WEBVTT - William D. Cohan on the Rise and Fall of GE 0:00:02.000 --> 0:00:07.160 This is Mesters in Business with very Results on Bloomberg Radio. 0:00:08.600 --> 0:00:11.800 This week on the podcast, I have an extra special guest. 0:00:12.119 --> 0:00:15.640 Bill Cohen is a fixture on Wall Street for a 0:00:15.680 --> 0:00:20.800 long time, both as an investment banker at Lizard Freres 0:00:21.200 --> 0:00:25.560 and eventually Meryl and JP Morgan Chase, as well as 0:00:25.640 --> 0:00:28.680 an author. He is one of the co founders of Puck. 0:00:28.880 --> 0:00:32.360 He is a writer for vanley Fair, for The New 0:00:32.440 --> 0:00:35.720 York Times, for Bloomberg. He's really well known on the 0:00:35.760 --> 0:00:40.760 street and puts out a number of fascinating books, arguably 0:00:40.960 --> 0:00:43.360 a sort of parallel career to Michael Lewis. He's at 0:00:43.400 --> 0:00:47.200 Lizard Freres for seven eight years and then sometime later 0:00:47.479 --> 0:00:50.880 writes his version of Liars Poker, which is a history 0:00:50.880 --> 0:00:54.840 of Lizard Frere. His most recent book, Power Failure, about 0:00:54.880 --> 0:00:57.920 the rise and fall of General Electric, is really of 0:00:58.000 --> 0:01:01.400 fascinating history with some fun stories and a lot of 0:01:01.440 --> 0:01:05.880 really interesting gossip throughout it. It's deeply researched, deeply reported, 0:01:06.160 --> 0:01:09.959 and really a very enjoyable read. I think you'll find 0:01:09.959 --> 0:01:14.000 this conversation quite fascinating. I know I did. With no 0:01:14.240 --> 0:01:20.720 further ado, my conversation with Bill Cohen, author of Power failure. 0:01:21.280 --> 0:01:25.520 William Cohen, Welcome back to Bloomberg. Thank you, Barry. It's 0:01:25.560 --> 0:01:28.120 great to be here. So let's talk a little bit 0:01:28.160 --> 0:01:31.440 about your career, which began as a reporter, went into 0:01:32.160 --> 0:01:34.240 M and A banking, and then went back to writing. 0:01:34.920 --> 0:01:37.400 You start writing for the Rally Times. Tell us a 0:01:37.440 --> 0:01:40.319 little bit about what you were doing there. I was 0:01:40.400 --> 0:01:42.800 doing something I probably should never have been allowed to do, 0:01:42.920 --> 0:01:48.920 which was right about public education in Wake County, which 0:01:48.960 --> 0:01:52.960 was fine. I had uh just graduated from Columbia School 0:01:52.960 --> 0:01:56.400 of Journalism again Masters and Journalism, and I had done 0:01:56.440 --> 0:02:00.400 my thesis on public schools in Central Harlem and Central 0:02:00.400 --> 0:02:03.080 Harlem School District. I went to one of the best 0:02:03.080 --> 0:02:05.960 schools in the district and one of the worst schools 0:02:06.000 --> 0:02:08.080 in the district and just sat there for like six 0:02:08.120 --> 0:02:10.240 weeks and tried to absorb what was going on, and 0:02:10.280 --> 0:02:11.799 no one had ever done that. I had to get 0:02:11.840 --> 0:02:15.120 special permission from the Board of Education in Brooklyn back 0:02:15.160 --> 0:02:18.280 when they still had that to do that. But uh, 0:02:18.320 --> 0:02:23.239 and then I went to Raleigh, uh and covered public 0:02:23.280 --> 0:02:25.639 schools in Raleigh. But I've never been to a public 0:02:25.680 --> 0:02:28.320 school in my life, so other than sitting in the 0:02:28.360 --> 0:02:32.600 classrooms in Central Harlem. So it was great, but it was, 0:02:33.520 --> 0:02:36.600 you know, like anything, a total learning experience. So you 0:02:36.760 --> 0:02:40.920 end up becoming an investment banker. You work at places 0:02:41.000 --> 0:02:44.760 like Loizard Freres and Merrill Lynch and JP Morgan. Tell 0:02:44.840 --> 0:02:47.760 us a little bit about your banking background. What did 0:02:47.760 --> 0:02:49.880 you do, what sort of deals? By the way, this 0:02:49.960 --> 0:02:51.959 wasn't like I'm going to try this for six months 0:02:52.120 --> 0:02:56.160 and go back to writing. You did this for seventeen years. Yeah, 0:02:56.160 --> 0:02:58.720 And I actually started out of business school and when 0:02:58.720 --> 0:03:01.800 had gone back to Columbia. So I graduated from business 0:03:01.840 --> 0:03:04.960 school in nine and went to G Capital for two 0:03:05.040 --> 0:03:07.919 years financing leverage buyouts. And I also spent a year 0:03:07.960 --> 0:03:11.200 there working for the chief credit officer at G Capital, 0:03:11.320 --> 0:03:14.360 learning all the different business lines at G Capital, And 0:03:14.400 --> 0:03:17.120 then I went to Lazard and so let's stay with 0:03:17.200 --> 0:03:20.000 the Capital for a minute, because they're gonna loom large later, 0:03:20.160 --> 0:03:24.560 Lenny relevant Um. In the eighties they were really a 0:03:24.639 --> 0:03:29.280 financial arm of ge in a way to facilitate its 0:03:29.400 --> 0:03:32.760 client base. It was seems like in the nineties it 0:03:32.840 --> 0:03:36.000 evolved into something else. When you were there, was it 0:03:36.120 --> 0:03:39.880 a financial engineering firm or was it a more traditional 0:03:40.800 --> 0:03:43.120 credit finance farm by the time I was there, and 0:03:43.160 --> 0:03:47.840 it started in the depression, you know, financing customers purchase 0:03:48.000 --> 0:03:51.560 of ges, appliances, right because credit was hard to come 0:03:51.560 --> 0:03:54.480 by during those years. Everybody General Motors had a credit 0:03:54.520 --> 0:03:58.200 on all the big manufactors that right, G had a 0:03:58.320 --> 0:04:02.560 benefit in over other companies in that regard because they 0:04:02.560 --> 0:04:04.440 had a triple A credit rating, so they were able 0:04:04.480 --> 0:04:07.480 to borrow very cheap and then lend out expensively, and 0:04:07.520 --> 0:04:10.880 they were able to arbitrage that credit rating, which of 0:04:10.920 --> 0:04:14.640 course Jack Welch did in spades. And by the time 0:04:14.720 --> 0:04:17.560 I got there, you know, uh, you know, Jack had 0:04:17.600 --> 0:04:20.359 been CEO for you know, six years, and he was 0:04:20.480 --> 0:04:25.839 well into turning G Capital into a financial powerhouse. So 0:04:25.880 --> 0:04:28.839 by the time I got there, it was well beyond 0:04:28.960 --> 0:04:33.080 just you know, financing customer acquisitions and appliances. I mean, 0:04:33.080 --> 0:04:35.440 we were actually, you know, I probably shouldn't have been 0:04:35.480 --> 0:04:38.599 doing it because I had been a journalist covering public 0:04:38.640 --> 0:04:43.000 schools and NW very nothing about leverage biouts. But I 0:04:43.040 --> 0:04:45.760 was financing leverage biouts a G Capital and that was 0:04:45.839 --> 0:04:49.080 one of eighteen or twenty business lines that the business 0:04:49.120 --> 0:04:52.960 was in, and you know, just making huge profits arbitrage 0:04:53.040 --> 0:04:56.279 and that credit rating so you go from GE Capital 0:04:56.440 --> 0:04:59.880 to Lazard. Next tell us about laz Art. Well, Lazar, 0:05:00.040 --> 0:05:04.240 it couldn't have been more different than ge old school, 0:05:05.040 --> 0:05:10.680 classic partnership, managing risk, very different headspace. Oh, totally, totally. 0:05:10.720 --> 0:05:14.279 I mean I had always been fascinated by Lizard because 0:05:14.320 --> 0:05:17.360 I had read Carrie Reig's book The Financier about Andre 0:05:17.520 --> 0:05:20.279 my Ear, which was a fabulous book. And Carrie reg 0:05:20.360 --> 0:05:24.400 was a great writer, but he died way too young. Uh. 0:05:24.480 --> 0:05:27.080 And you know, as it was, I've been a Francophile 0:05:27.160 --> 0:05:29.120 my whole life. I read that book, I wanted to 0:05:29.120 --> 0:05:31.279 work at Lazard. When I was at business school, I 0:05:31.320 --> 0:05:35.560 got an interview at Lizard with two partners who probably 0:05:35.560 --> 0:05:39.279 are still there. Uh. And uh, they didn't even send 0:05:39.279 --> 0:05:41.520 me a ding letter, Barry, do you know what a 0:05:41.600 --> 0:05:44.760 ding letter? Thanks for coming in, thanks for we don't 0:05:44.760 --> 0:05:50.240 need you, you know, good luck to you. Don't hold 0:05:50.279 --> 0:05:52.440 your breath. They didn't even send me one of those. 0:05:52.760 --> 0:05:55.800 They just ignored me. Okay. And then two years later 0:05:56.440 --> 0:05:59.240 I tried again. Uh, and I wanted to go you know, 0:05:59.320 --> 0:06:04.360 G Capital. You have to understand, like investment banking was 0:06:04.440 --> 0:06:08.520 so hot then everybody wanted to be it was it 0:06:08.560 --> 0:06:11.640 was monstrous. I mean, investment bankers were rock stars, right. 0:06:11.960 --> 0:06:14.600 So I was a g capital and you know, we 0:06:14.600 --> 0:06:17.360 were getting business because we had access to all this capital. 0:06:17.760 --> 0:06:21.760 You know, I became enamored of this idea of getting 0:06:21.800 --> 0:06:25.040 business through your ideas, right, And that's what happened. That 0:06:25.080 --> 0:06:27.720 was Lazar Lazard had no capital, no capital, but it 0:06:28.080 --> 0:06:31.120 got in the middle of deals. It became interstitial men 0:06:31.680 --> 0:06:36.839 because of you know, its reputation, it's brain power, and 0:06:36.920 --> 0:06:39.520 that really appealed to me. And plus it was French 0:06:39.560 --> 0:06:42.440 and a private partnership and all these great men were 0:06:42.480 --> 0:06:45.480 wandering around like, you know, Felix Rowant and Michelle Davie 0:06:45.520 --> 0:06:49.400 Bay and Damon Metsicapa and so I, you know, wanted 0:06:49.400 --> 0:06:51.240 to be part of that. I was the only associate 0:06:51.279 --> 0:06:55.280 they hired in in nine they're like the last partnership 0:06:55.320 --> 0:06:59.159 standing know they went public. Yeah, they've they've been. And 0:06:59.240 --> 0:07:01.839 that was my first book covered them being a private 0:07:01.880 --> 0:07:05.000 partnership to going public and when Bruce Wasserston came in 0:07:05.080 --> 0:07:08.320 and basically stole the company from Michelle David Bay, which 0:07:08.400 --> 0:07:11.200 is a story I tell in detail in the book. Uh, 0:07:11.240 --> 0:07:15.000 they went public in May about of two thousand. Uh, 0:07:15.040 --> 0:07:18.880 six and they've been public now. For the argument is 0:07:19.000 --> 0:07:22.680 they avoided trouble in the financial crisis because they didn't 0:07:22.720 --> 0:07:25.840 have a decade of over leverage. Well, they didn't have 0:07:25.840 --> 0:07:29.120 any They had basically zero capital markets business. They had 0:07:29.120 --> 0:07:32.320 no balance sheets, so they weren't ever gonna be, you know, 0:07:32.520 --> 0:07:34.840 having securities on their balance sheet that were at risk 0:07:34.880 --> 0:07:37.760 and losing value, whereas all the other public companies had 0:07:37.800 --> 0:07:41.440 access to capital and managed to get into trouble. Of course, 0:07:41.640 --> 0:07:43.680 having access to capital can be a big problem. And 0:07:43.680 --> 0:07:45.880 they used to say that the Goldman sex which is 0:07:46.120 --> 0:07:49.280 one of the reasons they stayed private until is because 0:07:49.800 --> 0:07:52.200 John Whitehead used to say that, you know, and I 0:07:52.240 --> 0:07:54.360 know this from writing my book about Goldman, John Whitehead 0:07:54.440 --> 0:07:57.760 used to say that, you know, not having capital forced 0:07:57.800 --> 0:08:02.160 them to make tougher choices, and other banks which had 0:08:02.240 --> 0:08:05.040 more access to capital, you know what, we're often foolish 0:08:05.080 --> 0:08:08.280 with that money. So you go from Lazard to Meryl 0:08:08.360 --> 0:08:11.960 to JP Morgan, tell us about those other experiences. How 0:08:11.960 --> 0:08:14.920 did they compare to Lazard, which seems much more unique 0:08:15.600 --> 0:08:18.160 being in a public company versus a partnership. What was 0:08:18.200 --> 0:08:22.000 the workflow like there? I mean, I mean Lazard you 0:08:22.000 --> 0:08:24.880 were drinking from the fire hose because you know, there 0:08:24.880 --> 0:08:28.440 were seventy two partners and seventy two non partners in 0:08:28.440 --> 0:08:31.920 the investment banking group, so very small. So you know, 0:08:32.000 --> 0:08:36.120 that was not a pyramid structure. That was a rectangular structure. 0:08:36.240 --> 0:08:38.600 So you know, there are a lot of people at 0:08:38.600 --> 0:08:41.960 the top of the funnel pushing down on the people 0:08:42.520 --> 0:08:44.840 at the bottom of the funnel. Uh And so you know, 0:08:44.880 --> 0:08:47.400 you're just constantly busy working on the biggest and best 0:08:47.440 --> 0:08:50.679 deals of all time, you know. Uh. And that's that's 0:08:50.720 --> 0:08:53.200 what I did. And you know, Meryl was of course 0:08:53.280 --> 0:08:57.880 much more corporative, was public, and the ultimate corporate was Chase, 0:08:58.000 --> 0:09:01.679 JP Morgan, JP Morgan Chase. You know, so they were 0:09:01.720 --> 0:09:06.559 all very different. But you'll note of those uh three uh, 0:09:06.600 --> 0:09:09.320 you know, Lazard and Meryl and J. B. Morrien Chase, 0:09:09.320 --> 0:09:11.240 the only one I've written a book about is Lazard 0:09:11.320 --> 0:09:14.480 because it was so unique and you know, really the 0:09:14.480 --> 0:09:18.160 people there were quite extraordinary and fun to write about. Huh. 0:09:18.400 --> 0:09:23.240 So compared to Lizard and Goldman Sachs. I have to 0:09:23.280 --> 0:09:27.200 ask the question about ge Capital, did they essentially in 0:09:27.240 --> 0:09:32.000 the nineties nineties morep what was an industrial giant into 0:09:32.080 --> 0:09:36.720 a financial giant in fairness. You know, once Jack took 0:09:36.720 --> 0:09:39.440 over G Capital in the seventies, and you know, once 0:09:39.440 --> 0:09:42.560 he decided that, as he told me, it was easier 0:09:42.600 --> 0:09:47.679 to make money from money than from making selling widgets, 0:09:49.000 --> 0:09:52.160 making jet engines, making power plants, making you know, it 0:09:52.200 --> 0:09:54.640 was just easier. It was easier to do that arbitrage 0:09:54.760 --> 0:09:57.120 and if you had the people in place who could 0:09:57.600 --> 0:10:03.560 understood the risks and managing the so uh during Jack's 0:10:03.679 --> 0:10:07.520 you know, twenty year reign atop UH g E A 0:10:07.640 --> 0:10:12.280 G Capital became an increasingly large and important contributor to 0:10:12.960 --> 0:10:16.000 the bottom line and to the point of like providing 0:10:16.760 --> 0:10:21.720 of the profits. So of course it was giant. It 0:10:21.760 --> 0:10:25.720 was like the third or fourth largest banking institution in 0:10:25.760 --> 0:10:30.320 the country, and it was completely unregulated Berry, completely unregulated. 0:10:30.320 --> 0:10:33.520 It was not a bank because no fd I C insurance, 0:10:33.559 --> 0:10:37.840 no regulations, didn't have deposits, well, they had one depositor. 0:10:37.880 --> 0:10:40.880 It was General Electric, it was it was the commercial 0:10:40.880 --> 0:10:44.480 paper market. That's quite amazing. So when I think of 0:10:44.600 --> 0:10:47.480 g E in the eighties and nineties, the three things 0:10:47.520 --> 0:10:53.640 that come up GE Capital obviously the rise of shareholder value, 0:10:53.679 --> 0:10:56.760 which a lot of people point to General Electric as 0:10:56.760 --> 0:11:00.679 a key driver of that, and then six sigma. Let's 0:11:00.960 --> 0:11:04.400 let's talk a little bit about shareholder value in that 0:11:04.679 --> 0:11:10.600 Chicago School philosophy that Jack seemed to have embraced. Well, 0:11:10.720 --> 0:11:13.960 I think what Jack, you know, Jack wouldn't know Chicago 0:11:14.040 --> 0:11:16.600 philosophy from you know, a hole in the wall. But 0:11:16.679 --> 0:11:20.560 what Jack really understood was you know, stock price and 0:11:20.640 --> 0:11:23.680 share and as you know, shareholder value. When he took 0:11:23.760 --> 0:11:27.000 over ge it was had a market value of twelve billion, 0:11:27.600 --> 0:11:29.679 and you know, by the time he left, like a 0:11:29.760 --> 0:11:32.160 year before he left, it was the most family company 0:11:32.160 --> 0:11:37.800 in the world. So that's a nice uh, you know, 0:11:37.880 --> 0:11:42.040 compounded rate of return over those basically twenty years. I mean, 0:11:42.520 --> 0:11:46.840 you know, we not unlike you know, sort of Tesla 0:11:47.000 --> 0:11:49.160 or even Apple. I mean, you know, really, I mean 0:11:49.200 --> 0:11:51.800 if you think about Tim Cook took over Apple, it 0:11:51.880 --> 0:11:53.800 was worth three billion, and at one point it was 0:11:53.840 --> 0:11:56.880 worth two and a half trillions. So that's inequally Jack 0:11:56.960 --> 0:12:00.679 Welchy and like or even more so, the afference between 0:12:00.720 --> 0:12:03.079 the two. I'm glad you brought that up as an example. 0:12:03.960 --> 0:12:07.880 The vast majority of the game we've seen in Apple 0:12:07.920 --> 0:12:13.199 has been an increase in revenues and profits with a modest, 0:12:13.559 --> 0:12:18.040 very modest uptick in pe multiple. When we look at 0:12:18.200 --> 0:12:20.800 GE from eight two to two thousand under the Jack 0:12:20.840 --> 0:12:26.760 Welsh rain, it began priced as a stage industrial. And 0:12:27.760 --> 0:12:32.120 I have argued that he left this giant, ticking time 0:12:32.160 --> 0:12:37.439 bomb of a pe on an industrial with a cratering 0:12:37.640 --> 0:12:41.240 capital business that had a ticking time bomb of an 0:12:41.240 --> 0:12:45.160 accounting fraud and sec finds about to happen. How much 0:12:45.360 --> 0:12:50.240 of the growth of GE was due to the legend 0:12:50.280 --> 0:12:54.160 of Jack Welsh and how effectively he presented the company 0:12:54.200 --> 0:12:58.560 to the world. So there's a lot, Derek to unpack. Hey, 0:12:58.600 --> 0:13:02.560 I read this giant that goes into all these details 0:13:02.600 --> 0:13:08.280 called power failure. Don't hurt yourself. So yeah, so I 0:13:08.320 --> 0:13:10.440 would agree with a lot of what you said, not 0:13:10.480 --> 0:13:14.760 all of it. So Jack had Wall Street research analysts 0:13:14.800 --> 0:13:17.439 eating out of the palm of his hand. Absolutely, Okay, 0:13:17.480 --> 0:13:20.959 So that's important number. And he figured that out, okay, 0:13:21.000 --> 0:13:23.400 and he played that game. And he also it was 0:13:23.400 --> 0:13:27.800 a fact that for the longest time, the research analysts 0:13:27.800 --> 0:13:32.800 that covered GE were industrial side analysts, didn't understand what 0:13:32.880 --> 0:13:35.439 was going on at the capital, so he could kind 0:13:35.480 --> 0:13:38.440 of wow them every quarter with the performance of the 0:13:38.440 --> 0:13:41.160 company and he you know, eighties straight quarters or something 0:13:41.200 --> 0:13:44.720 like that, you know, either met or exceeded the analysts 0:13:44.840 --> 0:13:47.840 estimates he had Bernie made Off numbers, didn't he just 0:13:47.960 --> 0:13:51.560 like consistency to a degree that should have raised some 0:13:51.600 --> 0:13:56.160 red flags. Well, except that Bernie made Off was a 0:13:56.200 --> 0:14:01.320 Ponzi scheme and totally fictional where never made a trade 0:14:01.840 --> 0:14:06.160 right for his customers. So Jack was actually you know, 0:14:06.400 --> 0:14:10.960 running legit. It was just that penny or two of 0:14:11.080 --> 0:14:12.920 up or down that well, you know, you know, we 0:14:12.960 --> 0:14:15.600 could debate that, probably endlessly, and there are people who 0:14:15.880 --> 0:14:18.760 you know, love to debate this. I mean, you know, 0:14:18.840 --> 0:14:22.480 having worked at ge Capital, I'm actually you know, sympathetic 0:14:23.120 --> 0:14:27.080 to you know, if you've got six fifty billion of 0:14:27.160 --> 0:14:32.320 assets you know, floating around including loans, uh, you know, 0:14:32.360 --> 0:14:36.480 actual buildings because you're in the real estate business, warrants 0:14:36.840 --> 0:14:40.520 in companies, equity stakes and companies, you know, and if 0:14:40.560 --> 0:14:44.800 you have those assets and you can monetize them at 0:14:44.840 --> 0:14:47.880 some point during a quarter to achieve what you told 0:14:47.880 --> 0:14:51.280 Wall Street Research analists you were going to achieve. If 0:14:51.320 --> 0:14:54.920 you don't do that, then I don't know, you're committing 0:14:55.040 --> 0:14:57.600 some sort of financial malpractice, it seems to me. And 0:14:57.640 --> 0:14:59.760 if you do do it, then people accuse you of 0:15:00.080 --> 0:15:02.920 financial mal practice. So well, we'll get to the SEC 0:15:03.160 --> 0:15:05.600 finds and that stuff later. I want to stick with 0:15:05.680 --> 0:15:08.800 the analyst community. Yes, Jack having them eat out, and 0:15:08.800 --> 0:15:10.880 he also had the media eating so that's where exactly 0:15:10.920 --> 0:15:14.080 where it's gonna go. G E owns NBC Universal. NBC 0:15:14.200 --> 0:15:18.480 Universal has on its platform CNBC. Jack created c NBC. 0:15:18.520 --> 0:15:24.280 He created MSNBC. So it's different today when the media 0:15:24.680 --> 0:15:29.760 ratings for financial television are all off. Regardless of which 0:15:29.840 --> 0:15:33.760 television channel you're talking about, the numbers are way down 0:15:33.920 --> 0:15:37.640 from the nineties. You'll get a spike during the financial crisis. 0:15:37.640 --> 0:15:41.080 You're getting a spike during the pandemic lockdown. But that's 0:15:41.080 --> 0:15:46.560 more like a cross between ESPN six Australian Rules Rugby 0:15:46.600 --> 0:15:50.080 and the Weather Channel. Right when some disaster happens, everybody 0:15:50.160 --> 0:15:52.560 turns to it. But look, we both came up in 0:15:52.560 --> 0:15:56.280 the eighties and nineties. At that time, if a CEO 0:15:56.560 --> 0:16:00.120 went on CNBC and said here's what I'm gonna do, 0:16:00.760 --> 0:16:03.080 and then he went out and do it, the entire 0:16:03.120 --> 0:16:06.840 investment community was hanging on that. Every word, which raises 0:16:06.880 --> 0:16:11.800 the question how effective was Jack Welch as a media 0:16:11.840 --> 0:16:16.600 spokesperson and how challenging was it for him to go 0:16:16.640 --> 0:16:20.760 on his own channel and tout his company's stock. Well, 0:16:20.760 --> 0:16:24.360 he obviously had a conflict a little, but I guess 0:16:24.400 --> 0:16:26.240 they got over that. I mean, did you ever meet 0:16:26.320 --> 0:16:30.960 Jack ever so briefly at CNBC for like thirty seconds 0:16:30.960 --> 0:16:33.920 in a green room getting he was getting makeup on 0:16:33.960 --> 0:16:37.160 and I was coming in for cud Low and Cramer 0:16:37.200 --> 0:16:40.760 and maybe it was eight seconds. Well, then you have 0:16:40.840 --> 0:16:42.920 a hint of what he what he was like. I mean, 0:16:42.960 --> 0:16:45.360 I spent you know, hours and hours and hours with 0:16:45.440 --> 0:16:48.880 him before he died, and he even is an eighty 0:16:48.960 --> 0:16:52.360 year old man. He was incredibly charming and magnetic and 0:16:52.440 --> 0:16:55.760 had a larger than life personality. So you know, when 0:16:55.760 --> 0:16:58.840 he would get on television, you know, with that cranky 0:16:58.960 --> 0:17:01.800 sort of New England, the accent that I managed to 0:17:01.800 --> 0:17:05.280 get rid of, and he didn't, even though we grew 0:17:05.320 --> 0:17:08.679 up near each other. He was magnetic, so you know, 0:17:08.760 --> 0:17:11.520 in captivating. So yes, he had the media eating out 0:17:11.520 --> 0:17:14.600 of the palm of his hands. He had the research 0:17:14.640 --> 0:17:16.399 community eating out of the palm of his hands. He 0:17:16.440 --> 0:17:18.520 had shareholders eating out of the palm of his hands. 0:17:18.680 --> 0:17:21.679 And when you have that kind of performance as a 0:17:21.760 --> 0:17:24.240 as a CEO over that long period time, don't forget 0:17:24.359 --> 0:17:28.160 he was around for twenty years, you know, he would 0:17:28.160 --> 0:17:31.040 he became sort of an imperial CEO. There was an 0:17:31.280 --> 0:17:34.200 I'm trying to remember which magazine it was. It might 0:17:34.240 --> 0:17:38.680 have been Fortune declared him the greatest CEO of CEO, 0:17:38.960 --> 0:17:42.600 the manager of the century, manager of quite impressive. Yes, 0:17:43.000 --> 0:17:45.200 you know, don't forget. At that time, Ge was the 0:17:45.240 --> 0:17:47.960 most valuable company, was the most respected company, and Jack 0:17:48.080 --> 0:17:52.600 was the manager of the century. So would be like Apple, Google, Microsoft, 0:17:52.640 --> 0:17:54.600 all rolled up into one, and you know that was 0:17:54.720 --> 0:17:57.400 g E. It was, you know, original member of the 0:17:57.480 --> 0:18:00.639 Dow Joe's Industrial Average. It was a triple a credit 0:18:00.760 --> 0:18:04.199 rated company, had been paying dividends for you know, fifties, sixty, 0:18:04.320 --> 0:18:08.439 seventy years. It's like they invented the light bulb, and 0:18:08.520 --> 0:18:11.199 they did. And it was a true bell weather. Remember 0:18:11.200 --> 0:18:13.880 that phrase, a bell weather. They don't really use that anymore, 0:18:13.920 --> 0:18:16.320 but it was a bell weather of the market. Amazing 0:18:16.760 --> 0:18:21.320 So power failure, the rise and fall of an American icon. 0:18:21.880 --> 0:18:23.919 You know, when I saw the title of this book, 0:18:24.160 --> 0:18:27.040 I thought it was gonna be about the modern GE. 0:18:27.640 --> 0:18:31.560 You really do an amazing deep dive into the early 0:18:31.720 --> 0:18:35.240 history of the company, I mean the foundation from when 0:18:35.240 --> 0:18:37.959 they before they were a company, when it was just 0:18:38.000 --> 0:18:41.040 a gleam in h Thomas Edison's eyes. Tell us a 0:18:41.040 --> 0:18:47.200 little bit of about the process of researching something this substantial, 0:18:48.400 --> 0:18:52.720 very very painful. Well, you do this in all your books, 0:18:52.800 --> 0:18:57.000 You do a giant dive. I feel like that's you know, 0:18:57.000 --> 0:18:58.720 I write the books that I want, I would like 0:18:58.800 --> 0:19:01.720 to read, you know, so they have to be sort 0:19:01.760 --> 0:19:06.280 of part oral history, part real history, part you know, 0:19:06.400 --> 0:19:12.480 investigative reporting, part documentary. Uh, you know, deep dive and evidence. 0:19:13.080 --> 0:19:15.560 And you know, I like to get at the d 0:19:15.680 --> 0:19:18.280 n A of these firms or these companies right there. 0:19:18.320 --> 0:19:20.639 And the d n A of g E goes back 0:19:21.000 --> 0:19:23.639 to the late nineteenth century, right, So I had to 0:19:24.040 --> 0:19:25.560 figure out and I didn't know what it was. So 0:19:25.600 --> 0:19:26.919 I had to figure that out because you know, the 0:19:26.960 --> 0:19:31.840 myth is that this GE was started founded by Thomas Edison. Well, 0:19:32.080 --> 0:19:34.760 within a minute of or two of researching, I discovered 0:19:34.760 --> 0:19:38.280 that actually that's not true. But they play that up 0:19:38.320 --> 0:19:40.119 at nauseam. And I don't blame him. I mean how 0:19:40.160 --> 0:19:43.720 can you not play up Thomas Edison and the light bulb. Well, 0:19:43.760 --> 0:19:46.879 the light bulb is real he he did, you know, uh, 0:19:47.359 --> 0:19:49.959 developed the light bulb, create the light bulb. But you know, 0:19:50.040 --> 0:19:55.919 the business started as a you know, electricity power generation up. 0:19:56.320 --> 0:19:59.560 Let's talk about that, because the lightbulb is useless if 0:19:59.720 --> 0:20:03.399 you and plug it into the At the time, it 0:20:03.600 --> 0:20:07.399 wasn't candles. If you heard of whale oil, have you 0:20:07.480 --> 0:20:09.679 heard of fireplaces? I mean, you know, this was an 0:20:09.720 --> 0:20:13.959 incredible This was an Internet like leap forward in technology. 0:20:14.040 --> 0:20:20.080 So General Electric plays an integral role into electricity, at 0:20:20.160 --> 0:20:23.720 least starting in the northeast of the United States. Tell 0:20:23.800 --> 0:20:28.920 us a little bit about that process of electrifying New 0:20:29.000 --> 0:20:33.360 York City, electrifying other parts of the Northeast. Well, basically 0:20:33.920 --> 0:20:38.080 what became General Electric, which was a merger of two companies, uh, 0:20:38.240 --> 0:20:42.879 you know, sort of was a pioneer in bringing electric power, 0:20:43.000 --> 0:20:46.280 the generation of electric power, and then creating the electric 0:20:46.280 --> 0:20:50.000 power grid. Remember, there was you can create electricity, but 0:20:50.000 --> 0:20:52.320 but if there's no way to deliver it to businesses, 0:20:52.359 --> 0:20:54.520 and then by the way, you know, you have to 0:20:54.560 --> 0:20:58.960 convince people to like connect to it, and it's invisible, right, 0:20:59.760 --> 0:21:05.600 and if you mess up, it's deadly. So other than that, 0:21:05.680 --> 0:21:08.239 it seems other than that, it seems like a simple thing. 0:21:08.280 --> 0:21:10.560 And then and in the early days, there were like fires, 0:21:10.760 --> 0:21:13.880 you know, and people's businesses burned down, so you can 0:21:13.920 --> 0:21:18.280 imagine that wasn't exactly the greatest recommendation for this product. 0:21:18.840 --> 0:21:21.960 But over time, you know, the miracle accord. And part 0:21:21.960 --> 0:21:24.520 of the reason the miracle occurred is because you know, 0:21:24.600 --> 0:21:29.440 there were electric subway cars and electric trams above ground. 0:21:30.080 --> 0:21:32.600 And you know, I don't know if you you you 0:21:32.800 --> 0:21:35.160 probably didn't watch this, but the you know, the Gilded 0:21:35.200 --> 0:21:39.200 Age Show, Okay, so I mean there's there's an episode, 0:21:39.280 --> 0:21:41.240 I think the second or third episode in there where 0:21:41.240 --> 0:21:45.399 they actually have a big social event in downtown Manhattan, 0:21:45.400 --> 0:21:48.720 in a square mile in downtown Manhattan around City Hall 0:21:49.280 --> 0:21:52.959 where they were, you know, electrifying that square mile of 0:21:53.000 --> 0:21:56.720 downtown Manhattan. And that was GE doing that, Okay, that 0:21:56.800 --> 0:21:59.480 was General Electric doing that, and that was like a 0:21:59.520 --> 0:22:03.040 major league event in New York City's history, you know, 0:22:03.080 --> 0:22:06.960 electrifying a square mile of downtown Manhattan. And there was 0:22:07.000 --> 0:22:09.240 like a big social event, and you know, Page six 0:22:09.320 --> 0:22:12.320 covered it, Bloomberg covered it. You know, everybody covered it. 0:22:12.640 --> 0:22:15.639 I don't think Bloomberg covered it might have been before 0:22:15.720 --> 0:22:17.960 Mike was born. It might have been. But when you 0:22:18.000 --> 0:22:21.840 think about people seeing street lights that are running without 0:22:21.920 --> 0:22:25.439 revolutionary this is maybe not as quaint. Well, this is 0:22:25.520 --> 0:22:29.800 before the days of fomo was called fomo. But how 0:22:29.960 --> 0:22:34.959 attractive was the idea of clean accessible light? How long 0:22:35.040 --> 0:22:38.240 did it take for this to catch on it? It 0:22:38.320 --> 0:22:43.400 happened quickly. Obviously it was a major, you know revolution, 0:22:43.480 --> 0:22:45.080 But I mean people had to get comfortable with it, 0:22:45.160 --> 0:22:46.840 and the and the grid had to be built out, 0:22:47.080 --> 0:22:50.080 and and the power had to be able to be manufactured. 0:22:50.480 --> 0:22:54.879 So as the demand crept up and continued, then the 0:22:54.920 --> 0:22:58.200 supply rose to meet that demand. So let's talk about 0:22:58.240 --> 0:23:01.560 how that was done. Tell us about the merger or 0:23:01.600 --> 0:23:05.479 in the early days that gave us General Electric, and 0:23:05.600 --> 0:23:10.639 who ran that company. It wasn't Thomas Edison. So Thomas 0:23:10.720 --> 0:23:14.679 Edison was completely against the merger of what became GE. 0:23:14.880 --> 0:23:17.719 So right off the bat, I'm thinking, why do they 0:23:17.760 --> 0:23:20.680 keep talking about Thomas Edison? Like I get it from 0:23:20.720 --> 0:23:24.840 the technology point of view and the entrepreneurial point of view, 0:23:24.920 --> 0:23:27.960 but the actual merger, So right off the bat, we're 0:23:28.000 --> 0:23:31.520 talking about M and A, which of course intrigue your wheelhouse, right, 0:23:31.840 --> 0:23:34.280 so you know, and and how I mean there was 0:23:34.440 --> 0:23:38.080 probably no bigger acquirer and seller of companies over the 0:23:38.160 --> 0:23:41.680 years than g So M and A was in ges 0:23:41.840 --> 0:23:45.840 D n A. It's like an investment banker's dream ge 0:23:46.119 --> 0:23:49.920 and so. Uh. Edison had a company called Edison General 0:23:49.960 --> 0:23:54.919 Electric but by uh it had about ten million of revenue, 0:23:54.960 --> 0:23:58.440