Speaker 1: This is Mesters in Business with very Results on Bloomberg Radio.
Speaker 1: This week on the podcast, I have an extra special guest.
Speaker 1: Bill Cohen is a fixture on Wall Street for a
Speaker 1: long time, both as an investment banker at Lizard Freres
Speaker 1: and eventually Meryl and JP Morgan Chase, as well as
Speaker 1: an author. He is one of the co founders of Puck.
Speaker 1: He is a writer for vanley Fair, for The New
Speaker 1: York Times, for Bloomberg. He's really well known on the
Speaker 1: street and puts out a number of fascinating books, arguably
Speaker 1: a sort of parallel career to Michael Lewis. He's at
Speaker 1: Lizard Freres for seven eight years and then sometime later
Speaker 1: writes his version of Liars Poker, which is a history
Speaker 1: of Lizard Frere. His most recent book, Power Failure, about
Speaker 1: the rise and fall of General Electric, is really of
Speaker 1: fascinating history with some fun stories and a lot of
Speaker 1: really interesting gossip throughout it. It's deeply researched, deeply reported,
Speaker 1: and really a very enjoyable read. I think you'll find
Speaker 1: this conversation quite fascinating. I know I did. With no
Speaker 1: further ado, my conversation with Bill Cohen, author of Power failure.
Speaker 1: William Cohen, Welcome back to Bloomberg. Thank you, Barry. It's
Speaker 1: great to be here. So let's talk a little bit
Speaker 1: about your career, which began as a reporter, went into
Speaker 1: M and A banking, and then went back to writing.
Speaker 1: You start writing for the Rally Times. Tell us a
Speaker 1: little bit about what you were doing there. I was
Speaker 1: doing something I probably should never have been allowed to do,
Speaker 1: which was right about public education in Wake County, which
Speaker 1: was fine. I had uh just graduated from Columbia School
Speaker 1: of Journalism again Masters and Journalism, and I had done
Speaker 1: my thesis on public schools in Central Harlem and Central
Speaker 1: Harlem School District. I went to one of the best
Speaker 1: schools in the district and one of the worst schools
Speaker 1: in the district and just sat there for like six
Speaker 1: weeks and tried to absorb what was going on, and
Speaker 1: no one had ever done that. I had to get
Speaker 1: special permission from the Board of Education in Brooklyn back
Speaker 1: when they still had that to do that. But uh,
Speaker 1: and then I went to Raleigh, uh and covered public
Speaker 1: schools in Raleigh. But I've never been to a public
Speaker 1: school in my life, so other than sitting in the
Speaker 1: classrooms in Central Harlem. So it was great, but it was,
Speaker 1: you know, like anything, a total learning experience. So you
Speaker 1: end up becoming an investment banker. You work at places
Speaker 1: like Loizard Freres and Merrill Lynch and JP Morgan. Tell
Speaker 1: us a little bit about your banking background. What did
Speaker 1: you do, what sort of deals? By the way, this
Speaker 1: wasn't like I'm going to try this for six months
Speaker 1: and go back to writing. You did this for seventeen years. Yeah,
Speaker 1: And I actually started out of business school and when
Speaker 1: had gone back to Columbia. So I graduated from business
Speaker 1: school in nine and went to G Capital for two
Speaker 1: years financing leverage buyouts. And I also spent a year
Speaker 1: there working for the chief credit officer at G Capital,
Speaker 1: learning all the different business lines at G Capital, And
Speaker 1: then I went to Lazard and so let's stay with
Speaker 1: the Capital for a minute, because they're gonna loom large later,
Speaker 1: Lenny relevant Um. In the eighties they were really a
Speaker 1: financial arm of ge in a way to facilitate its
Speaker 1: client base. It was seems like in the nineties it
Speaker 1: evolved into something else. When you were there, was it
Speaker 1: a financial engineering firm or was it a more traditional
Speaker 1: credit finance farm by the time I was there, and
Speaker 1: it started in the depression, you know, financing customers purchase
Speaker 1: of ges, appliances, right because credit was hard to come
Speaker 1: by during those years. Everybody General Motors had a credit
Speaker 1: on all the big manufactors that right, G had a
Speaker 1: benefit in over other companies in that regard because they
Speaker 1: had a triple A credit rating, so they were able
Speaker 1: to borrow very cheap and then lend out expensively, and
Speaker 1: they were able to arbitrage that credit rating, which of
Speaker 1: course Jack Welch did in spades. And by the time
Speaker 1: I got there, you know, uh, you know, Jack had
Speaker 1: been CEO for you know, six years, and he was
Speaker 1: well into turning G Capital into a financial powerhouse. So
Speaker 1: by the time I got there, it was well beyond
Speaker 1: just you know, financing customer acquisitions and appliances. I mean,
Speaker 1: we were actually, you know, I probably shouldn't have been
Speaker 1: doing it because I had been a journalist covering public
Speaker 1: schools and NW very nothing about leverage biouts. But I
Speaker 1: was financing leverage biouts a G Capital and that was
Speaker 1: one of eighteen or twenty business lines that the business
Speaker 1: was in, and you know, just making huge profits arbitrage
Speaker 1: and that credit rating so you go from GE Capital
Speaker 1: to Lazard. Next tell us about laz Art. Well, Lazar,
Speaker 1: it couldn't have been more different than ge old school,
Speaker 1: classic partnership, managing risk, very different headspace. Oh, totally, totally.
Speaker 1: I mean I had always been fascinated by Lizard because
Speaker 1: I had read Carrie Reig's book The Financier about Andre
Speaker 1: my Ear, which was a fabulous book. And Carrie reg
Speaker 1: was a great writer, but he died way too young. Uh.
Speaker 1: And you know, as it was, I've been a Francophile
Speaker 1: my whole life. I read that book, I wanted to
Speaker 1: work at Lazard. When I was at business school, I
Speaker 1: got an interview at Lizard with two partners who probably
Speaker 1: are still there. Uh. And uh, they didn't even send
Speaker 1: me a ding letter, Barry, do you know what a
Speaker 1: ding letter? Thanks for coming in, thanks for we don't
Speaker 1: need you, you know, good luck to you. Don't hold
Speaker 1: your breath. They didn't even send me one of those.
Speaker 1: They just ignored me. Okay. And then two years later
Speaker 1: I tried again. Uh, and I wanted to go you know,
Speaker 1: G Capital. You have to understand, like investment banking was
Speaker 1: so hot then everybody wanted to be it was it
Speaker 1: was monstrous. I mean, investment bankers were rock stars, right.
Speaker 1: So I was a g capital and you know, we
Speaker 1: were getting business because we had access to all this capital.
Speaker 1: You know, I became enamored of this idea of getting
Speaker 1: business through your ideas, right, And that's what happened. That
Speaker 1: was Lazar Lazard had no capital, no capital, but it
Speaker 1: got in the middle of deals. It became interstitial men
Speaker 1: because of you know, its reputation, it's brain power, and
Speaker 1: that really appealed to me. And plus it was French
Speaker 1: and a private partnership and all these great men were
Speaker 1: wandering around like, you know, Felix Rowant and Michelle Davie
Speaker 1: Bay and Damon Metsicapa and so I, you know, wanted
Speaker 1: to be part of that. I was the only associate
Speaker 1: they hired in in nine they're like the last partnership
Speaker 1: standing know they went public. Yeah, they've they've been. And
Speaker 1: that was my first book covered them being a private
Speaker 1: partnership to going public and when Bruce Wasserston came in
Speaker 1: and basically stole the company from Michelle David Bay, which
Speaker 1: is a story I tell in detail in the book. Uh,
Speaker 1: they went public in May about of two thousand. Uh,
Speaker 1: six and they've been public now. For the argument is
Speaker 1: they avoided trouble in the financial crisis because they didn't
Speaker 1: have a decade of over leverage. Well, they didn't have
Speaker 1: any They had basically zero capital markets business. They had
Speaker 1: no balance sheets, so they weren't ever gonna be, you know,
Speaker 1: having securities on their balance sheet that were at risk
Speaker 1: and losing value, whereas all the other public companies had
Speaker 1: access to capital and managed to get into trouble. Of course,
Speaker 1: having access to capital can be a big problem. And
Speaker 1: they used to say that the Goldman sex which is
Speaker 1: one of the reasons they stayed private until is because
Speaker 1: John Whitehead used to say that, you know, and I
Speaker 1: know this from writing my book about Goldman, John Whitehead
Speaker 1: used to say that, you know, not having capital forced
Speaker 1: them to make tougher choices, and other banks which had
Speaker 1: more access to capital, you know what, we're often foolish
Speaker 1: with that money. So you go from Lazard to Meryl
Speaker 1: to JP Morgan, tell us about those other experiences. How
Speaker 1: did they compare to Lazard, which seems much more unique
Speaker 1: being in a public company versus a partnership. What was
Speaker 1: the workflow like there? I mean, I mean Lazard you
Speaker 1: were drinking from the fire hose because you know, there
Speaker 1: were seventy two partners and seventy two non partners in
Speaker 1: the investment banking group, so very small. So you know,
Speaker 1: that was not a pyramid structure. That was a rectangular structure.
Speaker 1: So you know, there are a lot of people at
Speaker 1: the top of the funnel pushing down on the people
Speaker 1: at the bottom of the funnel. Uh And so you know,
Speaker 1: you're just constantly busy working on the biggest and best
Speaker 1: deals of all time, you know. Uh. And that's that's
Speaker 1: what I did. And you know, Meryl was of course
Speaker 1: much more corporative, was public, and the ultimate corporate was Chase,
Speaker 1: JP Morgan, JP Morgan Chase. You know, so they were
Speaker 1: all very different. But you'll note of those uh three uh,
Speaker 1: you know, Lazard and Meryl and J. B. Morrien Chase,
Speaker 1: the only one I've written a book about is Lazard
Speaker 1: because it was so unique and you know, really the
Speaker 1: people there were quite extraordinary and fun to write about. Huh.
Speaker 1: So compared to Lizard and Goldman Sachs. I have to
Speaker 1: ask the question about ge Capital, did they essentially in
Speaker 1: the nineties nineties morep what was an industrial giant into
Speaker 1: a financial giant in fairness. You know, once Jack took
Speaker 1: over G Capital in the seventies, and you know, once
Speaker 1: he decided that, as he told me, it was easier
Speaker 1: to make money from money than from making selling widgets,
Speaker 1: making jet engines, making power plants, making you know, it
Speaker 1: was just easier. It was easier to do that arbitrage
Speaker 1: and if you had the people in place who could
Speaker 1: understood the risks and managing the so uh during Jack's
Speaker 1: you know, twenty year reign atop UH g E A
Speaker 1: G Capital became an increasingly large and important contributor to
Speaker 1: the bottom line and to the point of like providing
Speaker 1: of the profits. So of course it was giant. It
Speaker 1: was like the third or fourth largest banking institution in
Speaker 1: the country, and it was completely unregulated Berry, completely unregulated.
Speaker 1: It was not a bank because no fd I C insurance,
Speaker 1: no regulations, didn't have deposits, well, they had one depositor.
Speaker 1: It was General Electric, it was it was the commercial
Speaker 1: paper market. That's quite amazing. So when I think of
Speaker 1: g E in the eighties and nineties, the three things
Speaker 1: that come up GE Capital obviously the rise of shareholder value,
Speaker 1: which a lot of people point to General Electric as
Speaker 1: a key driver of that, and then six sigma. Let's
Speaker 1: let's talk a little bit about shareholder value in that
Speaker 1: Chicago School philosophy that Jack seemed to have embraced. Well,
Speaker 1: I think what Jack, you know, Jack wouldn't know Chicago
Speaker 1: philosophy from you know, a hole in the wall. But
Speaker 1: what Jack really understood was you know, stock price and
Speaker 1: share and as you know, shareholder value. When he took
Speaker 1: over ge it was had a market value of twelve billion,
Speaker 1: and you know, by the time he left, like a
Speaker 1: year before he left, it was the most family company
Speaker 1: in the world. So that's a nice uh, you know,
Speaker 1: compounded rate of return over those basically twenty years. I mean,
Speaker 1: you know, we not unlike you know, sort of Tesla
Speaker 1: or even Apple. I mean, you know, really, I mean
Speaker 1: if you think about Tim Cook took over Apple, it
Speaker 1: was worth three billion, and at one point it was
Speaker 1: worth two and a half trillions. So that's inequally Jack
Speaker 1: Welchy and like or even more so, the afference between
Speaker 1: the two. I'm glad you brought that up as an example.
Speaker 1: The vast majority of the game we've seen in Apple
Speaker 1: has been an increase in revenues and profits with a modest,
Speaker 1: very modest uptick in pe multiple. When we look at
Speaker 1: GE from eight two to two thousand under the Jack
Speaker 1: Welsh rain, it began priced as a stage industrial. And
Speaker 1: I have argued that he left this giant, ticking time
Speaker 1: bomb of a pe on an industrial with a cratering
Speaker 1: capital business that had a ticking time bomb of an
Speaker 1: accounting fraud and sec finds about to happen. How much
Speaker 1: of the growth of GE was due to the legend
Speaker 1: of Jack Welsh and how effectively he presented the company
Speaker 1: to the world. So there's a lot, Derek to unpack. Hey,
Speaker 1: I read this giant that goes into all these details
Speaker 1: called power failure. Don't hurt yourself. So yeah, so I
Speaker 1: would agree with a lot of what you said, not
Speaker 1: all of it. So Jack had Wall Street research analysts
Speaker 1: eating out of the palm of his hand. Absolutely, Okay,
Speaker 1: So that's important number. And he figured that out, okay,
Speaker 1: and he played that game. And he also it was
Speaker 1: a fact that for the longest time, the research analysts
Speaker 1: that covered GE were industrial side analysts, didn't understand what
Speaker 1: was going on at the capital, so he could kind
Speaker 1: of wow them every quarter with the performance of the
Speaker 1: company and he you know, eighties straight quarters or something
Speaker 1: like that, you know, either met or exceeded the analysts
Speaker 1: estimates he had Bernie made Off numbers, didn't he just
Speaker 1: like consistency to a degree that should have raised some
Speaker 1: red flags. Well, except that Bernie made Off was a
Speaker 1: Ponzi scheme and totally fictional where never made a trade
Speaker 1: right for his customers. So Jack was actually you know,
Speaker 1: running legit. It was just that penny or two of
Speaker 1: up or down that well, you know, you know, we
Speaker 1: could debate that, probably endlessly, and there are people who
Speaker 1: you know, love to debate this. I mean, you know,
Speaker 1: having worked at ge Capital, I'm actually you know, sympathetic
Speaker 1: to you know, if you've got six fifty billion of
Speaker 1: assets you know, floating around including loans, uh, you know,
Speaker 1: actual buildings because you're in the real estate business, warrants
Speaker 1: in companies, equity stakes and companies, you know, and if
Speaker 1: you have those assets and you can monetize them at
Speaker 1: some point during a quarter to achieve what you told
Speaker 1: Wall Street Research analists you were going to achieve. If
Speaker 1: you don't do that, then I don't know, you're committing
Speaker 1: some sort of financial malpractice, it seems to me. And
Speaker 1: if you do do it, then people accuse you of
Speaker 1: financial mal practice. So well, we'll get to the SEC
Speaker 1: finds and that stuff later. I want to stick with
Speaker 1: the analyst community. Yes, Jack having them eat out, and
Speaker 1: he also had the media eating so that's where exactly
Speaker 1: where it's gonna go. G E owns NBC Universal. NBC
Speaker 1: Universal has on its platform CNBC. Jack created c NBC.
Speaker 1: He created MSNBC. So it's different today when the media
Speaker 1: ratings for financial television are all off. Regardless of which
Speaker 1: television channel you're talking about, the numbers are way down
Speaker 1: from the nineties. You'll get a spike during the financial crisis.
Speaker 1: You're getting a spike during the pandemic lockdown. But that's
Speaker 1: more like a cross between ESPN six Australian Rules Rugby
Speaker 1: and the Weather Channel. Right when some disaster happens, everybody
Speaker 1: turns to it. But look, we both came up in
Speaker 1: the eighties and nineties. At that time, if a CEO
Speaker 1: went on CNBC and said here's what I'm gonna do,
Speaker 1: and then he went out and do it, the entire
Speaker 1: investment community was hanging on that. Every word, which raises
Speaker 1: the question how effective was Jack Welch as a media
Speaker 1: spokesperson and how challenging was it for him to go
Speaker 1: on his own channel and tout his company's stock. Well,
Speaker 1: he obviously had a conflict a little, but I guess
Speaker 1: they got over that. I mean, did you ever meet
Speaker 1: Jack ever so briefly at CNBC for like thirty seconds
Speaker 1: in a green room getting he was getting makeup on
Speaker 1: and I was coming in for cud Low and Cramer
Speaker 1: and maybe it was eight seconds. Well, then you have
Speaker 1: a hint of what he what he was like. I mean,
Speaker 1: I spent you know, hours and hours and hours with
Speaker 1: him before he died, and he even is an eighty
Speaker 1: year old man. He was incredibly charming and magnetic and
Speaker 1: had a larger than life personality. So you know, when
Speaker 1: he would get on television, you know, with that cranky
Speaker 1: sort of New England, the accent that I managed to
Speaker 1: get rid of, and he didn't, even though we grew
Speaker 1: up near each other. He was magnetic, so you know,
Speaker 1: in captivating. So yes, he had the media eating out
Speaker 1: of the palm of his hands. He had the research
Speaker 1: community eating out of the palm of his hands. He
Speaker 1: had shareholders eating out of the palm of his hands.
Speaker 1: And when you have that kind of performance as a
Speaker 1: as a CEO over that long period time, don't forget
Speaker 1: he was around for twenty years, you know, he would
Speaker 1: he became sort of an imperial CEO. There was an
Speaker 1: I'm trying to remember which magazine it was. It might
Speaker 1: have been Fortune declared him the greatest CEO of CEO,
Speaker 1: the manager of the century, manager of quite impressive. Yes,
Speaker 1: you know, don't forget. At that time, Ge was the
Speaker 1: most valuable company, was the most respected company, and Jack
Speaker 1: was the manager of the century. So would be like Apple, Google, Microsoft,
Speaker 1: all rolled up into one, and you know that was
Speaker 1: g E. It was, you know, original member of the
Speaker 1: Dow Joe's Industrial Average. It was a triple a credit
Speaker 1: rated company, had been paying dividends for you know, fifties, sixty,
Speaker 1: seventy years. It's like they invented the light bulb, and
Speaker 1: they did. And it was a true bell weather. Remember
Speaker 1: that phrase, a bell weather. They don't really use that anymore,
Speaker 1: but it was a bell weather of the market. Amazing
Speaker 1: So power failure, the rise and fall of an American icon.
Speaker 1: You know, when I saw the title of this book,
Speaker 1: I thought it was gonna be about the modern GE.
Speaker 1: You really do an amazing deep dive into the early
Speaker 1: history of the company, I mean the foundation from when
Speaker 1: they before they were a company, when it was just
Speaker 1: a gleam in h Thomas Edison's eyes. Tell us a
Speaker 1: little bit of about the process of researching something this substantial,
Speaker 1: very very painful. Well, you do this in all your books,
Speaker 1: You do a giant dive. I feel like that's you know,
Speaker 1: I write the books that I want, I would like
Speaker 1: to read, you know, so they have to be sort
Speaker 1: of part oral history, part real history, part you know,
Speaker 1: investigative reporting, part documentary. Uh, you know, deep dive and evidence.
Speaker 1: And you know, I like to get at the d
Speaker 1: n A of these firms or these companies right there.
Speaker 1: And the d n A of g E goes back
Speaker 1: to the late nineteenth century, right, So I had to
Speaker 1: figure out and I didn't know what it was. So
Speaker 1: I had to figure that out because you know, the
Speaker 1: myth is that this GE was started founded by Thomas Edison. Well,
Speaker 1: within a minute of or two of researching, I discovered
Speaker 1: that actually that's not true. But they play that up
Speaker 1: at nauseam. And I don't blame him. I mean how
Speaker 1: can you not play up Thomas Edison and the light bulb. Well,
Speaker 1: the light bulb is real he he did, you know, uh,
Speaker 1: developed the light bulb, create the light bulb. But you know,
Speaker 1: the business started as a you know, electricity power generation up.
Speaker 1: Let's talk about that, because the lightbulb is useless if
Speaker 1: you and plug it into the At the time, it
Speaker 1: wasn't candles. If you heard of whale oil, have you
Speaker 1: heard of fireplaces? I mean, you know, this was an
Speaker 1: incredible This was an Internet like leap forward in technology.
Speaker 1: So General Electric plays an integral role into electricity, at
Speaker 1: least starting in the northeast of the United States. Tell
Speaker 1: us a little bit about that process of electrifying New
Speaker 1: York City, electrifying other parts of the Northeast. Well, basically
Speaker 1: what became General Electric, which was a merger of two companies, uh,
Speaker 1: you know, sort of was a pioneer in bringing electric power,
Speaker 1: the generation of electric power, and then creating the electric
Speaker 1: power grid. Remember, there was you can create electricity, but
Speaker 1: but if there's no way to deliver it to businesses,
Speaker 1: and then by the way, you know, you have to
Speaker 1: convince people to like connect to it, and it's invisible, right,
Speaker 1: and if you mess up, it's deadly. So other than that,
Speaker 1: it seems other than that, it seems like a simple thing.
Speaker 1: And then and in the early days, there were like fires,
Speaker 1: you know, and people's businesses burned down, so you can
Speaker 1: imagine that wasn't exactly the greatest recommendation for this product.
Speaker 1: But over time, you know, the miracle accord. And part
Speaker 1: of the reason the miracle occurred is because you know,
Speaker 1: there were electric subway cars and electric trams above ground.
Speaker 1: And you know, I don't know if you you you
Speaker 1: probably didn't watch this, but the you know, the Gilded
Speaker 1: Age Show, Okay, so I mean there's there's an episode,
Speaker 1: I think the second or third episode in there where
Speaker 1: they actually have a big social event in downtown Manhattan,
Speaker 1: in a square mile in downtown Manhattan around City Hall
Speaker 1: where they were, you know, electrifying that square mile of
Speaker 1: downtown Manhattan. And that was GE doing that, Okay, that
Speaker 1: was General Electric doing that, and that was like a
Speaker 1: major league event in New York City's history, you know,
Speaker 1: electrifying a square mile of downtown Manhattan. And there was
Speaker 1: like a big social event, and you know, Page six
Speaker 1: covered it, Bloomberg covered it. You know, everybody covered it.
Speaker 1: I don't think Bloomberg covered it might have been before
Speaker 1: Mike was born. It might have been. But when you
Speaker 1: think about people seeing street lights that are running without
Speaker 1: revolutionary this is maybe not as quaint. Well, this is
Speaker 1: before the days of fomo was called fomo. But how
Speaker 1: attractive was the idea of clean accessible light? How long
Speaker 1: did it take for this to catch on it? It
Speaker 1: happened quickly. Obviously it was a major, you know revolution,
Speaker 1: But I mean people had to get comfortable with it,
Speaker 1: and the and the grid had to be built out,
Speaker 1: and and the power had to be able to be manufactured.
Speaker 1: So as the demand crept up and continued, then the
Speaker 1: supply rose to meet that demand. So let's talk about
Speaker 1: how that was done. Tell us about the merger or
Speaker 1: in the early days that gave us General Electric, and
Speaker 1: who ran that company. It wasn't Thomas Edison. So Thomas
Speaker 1: Edison was completely against the merger of what became GE.
Speaker 1: So right off the bat, I'm thinking, why do they
Speaker 1: keep talking about Thomas Edison? Like I get it from
Speaker 1: the technology point of view and the entrepreneurial point of view,
Speaker 1: but the actual merger, So right off the bat, we're
Speaker 1: talking about M and A, which of course intrigue your wheelhouse, right,
Speaker 1: so you know, and and how I mean there was
Speaker 1: probably no bigger acquirer and seller of companies over the
Speaker 1: years than g So M and A was in ges
Speaker 1: D n A. It's like an investment banker's dream ge
Speaker 1: and so. Uh. Edison had a company called Edison General
Speaker 1: Electric but by uh it had about ten million of revenue,
Speaker 1: it wasn't doing that well. He was just basically a shareholder.
Speaker 1: And the other big air holder was JP Morgan, the man.
Speaker 1: And then it was you know, run by you know,
Speaker 1: a different CEO and who was also a venture capitalist
Speaker 1: friend of JP Morgan's. And uh there was another company
Speaker 1: called the Thompson Houston Company, which was owned by a
Speaker 1: guy named Charles coffin up in Massachusetts. Uh. And he
Speaker 1: was from Maine, but his uncle owned a shoe manufacturing
Speaker 1: business in Lynn, Massachusetts. He went to work for his
Speaker 1: uncle and decided, like many you know, entrepreneurial minded people,
Speaker 1: that the shoe business wasn't all that exciting, but what
Speaker 1: was exciting was the electric power business and the generation
Speaker 1: of electric power. So he ended up buying the Thompson
Speaker 1: Houston Company, which had was started by two high school
Speaker 1: teachers in Philadelphia, moved it up to eventually up to Lynn, Massachusetts,
Speaker 1: uh and started uh you know, running it, and he ran.
Speaker 1: He was a very good businessman and he ran at
Speaker 1: my such more profitably than Edison's company. So basically JP
Speaker 1: Morgan and the Boston venture capitalist backing Thompson Houston Company
Speaker 1: backing Charles Coffins business wanted to merge these two businesses,
Speaker 1: and the merger took place in over the serious objection
Speaker 1: of a guy named Thomas Edison. He wanted nothing to
Speaker 1: do with it. He became a minor shareholder, eventually sold
Speaker 1: his shares and like started working on like limestone mining
Speaker 1: in New Jersey. So did Edison profit from when GE
Speaker 1: eventually went public or did he he you know, he
Speaker 1: wasn't a very good businessman and no, h and you know,
Speaker 1: I'm sure he made money because he started the company.
Speaker 1: But he ended up like a ten percent shareholder of GE. Right,
Speaker 1: well you know when it went when it went public,
Speaker 1: but you know, we're talking about relatively small numbers. But
Speaker 1: at the time, I'm sure that was you know, more
Speaker 1: money than most everybody else. He was fine, don't you worry?
Speaker 1: But you know, JP Morgan and Charles coff and and
Speaker 1: others made a lot more money. That's really interesting. So
Speaker 1: let's roll into the twentieth century, the teens, the twenties,
Speaker 1: the thirties. GE has electrified a lot of America. They're
Speaker 1: adding businesses, is a lot of M and A. And
Speaker 1: it turns out that you know, this competition thing, it's hard,
Speaker 1: and it's much easier if we all kind of agree,
Speaker 1: don't tell anybody will meet in the hotel room, not
Speaker 1: in the conference facility. But let's all kind of fix
Speaker 1: our prices in a way that works out best for everybody.
Speaker 1: This is good for everybody, isn't it. What happened with that? Yeah,
Speaker 1: you're you're you're referring to a major league you know,
Speaker 1: electrical conspiracy, as it was called. I mean, you know
Speaker 1: where we're Westinghouse and other other manufacturers of electrical equipment
Speaker 1: basically conspired together at the prices. And by the way,
Speaker 1: these people didn't innovate that. This is fairly common. It's
Speaker 1: why we have any trust rules. At the time, this
Speaker 1: seemed to have happened pretty regularly, and you know, they
Speaker 1: would sort of get caught or they would decide that
Speaker 1: it wasn't such a great idea. They would try to
Speaker 1: stop it, and then or they would cheat amongst themselves,
Speaker 1: cheat amongst themselves, and and then then then they would realize,
Speaker 1: you know, this probably isn't great what we're doing here,
Speaker 1: let's wind it down. Then they would be told to
Speaker 1: wind it back up again. It was incredibly unethical, immoral, illegal.
Speaker 1: People went to jail, you know, no doubt. After about
Speaker 1: ten years it was flushed. What was so fascinating in
Speaker 1: the book, the way you describe it is when these
Speaker 1: sort of quiet coalitions and trusts would start to break down,
Speaker 1: the price competition became fierce, and the penetration into the
Speaker 1: market and the ability to get new products like capitalism
Speaker 1: turns out to work. It's a test case that shows
Speaker 1: you the importance of competition and collusion does not really
Speaker 1: work out for consumers. So, you know, there's a reason
Speaker 1: we have anti trust. There's a reason you know that's
Speaker 1: still being you know, litigated even today we see you know,
Speaker 1: anti trust litigation now ramping up again. So competition is important,
Speaker 1: and collusion really is not great and is illegal. You know,
Speaker 1: the differences between the twenty one century collusion and the
Speaker 1: twentieth century. You hear about Google and Apple and Microsoft
Speaker 1: trying to cap prices on certain software engineers salaries. This
Speaker 1: was just massive effected cities. It affected businesses like there
Speaker 1: was a real hard number that you couldn't buy a
Speaker 1: turbine from, which was enormously important. Now, I'm not saying
Speaker 1: what Apple and Google did was right, it was wrong.
Speaker 1: It just seems like it's so much smaller than the
Speaker 1: collusion from the good old days. Or maybe if there
Speaker 1: is collusion to let's just make it hypothetical. Uh, it's
Speaker 1: sort of more insidious because you're not exactly sure how.
Speaker 1: You know, it might affect, you know, the pricing of
Speaker 1: software products, or it might affect you know, whether there's
Speaker 1: you know, cookies that are taken you know, from our data,
Speaker 1: you know, and how our data is using. You know.
Speaker 1: Back then, it was okay, we need to build the
Speaker 1: power plant in Florida, and you know, you guys make
Speaker 1: your bids at Westinghouse. You make your bids, You make
Speaker 1: your bid and oh these bids seem awfully similar and
Speaker 1: you know, identical. In fact, what are you are you
Speaker 1: guys colluding And you know I'm gonna go around you know,
Speaker 1: and kind of deals, you know, So it was sort
Speaker 1: of amateur hour, if you will. It really was kind
Speaker 1: of amateur hour, which doesn't make it any less illegal
Speaker 1: or immoral or unethical. But you know what, you can
Speaker 1: probably get away with unbeknownst to people nowadays with and
Speaker 1: again I'm not saying that it's happening, but if it
Speaker 1: were to happen, uh, you know, it's probably much more
Speaker 1: insidious and hard to track down. So let's fast forward
Speaker 1: a little bit. Um, G E plays a huge effort
Speaker 1: during both world wars. Tell us a little bit about
Speaker 1: what GE did. How did they affect the ability to
Speaker 1: fight a global conflict like that from here in the
Speaker 1: United States. Well, G was, you know, for a long
Speaker 1: time a very big defense contractor. UH made jet engines
Speaker 1: for you know, fighter jets, um, but and you know,
Speaker 1: made nuclear power plants and probably had a role in
Speaker 1: making you know, nuclear bombs and triggers and things, and
Speaker 1: disclosed none of that. We know, you know, we know, no,
Speaker 1: we know you know they were you know, nuclear waste dumps, etcetera.
Speaker 1: Probably at one point that GE was involved with. UH.
Speaker 1: What I found to be the most interesting thing was
Speaker 1: sort of in World War One, GE created the radio
Speaker 1: technology uh you that we may be even using today.
Speaker 1: I don't know right now. Uh. That allowed people to
Speaker 1: communicate with one another and uh it was a real
Speaker 1: technological breakthrough and helped the Allies win the war. And
Speaker 1: so GE created this technology. Uh, and after the war
Speaker 1: wanted to sell it to Marconi, which was the big
Speaker 1: British company. They had an American subsidy called American Marconi,
Speaker 1: which was a public company, and basically the government would
Speaker 1: a Wilson's administration blocked the sale too valuable, and UH
Speaker 1: essentially forced g E to create what became our c A,
Speaker 1: the Radio Corporation of America inside GE, and forced GE
Speaker 1: to buy American Marconi and create what became our c
Speaker 1: A inside GE so that the British wouldn't get access
Speaker 1: to this technology and dominate the radio, which is funny
Speaker 1: because they're an ally of ours. And then I'm a
Speaker 1: recalling this correctly, wasn't the subsequent event of that And
Speaker 1: now that we've done all this, you have to divest
Speaker 1: our c Yeah. So that was like you know, in
Speaker 1: nineteen seventeen, nineteen eighteen, nineteen, nineteen, nineteen twenty, and then
Speaker 1: in nineteen thirty two for reasons that actually kind of
Speaker 1: I still don't quite understand. The Justice Department decided that
Speaker 1: g E owning r c A was anti trust violation,
Speaker 1: forced GE to divest our c A. That's when our
Speaker 1: c A became a public company run by David Sarnoff.
Speaker 1: And then you know, in nineteen eighty six, our hero
Speaker 1: Jack Welch buys back our c A for six point
Speaker 1: four billion dollars at that point, the largest M and
Speaker 1: A deal in history, and everybody like Harald's Jack Welch
Speaker 1: is like this hero for doing this incredible deal, which
Speaker 1: by then r c A also owned NBC. That's how
Speaker 1: g got NBC. And in fact, Jack was just buying
Speaker 1: back something that he had started. He's getting the band
Speaker 1: back together. He's getting the band back together. But of
Speaker 1: course nobody has that kind of a memory, and so
Speaker 1: everybody was like, front page of the New York Times
Speaker 1: was Jack Welch buying back r c A and the
Speaker 1: biggest M and A deal of all time, and now
Speaker 1: he's got NBC. But Jack was just buying back what
Speaker 1: had already owned. So let's and I didn't know that,
Speaker 1: by the way, and I had worked there, and that
Speaker 1: was one of the major That was a big revelation
Speaker 1: to me. I was fascinated by that. So let's stay
Speaker 1: with the chronology. Well, we're two ends. They come out
Speaker 1: of the war with a burgeoning defense business. Jet engine
Speaker 1: is invented during World War Two, but not deployed until
Speaker 1: after the war. I don't know if we had any
Speaker 1: jet fighters during the war. The Germans had a couple.
Speaker 1: It certainly didn't affect the tide of the war one
Speaker 1: way or another. I mean, I think, you know, the
Speaker 1: g E perfected, you know, the jet engine by going
Speaker 1: up to Pike's Peak, you know, I'm sure story they
Speaker 1: have to drive up there. It's the highest point that
Speaker 1: you can get to by truck because there's a road
Speaker 1: up to the top of Pike's Peak. And then they
Speaker 1: test the engine because they needed to test it. It
Speaker 1: out that a propeller engine, not a jet engine, right,
Speaker 1: I think that was a jet engine. But you know,
Speaker 1: but the whole idea was some of the fighter planes
Speaker 1: were losing altitude. They would get up to a certain power,
Speaker 1: they would lose power, and so they needed to test
Speaker 1: a new jet engine to see whether it would maintain
Speaker 1: its you know, velocity or firth thrust at that at
Speaker 1: had a I altitude, and obviously GE perfected that on
Speaker 1: top of Pikes Peak and that made a huge difference
Speaker 1: for the speed and the you know, viability of these
Speaker 1: fighter jets. So they come out of the war with
Speaker 1: this huge book of patents, all these new products, essentially
Speaker 1: an entire new line of aerospace and and defense sectors.
Speaker 1: It seems like the post war era really began the
Speaker 1: modern period of General Electric becoming a dominant conglomerate. Fair statement,
Speaker 1: I mean yes, I mean you know they would you know,
Speaker 1: GE kind of ended up, for whatever reason, doing some
Speaker 1: of the largest M and A deals you know up
Speaker 1: to that point. Like, uh, you know, Jack's predecessor, rig Jones,
Speaker 1: bought something called Utah International, which was like a mining
Speaker 1: company of all things, because he decided that, you know,
Speaker 1: owning commodities would be a good hedge against nineteen seventies inflation.
Speaker 1: So that was like a two and a half billion
Speaker 1: dollar deal that was again Utah International. That was the
Speaker 1: largest M and A deal you know up to that
Speaker 1: point prior to our c A. Right, so which Jack
Speaker 1: had done a decade later, and of course when Jack
Speaker 1: became the CEO in Night, he hated the Utah International deal.
Speaker 1: He was against it, but nobody listened to him. And
Speaker 1: the first thing he did was divested. So Jack divests,
Speaker 1: you know. So that's not unsurprising that the new CEO,
Speaker 1: you know, wants to undo Jeff em All wanted to
Speaker 1: un Jack Ge. Jack wanted to, you know, make changes
Speaker 1: to the way Reg Jones ran GE. And so I
Speaker 1: think you know, it was under Jack really that GE
Speaker 1: was just buying and selling so many companies all the time.
Speaker 1: They were really an M and A machine, you know.
Speaker 1: And they hired this guy, Mike Carpenter, you know, from McKenzie,
Speaker 1: to be the M and A guy, and you know,
Speaker 1: just create a strategic planning department just to do deals.
Speaker 1: And they did a ton of them, didn't That did
Speaker 1: a ton of deals. So I have to start by
Speaker 1: asking you begin the book telling a story of driving
Speaker 1: with Jack to the golf course. Tell us a little
Speaker 1: bit about how you met him and what that set
Speaker 1: of conversations were like. So once I decided to to
Speaker 1: see if I could do this book in August of
Speaker 1: two eighteen, Uh geez, that's a five year process. Huh, Well,
Speaker 1: I mean it took me probably two and a half
Speaker 1: years to write it and research it, and then another,
Speaker 1: you know, fifteen months to get it published. You know,
Speaker 1: getting a book published in the middle of a pandemic
Speaker 1: is not that easy. See I would think it's easy
Speaker 1: because you're at home there. You know, it was easy
Speaker 1: for me, but you know, we're talking about paper supply
Speaker 1: and printing, time on the printer and things like that
Speaker 1: really got bogged down, and not just for my book,
Speaker 1: but a lot of books. And getting time on the
Speaker 1: press was very hard to do, and finding the paper
Speaker 1: was very We had supply chain issues with supply chain
Speaker 1: paper for books exactly, and time on the press. I
Speaker 1: think I actually started it in October two eighteen. But
Speaker 1: one thing I did was, you know, I figured if
Speaker 1: Jack weren't going to talk to me, then I would
Speaker 1: have to think about whether I wanted to do it.
Speaker 1: But he was. You know, I had a home in Nantucket.
Speaker 1: I was there. He had a home around the corner
Speaker 1: for me and Nantuget. I would see him occasionally. Did
Speaker 1: you know him when you worked at the capital? I mean,
Speaker 1: of course we all quote new. Did you meet him?
Speaker 1: Did he chat? What was he familiar with you prior
Speaker 1: to I seriously doubt it, but I think I was,
Speaker 1: you know, Pip Squeak, way down the way down the
Speaker 1: food chain. And I think over time, over the years,
Speaker 1: he became aware of who I was writing the books,
Speaker 1: and and when I reached out to him, he surprised
Speaker 1: me by saying, yeah, let's have a meeting, and let's
Speaker 1: meet at the Nantucket Golf Club, which you know was
Speaker 1: where he was a member. Uh, and we met. I
Speaker 1: love the story of him like kind of rolling up
Speaker 1: in the car to the valet to us and the
Speaker 1: kid the keys to tell us a little bit about
Speaker 1: what that was. So so I you know, I uh,
Speaker 1: you know, when you I walked into the Nantucket Golf
Speaker 1: Club and told him I was meeting Jack Welch, of course,
Speaker 1: you know, it was like I was meeting Royalty. And
Speaker 1: so we go out. I love this story. We go
Speaker 1: out onto the verandah, which was the porch you know
Speaker 1: for lunch. Uh, and he was already seated there and
Speaker 1: at the next table there was Phil Nicholson. It was
Speaker 1: a Wednesday, okay, and and the Thursday was when this
Speaker 1: uh like the thing the Deutsche Bank Golf Tournament, the
Speaker 1: annual Deutsche Bank Golf Tournament happens in Massachusetts, right, So
Speaker 1: the professional golfers were in and around Massachusetts, and Phil Mickelson, lefty,
Speaker 1: was doing a practice round at the Nantucket Golf Club
Speaker 1: the day before the tournament started. So he was there
Speaker 1: having lunch, and he was seated at a table with
Speaker 1: Bob Diamond, who had been the CEO of Barkleys and
Speaker 1: I think had been defenstrated by then. And he was
Speaker 1: with Paul Salem, who I knew from growing up in
Speaker 1: central Massachusetts. And Paul was one of the founders of
Speaker 1: a private equity firm, Providence Equity Partners. And so they
Speaker 1: were having lunch, and you know, one after another they
Speaker 1: came over and paid their respects to Jack. Everybody was
Speaker 1: always paying their respects to Jack, uh and this was
Speaker 1: no different. And so and I knew Bob and I
Speaker 1: knew Paul. So they're probably wondering, what the hell is
Speaker 1: Bill Cohen doing sitting and having lunch with Jack Welch.
Speaker 1: The first thing out of Jack Welch, as I tell
Speaker 1: the story, in the out of his mouth, was that,
Speaker 1: you know, he had messed up. He didn't use messed up,
Speaker 1: but he used something he was not afraid to use.
Speaker 1: Salty line. He was not afraid. Uh. And he had
Speaker 1: messed up the succession process, and he had messed up
Speaker 1: the selection of Jeff Immult, which was basically who was
Speaker 1: his hand picked successor. And he felt, you know, by
Speaker 1: two teen, Jeff of course had been fired. He you know,
Speaker 1: he had been fired a year earlier. And uh, John
Speaker 1: Flannery was the new CEO. Now I had worked with
Speaker 1: John Flannery. John Flannery and I had started a G
Speaker 1: capital together and shared in office together. So I knew
Speaker 1: John for thirty years. Uh, and you know, it was
Speaker 1: great that John was the new CEO. And but so
Speaker 1: the first thing out of Jack's mouth is how he
Speaker 1: had messed up the process. And I'm thinking to myself,
Speaker 1: whoa Jack Welch is telling me that the person he
Speaker 1: had hand selected as his successor, he was completely disavowing
Speaker 1: and like saying, I messed this up completely. And but
Speaker 1: I said, Jack, you chose him. Yes, I know, but
Speaker 1: I screwed it up. And this is on me, and
Speaker 1: this is going to affect my legacy. At that moment,
Speaker 1: I kind of knew I was onto something quite special. Yeah,
Speaker 1: And he had already published his his memoir, his memoir
Speaker 1: came out literally on September eleven too as one. In fact,
Speaker 1: he had been on the Today Show that morning and
Speaker 1: had finished his segment about his book when Memory. If
Speaker 1: Memory serves his ghostwriter, a co author, eventually becomes his
Speaker 1: third wife, second wife. No, it was. The co author
Speaker 1: on that book was a former Fortune and Business Week
Speaker 1: reporter John Byrne. I'm pretty sure and and Jack Welch
Speaker 1: were not. Did not get married a woman that he
Speaker 1: ended up Okay, So so then this book comes out
Speaker 1: and there's a woman named he's married. Uh. This book
Speaker 1: comes out on September one, but because of the events
Speaker 1: of that day, it was still a best seller, but
Speaker 1: the publicity disappeared and they didn't pick up the publicity
Speaker 1: again until October. So it's part of the public city
Speaker 1: that got picked up in October of two thousand one.
Speaker 1: By the way, the book was a big bestseller straight
Speaker 1: from the gut h and as part of the publicity,
Speaker 1: they got picked up again in October two one. The
Speaker 1: woman who was the editor of Harvard Business Review when
Speaker 1: by the name was Susie wet Louver was the editor
Speaker 1: of the Harvard Business Review, had been a former journalist
Speaker 1: Harvard Business School graduate. Uh interviewed Jack came to New
Speaker 1: York to interview Jack. They had launched at the twenty
Speaker 1: one Club, which I think no longer exists, and then,
Speaker 1: you know, pretty much soon after that they became shall
Speaker 1: we say an item, and you know, next thing, you know,
Speaker 1: Jack was divorcing his second wife and marrying Susie, who
Speaker 1: was leaving her husband and her three kids to be
Speaker 1: with Jack. And then they wrote the two of them,
Speaker 1: you know, had a column in Business Week together, wrote
Speaker 1: books together. Okay, so I got the chronology wrong, but
Speaker 1: more or less, this, by the way, is an issue
Speaker 1: we'll circle back to because this has come up previously
Speaker 1: in his tenure. But let's roll back to Nantucket. You're
Speaker 1: on the veranda, everybody. So we we have our lunch
Speaker 1: and we have our first interview. Uh. And my wife
Speaker 1: had dropped me off there because she wanted to take
Speaker 1: our car. We had one car, and she wanted to
Speaker 1: take the car to you know, go around and do things.
Speaker 1: And so Jack was going to drive me home because
Speaker 1: he lived near me. Uh. So we have the lunch
Speaker 1: and usually I would see Jack around Nantucket driving his
Speaker 1: uh Mercedes, you know, coupe uh, convertible. It was that's right,
Speaker 1: It was. It was right. And so you can always
Speaker 1: see this sort of like you know, you know Mr
Speaker 1: Magoo type character because he's a little he was a
Speaker 1: little fellow, just sort of his his white baseball caps,
Speaker 1: sort of sticking a of you know, the drive, the
Speaker 1: steering wheel you know, around town. Uh. And he had this,
Speaker 1: you know, it was not a late model convertible. It
Speaker 1: was sort of an older ish but not really old version.
Speaker 1: So anyway, I was thinking, that's what we're going to
Speaker 1: drive home in, but it turned out it was his
Speaker 1: you know, grand Cherokee. One thing that they sort of
Speaker 1: do at the club, which was quaint, is you know,
Speaker 1: they bring the car around and they opened both doors
Speaker 1: facing out so and they turned it on. So all
Speaker 1: you have to do is like hop in and drive off,
Speaker 1: you know, like you're some you know, person out of
Speaker 1: a James Bond movie or something like you're some CEO
Speaker 1: of a giant job of the most valuable company in
Speaker 1: the world. And so, you know, I get in and
Speaker 1: I put my seatbelt on, you know, and Jack had
Speaker 1: a uh, you know, either a walker or a cane
Speaker 1: at that point, and I was wondering He's eighty or
Speaker 1: something at this point, and I'm I'm thinking, you know,
Speaker 1: when he wasn't in the greatest health. His mind was
Speaker 1: all there, but physically he had started to tear it,
Speaker 1: and I was wondering, how is he gonna hop up
Speaker 1: and you know, being the driver's seat, let alone drive
Speaker 1: us home. And but so he, you know, he scrambles
Speaker 1: right up there and but sits on the seatbelt, won't
Speaker 1: put the seatbelt on, and it's dinging, dinging like it is,
Speaker 1: And I said, Jack, you know, put your seat you know,
Speaker 1: why not put your seat belt on? Jack? You know, uh,
Speaker 1: still at least to stop the dinging. Yeah, I don't
Speaker 1: like those things. So he decides he's not going to
Speaker 1: put his seatbelt on, So he sits on the seatbelt.
Speaker 1: The dinging is going the whole way home, and he drives,
Speaker 1: you know, there's a long driveway out of the golf club,
Speaker 1: and we finally get to what is Milestone Road, the
Speaker 1: long road between the town of Nantucket and Ensconsin where
Speaker 1: we both live, and he took a left to go
Speaker 1: back down to the village Ofisconsin, and instead of driving
Speaker 1: on the right side of the road like we do
Speaker 1: in America. He decided to drive literally in the middle
Speaker 1: of the road, right down the two tires on the
Speaker 1: tires on either side of the center of the car
Speaker 1: were you know, straddling the yellow double yellow line. And
Speaker 1: of course cars come in the other direction. We're freaking out,
Speaker 1: pulling off into the uh, into the grass, and I'm thinking, well, okay,
Speaker 1: if I perish right now, at least my O bit
Speaker 1: will say that I was, you know, driving in a
Speaker 1: car driven by Jack Wells, the former CEO of g Neutron. Jack,
Speaker 1: you wouldn't be the first person eliminated by Jack, That's right.
Speaker 1: I just picked in the book. I just kind of
Speaker 1: picture him careening off of cars on either side of
Speaker 1: the road, just just you know, pin bowling down the road.
Speaker 1: You know it's close. But what what really was happening
Speaker 1: is cars come in the other direction. We're all pulling
Speaker 1: off into the grass, and there wasn't a lot of
Speaker 1: grass because it's sort a lot of trees and stuff,
Speaker 1: you know. So, UM, let's discuss his career at General
Speaker 1: Electric from the beginning, rather than his latter days as
Speaker 1: a demolition derby driver. Um, this is pretty much his
Speaker 1: entire career is at a general Electric. Tell us a
Speaker 1: little bit about where he began and how he rose
Speaker 1: through the ranks through plastics and everything else. Yeah, I
Speaker 1: mean he was an only child and uh, his mother
Speaker 1: was a stay at home mom. He grew up in Salem, Massachusetts,
Speaker 1: and his father was like a conductor or you know,
Speaker 1: on a train train, right on the train that went
Speaker 1: from Boston to the North Shore, which was a train
Speaker 1: that I grew up taking all the time too. So
Speaker 1: I might Jack Welsh's dad have punched your ticket. It's
Speaker 1: not inconceivable, but I doubt it because I probably would
Speaker 1: have been, you know, too young to have taken the
Speaker 1: train by myself, but you know that idea. Uh. And
Speaker 1: then you know, Jack was actually a bit of an athlete,
Speaker 1: even though he was small and his uh and he
Speaker 1: also stuttered. He had a stutter, and his mother got
Speaker 1: him over through. His mother was as great as champion. Uh.
Speaker 1: You know, he got him through. The stuttering, got him thinking,
Speaker 1: you know, made him seem like he was uh, you know,
Speaker 1: ten feet tall and a huge athlete, even though he
Speaker 1: really wasn't any of those things. But he was athletic
Speaker 1: and he was on high school teams. And then he
Speaker 1: went to u mass in Amherst, Massachusetts. UH and then
Speaker 1: you know, from there, got a ps PhD in UH
Speaker 1: chemical engineering at the University of Illinois UH and got
Speaker 1: offered a number of jobs back then h including an
Speaker 1: Exxon and other places. UH. GE he was offered a
Speaker 1: job at g which paid him a little bit more
Speaker 1: so that's why he decided to take it. UH and
Speaker 1: he moved to Pittsfield to basically try to figure out
Speaker 1: how to commercialize gees plastic pellets business. Gee had created
Speaker 1: these plastic pellets and you know, how do we make
Speaker 1: these useful to American industry and industry are all around
Speaker 1: the world. The plastic was used as an insulator on
Speaker 1: electrical wires, and it had all sorts of other applications
Speaker 1: that melted down and put it in cars like car bumpers,
Speaker 1: I mean, and all of a sudden, you know, potentially
Speaker 1: a huge business. Potentially a huge business. It was Jack's
Speaker 1: job to figure out how to commercialize that, and of
Speaker 1: course he did it fabulously. You tell the story of
Speaker 1: them hitting a roadblock and then ultimately one of the
Speaker 1: engineers who was working on this had left GE in
Speaker 1: a huff, but left all of his books behind his
Speaker 1: notebooks and someone said might have been Jack said, let's
Speaker 1: go through the notebooks. Literally the solution to the engineering
Speaker 1: problem written down waiting for them. Very true, and they
Speaker 1: ended up, you know, having to compensate that guy who
Speaker 1: they had I think who. Yeah, And but that made
Speaker 1: a you know, huge uh difference in Jack's career. And
Speaker 1: you know, he once was responsible for a chemical plant
Speaker 1: that blew up at ge and you know that literally
Speaker 1: the roof blew off. He thought he was gonna be fired,
Speaker 1: but he wasn't. Uh. You know, he did things like
Speaker 1: complain about his compensation because he was concerned that you know,
Speaker 1: he thought he was doing this great job and he
Speaker 1: was getting the paid the same as you know, the
Speaker 1: other people he had started with, and he didn't like that.
Speaker 1: So you know, even a year after he started, he
Speaker 1: threatened to quit, uh, and was literally given a going
Speaker 1: away party. Uh. And then he you know, one of
Speaker 1: his person who became his rabbi, uh, you know, had
Speaker 1: detected by then his talent and convinced him to stay
Speaker 1: paid him more. And you know, this guy became his rabbi.
Speaker 1: He sort of circumvented the guy who paid him the
Speaker 1: same as other people and you know, Jack really uh,
Speaker 1: you know, began to differentiate himself. Um for the quote
Speaker 1: the Rabbi tells him when the building blows up, Hey,
Speaker 1: you know, that's what happens in the chemistry. Stuff blows up,
Speaker 1: stuff happens, Stuff happens. Although that's not the exact quote.
Speaker 1: It's not so. The other thing that really stuck out
Speaker 1: to me from the pre CEO period with him was
Speaker 1: the Hudson Valley PCB issue. There was one of the
Speaker 1: plants that General Electric had up the Hudson legally, with
Speaker 1: the approval of the federal government in the state, is
Speaker 1: discharging right into the Hudson, And decades later we find out, hey,
Speaker 1: this stuff is really dangerous and kills people. Uh. And
Speaker 1: it was a giant overhang on General Electric. He seemed
Speaker 1: to negotiate a deal that everybody was happy with, Very
Speaker 1: rare when you're dealing with regulators, politicians, and big companies.
Speaker 1: Tell us a little bit about that deal. First of all,
Speaker 1: Jack is a chemical you know, engineer or PhD. And
Speaker 1: did not agree, did not think PCBs were dangerous. Isn't
Speaker 1: the science Like, hey, you know, given a choice, you
Speaker 1: probably don't want to be drinking PCBs. Well, look as
Speaker 1: you said again, and I'm just being reportorial here, Okay,
Speaker 1: So I'm not a scientist. I don't know what the
Speaker 1: science is. I know it's very controversial. The PCBs were
Speaker 1: discharged into the Hudson, pretty far up the Hudson, with
Speaker 1: knowledge and approval. With knowledge and approval, you know, then
Speaker 1: all of a sudden, V p A began to think
Speaker 1: that you know, there were reports of PCBs in like
Speaker 1: the milk in Japan making people sick, and you know,
Speaker 1: so there was starting to be some data and evidence
Speaker 1: that this chemical you know, could be dangerous to people,
Speaker 1: but not necessarily completely definitive. And Jack, for one, you know,
Speaker 1: do not believe they were dangerous. So then you know,
Speaker 1: it became his problem to clean up, like Greg Jones
Speaker 1: gave it to him to clean up, maybe because you know,
Speaker 1: Pittsfield was near the Hudson, and he was up there anyway,
Speaker 1: and he was a go getter and if anybody could,
Speaker 1: and a local guy. So Jack negotiates a deal, uh
Speaker 1: and g E pays three million dollars to three million.
Speaker 1: Three million. That was the original deal. I thought it
Speaker 1: was three billion. No, no no, no, the original deal was
Speaker 1: three million it was absurdly low pencils for the month
Speaker 1: exactly three million with the state. And it was you
Speaker 1: know in the New York Times, Uh, the picture of Jack,
Speaker 1: you know, reaching a deal with with the state and uh,
Speaker 1: long story short that again, the e PA got involved
Speaker 1: and other you know, state conservation people got involved, and
Speaker 1: that whole agreement, even though it was signed and G
Speaker 1: I think being paid the money, h that got all
Speaker 1: completely overturned Jack, you know, thought it was ridiculous. Then
Speaker 1: over time and it went on through Jack's tenure like decades, decades,
Speaker 1: and eventually G had to pay like five million dollars
Speaker 1: to have the Hudson dredged. They literally sucked all the
Speaker 1: PCBs out of the floor of the river, I mean
Speaker 1: where they had where they had rest come to rest.
Speaker 1: And some people think that that made it worse, made
Speaker 1: it worse. It's like asbestos, if it's there, leave it
Speaker 1: alone or cover it up, but don't Well, of course,
Speaker 1: you know asbestos is much worse than PCBs. But whatever,
Speaker 1: G E. You know, the whole thing became you know,
Speaker 1: caused lebt that went on for decades net net. It
Speaker 1: was a billion dollars by the time they're done. Whatever
Speaker 1: they have to pay to dredge the Hudson River. And
Speaker 1: we're not talking about like a little segment, no huge second.
Speaker 1: Miles miles, Miles, that's right. I mean, I can't even imagine.
Speaker 1: But ultimately this is a feather in his cap because
Speaker 1: they give him this assignment and is it. Well, he
Speaker 1: solved it three million dollars, you know, he solved so
Speaker 1: for Jack it was. But of course then then it
Speaker 1: got relitigated during his tenure and he was against it
Speaker 1: the whole time, and then even you know, it was
Speaker 1: ultimately Jeff emials Ge that had to pay the money
Speaker 1: to dredge the river, which is kind of ironic. But
Speaker 1: he ends up cleaning up a number of things after Jack,
Speaker 1: which is kind of ironic that Jack is not thrilled
Speaker 1: with him. But I want to roll back to Susie
Speaker 1: and the history the building blowing up. It seems like
Speaker 1: there's a lot of red flags in the early part
Speaker 1: of his career, alright, So he blows up a factory.
Speaker 1: Everybody's trying to get people to return to working from home.
Speaker 1: They had a hard time getting him to come into
Speaker 1: the Lexington Avenue headquarters, which is right down the street
Speaker 1: from us, which is actually a gorgeous Art Deco building
Speaker 1: which g E got as part of the divestiture from
Speaker 1: our right that was originally the r c A building,
Speaker 1: And it's the spectacular, spectacular crown of that building is gorgeous,
Speaker 1: which I think was in the movie Mr Mrs Smith.
Speaker 1: And the base of it is fabulous lobby, the elevators,
Speaker 1: everything right down the street from the priceler buildings. So
Speaker 1: it's a little overlooked because of that, but a fantastic building.
Speaker 1: And he's listen, I'm on the road anyway, two hundred
Speaker 1: days a year. What does it matter if I have
Speaker 1: a desk here or a desk in Pittsfield. So there's that,
Speaker 1: there's the drinking. There's if there was an HR department,
Speaker 1: he would have been in a lot of trouble. There was,
Speaker 1: and then there was if he were, he would have
Speaker 1: been canceled. Today. A lot of womanizing going on back in,
Speaker 1: the lot of insulting, fat jokes. Really, oh yeah, a
Speaker 1: lot of that. Like he would go into manufacturing plants
Speaker 1: and he'd take the scale out and he would force
Speaker 1: people to weigh themselves, men and women, not not just
Speaker 1: the females in the man too, men too yet right sore.
Speaker 1: And in fact, once when Jeff Immolt was working his
Speaker 1: way up and was head of major appliances, Yeah, I
Speaker 1: guess he had gained a lot of weight and was
Speaker 1: weight like pounds or something, and and well he had
Speaker 1: played football at Dartmouth, but he had sort of bloomed
Speaker 1: up because it was a very stressful time and just
Speaker 1: testing all the cooking, and he blamed it all the
Speaker 1: business wasn't The business he was running was the g's
Speaker 1: toughest business before they sold it. Uh, And Jack basically
Speaker 1: told them like, if you don't lose weight, you're not
Speaker 1: going to be ever be the CEO of this place.
Speaker 1: So let's talk a little bit about succession planning. And
Speaker 1: there were a couple of things that really stood out first.
Speaker 1: It seems like for all the criticism about Jack's succession planning,
Speaker 1: he really groomed and created a lot of people who
Speaker 1: became successful elsewhere. Now whether or not that was because
Speaker 1: Jack wasn't going anywhere, and people figured out pretty quickly, hey,
Speaker 1: if I want to be CEO, I gotta find a
Speaker 1: different home because it ain't gonna be a e um.
Speaker 1: But still, there have been a lot of leaders groomed
Speaker 1: under Jack Welsh tell us a little bit about that.
Speaker 1: I mean, I think that there's an analogy to be
Speaker 1: made with you know, Jamie Diamond and JP Morgan Chase. Right,
Speaker 1: Jamie has been there since whatever two thou five, uh,
Speaker 1: and so that's you know, eighteen years. Jack was there
Speaker 1: for twenty years and he just got the stints, so
Speaker 1: he's good for another ten years. Jamie ain't going anywhere, uh,
Speaker 1: as far as anybody can tell. And but you can
Speaker 1: see even with Jamie, a lot of top executives have
Speaker 1: left and they've become CEOs of other financial institutions. And
Speaker 1: you know, the Jamie Diamond coaching tree is large and influential.
Speaker 1: You know, the Coach k uh coaching tree is large
Speaker 1: and influential. Jack Welch's coaching tree was large and influential. Uh.
Speaker 1: And you know, Jack, and I'm sure Jamie is the
Speaker 1: same way had no hesitation in telling potential CEO candidates
Speaker 1: that they weren't going to make it and and firing them.
Speaker 1: Might tell the great story of Dave Cody, who was
Speaker 1: also ran the major appliance business for a period of time.
Speaker 1: Jack called him in and of course Dave Cody went
Speaker 1: on to be the CEO of Honeywell, and Honeywell was
Speaker 1: incredibly successful. You know, of course Jack could have bought Honeywell.
Speaker 1: That's another story. But Dave Cody went on to become
Speaker 1: CEO of honey Well, and honey Well's market value exceeded
Speaker 1: gees uh for for a long period of time. So uh,
Speaker 1: And Jack admitted to me that he made a mistake
Speaker 1: by getting rid of Dave Cody. But uh, and Dave
Speaker 1: Cody is a great guy, by the way, and uh,
Speaker 1: but Jack, you know, he was running major appliance business,
Speaker 1: which was their most difficult business, was like thirteen out
Speaker 1: of thirteen in the GE portfolio. And Jack called him
Speaker 1: up one day and basically had dinner with him and said,
Speaker 1: that's it, Dave, you're out. And Dave tried to you know,
Speaker 1: he'd been at G's whole career too, and you know,
Speaker 1: tried to discuss it with Jack and try to you know,
Speaker 1: buy himself more time, and tried to have Jack explained
Speaker 1: to him why he was being like, oh, Jack, you know,
Speaker 1: basically just wanted nothing to do with that conversation, just
Speaker 1: kept repeating over and over and over again. You know,
Speaker 1: it's over, Dave, just take your stuff and go. I
Speaker 1: want you out by the you know, you know, the
Speaker 1: end of the year, whatever it was, and just go.
Speaker 1: And so Jack, you know, once it was like a
Speaker 1: light switch. Once he had made a decision and that
Speaker 1: was it. You're out. So uh, either he had that
Speaker 1: discussion over and over again with people or they realized
Speaker 1: they weren't going to make it on their own. And
Speaker 1: so you know, they were constantly being headhunted because you know,
Speaker 1: of G of course had Crotonville, which was the Management
Speaker 1: Development Training Center, which was you know, world famous. You know,
Speaker 1: they had you know, executives were schooled in six signal
Speaker 1: whether it was worthwhile or not, I mean, you know,
Speaker 1: and they were rotated around in all sorts of positions.
Speaker 1: So they you know, had a very declared eclectic and
Speaker 1: diverse both manufacturing and finance background, most of them, and
Speaker 1: so they were very desirable as CEOs of other companies.
Speaker 1: So head hunters would of course go there and pick
Speaker 1: him off left and right. So now that leads us
Speaker 1: to Jeff em Altz. And let me just preface this
Speaker 1: by saying I had him alt on the show during
Speaker 1: the pandemic while he was out in Stanford where he's
Speaker 1: a professor now. And I gave him a dozen opportunities
Speaker 1: to toss Jack under the bus. And remember Jack is
Speaker 1: by this time gone, so there's not gonna be any
Speaker 1: tit for tat, And he absolutely refused to rise to
Speaker 1: the bait, continuously said, hey, he left you a ticking time, um,
Speaker 1: paying for the Hudson clean up, cleaning up the SEC
Speaker 1: accounting scandals, cleaning up the ge Capital subsequent fraud, all
Speaker 1: this other stuff, uh, and an industrial with a pe
Speaker 1: ratio of He refused to do that. You know. So
Speaker 1: I spent a lot of time with Jeff immult to
Speaker 1: uh many many hours, um, just like I did with Jack.
Speaker 1: Of course, I've read Jeff's book, uh hot seat many times. Uh,
Speaker 1: you're right, Uh, I know Jeff privately was quite miffed
Speaker 1: at Jack. Don't forget. In whatever was April of two
Speaker 1: thousand and eight, after Jeff announced that the first quarter
Speaker 1: of two thousand and eight was going to be a
Speaker 1: major miss. You know, he had promised he was gonna
Speaker 1: make X amount of money and then it was a
Speaker 1: major miss. He didn't do any of things because don't forget,
Speaker 1: bear Stearns went down the tubes, and you know, the
Speaker 1: levels that he might have usually pulled weren't available, Like
Speaker 1: selling G capital assets was not an option. Right. The
Speaker 1: financial chull crisis kind of revealed the black box of
Speaker 1: G capital and suddenly the scales fell from the analyst
Speaker 1: size totally. The financial crisis of two thousand eight, where
Speaker 1: everybody was focused on Wall Street banks and even the
Speaker 1: car companies, the dirty little secret of the two financial
Speaker 1: crisis was G and capital for sure. So Jack goes
Speaker 1: on CNBC in April of two eight to criticize Jeff
Speaker 1: and GE for missing the first quarter of two thous
Speaker 1: earnings and he says, on national television, you know, if
Speaker 1: Jeff Emma misses earnings again, I'm going to take a
Speaker 1: gun out and shoot him on national television, which, you know,
Speaker 1: can you imagine the hoots of this guy who himself
Speaker 1: has been engaging in the sort of behavior manipulating GE capital,
Speaker 1: manipulating some big word. But okay, alright, but the SEC
Speaker 1: used the phrase accounting fraud, earnings manipulation action and find
Speaker 1: ge was it two d thirty million or three thirty
Speaker 1: million for their earnings falsity? Under the one and only
Speaker 1: Jack Welch Well, I don't know if there's a question there. Again,
Speaker 1: I go back to what I said before. And maybe
Speaker 1: it's because Jack repeatedly made this argument to me. Maybe
Speaker 1: it's because I worked at G Capital. Maybe it's because
Speaker 1: I understood and understand how the two pieces of g
Speaker 1: E fit together. It's a fabulous combination. When it's working,
Speaker 1: there's no doubt about it. So if you have those
Speaker 1: assets and you've promised research anial, you've promised the street
Speaker 1: you're gonna do X dollars per share, and then you
Speaker 1: don't do it, then obviously people are gonna fall out
Speaker 1: of love with you. And if you do do it,
Speaker 1: they're gonna love you. And if you do it because
Speaker 1: you're you know, selling a building that you own, or
Speaker 1: or selling warrants that you own, or or monetizing the
Speaker 1: equity in a business that you own in the market
Speaker 1: to make up any shortfall going on in the industrial
Speaker 1: side of the business, that's not manipulation, that's not fraud.
Speaker 1: That's just telling people doing what you told people you're
Speaker 1: gonna do. Why don't Why is that a problem? The
Speaker 1: problem that if it was just selling the building, that's
Speaker 1: one thing, But there was a lot of paper transactions. Look,
Speaker 1: when I'm an investor in ge I expect them to
Speaker 1: sell a certain amount of widgets, whether that's industrial or
Speaker 1: financial widgets, and generate a profit. And if they're playing
Speaker 1: with the levers and this is what this is what
Speaker 1: what did happen was what I call ocation, constant obsucation.
Speaker 1: They would make big acquisitions and then of course everyone
Speaker 1: would say, oh, well, now everything has to be integrated.
Speaker 1: You know, the special charges, you know, discontinued operations. You know,
Speaker 1: we're gonna have to wait for this to get all
Speaker 1: smoothed out. And that would go on year after year
Speaker 1: after year, constant inability to compare apples and apples and
Speaker 1: apples and oranges. And then after Sarbanes Oxley passed, you know,
Speaker 1: the g E annual report became like a textbook, so
Speaker 1: you couldn't parse it even if you knew what you
Speaker 1: were parsing. And the accounting mumbo jumbo that was contained
Speaker 1: in there, Yeah, there was an awful lot of that
Speaker 1: you could never figure out with you are you still cannot?
Speaker 1: If I may figure out GEES earnings, it's always well,
Speaker 1: you know, we can't compare this quarter to that quarter
Speaker 1: because in this quarter there was this distinctntinued operation or
Speaker 1: that special charge and oh, by the way, the pandemic
Speaker 1: and blah blah blah blah blah. I mean, so to me,
Speaker 1: when I walk into a room full of manure, I
Speaker 1: don't say where's the pony? I say, hey, there's a
Speaker 1: lot of bs in here. You're looking for the pony.
Speaker 1: You're more generous than I am to fair Well. I
Speaker 1: mean I am more generous perhaps to Jack and what
Speaker 1: he was doing than you are. Yes, you know, maybe
Speaker 1: because I have yet to meet a person who spent
Speaker 1: any time with him, people who who we fired. If
Speaker 1: you if Dave Cody was sitting here today, they would
Speaker 1: say how much he loved him. Right, It's amazing you
Speaker 1: could fire people and they still said. This guy, David Zaslov,
Speaker 1: the head of you know, Warner Brothers Discovery, loves the guy.
Speaker 1: I mean, you know, people who left Ge and worked
Speaker 1: for him loved the guy. I mean. And so manipulation
Speaker 1: and fraud those are big, big, big words. Okay. Another
Speaker 1: more charitable way to look at it is, you know,
Speaker 1: and don't forget he managed the earning. He managed the
Speaker 1: earnings beautifully. Okay. Remember our friend Harvey Marcopolis, Harry Marcopol
Speaker 1: from from the Bernie Maynoff scheme. Remember a few years
Speaker 1: ago he also took his vast accounting skills and and
Speaker 1: forensic skills and applied them to ge working for a
Speaker 1: short seller, and he produced a document that was supposedly,
Speaker 1: you know, definitive, and that became pretty much totally debunked.
Speaker 1: Could one person ever in a given lifetime figure out
Speaker 1: the full earnings report? But to me that lack of
Speaker 1: transparency is kind of telling. Of course it was telling.
Speaker 1: But we're talking about a major Can you figure out
Speaker 1: in fairness, can you figure out Amazon? Can you figure
Speaker 1: out Google? I mean you're yes, this is going you
Speaker 1: know what you're advertising? Can you figure out Meta? Can
Speaker 1: you figure out I mean yes, I can figure out Apple.
Speaker 1: I can figure out Meta because they have certain revenues
Speaker 1: and they have certain costs and they line up fairly certainly.
Speaker 1: I'll tell you of all the companies you can figure out,
Speaker 1: can you figure out JP Morgan? Chase? You you took
Speaker 1: the words out of my math. That's although of all
Speaker 1: the banks, that's the easiest one to figure out. Can
Speaker 1: you imagine a business that was like half JP Morgan
Speaker 1: Chase and half and half honeywell and try to figure
Speaker 1: it out. I mean, so you could have made that
Speaker 1: more transparent if you wanted to. It's a choice to
Speaker 1: say we're gonna move the meter, which, by the way,
Speaker 1: leads me to a funny little story with Jack back
Speaker 1: during the financial crisis, post financial crisis, when Obama was president,
Speaker 1: after Bush had left and McCain had lost. I want
Speaker 1: to say, it was like or where the economy is
Speaker 1: coming off the lows and you're finally, after three years,
Speaker 1: seeing the employment data improve, which is what you would
Speaker 1: expect with zero percent interest rates and a fifty seven
Speaker 1: percent market reset. Welsh had a line I'm paraphrasing, but
Speaker 1: the BLS report comes out one Friday, and Welsh tweets
Speaker 1: leave it to those Chicago boys to cook the books,
Speaker 1: meaning Obama and BLS. And I responded immediately, if anybody
Speaker 1: knows about cooking the books, it's Jack Welsh. And one
Speaker 1: of my greatest memories is Jack Welsh, you know, cursing
Speaker 1: me out on Twitter, and I was thrilled to death
Speaker 1: about that. I'm not sure there's a question there, but
Speaker 1: I can tell you that Jack did not like Obama
Speaker 1: clearly he was veriolently anti Obama. I remember going to
Speaker 1: a talk that Jack gave with Bob Wright in Nantucket
Speaker 1: at the Nantucket High School, and I was in the
Speaker 1: audience and they were up on stage talking and I
Speaker 1: think David Gregory if I'm not Bob Bob. Bob Wright
Speaker 1: also lived in Nantucket and ran NBC and then NBC
Speaker 1: Universal for a long time was a vice chairman of Jack.
Speaker 1: Brought him in Jack and a rock star. Well Jack,
Speaker 1: he was the lawyer that worked for Jacket Plastics. I mean,
Speaker 1: Jack had the vision to make Bob right, you know,
Speaker 1: into a media and he did fabulous job, even though
Speaker 1: most people doubted that he could ever do it. And
Speaker 1: up on stage and this was I think during the
Speaker 1: Obama years. Uh it was, and Jack just lit into
Speaker 1: it was offensive almost how how veriantly anti Obama he was. So,
Speaker 1: you know, Jack was to the right of Attila the Hunt,
Speaker 1: I think, you know kind of thing. But he did
Speaker 1: not like Donald Trump. I got to talk about some
Speaker 1: of your other columns and books. You're writing for Puck.
Speaker 1: You're writing for Vanity Fair, not writing for Vanity Fair anymore.
Speaker 1: So now it's all Puck. It's all Puck and other things. Previously,
Speaker 1: you wrote for The Times, you wrote for a Bloomberg,
Speaker 1: You've written for all over the place. I want to
Speaker 1: do one Vanity Fair story, And I mean I wrote
Speaker 1: for Vanity Fair for thirteen years Undergraden and then by
Speaker 1: the way, Great was the publisher. You'll remember this in
Speaker 1: the eighties of spy magazines he was, which was the
Speaker 1: greatest publication of Old Times. He famously called Donald Trump
Speaker 1: a short fingered vulgarian. And we'll come back to some
Speaker 1: of your quotes on Trump, which I found to be
Speaker 1: quite fascinating, some of the stories. But let's stick with
Speaker 1: the pandemic. You're writing about the meme stocks, and uh,
Speaker 1: this is effing unbelievable. Bankrupt hurts is a pandemic, zombie
Speaker 1: meme stock. Tell us a little bit about what was
Speaker 1: going on when you were writing that piece. Well, you know,
Speaker 1: when I was at Lizard, I did a lot of
Speaker 1: restructuring advisory work, both out of bankruptcy and in bankruptcy.
Speaker 1: So I mean the law, well, I know the rules anyway,
Speaker 1: I know the rules, and I know the financial side
Speaker 1: of bankruptcy. So do recommend people by companies that are
Speaker 1: publicly traded and have declared bankruptcy. Absolutely not, because in
Speaker 1: nine hundred and nine times out of a thousand, the
Speaker 1: equity gets wiped out. For instance, when Revalon filed for
Speaker 1: bankruptcy last year and next thing you know, it became
Speaker 1: a meme stock and the equity like went up six times.
Speaker 1: I had I wrote and said, this basically is insane.
Speaker 1: This is insane. The equity is going to get wiped out.
Speaker 1: Here you are, you are making a major mistake. And
Speaker 1: of course the equity got wiped out in their structuring.
Speaker 1: Now once every thousand times something weird happens, and that's
Speaker 1: what happened with Hurts. It's a stub. You don't ever
Speaker 1: see a hundred cents on the dollar. You'll see some
Speaker 1: fraction of it unless someone comes in to make the
Speaker 1: creditors who well, look, you know, usually in a bankruptcy,
Speaker 1: you know, a company files for bankruptcy because they can't
Speaker 1: pay their creditors, They can't pay their bills as they
Speaker 1: become do right. That's what happened with ft X. That's
Speaker 1: what happens. People. Companies go into bankruptcy because they literally
Speaker 1: cannot pay their obligations as they become do so to clarify,
Speaker 1: It's not a buying opportunity on the equity side, is it. No,
Speaker 1: it might be a buying opportunity on the debt side. Sure,
Speaker 1: you pick them up for pennies on the dollar, and
Speaker 1: then you convert that debt to equity and baba being
Speaker 1: there are people who loan to own on the other
Speaker 1: side of the bankruptcy proceeding rights, and then you convert
Speaker 1: that debt to equity in the new in the reorganized company,
Speaker 1: and then you know, maybe that will become worthwhile. Maybe
Speaker 1: it will, maybe it won't. With Hurts, what happened is
Speaker 1: that the people there was like a bidding war for
Speaker 1: Hurts in bankruptcy. And you know, once you make the
Speaker 1: creditors hold, then you know you can control you know,
Speaker 1: the equity, you can control the action. And so you know,
Speaker 1: this is apparently something that these hedge funds did and
Speaker 1: and made a killing from the equity side, or the
Speaker 1: death from buying the equity. I mean, and you know,
Speaker 1: I'm not sure. Well, I mean it was pandemic related
Speaker 1: because you know, everybody was, you know, not going anywhere,
Speaker 1: and and the and the demand for rental cars evaporated,
Speaker 1: and I guess they figured correctly that it would rebound,
Speaker 1: and they were right. So let's talk a little bit
Speaker 1: about a more recent piece you wrote in Puck about
Speaker 1: Bob Iger's Nelson Peltz saga. Let's talk about what's happening
Speaker 1: over there. Well, of course, you know I've known, uh,
Speaker 1: you know, having done all this restructuring work at Lizard
Speaker 1: and working with private equity firms at at Maryland, JP, Morgan, Chase,
Speaker 1: Uh and Uh. You know, I was extremely familiar with
Speaker 1: uh Nelson Pelts and try On Uh. And of course
Speaker 1: they had taken a two and a half billion dollar
Speaker 1: position in GE and Jeff Immolt had been friends with
Speaker 1: Ed Garden's brother. Edgarden is Nelson Peltz's son in law.
Speaker 1: So after Jeff Emil decided to sell G Capital in
Speaker 1: two thousand fifteen Project Hubble, he also decided it would
Speaker 1: be you know, a great idea to invite try and
Speaker 1: partners into the GE Capital shareholder base. It's sort of
Speaker 1: a way to ratify Jeff's strategic initiatives, you know, to
Speaker 1: refocus the company on its industrial origins, to get out
Speaker 1: of G Capital. He had by that time gotten out
Speaker 1: of NBC Universal, He had doubled down by buying uh Alstom,
Speaker 1: the big you know, power generation business in France, and
Speaker 1: was remaking the company. And he thought, well, he had
Speaker 1: been told that activists investors were going to come into
Speaker 1: the company one way or another. So Jeff decided he
Speaker 1: would invite someone in who we thought would be friendly
Speaker 1: to him because he knew Ed Garden's brother from Dartmouth,
Speaker 1: and he had known the Gardens. He used to go
Speaker 1: to their house on holidays and steading going back to Cincinnati.
Speaker 1: They lived in Melrose, Mass And Uh, Jeff would go
Speaker 1: down there for Easter and other holidays, Thanksgiving and things
Speaker 1: like that. And so he thought bringing, you know, Nelson,
Speaker 1: and he would talk to Nelson and get advice and
Speaker 1: invite him up to Crotonville and things like that. And
Speaker 1: he thought that he was going to get a sympathetic
Speaker 1: partner by having try and partners in by two and
Speaker 1: a half billion dollars worth of stock. Huh, that's not
Speaker 1: how it works out. It's fine if you you know,
Speaker 1: make your numbers and the stock price goes up and
Speaker 1: you do everything he wants you to do. But you know,
Speaker 1: Jeff got overtaken by events. It didn't work out, and uh,
Speaker 1: you know, the smiling crocodile and Nelson Pelt's Bard's Tea
Speaker 1: and basically was responsible for Jeff Mo being fired. So
Speaker 1: and basically being responsible for firing John Flannery after fifteen
Speaker 1: months and bringing in Larry Culp who is still there
Speaker 1: and sort of Larry Culp sort of executing the try
Speaker 1: and playbook. Uh. And so then when I see uh
Speaker 1: try and you know, making a nine D thirty million
Speaker 1: dollar investment in Iger and Iger kind of and asking
Speaker 1: for a board seat, and I kind of showing him
Speaker 1: his hand. Uh, well that I couldn't I couldn't resist
Speaker 1: writing that. That is a big mistake. We've seen this
Speaker 1: movie movie repeatedly, not just at G but in other
Speaker 1: places to you know, P and G and du pont.
Speaker 1: I mean, you know, come on here, Bob, the Leander
Speaker 1: leopard doesn't change its spots. And uh, you know, why
Speaker 1: does scorpions Stingbob? Because that's what they do, right. So,
Speaker 1: but Bob Iger is going to learn the hard way.
Speaker 1: I think the scorpion in the as a perfect metaphor. Um,
Speaker 1: let's talk about some of your other books. This is
Speaker 1: an embarrassment of riches. I don't know where to go first, Goldman, Bear, Lizard,
Speaker 1: we only have you for a limited amount of time?
Speaker 1: Which was the most fun to write? Which one do
Speaker 1: you like talking about the most? Lazard seems to be
Speaker 1: the most fascinating and least well known of the three.
Speaker 1: I had a great time writing about Lazard because that was,
Speaker 1: first of all, was my first book. And of course
Speaker 1: it was challenged who who was I to think I
Speaker 1: could even write a book. I mean, I hadn't written
Speaker 1: anything in twenty years. But I decided, well, you know,
Speaker 1: this is what I was going to do. And I
Speaker 1: knew it was a great story. I knew the characters
Speaker 1: were great, and I knew that because I had worked
Speaker 1: there even though it was you know, ten years before,
Speaker 1: so uh, and I didn't take a single note or anything.
Speaker 1: I had no plans ever to write a book, so
Speaker 1: you know, to me, it was every you know, every
Speaker 1: page was kind of a revelation, you know, going back
Speaker 1: and trying to figure out the history and then unearthing
Speaker 1: various scandals which I had heard about but no one
Speaker 1: ever talked about, and so it was just I was
Speaker 1: just a lot of fun, money and power. How Goldman
Speaker 1: Sacks came to rule the world do we still think
Speaker 1: today Goldman Sachs ruled the world? Have they been bypassed
Speaker 1: a little bit by other companies or are they still
Speaker 1: you know, the company that fills all the seats in
Speaker 1: the federal government, Department of State, Department of Treasury. I
Speaker 1: mean there used to be former Goldman execs wherever you
Speaker 1: looked in d C. Yeah, it's two different questions. I
Speaker 1: think there are still Goldman execs who managed to make
Speaker 1: the leap into government all around the world, you know,
Speaker 1: better than any other bank. Uh. And their influence continues
Speaker 1: to be, you know, unparalleled in the halls of government.
Speaker 1: You know, obviously depends on the administration, like in the
Speaker 1: Trump administration, they were kind of everywhere, you know, in
Speaker 1: the Biden administration less. Oh, but there are still examples. Uh.
Speaker 1: Then there's a question about Goldman as a as a bank,
Speaker 1: h and as a financial institution. Uh, you know still
Speaker 1: you know, uh, highly respected. Uh still probably the number
Speaker 1: one place that you know, college graduates want to work
Speaker 1: and nbas want to work. Probably number one still in prestige.
Speaker 1: Certainly you know, number one in many investment bank care categories,
Speaker 1: including M and A, and has been forever basically, but
Speaker 1: it's no longer. Uh, you know, it's trading below book value.
Speaker 1: It went public at like four times book value. It's
Speaker 1: trading below book value or at book value. Uh. Morgan Stanley,
Speaker 1: it's a longtime rival. Trades at one point seven times
Speaker 1: book value. You know. James Gorman, the CEO of Morgan Stanley,
Speaker 1: diversified Morgan Stanley into wealth management and asset management. Bob Smith, Barney,
Speaker 1: you know, Goldman has sort of been stuck. It's the
Speaker 1: truth is, it's not very good at doing M and
Speaker 1: A deals for its own account. The ones that it's
Speaker 1: done have not worked out particularly well, except for perhaps
Speaker 1: Jay Aaron, which got them a lot of management talent,
Speaker 1: but basically hasn't haven't worked out. Whereas you know, Morgan
Speaker 1: Stanley has been much more successful at doing deals and
Speaker 1: diversifying its business away from the volatile investment, banking and
Speaker 1: trading businesses two more steady fee income and it's gotten rewarded.
Speaker 1: Now trades at one point seven times book It's market
Speaker 1: capped is like forty to fifty billion dollars higher than
Speaker 1: than Goldman's now. Uh. And uh, you know, so Goldman's
Speaker 1: valuation is around you know, hundred ten hundred twenty billion
Speaker 1: and Morgan Stanley is around one seventy. You now, meanwhile, J. B.
Speaker 1: Morrigan is was what four fifty I don't know what
Speaker 1: it is today, but you know, so JP Morgan Chase,
Speaker 1: you know, Jamie Diamond of course is you know, the
Speaker 1: biggest bank, the most powerful financial institution, and that used
Speaker 1: to be Goldman's role. But you know, Goldman has not
Speaker 1: diversified well or easily. And you know, obviously now everybody's
Speaker 1: wondering about David Solomon in his tenure and how long
Speaker 1: he can last. You know, his effort at diversification into
Speaker 1: consumer banking was very expensive and so far on rewarding
Speaker 1: trying to get into commercial banking and banking generally. Basically,
Speaker 1: Goldman needs to do what the FED won't let it do,
Speaker 1: which was you know, by a balance sheet merge with
Speaker 1: a big bank, you know, like you know banking New York,
Speaker 1: Melon or something which doesn't have h investment banking so
Speaker 1: that you don't be on then overlap there. But it's
Speaker 1: has a very big asset management business in a very
Speaker 1: big sort of back office custody will be I mean,
Speaker 1: it would be a great merger with Goldman, which ironically,
Speaker 1: is the thing that John Corson was trying to do
Speaker 1: in the late nineties do that merger. And he was
Speaker 1: trying to do it without the approval, as I write
Speaker 1: in the book of his partners on the management committee,
Speaker 1: like Hank Paulson, and that got cor designed zoughts and
Speaker 1: they and they probably missed their window. Let me ask
Speaker 1: you one last question before I get to my favorite questions,
Speaker 1: which is, you've had some really interesting columns about Donald Trump,
Speaker 1: who spoke with you on frequent occasion and liked a
Speaker 1: lot of the stuff you were writing, even though a
Speaker 1: lot of it was fairly critical. Tell us a little
Speaker 1: bit about what it's like to get that phone call
Speaker 1: from Trump inviting you on Air Force one. No, no, no,
Speaker 1: I never got invited. Weren't you supposed to take a flight.
Speaker 1: Maybe it was before he was elected, you were supposed
Speaker 1: to take a flight with him? And then yes, well, well,
Speaker 1: so I had written a piece in the Atlantic about
Speaker 1: why nobody does business, why nobody on Wall Street this
Speaker 1: is except for Deutsche Bank, right, But this is why
Speaker 1: you like mainstream Wall Street doesn't do busines with Donald Trump.
Speaker 1: And this was in like two thousand thirteen, beginning of
Speaker 1: two thousand fourteen. Uh, and I talked to the Donald
Speaker 1: for that. You know, he was not he was a
Speaker 1: pretend candidate at that Uh. So, you know, I spoke
Speaker 1: to him several occasions. And then he didn't like that article.
Speaker 1: It was critical of him. And then I wrote an
Speaker 1: article in Vanity Fair about Trump University and Eric Schneiderman,
Speaker 1: then the New York State Attorney General, going after Trump University,
Speaker 1: and I spoke to him again as well as Schneiderman,
Speaker 1: and they basically went at each other in this vanity
Speaker 1: Vanity Fair article and that was fun. That was great. Uh.
Speaker 1: And then Graydon and so then he announces he's you know,
Speaker 1: he comes down the escalator in June of two thousand
Speaker 1: and fifteen and he announced he's going to be a candidate,
Speaker 1: and he's like campaigning. And so Graydon said, well, you're
Speaker 1: the only one that because of course, as you pointed out,
Speaker 1: Graydon had referred to Donald Trump as a short fingered
Speaker 1: bulgarian in Spy magazine. So let's just say Grayden and
Speaker 1: Donald Trump didn't get a very well. Among other things
Speaker 1: over the years that Graydon had done to Donald oppresciently,
Speaker 1: I might add Uh. And so Graydon said, well, you're
Speaker 1: the only one that gets along with him, can you,
Speaker 1: you know, see if he'll let you follow him around
Speaker 1: on the campaign trail. So at that time, as you'll remember,
Speaker 1: what Donald like to do is he would take Trump
Speaker 1: Air out for the day and he'd fly to you know, Iowa,
Speaker 1: or he'd fly to Minnesota, or he'd fly to Chicago
Speaker 1: and they'd fly home to you know, sleep at Trump Tower.
Speaker 1: So I I asked him if I could go on
Speaker 1: a day on, you know, go with him. Uh. And
Speaker 1: Hope Hicks, who is his communications person at that time,
Speaker 1: you know, uh, you know I was in touch with Hope,
Speaker 1: I mean, and Hope basically said, yeah, you know, we
Speaker 1: can get you, we can get you on. I think
Speaker 1: this is gonna work out, you know, Uh, let me
Speaker 1: work on it for you. But I think he's he's
Speaker 1: basically favoritely disposed to this. And I'm getting ready to go,
Speaker 1: and then I get an email saying, you know, no, no, Bill, Uh,
Speaker 1: he's changed his mind. Uh, he's not gonna let you
Speaker 1: go with him. But he did want me to ask
Speaker 1: you this question. What happened to you? Bill? What? What
Speaker 1: what happened to you? Why the implication being, you know,
Speaker 1: I thought you were a fan of Donald Trump's. Now
Speaker 1: you seem to be so against him. We can't have
Speaker 1: somebody who's this against Donald Trump, you know, uh being
Speaker 1: going with him and reporting on it. You really weren't
Speaker 1: editorializing against him. And you had said, Okay, the guy
Speaker 1: cheats at golf, hold that aside. But you also said, hey,
Speaker 1: he used to be a terrible business who would put businessman,
Speaker 1: who would put his own money at risk. Now he
Speaker 1: uses other people's capital. He slaps his name on stuff.
Speaker 1: It's a cash cow. In fact, Barry I said that
Speaker 1: on Bloomberg TV air. Okay, so can I tell you
Speaker 1: this story? This is like so I had written this
Speaker 1: article in the Atlantic about why nobody on Wall Street
Speaker 1: does business with Donald Trump anymore except for Deutsche Bank,
Speaker 1: And I talked about in that article how he had
Speaker 1: evolved as a businessman where instead of putting his own
Speaker 1: money at risk and when losing it oftentimes you know,
Speaker 1: Trump Air and Trump Steaks whatever it was, he had
Speaker 1: decided to license his name and just take fees. And
Speaker 1: you know that, you know, much better business model, much
Speaker 1: better business model. He was capitalizing on his uh name
Speaker 1: recognition and his you know, so called the business expertise.
Speaker 1: So this is after the Apprentice, after the election. He
Speaker 1: had a brand. He had he had a brand, I mean,
Speaker 1: and of course, as we all know, he capitalized it
Speaker 1: on two thousand sixteen. So so I come on TV
Speaker 1: here and uh, the anchors who I don't remember who
Speaker 1: they were, but they were asking me, you know, to uh.
Speaker 1: They were saying, but you know, Donald's not a very
Speaker 1: good businessman, is he, you know, know you're writing your article.
Speaker 1: I said, well, actually he was. You know, he evolved.
Speaker 1: He wasn't a great businessman, but and he's probably not
Speaker 1: worth as much as he claims to be, but he
Speaker 1: is evolved, and I have to give him credit for
Speaker 1: evolving his business model and becoming smarter about that. He
Speaker 1: had invested forty million dollars in the Chicago Tower, which
Speaker 1: he lost, but you know, basically that was chump change
Speaker 1: as far as Donald was concerned. He was using other
Speaker 1: people's money. He was taking fees for licensing his name used,
Speaker 1: and I thought that was pretty smart, even though Wall
Speaker 1: Street won't do business with him. And I understood why
Speaker 1: because he, you know, was famous for not paying his
Speaker 1: bills and stiffing creditors. So but he had evolved. So then,
Speaker 1: so that was the Atlantic article. Then I called him
Speaker 1: up and I say, I want to do this article
Speaker 1: about Trump University. And I didn't know whether, you know,
Speaker 1: he was gonna I knew he didn't like the Atlantic
Speaker 1: article because he had written me they didn't like it,
Speaker 1: but I didn't know whether he was going to talk
Speaker 1: to me. But I figured, okay, he called me up
Speaker 1: and he says, William. He called me William mean, you
Speaker 1: know they I won't do his voice, but I could,
Speaker 1: but I won't come, he said. He said, you know, Bill, uh,
Speaker 1: you know, I thought that that Atlanta article you rode
Speaker 1: was a bunch of crap and um. But then I
Speaker 1: saw you on Bloomberg talking about it, and the anchors
Speaker 1: wanted you to say bad things about me, and you
Speaker 1: wouldn't do it. And I really appreciated that. And so
Speaker 1: as a results, he told me he would talk to
Speaker 1: me for the Trump University article. And then he told
Speaker 1: me my favorite line of all, which is he said,
Speaker 1: to me, like me, Bill, William, Like me, William. You're
Speaker 1: a good looking guy and you have a great head
Speaker 1: of hair. And I thought the like me part was
Speaker 1: my favorite thing ever because we all know that hair
Speaker 1: whatever that is on top of his head is not hair.
Speaker 1: That what I don't know what it is. I don't
Speaker 1: know what it is, but it's you have a full
Speaker 1: You and I both middle aged guys, genetics something that
Speaker 1: whatever whatever that orangutan is on top of his head, uh,
Speaker 1: that is not And the pictures of him, you know,
Speaker 1: making it up in the wind and then making it
Speaker 1: up in the morning are like my favorite thing ever.
Speaker 1: So in the last few minutes we have let's jump
Speaker 1: to our favorite questions and we'll we'll make this a
Speaker 1: speed round. What are you streaming these days? Tell us
Speaker 1: your favorite Netflix? Amazon Pride. Yeah, I mean I've I've
Speaker 1: been doing Bad Sisters. I have to say, I really okay,
Speaker 1: they really are bad sisters. What they're great now watching
Speaker 1: Dairy Girls, which is you know, crazy fun. But you
Speaker 1: know it's been like call my agent and and uh
Speaker 1: the Americans and yeah, a big Francophile. So my wife
Speaker 1: and I went to Paris for like two weeks for anniversary.
Speaker 1: So we loved Call my agent and we watch Emily
Speaker 1: in Paris just because the scenery is just the it's spectacular,
Speaker 1: and you know, it's a goofy sec. I have not
Speaker 1: watched that, but but if you just mute it and
Speaker 1: just let it roll, it's fantastic. Um, tell us about
Speaker 1: your early mentors who helped shape your career. Uh well,
Speaker 1: I mean, I think, and I've talked about this in
Speaker 1: my books. Someone. I mean, you know, I had two careers.
Speaker 1: I had invested banking career, h such as it was,
Speaker 1: uh and uh journalistic career, and uh you know which
Speaker 1: probably been better. Uh So I think you know, one
Speaker 1: of my important mentors was a guy named mel Mencher,
Speaker 1: who was a professor at Columbia Journalim School who basically
Speaker 1: told me something I've never forgotten. And you know, he
Speaker 1: was a very tough professor and most people could only
Speaker 1: take his course for one semester because it couldn't stand it.
Speaker 1: He was very rough and gruff and abusive. But I
Speaker 1: of course love that, and uh took him for the
Speaker 1: whole year. It was a one year program. And he
Speaker 1: always used to say, you can't write writing, you can
Speaker 1: only write reporting. And I never quite understood what that
Speaker 1: meant for a while, but but I figured it out now.
Speaker 1: And basically, if you don't do the reporting, you can't
Speaker 1: write anything. So you have to do the reporting. You
Speaker 1: can't just you can't. You've got to do the reporting.
Speaker 1: And so that's why these books are so full, chopped,
Speaker 1: full of reporting, because if you don't do the reporting,
Speaker 1: you can't do the writing. Every page is rich with
Speaker 1: research and details, and you know, it doesn't make for
Speaker 1: a fast read, but it makes for a very satisfying read.
Speaker 1: I don't know if if anybody has ever told you that,
Speaker 1: but I found myself going back and saying, let me
Speaker 1: just make sure I understand this chronology, because it's so
Speaker 1: detailed and so rich. So you put that advice to work, right,
Speaker 1: Thank you well, and and and and Melmenter was the
Speaker 1: proponent of that. And then you know, in banking, you know,
Speaker 1: I think about guy was still my friend. David Supino
Speaker 1: at Lizard was a Lizard partner. He's also a renaissance man.
Speaker 1: He loved art and collected art. Is you know, I
Speaker 1: love art and he's a real collector. And he's also
Speaker 1: a writer. Uh David, Uh. You know, he was a
Speaker 1: lawyer at Sherman Sterling and then he went to Lizard
Speaker 1: as a partner. He was head of the restructuring, bankruptcy effort.
Speaker 1: I mean he was a true renaissance man and he's
Speaker 1: written you know, bibliographies of of great writers and uh
Speaker 1: he's incredibly uh incredibly important to me, uh in my
Speaker 1: banking and writing a career, and um so I think
Speaker 1: of all Uh, you know, I didn't have many mentors
Speaker 1: at Javid Morgan Chase. I had sort of uh colleagues
Speaker 1: who were very competitive. It was more of a I mean,
Speaker 1: Lizard always seemed like a viper pit. But uh, and
Speaker 1: of course it was if you were a partner, but
Speaker 1: I wasn't. I I left before became a partner. But
Speaker 1: Jabe Morgan Chase it was a true viper pit, at
Speaker 1: least before Jamie Diamond got there. And uh and you know,
Speaker 1: people were at each other all the time. Speaking of art,
Speaker 1: doesn't Wizard have quite a storied art collection? Not inside
Speaker 1: the firm? The partners had an incredible art collection. And
Speaker 1: one of my favorite parts of the Lizard Book was
Speaker 1: when I went and spent time with Michelle David Bay,
Speaker 1: of course, the the descendant of the David Bay family
Speaker 1: who owned the firm before Bruce Watterston came along, as
Speaker 1: I said, stolen and took it public. Uh, Michelle and
Speaker 1: I would meet his apartment on Fifth Avenue and it
Speaker 1: was just filled with art. And then I met with
Speaker 1: him once at his incredible uh uh full block uh
Speaker 1: town house on in Paris, which is filled with this
Speaker 1: incredible art collection and and and he walked me through
Speaker 1: his collection. Uh. He basically didn't explicacion de text of
Speaker 1: his collection and how it had been stolen by the
Speaker 1: Nazis during World War two, and you know, he had
Speaker 1: to fight to get it back, and he basically got
Speaker 1: back his father's and his grandfather's a large part of
Speaker 1: that collection, and you know, it was just surrounding him
Speaker 1: and his party. It was an incredible collection. But I
Speaker 1: mean Andre Meyer collected art, and Felix wrote and collected art,
Speaker 1: but Andre but it was Michelle was annually named one
Speaker 1: of the best two collectors in the world. That's amazing.
Speaker 1: I actually just watched A Woman in Gold when we
Speaker 1: were traveling about that whole story and the recovery of
Speaker 1: Nazi I was it was really quite fascinating. With Gustaf
Speaker 1: Clempton and all that. Speaking of books, tell us about
Speaker 1: some of your favorite books. What are you reading right now.
Speaker 1: I'm finishing up The Divider by Peter Peter Baker and
Speaker 1: Susan Glasser, who are my friends. I mean, it's it's suh,
Speaker 1: it's a great book. Uh. I hate to read it
Speaker 1: because it's reliving of course Donald Trump era, which you know,
Speaker 1: I hope we all don't have to relive again, but
Speaker 1: I fear that we you know, there's probably better than
Speaker 1: that we might. Uh. And uh, you know I've I've read, Uh,
Speaker 1: I've been blurbing books. So there's some new books coming
Speaker 1: out which you'll probably want to have people on your
Speaker 1: show about. Uh, you know, a book about Mark Spitznagel
Speaker 1: and it seemed to lab. Uh that's coming out by
Speaker 1: a Well Street Journal reporter who's Scott Patterson. That's a
Speaker 1: very uh interesting book that I just blurbed, which is
Speaker 1: coming out soon. You should have Scott on he wrote
Speaker 1: the Quantz and Um. So you know, Uh, it's it's
Speaker 1: hard when you write as much as I do to
Speaker 1: actually you know, be constantly reading other stuff. But I'm
Speaker 1: always reading, you know, articles, and so so let's get
Speaker 1: to our last two questions before they toss us out
Speaker 1: of here. Um, what sort of advice would you give
Speaker 1: to a recent college grad who was interested in a
Speaker 1: career in either investment banking or journalists. You know, Uh,
Speaker 1: my father, who's still I've never wanted me to go
Speaker 1: into journalism, Uh because he knew intuitively and correctly that
Speaker 1: it is extremely low paying profession. Uh compared to others.
Speaker 1: You didn't want to be an ink stain wretch. He
Speaker 1: would rather have you in investment banking. Well, I think
Speaker 1: he wanted me to be able to, you know, uh
Speaker 1: have a good life, you know, an affordable uh make
Speaker 1: a good enough living to afford a style that I
Speaker 1: probably had become accustomed to, so to speak. And uh
Speaker 1: know that being an ink stained wretch. You know, I
Speaker 1: was making thirteen thousand dollars a year working for the
Speaker 1: Raley Times, which was fine. I was a single guy,
Speaker 1: but that was clearly not going to be sustainable long term.
Speaker 1: So uh, you know, I don't know, it's it's very tough.
Speaker 1: Profession has gotten no easier. I mean, don't forget when
Speaker 1: I was making thirteen thousand dollars a year. Uh, the
Speaker 1: Ibadam Margins in the newspaper business was sixty and the
Speaker 1: paper I worked for, the News Observer Publishing Company, got
Speaker 1: sold by the Daniels family for three hundred million dollars
Speaker 1: to to McClatchy. Uh, you know, the Louisville Courier Journal
Speaker 1: got sold, uh you know, to Gannett for whatever. You know.
Speaker 1: That's before eBay, Craigslist, Google, before before everything. Okay, And
Speaker 1: so now we're you know, sort of having a media meltdown.
Speaker 1: And of course, you know, I'm a founding partner of
Speaker 1: Puck and We're trying to to make, you know, a
Speaker 1: go of it, and I think we're doing knockwood. Uh,
Speaker 1: you know quite well, but uh, you know, so I
Speaker 1: don't know that I could. You know, And my younger son,
Speaker 1: my oldest son is a lawyer here and tell my
Speaker 1: younger son works in l A and sort of has
Speaker 1: aspirations towards writing and journalism and he's doing documentary films now.
Speaker 1: So you know, that's tough. It's great in the abstract,
Speaker 1: you know, it's great for people to get into these
Speaker 1: line of work because you know, it's obviously endlessly fascinating
Speaker 1: and riveting, and you know, every day is a new
Speaker 1: day and you learned so much. It's great if it's
Speaker 1: not your child. When it's your child, and you know,
Speaker 1: it's can be challenging, you can understand your own father's concern.
Speaker 1: Now I can, and and you know he encouraged me
Speaker 1: to go back to get my m b A. And well,
Speaker 1: I didn't want to do it, just like my younger
Speaker 1: son didn't want to do it and he hasn't done it.
Speaker 1: I did do it, and it worked out great for me. Uh.
Speaker 1: You know. One of the fleetings I wanted to do
Speaker 1: was to get a job working for Business Week before
Speaker 1: Mike Bloomberg going to I know, I know Joe Weber,
Speaker 1: I know Joel, but I mean before, but when it
Speaker 1: was owned by McGrath hill, I wanted to work there
Speaker 1: and I couldn't couldn't pull it off. I wanted to
Speaker 1: work at the Wall Street Journal, and I couldn't pull
Speaker 1: it off. So that's why I. In fact, I told
Speaker 1: the editor at the Wall Street Journal, whose offices I
Speaker 1: had managed to get myself an interview at, and he
Speaker 1: I was in his office when he came in, and
Speaker 1: he couldn't figure out what I was doing there, and
Speaker 1: I said, I'm here for a job interview, and he said, well,
Speaker 1: forget that, my friend, Yes, you forget that. We have
Speaker 1: a hiring freeze on this either. And if we didn't
Speaker 1: have a hiring freeze. We're gonna hire this person from
Speaker 1: Fortune and that person from Forbes, so you know you
Speaker 1: can take your Abbott M B A and and shove
Speaker 1: it and and I said, well, I mean they're gonna
Speaker 1: go to the Wall Street Journal or Wall Street and
Speaker 1: he said goodbye. Wow, that's fascinating. Our final question, what
Speaker 1: do you know about the world of finance, investing and
Speaker 1: journalism today? You wish you knew forty or so years
Speaker 1: ago when you were first getting started. Really thirty or
Speaker 1: so years ago when you were first getting started. So
Speaker 1: I'll tell you one of another one of my favorite stories.
Speaker 1: Since we seem to have endless amount of time here,
Speaker 1: I told you I get you out by dinner. You
Speaker 1: did you mentioned that? Uh? And endless? So when I
Speaker 1: was at Lazard UH as an associate. Um, it was
Speaker 1: about I used to have a quotron machine. Do you
Speaker 1: know what a quotron machine? Of course you do. Now
Speaker 1: we have Bloomberg's streaming real time information. The quotron machine,
Speaker 1: you would put in the ticker and out would come
Speaker 1: the price or something resembling a price, so or less
Speaker 1: Lawrence who knows what? Certainly no desktop streaming of real
Speaker 1: time financial information which enables us to be sitting here today. Uh.
Speaker 1: And so I decided I wanted to buy some Berkshire Hathaway.
Speaker 1: I had become enamored of Warren Buffett. He had gone
Speaker 1: to Columbia Business School. I had gone to Columbia Business School,
Speaker 1: and I just thought, okay, uh he's you know, there's
Speaker 1: something about him that's captivating to me. Uh. So this
Speaker 1: was what thirty plus years ago, and the Berkshire huh
Speaker 1: so I Uh. I went to the quotron machine. There
Speaker 1: was one on the floor. One one. I went to
Speaker 1: the quote on machine floor. I put b r k
Speaker 1: into the quotron and up popped hundred person. Well, I'm thinking, okay,
Speaker 1: twelve d per shire. I didn't have much money. Uh.
Speaker 1: And you had to put the trade through the Wizard
Speaker 1: trading desk, even though there was like one person or
Speaker 1: a quarter of a per person who was the Lizard
Speaker 1: trading desk. Uh. And so I said, I want to
Speaker 1: buy ten shares. So I thought, okay, I have twelve
Speaker 1: thousand dollars barely, I'll buy ten shares of Berkshire Hathaway.
Speaker 1: There was only Berkshire Hathaway a there wasn't Berkshire Hathaway
Speaker 1: b uh so I They said, okay, do you want
Speaker 1: to do it at market? I said, sure, I'll do
Speaker 1: it at market. Call I'll call you back. Call me
Speaker 1: back a half hour and say, okay, you're done. Uh
Speaker 1: twelve ten shares of Berkshire at Uh. How do you
Speaker 1: want to pay for it? I said, I'll write you
Speaker 1: a check. So I'm thinking I'm gonna have to write
Speaker 1: a check for twelve thou dollars. He said, it's a
Speaker 1: hundred and twenty thousand dollars. How do you want to
Speaker 1: pay for it? I said, what are you talking about?
Speaker 1: I'm literally having a heart attack. Hundred twenty thousand dollars.
Speaker 1: I went to the quotron and it said twelve hundred
Speaker 1: times ten. That's twelve thousand. What am I missing here? No? No, no,
Speaker 1: no no. The quotron only went to four spaces. It's
Speaker 1: twelve thousand. You owe me a hundred twenty thousand dollars?
Speaker 1: You know what? What do you? What do you want
Speaker 1: to do? I don't have a hundred twenty thousand dollars.
Speaker 1: I thought, okay, well I there goes my career at
Speaker 1: laz Art. I will buy two shares, I will write
Speaker 1: you a check for two thousand. So I did that,
Speaker 1: and it's okay, we'll sell the rest. I said, sell
Speaker 1: the rest. They sold the rest. No one was hurt,
Speaker 1: no foul. I gave them food dollars. I kept my
Speaker 1: two shares. I still have them. And and what are
Speaker 1: the Asia strading at today? Well, I don't know four
Speaker 1: So are you happy you made a million dollars in
Speaker 1: the trade or are you thinking about shares? You left
Speaker 1: the other eight shares, so you want to know what
Speaker 1: my advice would have been? Right, the check for the
Speaker 1: whole hundred twenty thousand would have been my advice. Thank you,
Speaker 1: Bill for being so generous with your time. We have
Speaker 1: been speaking with Bill Cohen, author of many fabulous books.
Speaker 1: The most recent is Power Fail Year. I wish we
Speaker 1: had a little time to talk about your history at
Speaker 1: Duke and the lacrosse team in the book you did there,
Speaker 1: but we're completely out of time. It's been four hours
Speaker 1: and there's only so long they can leave us with this.
Speaker 1: If you enjoy this conversation, be sure and check out
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Speaker 1: of research. A Tika val Bron is our project manager.
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