to be. Something happened such that you're at the center
Speaker 1: of a news item. Reporters come out of the woodwork.
Speaker 1: They want to be your best friend. Whatever happens, they
Speaker 1: move on to the next story when they're done with
Speaker 1: you and people are more sophisticated than that. To what
Speaker 1: degree are you anxious about asking people questions? And and
Speaker 1: a lot of people are not withcoming? How do you
Speaker 1: convince them to be forthcoming? Yeah, I don't have a
Speaker 1: lot of anxiety about asking people questions. Um, I'm I
Speaker 1: put my cards on the table when I'm talking to someone,
Speaker 1: I tell them what I want to talk about, So
Speaker 1: that doesn't. Um, that's not a big inhibitor in my
Speaker 1: own work in terms of convincing people to talk to
Speaker 1: us or to go on the record about things they
Speaker 1: might be uncomfortable with. That's one of the hardest things
Speaker 1: and I'm I'm frankly not an expert at it. That's
Speaker 1: I've done some of that in my career, but it's
Speaker 1: not my bread and butter. Um. I think that you know,
Speaker 1: people like my friend Emily Steele, who helped break the
Speaker 1: Bill O'Riley story, our colleagues Jodi Canter and Megan Tooey
Speaker 1: who broke the Harvey Weinstein story for us, they are
Speaker 1: way more seasoned than I in convincing people to talk,
Speaker 1: especially on the record, about really difficult and challenging things.
Speaker 1: H But I think at the end of the day.
Speaker 1: What they would say, if I could summarize for them,
Speaker 1: and what I would say is, you gotta appeal to
Speaker 1: the greater good. And you've got to convince people that,
Speaker 1: even if they don't want to do this, and they
Speaker 1: believe that there might be some personal repercussions for them
Speaker 1: in the form of blowback or embarrassment or making them
Speaker 1: a public figure in a way they're not ready for,
Speaker 1: that there is a greater social good at work here,
Speaker 1: and that they have the opportunity to, you know, help
Speaker 1: make things better for other people, to prevent some suffering
Speaker 1: for other people down the line, uh, and to make
Speaker 1: the world a better place. And I think if you
Speaker 1: can make that argument convincing on you, you got a shot.
Speaker 1: Do you personally have any anxiety about flying on a
Speaker 1: seven seven back? No, because a variety of reasons. I mean,
Speaker 1: I like, uh, tens of thousands of commercial planes take
Speaker 1: off on land every day and almost none of them
Speaker 1: ever crashed. So just by the law of numbers, uh,
Speaker 1: I just like my chances. Um. It's also true that
Speaker 1: the seven even Max has undergone a series of changes
Speaker 1: and revisions and updates that have addressed the problem that
Speaker 1: was responsible for those two crashes. So there's there's no
Speaker 1: that you know, I shouldn't be speaking total declarative, but
Speaker 1: there's almost a zero chance that that seem problem whatever encounter,
Speaker 1: be encountered again. But more more broadly than that, I
Speaker 1: just the law of big numbers suggest that you're very
Speaker 1: very very very very unlikely to die in a commercial
Speaker 1: erwle plane crash. Okay. Recently the New York Times had
Speaker 1: a change in editorship. What has changed, uh, not a
Speaker 1: lot um. You know, Joe con who's our new executive editor,
Speaker 1: was an instrumental part of guiding the daily report for
Speaker 1: years now. He's a known quantity in the newsroom. I
Speaker 1: think his priorities are very avigned with those of Dean mackay.
Speaker 1: So I would not be the first to note that
Speaker 1: this is a pretty drama free succession at the New
Speaker 1: York Times, and I think that's a good thing for
Speaker 1: the paper. Well, many people have commented, and I've noticed
Speaker 1: myself as an avid Times reader, that certainly on the
Speaker 1: political front, there's I don't want to say a few
Speaker 1: or false equivalence us there's more reporting on the right
Speaker 1: and things that are troubling than they're used to be before.
Speaker 1: Is that something you feel at all? I guess I
Speaker 1: would dispute that conclusion. But I would also note that
Speaker 1: Joe has been executive editor for a matter of weeks,
Speaker 1: and that kind of reporting takes months and months to
Speaker 1: plan and deliver. So whatever changes people might have noticed
Speaker 1: on a particular way that we're covering something in the
Speaker 1: past couple of weeks is probably reflective of decisions that
Speaker 1: were made. Uh you know many months prior. How do
Speaker 1: you end up working in the New York Times? Uh?
Speaker 1: So someone just had a good quote about you know,
Speaker 1: luck is what is it? Luck is where opportunity meets
Speaker 1: hard work or something like that. So I feel lucky. UM.
Speaker 1: I also had good opportunities. But I also busted my
Speaker 1: butt for a long time. I was late to the
Speaker 1: journalism game. I was not part of my high school newspaper,
Speaker 1: my college newspaper. It was really in my early twenties
Speaker 1: when I got the journalism bug, and I was designing
Speaker 1: museum exhibitions at the time, doing nothing like reporting at all. Um,
Speaker 1: but I got the bug, and I went back to
Speaker 1: journalism school at Berkeley, and UM, I think a couple
Speaker 1: of things I had a really great professor, a couple
Speaker 1: of really great professors. I got a really great story
Speaker 1: early on that gave me a huge amount of confidence,
Speaker 1: um that I could really do this and and and
Speaker 1: make a go of it. And then I decided to
Speaker 1: focus on business reporting pretty early on, which was a
Speaker 1: strategic moved and one that that really has worked to
Speaker 1: in my advantage over the years. So why business reporting.
Speaker 1: I realized no one else was interested in it and
Speaker 1: I was, and that you know, that delta there was
Speaker 1: very compelling to me because I understood right away not
Speaker 1: only that there were huge stories in business right, businesses everything,
Speaker 1: they're huge stories here. It was super fascinating to me.
Speaker 1: It was where there was power. I could see that
Speaker 1: there was power there and and it was a way
Speaker 1: into reporting on powerful people. And the fact that I
Speaker 1: basically had it to myself among my ass at the
Speaker 1: business at the journalism school meant that it was pretty
Speaker 1: wide open. Uh. And then I also realized that there
Speaker 1: were jobs in it, and I didn't want to be like,
Speaker 1: you know, making sixteen thousand dollars a year right in
Speaker 1: features about street poets for the rest of my life.
Speaker 1: I wanted, like I was gonna do this, I wanted
Speaker 1: to have a real career. Okay. One of the criticisms
Speaker 1: of the New York Times is there's groupthink, and it's
Speaker 1: really like its own sports team, and you don't really
Speaker 1: want to be too much of a star, go too
Speaker 1: far out, maybe hurt the team. To what degree do
Speaker 1: you feel pressure to fall in line with the team
Speaker 1: in general or be fearful that you raise your head
Speaker 1: and do something might piss people off. I don't even
Speaker 1: know what you're talking about. Give me an example. Okay, Well,
Speaker 1: you know there was the whole Taylor Wren's thing that
Speaker 1: people were blowing back. There was the very wise thing
Speaker 1: that people were blowing back. You know what people don't
Speaker 1: realize is these newspapers. This tends to be people who
Speaker 1: see this as a lifelong career, and their employers are
Speaker 1: these giant institutions, writing books individually, etcetera. Something completely different.
Speaker 1: So such that people end up becoming even though they're individuals,
Speaker 1: they're part of the group, and then therefore they can
Speaker 1: react to another person in the group maybe having too
Speaker 1: much success or doing something that pisces them off. We
Speaker 1: had a certain thing to happen at the Washington Post.
Speaker 1: You're in the belly of the beast. Is it just
Speaker 1: calm or can you feel these things? All? Right? I'm
Speaker 1: gonna back up. Uh, I'm an employee of a for
Speaker 1: profit corporation. They pay me to do a job. My
Speaker 1: responsibility is to do my job really well as well
Speaker 1: as I can for my organization. So that's how I like.
Speaker 1: That's the fundamental level that which I understand my relationship
Speaker 1: with The New York Times. I get paid to do
Speaker 1: a job. You said, like I you know, a lot
Speaker 1: of people see it as a life on career. I don't.
Speaker 1: I won't necessarily accept that as a as uh as
Speaker 1: the way I think about my time at the times,
Speaker 1: I'm super grateful I've been here for nine years. I'm
Speaker 1: in no rush to leave. I have no plans to leave.
Speaker 1: But I also don't necessarily think it's the only job
Speaker 1: I'll ever have in my life. I think as some
Speaker 1: people might feel that way, sure, but it's not necessarily
Speaker 1: how I think about it. In terms of interpersonal dynamics,
Speaker 1: I don't think it's different than any other organization. If
Speaker 1: you and I'm not speaking about any specific incident or
Speaker 1: any of the ones you just mentioned, but if you
Speaker 1: work at PepsiCo and you publicly are talking shit about
Speaker 1: your colleagues or probably be repercussions if you're on a
Speaker 1: sports team and you go to the press conference after
Speaker 1: a loss and say, you know, like you know, if
Speaker 1: you're Katie and Katie is like Kyrie was a piece
Speaker 1: of ship, like he's you know, such and such and
Speaker 1: such and such and goes off on your teammate, there
Speaker 1: might be consequences. So the do It's no doubt about it.
Speaker 1: Institutions like the New York Times get a huge amount
Speaker 1: of scrutiny, But I don't necessarily believe that there is
Speaker 1: a you know something some like weird magic sauce about
Speaker 1: the a newspapers culture um in terms of can I
Speaker 1: feel like, of course, you know, like when when big
Speaker 1: things royal and organization, the individuals of that organization, whether
Speaker 1: there or not, they're directly a part of it, They
Speaker 1: notice it, they feel it. And so again I what
Speaker 1: I alluded to earlier when we talked about the new
Speaker 1: executive editor Pertains here too write like things are pretty
Speaker 1: calm at the New York Times right now, internally, at
Speaker 1: least for me at least what I'm seeing and for
Speaker 1: the most part, that's good, and I think it's reflective
Speaker 1: of a healthy culture where reporters by and large are
Speaker 1: focused on doing the work, which is what they pay
Speaker 1: us for. Okay, you beat recently changed to the climate.
Speaker 1: How did that happen? I won't borroy you with the
Speaker 1: whole way it happened, but what I'll say is that
Speaker 1: I have been on the business desk for the better
Speaker 1: part of nine years at the paper, and I've done
Speaker 1: all sorts of different things than the business desk. And
Speaker 1: I was at a place and the paper was at
Speaker 1: a place where we realized there was the opportunity for
Speaker 1: me to do uh, sort of refocus my energies, and
Speaker 1: the way to do that while capitalizing on all my
Speaker 1: experience reporting on business, all my connections in the business
Speaker 1: world and get me focused on the topic I'm really
Speaker 1: excited about, was to essentially move me from the business
Speaker 1: desk to the climate desk. But I'm still I'm still
Speaker 1: writing about business, so my focus is on the intersection
Speaker 1: of the business world and public see and that's a
Speaker 1: that's a big overlap. But I'm still very much reporting
Speaker 1: on the business world, um, though very much through the
Speaker 1: lions of climate change and particularly the energy transition. Okay,
Speaker 1: so what's going on? Give us a snapshot. Well, the
Speaker 1: humanity has been burning fossil fuels relentlessly for the past
Speaker 1: fifty years, depending when you start counting it, and it's
Speaker 1: dramatically changed the climate of the Earth in ways that
Speaker 1: are creating exponentially more destructive and severe weather events, and
Speaker 1: that are starting to affect and endanger and jeopardize not
Speaker 1: only you know, many millions of humans, um, but many
Speaker 1: other parts of the ecosystem as well. And while there
Speaker 1: has been decades of scientific consensus UH making clear the
Speaker 1: impair wative to stop burning fossil fuels, we as a
Speaker 1: human society have not done a very good job following
Speaker 1: the advice of our scientists, and on balance, we are
Speaker 1: still headed in the wrong direction. Needles say, there's two
Speaker 1: sides here. There's climate deniers their corporations that have an
Speaker 1: investment in burning UH fossil fuels. So to what degree
Speaker 1: do you feel you're preaching to the converted? How do
Speaker 1: you penetrate the minds of people who could make better decisions,
Speaker 1: whether to be corporations or people who believe otherwise? Yeah,
Speaker 1: I don't, I don't, Again, Bob, I don't see that
Speaker 1: as my job, right, Like, my mandate isn't to convert people. Um.
Speaker 1: My mandate is to report on what's happening and be
Speaker 1: as accurate as possible and try to find stories that
Speaker 1: help explain how we got here and where we're going.
Speaker 1: So I'm not in the business of of converting people. Um.
Speaker 1: You know, if that happens along the way, and and
Speaker 1: people who previously didn't believe in science believe in science
Speaker 1: as a result of my reporting, great, but that's that's
Speaker 1: not my remit. Okay, we're just getting a little deeper
Speaker 1: into the fact. We have the Supreme Court decision that
Speaker 1: ultimately neuter the e p A to a great degree.
Speaker 1: What's the landscape going forward? Well, I would, I would,
Speaker 1: I would dispute your characterization of that ruling of West Virginia. Uh.
Speaker 1: By all accounts it was it was not great for
Speaker 1: the power of the e p A to regulate the
Speaker 1: emissions of power plants in general, but it was not
Speaker 1: nearly as expansive of a ruling as some climate advocates feared. Um,
Speaker 1: So the e p A still does the have the
Speaker 1: ability to in to regulate the emissions of individual power plants.
Speaker 1: But but it makes it more complicated to regulate them
Speaker 1: as a group. All that is a roundabout way of
Speaker 1: saying that the Supreme Court is uh, well, the Supreme
Speaker 1: Court is and this decision is one of the ways
Speaker 1: in which the Biden administration has been essentially losing the
Speaker 1: tools it has as its disposal to reduce overall emissions
Speaker 1: in the United States, and the inability to pass Build
Speaker 1: Back Better was one of those. There are other issues
Speaker 1: going on that my my colleague Coral Davenport has reported
Speaker 1: on in depth. But the upshot is we as a
Speaker 1: nation and it's largely a result of the hyperpartisanship and
Speaker 1: as you said, a pretty clear partisan rift between how
Speaker 1: the different parties are approaching climate and energy issues. UM
Speaker 1: are not moving very quickly to reduce the United States
Speaker 1: is greenhouse gas emissions. And if one wanted to reduce those,
Speaker 1: we're the opportunities, well, there are many and I want
Speaker 1: to be careful here because I am not an expert, UM,
Speaker 1: but the Buildback Better plan and the reconciliation package that
Speaker 1: was on the table and that was essentially killed by
Speaker 1: Senator Mansion, who of course is from West Virginia and
Speaker 1: has business interests tied to the coal industry. Uh. That bill,
Speaker 1: that that package would have uh advocated huge sums of
Speaker 1: money towards essentially transitioning power generation in the United States
Speaker 1: to renewable energy. And that's that. That is not necessarily
Speaker 1: the number one way to reduce emissions, but it's one
Speaker 1: of the biggest, right, Like, let's stop using We don't
Speaker 1: use a whole lot of coal in this country anymore, um,
Speaker 1: but let's stop using natural gas. Uh. Let's for power generation.
Speaker 1: Let's stop using coal wherever it is still used. Uh.
Speaker 1: And let's start using more oil. Excuse me, more solar,
Speaker 1: more wind, uh, and more hydro electricity. These are renewable
Speaker 1: sources of energy that do not create new emissions. Okay,
Speaker 1: just on a very practical matter. You know, we've had COVID.
Speaker 1: Everything's a little bit crazy. Maybe we should go before that,
Speaker 1: to what degree do you go into the office every day?
Speaker 1: To what degree do you choose your own topics? Are
Speaker 1: they assigned? Do you write stuff specifically be printed? Do
Speaker 1: you write stuff? And they rejected? What's the whole process
Speaker 1: of the mechanics there? Well, I've been in the office
Speaker 1: more than most for the last year and a half
Speaker 1: or so I like the office, I like my desk,
Speaker 1: I like seeing people and talking to people. Um. But
Speaker 1: it's also the case that not I'm one of I'm
Speaker 1: in the minority still And so have you had COVID? Yes,
Speaker 1: I've had COVID twice as a matter of fact. Um uh.
Speaker 1: And I'm fortunate to still be said in here and
Speaker 1: and to not have any severe lasting impacts at least
Speaker 1: that I'm aware of right now, maybe in my brain. Um.
Speaker 1: But listen. As for the reporting process, um, it's a
Speaker 1: mix of writing stories that the editors have asked for
Speaker 1: and then working with them to identify targets that again
Speaker 1: sort of help us continue our mission of trying to
Speaker 1: write fact based stories that that helped explain where the climate,
Speaker 1: the situation is and what's what's to come. So I
Speaker 1: would say, on balance, you know, since I joined the
Speaker 1: Climate desk, most of my sort of biggest marquee pieces,
Speaker 1: you know, big investigative features those kind of things, have
Speaker 1: been ones I've come up with myself. I've got a
Speaker 1: good line of reporting I'm excited about, which was uh,
Speaker 1: you know, probably myself and another reporter sort of stumbled
Speaker 1: across some stuff, and I'm I'm picking it up and
Speaker 1: running with it. But it's all is the case. I
Speaker 1: wrote a news analysis story on Friday after the West
Speaker 1: Virginia ruling that was very much something the editors wanted
Speaker 1: to see and it was their idea. And I'm like,
Speaker 1: that's a good idea. I can turn that around in
Speaker 1: a day or so. And there wasn't the paper. Let's
Speaker 1: go back to the book. There was a review in
Speaker 1: the New York Times book review by Curdie Anderson which
Speaker 1: was more than relatively negative. Now the caveat here is
Speaker 1: he wrote a book which I would not call identical,
Speaker 1: but many people feel covered a similar subject. How do
Speaker 1: you feel about all that. I didn't write my book
Speaker 1: for book reviewers. Uh, And so I'll just leave it there.
Speaker 1: Let me put it in in a different way. The nature
Speaker 1: of being in the public eye is you get a
Speaker 1: lot of feedback. There are people who attack you just
Speaker 1: to attack you. So now that your level has been raised,
Speaker 1: your profile has been raised, what's that been like for you.
Speaker 1: I've been surprised how few people have really come at
Speaker 1: me and tried to argue with the premise of the book. Right,
Speaker 1: I make a make a pretty clear Uh, rhetorical argument
Speaker 1: in this book, which is that Jack o Elch bears
Speaker 1: singular responsibility for a lot of the problems we have
Speaker 1: in our society. Um. I have yet to see someone
Speaker 1: sort of take the other side of that debate in
Speaker 1: a really forceful way. Um ah. And that to me
Speaker 1: has been surprising. Even when Jeff you know, Jack's successor,
Speaker 1: came after me on LinkedIn, it was in this sort
Speaker 1: of limp way of saying, like Jack was actually a
Speaker 1: good manager, all right, Like no effort to to dispute
Speaker 1: the actual merits of my argument, okay, And that to me, Um,
Speaker 1: you know, I'm not saying I'm entirely right. I mean,
Speaker 1: I believe in my thesis. But but this is a
Speaker 1: book that was meant to start a conversation. And what
Speaker 1: I've been really gratified by is the fact that people
Speaker 1: want to have this conversation. And certainly not everyone agrees
Speaker 1: with me. Um. But what you said, honestly about what
Speaker 1: you said in in your newsletter is one of my
Speaker 1: favorite things. And it's a quote I'm using and I'm
Speaker 1: telling my marketing people to use. You said if everyone
Speaker 1: in America read this book, there would be a revolution.
Speaker 1: And I was God, God, damn, that's right, right, that's
Speaker 1: actually that was the intent. That was the spirit I
Speaker 1: was trying to provoke with this book. And the fact
Speaker 1: that you and others have responded to it to me,
Speaker 1: UM suggests that at least you know, that effort to
Speaker 1: spark a conversation, to get us talking about these big
Speaker 1: issues and how we can live in a in a
Speaker 1: society that works for more people. Um, was was at
Speaker 1: least somewhat successful. And commercially is the book met your expectations?
Speaker 1: Exceeded them? Disappoint did you? Yeah? Exceeded? Uh? It was
Speaker 1: a hit, um. And I I was a nervous author
Speaker 1: right the the in the days and months and weeks
Speaker 1: before we knew how this book was doing, and I
Speaker 1: was haveing, I was deeply nervous. But listen. It debuted
Speaker 1: on the New York Times bestseller List, It was on
Speaker 1: the Wall Street Journal best seller list. It hit number
Speaker 1: twenty eight in all books on Amazon. Uh. It's gotten
Speaker 1: a huge amount of press coverage. UM. I will note
Speaker 1: almost all of it favorable, with a few notable exceptions
Speaker 1: which I can take my lumps on and keep keep
Speaker 1: marching forward. And uh and yeah, and like people are
Speaker 1: talking about this, and that that to me was like,
Speaker 1: if people want to talk about this, and if it
Speaker 1: gets if it fires people up, you know, whether they
Speaker 1: get piste off about it or not, I'm fine, Um,
Speaker 1: as long as they're sort of having the argument in
Speaker 1: good faith. Uh, that's gravy to me. I hope people
Speaker 1: just agree with it, right, Like, if if it's not Jack,
Speaker 1: tell me who it is, Tell me how we got here?
Speaker 1: Tell me what's wrong with our society that this? You know,
Speaker 1: CEO has makes six times with the medium employee works
Speaker 1: makes and and then it takes like three jobs for
Speaker 1: a low income family to keep food on the table, right, Like,
Speaker 1: how did we get here in the world today? There's
Speaker 1: so many messages. You've had a successful book, What is
Speaker 1: the key to getting the message out? I had a
Speaker 1: great team. I'm not I'm not b S and you.
Speaker 1: I have good marketing people at Simon and Schuster who
Speaker 1: who did humans work? Um? And I was very engaged
Speaker 1: in it as well. I tried real hard to get
Speaker 1: people to buy this book. I didn't just write it. UM.
Speaker 1: So there's some hustle involved, for sure, But I think
Speaker 1: at the end of the day, you have to have
Speaker 1: a really crystalline idea that people want to talk about,
Speaker 1: and and I was I did know if this was
Speaker 1: going to be one of those, but but clearly it
Speaker 1: has been, and it's it's helped me, you know, if
Speaker 1: I if I ever write another book, I think I've
Speaker 1: learned things through this process that have really made me
Speaker 1: realize what what what some of these successful elements of
Speaker 1: a book launch would be. And I think number one
Speaker 1: is like, can you can you stay in a sentence
Speaker 1: what your idea is and does that sentence want to
Speaker 1: make people keep talking? Okay? In the actual process of
Speaker 1: writing the book, did you take time off from the
Speaker 1: times you write in your spirit time? How did you
Speaker 1: do it? I didn't take time off. I did in
Speaker 1: my spare time. It was incredibly incredibly quick process. UM.
Speaker 1: I had the idea for the book in April of so,
Speaker 1: just over two years ago. I wrote the proposal UM
Speaker 1: in August of so, less than two years ago. I
Speaker 1: didn't sign a contract until October November, so now we're
Speaker 1: talking like eighteen months ago. And then I crashed this
Speaker 1: thing in a in a year or so, which is
Speaker 1: an absurd timeline for a book. Uh So, I my
Speaker 1: wife gets lots of thanks for bearing with mean and
Speaker 1: helping take care of our kids. Well, I spent time
Speaker 1: writing this book. Well, thanks for taking the time to
Speaker 1: talk to us here, David. Really fascinating. I'm sure everybody
Speaker 1: will be stimulated. I've already gotten a ton of email
Speaker 1: people bought and read the book. I'm sure now even
Speaker 1: more people will. So thanks for writing the book. Because
Speaker 1: someone had to write the truth. That's why I had
Speaker 1: to get it immediately said, someone is speaking the truth
Speaker 1: about Jack Welch, which was sitting there in plain sight.
Speaker 1: So in any event, thanks so much for taking the time.
Speaker 1: Thank you so much, Bob, and you you literally gave
Speaker 1: me my favorite quote, my favorite blurb of this whole cycle,
Speaker 1: and I'll never forget it. Wow, that's great. Until next time.
Speaker 1: This is Bob Lefts