Okay, so two quick things before we jump into this unbelievable episode on Ted Turner.
I think the intro to this podcast is one of frankly, just one of the most shocking intros that I've ever done.
And it kind of sets the tone for Ted's just incredible, you know, multi-decade long career.
The first thing I want to talk to you about is I was invited to fly to Notre Dame to actually speak to a class called The Art of Investing.
That class was actually recorded and turned into a podcast.
So, whatever podcast player you're listening to this on, if you don't mind going and searching for Art of Investing, do me a favor follow that show and then listen to episode number four.
The feedback on that episode has been incredible.
But more importantly to you is that in about 90 minutes I try to summarize the best I can about the main lessons that I've learned from this seven or eight years of intensive study on history's greatest founders.
The second thing I want to tell you about is this collaboration that I have with Readwise.
A bunch of people have already subscribed to this.
So back in 2019, one of the co-founders of my favorite app, the best app I pay for, I literally could not make the podcast without.
It is called Readwise.
I've been talking about it for years.
I've been tweeting about it for years.
Every single other interview on other people's podcasts I go on, I talk about this.
And I did this way before I knew I was going to partner with them on my own product.
So I built this product with Readwise.
It's called Founders Notes.
You can see it at foundersnotes.com.
And it's founders with an S, just like the podcast.
So foundersnotes.com.
I got a DM from Tristan in 2019, and he was the one that made me aware of Readwise.
It was perfect.
And the reason it was perfect is because I have way more highlights and notes on my books than most people do.
So I have over 20,000.
Over the years I've added over 20000 highlights and notes for all the books that I read for the podcast to the ReadWise app.
And the reason I do that is because I'm able to search everything that I've ever done.
I use this every day.
I search it every day.
It really is the world's most valuable notebook for founders.
So I contacted the founders of ReadWise and said hey, can we do this?
Can we actually do this project together?
I want to make my own version.
I want people to have access to everything that I see.
Literally.
If you sign up at foundersnotescom, you are able to search and see every single one of my highlights and notes.
It's exactly what I see.
And so, as an illustration of just one of the ways that I use, this is at the end of this episode.
I'm going to include this 20-minute episode I made for my AMA feed, where somebody asked me how did history's greatest entrepreneurs think about hiring?
And anytime I'm asked a question like that, anytime I'm making a podcast, what I do is I'm constantly searching my Readwise app, which is now available at foundersnotescom.
And just it gives me a complete list of all the different ways that history's greatest founders have thought about.
So at the very end of this episode, you're going to hear me speak for 20 minutes about And it's answering the question how did history's greatest entrepreneurs think about hiring?
And all that information came from me searching my notes and highlights which is exactly what you can do with founders notes.
Keep in mind, this is made for founders already running successful companies.
Those already running successful companies will get the most value out of this, because it's a way for you to reference the thoughts and ideas of history's greatest founders.
And then you know how to apply them to whatever's going on in your company at the At this very moment.
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You can get immediate access to over 20000 of my highlights and notes right now by going to foundersnotescom.
Turner Advertising Company was already one of the largest billboard companies in the South when my father put together a deal that would make it the biggest.
My father had developed a close relationship with a successful billboard operator in Minnesota named Bob Nagel, and together they hatched a deal.
They would go in, purchase General Outdoor, and then split it into two pieces.
Nagel's company would take the properties in the north, while my father would own the markets in the south.
This merger would quadruple our revenues overnight.
To afford the deal, my father had to finance nearly all of the purchase price.
When the dust settled on the general outdoor acquisition, my father moved into our new headquarters as CEO of the biggest outdoor advertising company in the south.
Dad was elated.
This was the most energized I had ever seen him.
Unbeknownst to all of us.
This upbeat behavior came just as he was approaching the brink of a collapse.
Almost overnight, his behavior became significantly more erratic and unpredictable.
One day he'd be high as a kite, and the next he'd be in a state of abject depression.
He had always been a fairly large man, but now he was putting on more weight and growing a big potbelly.
After years of smoking two or three packs of cigarettes a day, he had developed a bad case of emphysema that, combined with his drinking and his weight gain, took a heavy toll on him physically.
It's clear to me now that reaching new heights in business and material wealth actually undermined his mental state.
He told me a memorable story on this subject.
He was preparing to enter Duke University just as the Great Depression hit.
His parents lost nearly everything, and they struggled to tell him that they could no longer afford his tuition.
At that young age, he consoled his mother, saying, "'Don't worry, Mom.
When I grow up, I'm going to work really hard and I'm going to be a success.
I'm going to be a millionaire and I'm going to own a plantation and a yacht.'"
He had achieved all three of these things.
He said that now, having checked off each of these goals, he was having a really tough time reevaluating things and coming up with a plan for the rest of his life.
He then told me something that I've never forgotten.
He said son, you be sure to set your goals so high that you can't possibly accomplish them in one lifetime.
That way, you'll always have something ahead of you.
I made the mistake of setting my goals too low, and now I'm having a hard time coming up with new ones.
In addition to achieving all that he'd ever hoped to, this new acquisition seemed to trigger other insecurities in dad.
Seeing his parents lose everything in the depression created a deep-seated concern about going too far into debt.
His post-acquisition interest payments were big and the company needed large capital investments to continue its growth.
The billboard business was doing well and he shouldn't have had trouble meeting his obligations.
This was an irrational fear of losing everything and it began to consume him.
He tried to get his addictions under control by checking into rehab.
They managed to curb his drinking and his smoking, but then he was also prescribed a variety of medications.
My dad basically swapped alcohol and tobacco for prescription drugs.
After years of grooming me to succeed him, all of a sudden he seemed in a panic about the company's future.
It was the middle of the week and I was in Atlanta working.
My phone rang and it was my father calling.
He said that he was calling to tell me that he was selling a large chunk of the company.
I couldn't believe it.
I was stunned.
I tried to talk him out of it.
I told him that the company was doing well and there was no doubt in my mind that we could make our debt payments.
When it was clear I wasn't getting anywhere.
My shock gave way to anger and I said Dad, all my life you taught me to work hard and not to be a quitter, and now you're the one who's quitting.
What happened to you?
How could you do this?
Dad remained surprisingly calm and unmoved.
I hung up the phone, dazed and disappointed.
Just a few days later, I got another call, but this time it was my stepmother.
Dad was dead.
After having a relaxing breakfast, my father walked up to his bathroom, climbed into the tub and shot himself.
I never thought it would come to this.
I had lost my best friend.
That is an insane excerpt from the book that we talked about today, which is Ted Turner's autobiography.
It is called Call Me Ted.
I want to start a few years before his father's suicide.
This is an insane story.
There's so much that's going on that happens in this book.
So Ted is around 24, 25 years old when his dad kills himself.
He inherits his dad's company.
The company is worth, in like today's dollars at that time, something around $15 million.
For the next 50 years, Ted Turner is going to work on this company.
He's going to sell the company to Time Warner for $8 billion.
And then a few years later, Time Warner is going to merge with AOL.
Ted Turner's stock goes up to a value of $10 billion.
And then he winds up losing over the next 30 months $8 billion.
He has this funny line in the book where he says my network dropped by about 67 million per week, or nearly 10 million per day every day for two and a half years.
Losing that much money so quickly might have been a record, but it obviously wasn't the kind that I was hoping to set.
So his merger, his sale to Time Warner Actually happens about 37 years in the future from where we are.
His dad is still alive.
He just he's around college age.
He'd been working for his dad's billboard company every summer and every year since he was 12 years old.
So he's like OK, I have a very complicated relationship with my father, but I need to stop delaying the inevitable.
And I'm actually going to work full time at the Turner Advertising Company which, at this point in history, is just an outdoor advertising company.
Their sole focus is they have a bunch of billboards.
And so Ted describes the education that his dad is giving him once he comes to work with his dad full time.
There were many days when he'd drive me to and from work and the entire ride.
He'd only talk to me about the business.
It was almost as though he gave me the business degree that he didn't get in college.
He'd punctuate his lessons with funny stories or memorable expressions.
Once to drive home a point about the difficulties of attracting good, loyal employees, he told me heck, Jesus only had to pick 12 disciples and even one of those didn't turn out well.
One of his favorite mottos was one that I've used for myself ever since.
Early to bed, early to rise, work like hell, and advertise.
That's a great line.
It's funny, actually, that Arnold Schwarzenegger actually adopted that as his motto as well.
He would repeat in his biography, early to bed, early to rise, work like hell and advertise.
And so one thing that sticks out about Ted Turner is in his early life his dad sent him to a bunch of like Christian military academies.
And he was really trying to teach his son like self-discipline and a fierce work ethic.
Ted is clearly being groomed to take over his dad's company.
He's going into the company as And he doesn't want people to think that he's getting handouts.
And this is the first time we see a hint that Ted is definitely a workaholic.
Many times he never leaves his office.
He sets up a bed.
He sleeps there.
He wakes up, gets to work.
He works all the time.
And he does that later on in life.
But he's also doing this as a 21-year-old.
I was trying to do my best to do everything right.
I would work the hardest, follow every rule, and seek excellence in everything I did.
As the boss's son, I made a point to impress the other employees by being the first one to arrive every morning and the last one to leave at night.
And so there's probably about 50 pages that just deal with the relationship that Ted had with his father.
There's a bunch of stuff in here.
It's interesting that we're still we haven't got to the point where his dad shoots himself.
And then Ted's response is that he lost his best friend because frankly, there was a lot of times was like man.
I wouldn't want my son to describe me this way.
They had a very complicated, contemptuous relationship.
His dad is definitely a control freak.
His dad is definitely a dictator.
Ted's own kids would describe Ted that way as well.
But at this point, when you're 21, he's like, I'm my own man too.
And so he's actually having a conversation with his dad because it's just reaching a boiling point where his dad's just trying to to control every single decision, personal or professional, that ted is going to make.
And this is what he says to his dad.
Dad, it gets tough when you're involved in every aspect of my life.
You tell me where i should live, who i should date.
I'd like you to consider letting me be myself a little bit in my business life.
I'll do anything you say, but please try not to bug me so much about my personal life.
When i want advice, i'll ask for it, but if not, please let me try to work this out for myself.
And the fact that Ted stood up for himself, told his dad exactly what he felt and what he wanted happened, was really important, because this was what happens next.
He actually gets a letter from his dad.
Well, first he's driving him to the airport and his dad tells him son, you're starting out where most men finish.
Meaning here I was, 21 years old, running a business.
A few days after, I got a letter from him telling me what a great job I was doing and how proud he was of me.
My father was very sparing with his praise, and nothing he ever did before or after that day ever made me feel as good.
Within three years of that letter, his father would be dead.
And so, as I go over all the notes of this complicated deal, he put together the fact that he was abusing drugs and alcohol, the fact that he was out of rehab.
There's a line that I heard from Charlie Munger one day that I've never forgotten.
And it's something that he's realized with human history, with a lot of like really successful entrepreneurs and executives.
And he says that the problem isn't getting rich.
The problem is staying sane.
The problem isn't getting rich.
The problem is staying sane.
Ted's father got rich, but he was incapable of staying sane.
So imagine you're Ted Turner at this point in the story.
You're 24 years old.
Your father, who was your best friend, didn't say anything, didn't leave a note, went into the bathroom and shot himself in the head.
So not only did you lose your best friend, but now you have to try to save his company.
And what he's realizing is he had signed this deal to sell off these assets back to Bob Nagel the day before he killed himself.
And he actually wrote it.
It was a handwritten note.
And so from Ted's perspective, it's like, OK, well, my dad and Bob Nagel were friends.
My dad was obviously not of sound mind when he entered into an agreement, considering that he signed it one day and then popped his top the next.
I'm going to get out of this deal.
But now he's a 24-year-old inexperienced entrepreneur going to a 60-year-old man that has built an incredible company saying, hey, how can we get out of this deal?
And Bob's like, listen, I admire your father.
I'm very sad that he died, but I have no intention of letting you get out of this deal.
This deal will continue and go forward.
And so this is the first time in the book we see some traits that Ted's going to have his whole life.
He likes to fight.
He just does.
He doesn't back down.
The giant conglomerates that this guy takes on in the early days of the cable industry and the satellite TV industry is incredible.
He's involved in multiple lawsuits.
And so he's like, OK, well, this guy thinks I'm just some snot nosed 24 year old rich kid.
He thought, oh, like I'm going to threaten his son.
His dad's not here to save him.
He's going to back down.
Ted doesn't do that at all.
And so Ted's like, OK, let me go and actually read all of like this, this very informal agreement.
And what he realizes is that Bob Nagel made a giant mistake, that he did not actually call for a non-complete cause clause for the employees of Ted's dad's company.
And so Ted's idea is like how can I severely diminish the value of this asset so Bob's not going to actually want it anymore?
And so he says, I'm going to jump his leases.
So I didn't know anything about this.
He says, in the billboard business, a company's leases are its most valuable assets.
And if you really wanted to mess up a competitor, jumping the leases was a great way to do it.
So what does that mean?
Most of these leases, so what the billboard companies did, right?
They'd go around to people to own a bunch of land next to highways or high traffic areas.
They go knock on the door and say, hey, we'd like to put up a billboard here in return.
We'll pay you.
You know, this is 1950.
So it's like we'll pay you twenty five dollars a month or fifty dollars a month.
You can enter into these agreements with us.
But guess what?
If you change your mind, you can always cancel a lease within 60 to 90 days.
And so Ted's like, okay, so I'm going to jump all these leases.
I'm going to use the exact same people.
So the exact same group of people that signed up the leases are now going to contact these people again, but from a different company, and say hey, I know you can cancel in 60 to 90 days.
You're getting paid $50 a month or $25 a month.
Guess what?
We're going to pay you $75 a month if you'll switch that lease to our company.
So for the next few weeks, all Ted Turner and his team do is they go and work the phones and they're feverishly just renegotiating and jumping all these leases.
And over a matter of few weeks, he did significant damage to these assets that Nagel wanted to acquire.
And so...
Finally, Nagle figures out what he's doing.
And so he comes up with a deal.
It's OK if you pay me two hundred thousand dollars, then we can cancel the deal.
And Ted's like, OK, great.
I agree right away.
Here's the problem.
Ted doesn't have two hundred thousand dollars.
This is another main theme from his career.
He's constantly agreeing to deals.
Then he realizes, oh, I don't have the money.
So he's got to constantly get really creative on how to raise money.
The funds, this gets really complicated later on.
This is like a more simple idea.
So he had this idea where he's like, okay, we have this agreement.
I'm going to pay him 200 grand.
I'm going to keep all the assets that my dad was trying to get rid of the day before he committed suicide.
But I need to find a creative way out.
And so this is what Ted says in the book.
Let me read this part to you.
I learned a lesson that would stick with me throughout my career.
When the chips are down and the pressure is on, it's amazing to see how creative people can be.
And with a 90-day clock ticking, so Bob gave him 90 days to come up with the money we had to get really creative very fast.
So now this is very interesting.
He realized, well, Bob's a very rich guy.
He makes a lot of income at this point in American history.
The top, he was at the highest bracket, like income tax bracket.
And so at this point he's like well, if I pay you 200 grand in cash, that's taxed at a 90 percent rate.
So you wind up with, what, $20,000 and the government, the U.S. government gets $180,000.
Obviously, you don't want to do that because this is being treated as a short term capital game.
And therefore, it's taxes, ordinary income.
Right.
And so he goes.
Well, what if I actually give you stock in Turner Advertising, which is the company that he inherited from his dad?
And then that way you can hold the equity as long as you need to to shield yourself from any heavy tax that you would get on a short term game gain.
And Bob's like, OK, I accept that offer.
So I want to jump to another example where Ted always has to get really creative when he's financing these deals.
And something to know about him.
He's acquisitive by nature.
If he has, you know, billboards in Georgia, he wants to expand into Tennessee.
If he has billboards, he wants to get into radio.
If he has billboards and radio, he wants to get into billboards, radio and TV.
If he starts buying the Atlanta Braves, then he wants to also own the Atlanta Hawks.
This is something he does his entire life.
He's very, very acquisitive.
At this point he says I'm eager to expand.
I found a very profitable billboard company in Chattanooga Tennessee, but the price was a million dollars.
Great, I'll buy it.
Here's the problem I didn't have that kind of cash.
So he convinces the seller.
Right.
This is how he makes the acquisition of no money down.
He's like, will you finance 75 percent of the purchase price over seven years at a very high interest rate?
He says yes.
Then he goes to a bank that's actually looking to expand their investments in the South.
And they lent Ted the rest of the money in return for equity in the Chattanooga company.
And so this is another important thing he learned from his dad.
His main company, right, is Turner Advertising.
If you're gonna go and acquire another company, don't just fold that into Turner Advertising.
You wanna keep that as a separate entity.
He says my father always maintained many of the different billboard businesses as separate legal entities.
And so in this deal, this is important.
Why?
For two reasons.
He could offer the bank the equity in the Chattanooga company without diluting his ownership of the main entity, which is Turner Advertising.
It also allows for periodic reorganization to offset potential capital gains liabilities.
And especially at the time.
This is still important to this day, but it's really important when your top marginal tax rate is 90.
So he continues to expand by acquisition, but he's not content being the biggest billboard company around.
He wants to get into new and exciting industries.
So the first thing he does, he's like, okay, I want to go and buy a bunch of radio stations.
Now, this is very important because he repeats multiple times throughout the book that when you own an asset, your job is to maximize its value.
And what Ted is really great at.
This may be the most important idea other than he failed to.
He's a dictator.
And if you're a dictator, You want to listen to James Dyson when he said one of the most important things is retention of total control.
Ted is a dictator but then sells his company and then loses control and is very frustrated when he watches other people take 10 billion of his assets and drive it into the ground.
And so that was another big mistake.
But other than that, I think the most important idea in this book for me is that he's really great at combining his assets in a way that his competitors can't.
So you can think about this as like you find an advantage by doing only what you can do.
And so there's a bunch of people that own radio stations.
That's great.
Not many people own a bunch of radio stations and also own a billboard company.
And so this idea, what he's about to do here, he also does when he gets into TV, which we're going to jump into in a minute.
So he starts buying up these radio stations.
He's like well, I'm just not going to like, if I'm going to buy my first radio station, like what is the advantage that I have that other people don't?
I should buy a radio station in the same market where I already have billboards.
So there's two things that happen here.
One, he benefits from an efficiency in sales and promotion because he's selling ads.
It's the same thing.
Like if I'm selling ads on a On a billboard, right?
My sales team can sell ads on billboards.
My sales team, the same very sales, the very same sales team can also sell ads in a radio station.
So that was fascinating, but even better is what he does.
So let's say I own a radio station, right?
And I want to compete.
What do you want?
You want more listeners than the other people.
This isn't podcasts, right?
It's not like, oh, anybody all over the world can listen to it.
You're listening to it in a specific geographic.
You're constrained by a specific geographic location.
So therefore, it is a much more zero sum game.
So I want to take listenership right away from the people, because we're fighting over, let's say, all the residents of Atlanta.
And I want to beat the other radio stations.
And so what happens is like, OK, well, you have a radio station.
I have a radio station.
We're competing against each other.
But guess what?
I have the biggest billboard outdoor billboard and outdoor advertising company in this area.
Fifteen percent of my ad sales are my ad inventory on my billboard company.
Every month goes unsold.
Guess what I'm going to do?
I'm going to put ads for my radio station.
I'm going to use that unsold inventory because it has no cost to me.
Right.
I'm going to put the ads for my radio station on these billboards.
That's going to increase listenership.
I'm going to have more listeners than you.
I'm going to make more money in ad revenue.
Eventually, I can acquire all these other radio stations.
He does this exact same idea in local TV stations before he gets into satellite and cable TV as well.
And again, it comes from this main idea.
He does this in a variety of ways.
He's combining the assets that he has in a way that his competitors cannot understand.
And he's also good at taking ideas that worked in one industry and transferring them to another.
He doesn't even like, like, if you really think how crazy this is, right?
90%, maybe not, 80% of the book is his career in TV.
He says, I never developed a passion.
This is why.
I never developed a passion for radio the way I later would for television.
For television.
This is why he's going to start getting into the TV business.
He thought the TV business was way more exciting.
And he says you should always bet on the medium that looked like it would grow the fastest.
And obviously TV is going to grow a lot faster than radio is from this point in history.
And so he's like well listen, if it comes down to buying a lousy radio station or a lousy TV station, then the choice is easy, because I want to bet on the medium that looked like it would grow.
And so when he buys this local TV station, you're only watching if you're in and around the Atlanta area.
This is before, remember, there were decades before the internet, for God's sake.
But this was before cable and satellite TV.
That does not exist.
This is all like an antenna.
So he does the exact same thing here.
He's like, okay, well, I still have this, you know, 15% of the billboard inventory.
It's going to go unsold.
So I'm just going to put ads for my TV station on these billboards, just like I did when I only had radio stations.
And when he says that these are lousy, right, these are lousy TV stations, he means it.
Listen to this.
This is the first channel that he buys, the first station he buys.
The more I learned about TV stations, the more I realized that ours was a disaster.
Of the 35 people who were on the payroll when we took over, only two were still there a year later the custodian and the receptionist.
One of the most important things about Ted Turner and understanding his career is that he believed in the power of TV, specifically if you could have a 24 hour station, or if you could reach people all over the world if you were not constrained by, you know, just the small being in one small city.
Right.
He believed in the power of television more than almost anybody else.
Remember, he built a media company.
All of his money is going to come from ads.
And so this is the first hint that he gets that TV can be an incredible distribution channel.
And so one of the people that are paying him to do a show on their TV is these televangelists that are going to wind up becoming infamous many decades into the future.
Jim and Tammy Faye Baker.
Jim is known for...
He becomes one of the largest televangelists in the world and then gets caught, I think with a bunch of hookers and he like cries on TV and stuff.
This is like a very well-known event that happened.
But this is multiple decades before that happened.
And listen to this.
The only show that aired live from our studios, which was a religious program hosted by a young couple named Jim and Tammy Faye Baker.
Well before they went on to national fame, they got started with this local show called, And before long they were bringing in more money in a week than the entire station made in a month.
Okay, so at this point in Ted's career, he owns one.
There's only two independent TV stations in the Atlanta area.
He owns one of them.
The other one is going to go out of business.
Remember, he said they're lousy businesses, especially when there's almost no financing.
So when you get in a jam, it's really hard to get financing.
But What happens here is a blessing, because he's like OK well, it helps if I can be the only one bidding, because you're buying content.
And at this time, it is restricted by your geographical location.
That means that you can't bid on syndicated programming from say, MGM MGM Studios for Atlanta unless you own a show or unless you own a station in Atlanta.
So there's only two possibilities. previous bidders.
Now the other bidder is gone.
And so he's the only buyer in this entire market.
And so what Ted's are also really good at is he happens to understand.
He spends a lot of time thinking about, thinking about and understanding the financial incentives of the person that he is buying from.
Again, he understands the financial incentives of the person he is buying from.
And so he's like, well, if the other station's gone, no one else is in Atlanta is buying old movies.
And why is that important?
Because there's thousands of old movies and thousands of TV shows that no one else is competing to air them on in the market, that right now he finds himself with the temporary monopoly on.
Right.
And these old films were long since fully amortized by the studios.
And they don't have to pay any of the talent.
So that means that any revenue that is generated by selling these old movies to Ted drops straight to their bottom line.
And so as a result of this, he's able to get great pricing.
He buys about every single movie that he can get his hands on and he strikes long-term deals whenever possible.
This series of events, like this advantage is going to change as soon as there's another bidder in the market.
So the long-term part of that is actually really important.
And he's doing business with MGM, Warner Brothers, Paramount, MCA, all of them.
And then he also has sports.
What he realizes is that now that we're in the 1970s, that local sports is huge.
And so he winds up being the one he bids on and he winds up broadcasting all the Atlanta Braves baseball games.
And so this is an idea that you and I've talked about over and over again the fact that relationships run the world.
This is how he winds up buying the Atlanta Braves and why.
Remember, his channel is the one that carries the Braves games.
And so he's like listen.
The ratings for the local Atlanta Braves games, I think, is the highest thing, highest rated show that he has on his TV network or his TV station.
Rather right.
But the problem is like that fluctuates whether the team is winning or losing.
Team wins more games, obviously more people tune in, right?
And so he goes to the president of the club.
His name is Dan.
He's like, Dan, I consider us to be partners.
We need to add some more excitement next year.
What are you going to do to get the team on track?
And Dan tells him, well, I'm not going to do anything because I'm going to sell the team.
And Ted's freaking out.
He's like, what are you talking about?
Who are you going to sell it to?
And Dan says, I'm going to sell it to you.
And the reason I say relationships run the world is because one you see this in these biographies over and over again, but it's also something that his dad told him a long time ago.
He says my dad taught me early on that long-term relationships with your customers and partners are very important.
You never know how the guy who you're friendly with today might be able to help you tomorrow.
And so what's happening?
He's like, they're offering me a first look chance to buy the franchise.
And this is another example where Ted does not have the money.
And this is what he says.
It's like, it doesn't matter.
I don't have any money.
I have to do this.
The Braves were a key asset and I had to go for them.
By owning the team, I could control its long-term TV rights.
They were too important to his TV station.
And so they're like, okay, we want $10 million for the team.
Could you imagine buying a professional sports team for $10 million, by the way?
And so this is where he has to get creative.
He's like okay, I can give you a million dollars down and then you give me nine years to pay the rest at a high interest rate.
And they say yes.
Another smart thing Ted does.
So he understood this is very fascinating.
We're going to get into literally the invention of the cable TV industry.
The best book I've read on this is actually Cable Cowboy.
It's actually episode 268.
If you haven't gone back and listened to it, it tells the story of John Malone.
Oh, that's another thing.
The remarkable thing about this book is all the different people involved, that at the time they're still coming up, but these people are like, world famous.
A lot of these people now are in their 80s.
Most of them are multi-billionaires.
I love reading stories about people like these, intersection of these, like a players uh, that all either know each other.
Sometimes they collaborate like let me give you example ted turner goes to a meeting.
There's four people in the meeting ted turner, john malone, warren buffett and bob eiger and this is before bob eiger was the ceo of disney.
John Malone's in this book all the time because he saves Ted's ass a couple times.
But also the book is structured in a way where like, Ted will be telling a story and then there'll be other people throughout his life that commentate on what was also taking place at that time, and some of them you know like I have a little different view on that.
And so, John Malone, What I think I'm going to do is actually You could buy the Kindle version of the book and just search John Malone and just read all of Malone's excerpts.
And I think that's even worth the price of the book alone.
There's just a million really interesting people that are spread throughout the book.
That was one of my favorite parts about reading the book.
But...
Let me get back to this, though.
What was fascinating is right now, Ted is considered a broadcaster.
He owns a TV station.
You can only get access to that TV station when if you have like an antenna.
And yet this is the brand new cable TV industry is going to be seen as a threat by broadcasters.
Ted is a broadcaster and he realizes this is not a threat.
This is an opportunity.
So he says.
I also saw that people were signing up for a new service to get local stations they were unable to tune into with their antenna, which is the basis of his TV business at this point.
This technology was often referred to as CATV, which stood for Community Antenna Television or, more simply, cable TV.
Ted thinks this is a massive opportunity.
So anytime he thinks there's a massive opportunity, Ted does the same thing.
He goes and tries to build relationships with the main players in that industry.
So he goes and becomes friendly with the cable TV operators.
And this is hilarious because...
This is what they tell them.
They told me that I was their first friendly broadcaster that they had ever met.
Back then, broadcasters saw cable operators as the enemy.
For many years, local TV stations had a monopoly and they viewed cable operators with fear and suspicion.
Why?
Because broadcasters say, hey, how dare you import distant stations?
I have a local monopoly and you're coming over the top.
And Ted thought that was a stupid position to have, because he's like no, you're not coming over the top.
You're greatly expanding my audience.
Now, instead of 20000 people watching the show, or 100000 people watching the show, there's going to be millions of people watching my shows.
So at this point, he starts the first... They call it a superstation.
So he's credited with creating the superstation concept.
He was the first person.
This is actually going to be TBS.
What we know as TBS.
And he's always on the forefront.
He's usually so far ahead of other people that...
Whether it's a financial institution like banks, don't understand how to loan them money because they don't understand what he's doing.
Or in many cases, advertisers, they're not comfortable.
And so this is fascinating.
Because he couldn't convince traditional advertisers to buy ads.
He finds small companies with products to sell and then gives them distribution.
So the thing that saves his ass until he can bridge this gap is the fact that he does direct response.
So think about you've undoubtedly seen these.
Let's say you are a manufacturer of steak knives and you're a small company.
You go on TV and you, you know, sell your, sell your steak knives in like a two minute commercial, like Billy Mays style.
Right.
These are the small companies that he chooses to partner with.
And here's the thing.
This is again, he's always proving his concept.
He knows that TV can be an incredible distribution channel because back when nobody was watching his station, he saw Jim and Tammy Faye Baker make all this money.
And it's the same thing that's happening now when he expands to this region.
He's like, of course, the bigger the market, of course, you're going to increase your sales.
So he says, we managed to sell a lot of merchandise.
Direct response revenue would prove to be vital for us while we work to convince traditional advertisers that we were well worth considering.
And remember, I said he was acquisitive.
He sees this article and it mentions that there's this brand new company called Home Box Office, HBO.
That is going to be a new pay for movie channel that's going to distribute their signal not by antenna, not by cable, but by satellite.
This is gonna be both one a massive opportunity and a big headache, because he's buying content from other people.
Those people that are selling the content usually like to sell it by again.
They're geographically constrained.
He's like no no no, not only am I don't wanna just put in like one little city or one little state, I'm gonna broadcast this all over the world and people flip out.
So I'll get there in one second.
Now, this is also interesting.
And it is John Malone's take on Ted Turner at this point in Ted's career that he was impervious to roadblocks that would stop people from even starting.
So he says, this is John Malone.
Remember, John Malone describing Ted Turner.
He always had this kind of basic, almost childish logic about him that refuses to accept artificial impediments.
I think one of his biggest secrets of success over the years is that, the things that most of us would sit there and ponder, all these regulatory and legal reasons why it might not be something you could do, and Ted would just say, oh hell, you can overcome those kind of things and he'd just go and do it.
And so he's making enemies everywhere.
He's fighting with.
He's like we managed to alienate the Hollywood studios, the sports leagues, the broadcast networks and the local stations all over the country.
And so he has to fight this actually in Washington.
There's going to be a bunch of lawsuits, a bunch of regulations.
This is what I mean.
He's going to describe what he.
This is one of the most difficult periods of his life, but this also speaks to this obsessive workaholic nature that he has.
There's a bunch of stuff in the book about his childhood which was crazy, about the way he went through multiple divorces talks about you know wasn't really around when his kids were there.
If you're interested in that, I'm going to skip over that from.
I want to focus on really how he built his business.
But there is a lot of that in the book.
And it's well worth reading.
But this is he's describing the hardest part of period of his life.
These issues were all uncharted territory.
All of us, the regulators, the broadcasters, the program suppliers and the leagues the sports leagues were sorting things out on the fly.
I was working as hard as I could.
I'd go all out during the day working on sales distribution, regulatory issues, whatever the battle happened to be, and I'd work right up until it was time to fall asleep.
I had a pull-down Murphy bed in my office and I would literally work until the point of total exhaustion.
Then I'd put my head on the pillow at night, worried about problems.
Then I'd wake up and spend the entire next day trying to solve them.
And so in many cases, the solutions he comes up with to these problems is very creative.
And so one of the problems he has at this point is there's this company called Nielsen.
So Nielsen is the one that measures viewership for regular TV stations.
At this point, remember, he's one of the first, I think he is the first superstation on a satellite.
And they're like, hey, we're not going to measure your audience.
We can't document your audience outside of Atlanta.
You know, you're spread out all over the place.
It's too expensive for us to do it.
And if they don't do it, then he can't sell ads against it, because he can't prove how big his audience is right.
They literally turn over the Nielsen data to the advertisers, and that's what they sell their ads against.
Now, here's the problem.
He's like, yeah, but this is bullshit.
This is not why you're saying that.
Your real motivation is because your customer base is actually the broadcast networks and the local stations, and I'm competing them and out-competing them with the satellite.
And so eventually he's going to threaten to sue them.
They're going to wind up uh, acquiescing to his demands, but before then he's like this is a problem i need to prove like essentially, his problem is like okay, how can i prove that people all over the country are watching my superstation if i don't have any analytics?
And this is where he had that blessing in disguise, where he couldn't earlier in the story he couldn't sell regional, nobody would buy regional advertising, right.
So he's like oh, i gotta go to direct response.
And he realizes oh okay, well it, Since we're running so much and we're relying on direct response so much, we know where our customers are because they send in personal checks and the postmark tells us where the check comes from.
Check this out.
Direct response advertising could be a solution to our problem.
Since many of our orders for direct response products came in the form of personal checks mailed directly to our Atlanta offices, we could tell where they were coming from based on the postmarks on the envelopes.
So he has his team.
He says, okay, I want you to put all the checks from our customers into one of two piles.
You have the Atlanta pile, which is the market that Nielsen wants to verify, and the non-Atlanta pile.
And very quickly he realized oh my God, the non-Atlanta stack grew to such a size that it dwarfed the size of the local one.
Obviously, I have a lot larger audience outside of Atlanta than I do inside of it.
And so he's doing anything he can to get an advantage and to keep his company alive.
But keep in mind, there's usually a very slow lag.
And he describes this part of human nature.
It's like no one wants to be the first person that does something, but once other people do it, a lot of people flood in.
It was nearly two full years before we got any meaningful national buys.
What we were doing was so new and so unique that everyone was slow to adapt.
But once a few of the biggest players validated our concept, the rest began to follow.
And then he's constantly looking for these ways to differentiate himself from competitors.
I remember.
So when I was a kid, there's this thing called TV Guide.
TV Guide was literally a physical book that would tell you what's on TV.
Eventually it got digitized.
And essentially they copied what was in the book on a TV.
But what I couldn't understand is like when I'd want to watch like TNT or TBS, which Ted Turner owned, they would start their programs at a different hour.
And I didn't know why.
And so Ted's going to explain why.
And it worked because this worked on me.
So he says the listings in the TV guide for every other channel started and ended at the top and the bottom of the hour.
So it was very common for TV.
Everything starts at seven.
Everything ends.
The next show starts at eight.
Everybody does it the exact same way.
And he's like okay well, if we can extend a program through the end of the hour, and then we'd start.
He pushed the start time back five minutes.
I think this was, TBS was five minutes.
I thought when I was younger, one of them was five and 15 minutes, but maybe it was all five.
So he's describing why he did this.
We're going to extend a program through the end of the hour and start the following one at 7.05.
I envision that people watching our competition would start flipping around at the end of their shows And while the other channels would all be running commercials, we'd be showing programming.
The other benefit of this strategy was that we got our own little slot in every program guide.
A group of channels would be listed together at the top and bottom of the hour, but we were by ourselves on the 05 and 35 minute mark.
We tried this and immediately our ratings improved.
And so, again, this constant trial and error.
Another thing that he does, that he gets.
He gets criticized for later on.
That I thought was actually really smart is he did heavy investments.
Remember, he's like buying all these old movies, right?
He's syndicating all these old movies.
He's using them in a bunch of different formats, a bunch of different TV stations that he owns.
And there's a new technology comes along that would recolorize them.
This is like decades ago.
And it was very expensive.
He'd have to pay like 200 grand per every every single film.
You're like, oh, you want to take this black and white film and you want to turn to color.
Great, Ted.
That's going to be 200 grand.
And no, it was like you're out of your mind.
It's way too expensive.
People considered it was like like almost like graffiti because why are you doing this?
It was meant to be black and white.
Ted didn't care about any of that stuff.
And what happens is he's like okay, I could run the black and white version of that movie and then I can invest 200000.
Then now I have the color version, and I'd run that exact same movie.
One is in black and white.
One is in color.
The color one would get six times the amount of viewers.
So in other words, it would pay for itself very quickly because it gets six times the audience.
Ted is always paying attention.
Ted is always adaptable.
And that leads him.
I think if most people ask, like, what is Ted Turner known for?
I think it would be the invention of the first the world's first 24 hour news station, CNN.
And what was fascinating is he's like, well, that idea was rather obvious.
And why was it obvious to him and other people?
Because he's paying attention to this industry.
He's obsessed with this industry.
And he's like, well, what came before CNN?
Well, you had HBO, which is a 24-hour movie network.
People love that.
Then you had ESPN, which is a 24-hour sports service, and people love that.
Why wouldn't there should be a 24-hour news channel?
And he thought about this idea for five years before he winds up doing it because he's like obviously, the big three networks ABC CBS, NBC they have everything.
Tons of reporters.
They have news bureaus all over the world.
They have all these assets that I don't have that I have to build to do.
Obviously, they see that we should just take those assets, produce more content.
So instead of doing they did news four hours a day at this time, let's add an extra 20 hours.
We're going to do it 24 hours a day.
And of course, we're going to grow a giant audience.
And so for five years Ted Turner has this idea, is just waiting waiting waiting, and they don't do it.
And that leads us to one of the most important ideas in the book, the power of belief.
Clearly, the company for whom the economics of 24-hour news would have made the most sense were the big three broadcasters.
They already had most of what was needed.
Studios, bureaus, reporters, anchors.
They had everything but a belief in cable.
And this is such an important point because over and over again in the early days of his career, they would call he's like Ted Turner's nuts.
This guy's crazy.
He's not nuts.
He's not crazy.
He's early.
He sees something that you don't see.
Listen to this.
He's 38 years old.
And this is how much he has a belief in cable and cable TV.
He's on a plane and he's like, I'm going to be a billionaire.
He's saying this in October of 1976.
He's 38 years.
So it says the guy's telling the story that said, next time we managed to get seats together on the plane.
He pulls out a copy of the Delta Airlines magazine and he turns to the map of the United States and starts explaining to me how he's going to be a billionaire.
Make sure you buy my stock.
I'm going to be a billionaire.
And here's why.
I'm going to put this station up on a satellite and I'm going to get a news thing going.
Sports, movies and news 24 hours a day all over the world.
He said that in 1976.
That is incredible.
I haven't even mentioned yet the fact that this guy is a voracious reader.
And you already know, before I say this to you, what do you think he's reading?
What do you think he's reading?
You know what he's reading.
He's reading history.
He's reading biographies.
He's constantly.
I don't know if I'm going to there's some highlights on this, but he's constantly comparing stuff he read in books, like from history, to what's taking place in his life.
And I love this part.
He's like.
I'm often asked if we ever did any formal research on the viability of a 24 hour news or 24 hour cable news station.
My answer is no.
I had spent over five years thinking about it.
Henry Ford didn't need focus groups to tell him that people would prefer inexpensive, dependable automobiles over horses.
Alexander Graham Bell never stopped to worry about whether people would prefer speaking to each other on a phone.
If viewers liked watching news on television, why wouldn't they want the option to do it any hour of the day?
And so when I say that I think the highest order bit is his belief in cable, and I can prove to you that he believed it, because you have all these people saying that Ted Turner was like literally jumping up on desks and people were like literally like screaming, that people didn't understand what he saw.
But...
His actions show this.
And he's like, you know what?
I don't have enough money or experience.
I believe in this idea of CNN so much.
I'm going to sell off all my other assets to fund this unproven idea.
And so this is where it gets really crazy what he was willing to do. to make this dream happen.
He says, listen, we're breaking one of the golden rules of startups.
We're launching a business and we know, we know we do not have sufficient capital.
It's not gonna be profitable enough on the money we have.
So he's like, okay, I gotta figure out what the hell I'm doing.
And again, like I said before, he's always so far ahead.
There's no lenders or investors.
They don't understand what he's doing.
So, like he's like okay, my only option is like I gotta sell assets and I'm gonna put all these profitable assets.
That would make me a very rich man if I just did that.
And I'm going to sell them all, take that money. maybe light it all on fire if CNN fails.
This is pretty wild.
So he has to go to these very difficult, almost like loan sharks.
They're highly collateralized.
They're very high interest rates.
He winds up taking money from a factoring company.
So they actually come in and actually check his books every week before giving him more cash.
But the main idea I want to tell you about what's going on here is really asking yourself the question what is the most valuable but least strategic asset That I have that I can sell so I can actually make it to the next fuel station?
That's going to make more sense because he's going to do another historical analogy.
And so he's looking around all the stuff he's owning.
He's like, OK, I'm selling in the billboards, selling the radio station.
So he's like, well, I own the Atlanta Braves and the Atlanta Hawks, but I can.
They're very, very valuable, but they're too important strategically to the actual, like his TV stations, right.
He's like, I can't sell them.
And so he's looking around for the most valuable and least strategic asset.
He has this local TV station in Charlotte that eight years before he had bought for a million dollars.
Remember, he's always early.
And now that business is valued at 20 million.
So he sells that for $20 million, takes a $19 million profit.
And this is why, this is excellent.
I've always been a student of military history.
I thought the CNN launch strategy was similar to Rommel's desert campaign during World War II.
So Rommel was a German general.
He's fighting the British in World War II.
He knew he didn't have enough fuel to conduct an entire offensive.
He's a tanker.
They have Panzer tanks at this point.
What he intended to do was strike when they weren't expecting it, meaning the British overrun their lines and then capture their fuel dumps.
At that point, he could refuel his Panzer's tanks and continue the offensive.
This is Ted's strategy.
My vision for financing CNN was similar.
If we had enough cash to get on the air and could somehow get through our first year of operation, people would see that this was viable.
And then once the concept was proven, we would have easier access to capital.
So he kind of has a burn the boats, no plan B mentality.
There is something that happens over and over again where it's like how the hell is this guy, this little startup, going against some of the biggest companies in the world, some of those profitable companies in the world?
He talks about going to meetings with some of the people he's competing with.
They're at this shack in Atlanta.
He goes up to their company headquarters in New York and it's like they're eating on China from Versailles.
They have a million-dollar artwork.
I'm like, what the hell is going on?
And he winds up winning.
And he talks about this.
And he says I'm always convinced that one of the reasons that I've been successful is that I've almost always competed against people who were bigger and stronger but who had less commitment and desire than I did.
And so in this case, he's fighting RCA.
RCA was a huge company.
But for Turner Broadcasting, this dispute meant everything.
We had to win.
And so I just went through and looked at all my notes that are that's happening during this time, trying to figure out what is the main theme here.
And there's just a couple of things that he has that his opponents don't, even though they have more assets and he shouldn't have won.
He's fully committed.
Right.
Where they have this is just like one dispute and they had a huge conglomerate.
They're not fully focused.
He has a stronger desire as a result of that.
He has more belief by far. by far.
He's got more belief about cable and satellite TV than anyone else.
More belief about the fact that this makes no sense, that no one else has made a 24-hour cable news network yet.
And he's got the highest level of enthusiasm.
This guy is one of the greatest one-on-one salespeople.
Even when he recruits talent, they just say over and over again Listen, he's very charismatic and his enthusiasm is very infectious.
It's almost like how people describe Steve Jobs, like that reality distortion field, that when you're in his presence there's an aura.
You cannot understand it and you know that, because when you leave it you're almost like you snap out of it.
You stop being hypnotized, and you're like, what the hell just happened?
This guy completely hypnotized.
Ted Turner is capable of completely hypnotizing people with his enthusiasm and his sheer belief in what he is doing.
And so there's a bunch of times where he's there's a bunch of anti-competitive behavior.
He threatens all these like antitrust and monopolistic lawsuits.
In this case, he launches CNN and then ABC and Westinghouse are going to do a joint venture.
They're essentially going to copy CNN.
But instead of charging the cable networks for it, they're going to go.
You can have our channels for free.
Ted Turner's.
Like you know, this is predatory, anti-competitive behavior.
Willing to sue you winds up not backing down.
They wind up saying, okay, they never launched their version.
I think it was called like SNC or something like that.
And they're like, okay, we'll back out of this.
You have to pay us $25 million.
Ted's like, I don't have that money right now, but I have to.
Again, how many times has he said this?
I don't have the money, but I have to do this deal.
And so it says.
One of my top financial advisors reasoned with me that fighting it out with them, with Westinghouse and ABC, was costing me right now 4 million a month.
So for the cost of about six months or more of fighting, well, we could buy them out altogether.
We decided to settle for the $25 million.
Now, that's interesting.
That's fine.
This is the crazy, mind-blowing thing that I can't understand.
The next sentence blows my mind.
CNN obviously gets a large viewership.
It's obviously working, even though he's going to bleed a couple million dollars for a few years before it becomes wildly profitable.
We know that his 24-hour superstation, because his TBS superstation is printing money, right?
I think they were making around this time 100, I want to say 160.
Let me see if I can find it real quick.
177 million in revenue and 66 million in profit.
So clearly, why wouldn't that work with news as well, right?
It's a 24-hour satellite station.
And so this is the crazy thing, the crazy sentence.
After he settles with ABC and Westinghouse and they never launched their 24-hour news network.
It says it would be 13 years before we faced another 24-hour news channel.
Imagine having an unbelievably lucrative brand-new opportunity and you don't even have a competitor for 13 years.
And again, Ted uses an historical analogy.
Turner Broadcasting.
Defeating ABC and Westinghouse in the early 1980s was like Luxembourg going to war with both the United States and Soviet Union and winning.
And so there's several examples in the book where it's like OK, why aren't they these broadcast networks?
Why aren't they doing a 24 hour news station?
Right.
If you're a broadcast network.
And so what I mean by broadcast network and be clear about this, this is like the big three.
This is ABC, CBS and NBC.
Right.
And everything he's doing is like these are cable networks.
And he's like why aren't like a broadcast network and a cable network under the same ownership?
Actually makes a lot of sense.
Why is nobody doing this?
I think this is another example of the fact that he just understood the industry more so than other people.
And you have an inkling that you might be able to do that, because there's something that's obvious to you, like an opportunity hiding in plain sight, that's obvious to you, that no one else sees.
So he says to my continued amazement, the network stayed on the sidelines and watched the launch of other cable channels.
So not only did you have his TBS, his Superstation, you have ESPN, you have HBO, you have all these other experiments.
You're seeing things like MTV, Nickelodeon, the Discovery Channel.
And his hypothesis, Ted's hypothesis about why this was happening, is saying it's almost like the innovator's dilemma.
They were worrying more about the previous night's ratings and the money that comes from that than the long-term future of their business.
And so he keeps trying to merge Turner Broadcasting with – this is again just how this whole thing ends up when he tries to merge later on with GE, and he's having this conversation with Jack Welch.
Uh, the note I left myself, but there's not even a highlight there.
But I'm just like reading about this page after page, after page.
There's probably like a hundred pages where this is like he's always trying to be a bigger part of a bigger company.
And to me, it's like, that's not your personality.
And so I just wrote to myself why does he keep trying to sell his company and then have a position at the larger company?
He's not going to be in charge.
And I didn't know, when I wrote that note to myself, what was going to happen when he gets to Time Warner and effectively gets fired.
But we're not there yet.
So at this point he's still again trying to merge Turner Broadcasting with another one of the big three networks.
And his whole point, and this is just about the news part of it, which I thought was really smart.
He's like, well, you guys have, in this case, it's CBS.
You guys at CBS, you have four hours of news a day, right?
Okay.
I have CNN and I have headline news.
So we have 48 hours.
That means if we combine, we have 52 hours, 48 plus four, right?
52 hours against which to amortize our costs.
ABC and NBC has the same thing you do.
They have four hours a day.
Combine with me.
We have 52 now, and then we can amortize the cost across those 52 and we'll leave our competitors in the dust.
And there's another benefit, because the antitrust rules at this time prohibited the broadcast networks from vertically integrating.
So that means they cannot produce their own programming at this time.
They would license most of their shows from Hollywood studios.
And so his whole point was like OK well CBS, you're going and you're going to a studio and you're leasing a show like MASH.
MASH was like the biggest TV show at this point in history.
So you get the first run of MASH, but then the actual owner of the show, which in this case is 20th Century Fox, then goes around and sells its reruns to a local station or a cable channel.
And CBS doesn't make a dime off this off-network syndication.
But you would make a dime if you owned a cable network.
So he's like if CBS and the Superstation which is TBS were part of the same company, we could negotiate a comprehensive corporate deal with Fox.
CBS can build the show into a hit, right?
They get their first run.
And then TBS would have the option to syndicate the hit episodes.
In other words, you'd make more money.
You'd make money on both the transactions.
Right now, you're only making money on one of the transactions.
And you could argue that because it's a hit on CBS is what gives the value for the secondary transaction.
It's Ted's point here, which is like really smart.
This guy is just very keen is the way I guess we think about it.
He has a keen understanding of how to combine assets to create an advantage. that no one else has.
And I think the mistake he makes which we're going to get to here now is he just lets his deals get too complex.
And so CBS turns him down and says, OK, well, I need content.
Like, what can I do?
And he goes and does a deal with MGM.
And remember how his dad killed himself because he thought he over leveraged himself and he was risking everything else.
Ted Turner actually does that.
And he over leverages himself in this deal.
Kirk Kerkorian, who I did a long time ago.
I'm going to reread that book.
So many people ask me to do another episode on it.
I think it's like episode 65.
So probably, you know, five or six years ago.
This book called The Gambler.
A lot of people know it.
It's an excellent book.
It's the biography of Kirk Kerkorian.
So Ted Turner is actually buying MGM from Kirk Kerkorian.
And he winds up screwing himself.
And he actually has to call on John Malone.
And John Malone saves him.
And as a result, then he has like some veto power.
So this is like the first step where Ted Turner actually kind of has a boss not a complete boss, but hey, over a certain amount he can't just go and buy and do deals anymore without approval from his board.
This is really important, actually, because I think genius has the fewest moving parts.
And I think the biggest weakness that I see in this book and one I want to avoid for myself is never get into deals that are too complicated.
Ted's deals are way too complicated.
They have way too much debt.
And They rely on the future company performance that is impossible to predict.
And so he finds himself in a bad deal and a few months away from losing everything.
And good thing he is good friends with and calls John Malone, who's really good at situations like this.
By the end of 1986, it was clear that if I didn't do something soon, I'd be having to transfer my stock to Kekorian within a couple of months.
John Malone understood my situation and he and I set to work immediately, knowing that if we didn't successfully change the company's ownership structure within five quarters, I would lose control of Turner Broadcasting.
Exactly what his father feared Ted did.
This is insane.
Calling on John Malone turned out to be the best thing I could have done.
And so John Malone also describes what's going on.
I'm just going to pull out one sentence here.
I think you'll understand this.
He took his leverage too high, and the structure of the leverage was a problem.
And so it goes into all these deals he's trying to do with these giant companies.
I mentioned GE and Jack Welch before.
He almost does a deal where he sells to Bill Gates and Microsoft.
And that's when I was like hey, why does he keep trying to sell the company and then have a position at the larger company that he's not going to be in charge of?
And part of this is because he's already lost complete autonomy.
He does not adhere to James Dyson's principle of retention of total control and the importance of retention of total control.
And Bill Gates talks about this.
He's like listen, Ted had these weird control provisions relative to the other cable guys who own pieces of his company.
This is the rescue package that John Malone put together to save him from Kirk Corian.
It drove Ted kind of crazy.
He never really knew how to deal with having sort of a boss.
So it's not really a boss, but it's kind of a boss, you know?
You get up one morning with a wild idea, and then you have to think, am I going to get vetoed?
Ted did not like this.
And again, I really think the most important, most prominent instinct natural instinct and founder and entrepreneurial types is the control and conquer instinct.
I think what we think we want money or prestige or status but I really think what we actually want is control.
And so I think there's a lot of wisdom in James Dyson's maxim that you know retention of total control.
Never relinquish total control.
And I think the loss of total control being exhausted and flat out running for three decades, and then also somebody offering you 8 billion, leads to why he sold to Time Warner.
The final reason I agreed to do the deal was a simple one.
I was tired.
It was now more than 30 years since my father's death, and I'd been running the company on my own ever since.
30 years of long weeks and 18 hour days would get to anyone.
And by this time I was flat out exhausted.
I made the official announcement in September of 1995.
The little billboard company that I struggled to hold together had grown into a diversified entity that was being acquired at a value of more than 8 billion.
I would now be the largest shareholder of the biggest communication company in the world.
I wish my father could have seen what we'd accomplished with the business that he'd left.
I'm sure he would have been proud.
And that is where I'll leave it.
Highly recommend reading the book if you're interested in building a media company.
I think there's a lot of ideas actually here that are transferable outside of media, including this just really smart way to combine assets in a way that your competitors can't.
It is unbelievably dense.
It is easy to read, but there's so much going on on every page.
What I would do is one, take your time with it.
And two, I would go and highlight and do a lot of notes.
And then what I would do is I read there was so much going on, even like a single page, or maybe two or three pages.
I have to rewrite out what actually is happening to understand.
So I would definitely take your time with it.
If you want to buy the book and support the podcast at the same time, there'll be a link down below.
That is 337 books down, 1,000 to go.
And I'll talk to you again soon.
Okay, so what you're about to hear is this question I was asked a few months ago.
I actually recorded this a few months ago.
They asked, how did history's greatest entrepreneurs think about hiring?
All the answers.
People think I have a better memory than I actually do.
You know, if people say, oh, David, you have a great memory.
My wife would laugh at that because I forget things all the time.
It's not that I have a good memory.
It's I reread things over and over and over again.
Every single answer, every single reference you're about to hear in this 20-minute mini episode came from me searching online all of my notes and highlights.
That option is now available to you.
If you like what you hear, if you think it's valuable, if you're already running a successful company and you want an easy way to reference the ideas of history's greatest entrepreneurs in a searchable database that you can go through at your convenience, anytime you want, then you can go to foundersnotescom and sign up.
I want to start out first with why this is so important.
There's actually this book that came out in 1997.
It's called In the Company of Giants.
I think it's episode 208 of Founders.
It's two Stanford MBA students, if I remember correctly, and they're interviewing a bunch of technology company founders.
In there, Steve Jobs is one of them.
This is right, I think, even before he came back to Apple.
And they were talking about.
Well yeah, we know it's important to hire, but in a typical startup, a manager or a founder may not always have time to spend recruiting other people.
And I first read Steve's answer to this, I don't know, two years ago, and I never forgot it.
I think it's excellent.
I think it sets up why this question is so important.
And you should really be spending, especially in the early days, like Basically all your time doing this.
In a typical startup, a manager may not always have the time to spend recruiting other people.
Then Steve jumps in.
I disagree totally.
I think it's the most important job.
Assume you're by yourself in a startup and you want a partner.
You take a lot of time finding a partner, right?
He would be half of your company.
I'm going to pause there.
This idea of looking at each new hire as a percentage of the company is genius.
Why should you take any less time finding a third or a fourth of your company or a fifth of your company?
When you're in a startup, the first 10 people will determine whether the company succeeds or not.
Each is 10% of the company.
So why wouldn't you take as much time as necessary to find all A players?
If three three of the 10 were not so great, why would you start a company where 30 of your people are not so great?
A small company depends on great people much more than a big company does.
Okay, so to answer this question, The advantage that I have making Founders and that you have as a byproduct of listening to Founders is not only that I've read 300-something biographies of entrepreneurs now, but I have all of my notes and highlights stored in my Readwise app.
And that means I can search for any topic.
I can look at the past highlights of books, or I can search for keywords.
So what I did is, first of all, what I've started to do with these AMA questions is I read them, decide which ones I'm going to do next and then think about it for a few days.
I don't put anything, just literally that I know that's the next question.
Just let my brain work on it in the background for a few days.
And then I'll go through and start searching all my notes.
And so that's what I did here.
And so there's a bunch of you know I don't have.
I may have like 10 or 15 different founders talking about hiring.
The first idea is the most obvious, but I think probably works best when you're already established.
So Steve Jobs is talking about?
Hey, you know, the great way to hire is just find great work and find the people that did that and then try to hire them.
When you're Steve Jobs, that's a lot easier right than if you're just somebody that doesn't have a reputation.
Maybe you don't have resources, maybe your company's rather new or not as well-known.
David Ogilvie.
I just did Confessions of an Advertising Man a couple episodes ago I think 306 or something like that 307 and he did the same thing.
But he's David Ogilvie at that point.
So he would find.
He'd go through magazines, find great advertising, great copywriting, and he'd write the person a letter and then set up a phone call.
And he says he wouldn't.
He was so well known.
And, you know, he's one of the best in his field that he wouldn't even have to offer a job.
Just the conversation.
Then the person would he'd want to hire the person, never mention it.
And the person would apply to him.
And so, again, I think if you can do that, then, of course, it's straightforward.
Find somebody who does great work.
Usually you can do this.
I actually have a friend.
I can't say who it is.
He's doing this right now, actually.
I have a friend that's really good at doing this.
He's finding people that do great stuff on the Internet and then just cold cold DMing them and then getting convincing them to work on things.
And that usually works, especially with people like younger people earlier in their career.
There's a bunch of different ways to think about this and a bunch of different ways to prioritize.
So the first thing that came to mind that I found surprising is you read any biography on Rockefeller?
And he had a couple ideas where he felt the optimization, you know, table stakes that you're intelligent and you're driven and you're hardworking.
Right.
We don't even have like if you're listening to this, you already know that.
But he prioritized hiring people with social skills.
And so this is what he said.
The ability to deal with people is as purchasable a commodity as sugar or coffee.
And I pay more for that ability than any other under the sun.
There's the second part to this, though.
And this also works well if you have access to more resources.
Rockefeller would hire people as he found, as he found talented people, not as he needed them.
It's not like, okay, Standard Oil has six open spots.
Let's go find six candidates, right?
He'd come across what he considered a talented person.
It didn't even matter if he didn't know what they were going to do.
He's like, I'm just going to stack his team.
And if you really think about his partners at Standard Oil, he essentially built a company, an executive team of founders, because he was buying up all their companies.
So it's very rare.
But There's a line from Titan I want to read to you.
Taking for granted the growth of his empire, he hired talented people as found, not as needed.
And then I found another idea in the hiring, like the actual interview process.
So there's this guy named Vannevar Bush.
I did two episodes on him.
I think it's 270 and 271.
He is the most important American ever in history in terms of connecting the scientific field, private enterprise and the government.
The most important person to keep alive for the American war effort was FDR.
The second one was Vannevar Bush.
Vannevar Bush is like the Forrest Gump of this historical period.
He is involved in everything from the Manhattan Project to discovering a young Claude Shannon, to building A mechanical computer, like this guy literally has done.
He's just he pops up in these books over and over again.
If you were reading about American business history during World War Two and post-World War Two, you are going to come across the name Vannevar Bush over and over again.
I read his fantastic autobiography called Pieces of the Action and I came across this weird highlight.
And so this is his brilliant and unusual job interview process.
And so he's talking about this organization he's running called Amrad.
At Amrad, I hired a young physicist from Texas named C.G.
Smith.
The way I hired him is interesting.
An interview of that sort is always likely to be on an artificial basis and somewhat embarrassing.
So I discussed with him a technical point on which I was then genuinely puzzled.
The next day, he came in with a neat solution, and I hired him at once.
Here's another idea.
This is from Nolan Bushnell.
Nolan Bushnell is the founder of Atari, founder of Chuck E. Cheese, and Steve Jobs' mentor.
He hired Steve Jobs when Steve Jobs was like 19 at Atari.
He would ask people their reading habits in interviews.
This is why.
One of the best ways his whole thing was he wanted to build all of his companies laid on a foundation of creative people.
So that's what he's looking for.
He's like, I need creative people.
But loved, say, books on birdwatching.
A blatant but often accurate generalization.
People who are curious and passionate read.
People who are apathetic and indifferent don't.
I remember—that's such a great line, and I obviously agree with it.
I remember one—I'm going to read it again.
A blatant but often accurate generalization.
People who are curious and passionate read, people who are apathetic and indifferent don't.
I remember one particular woman who, during an interview, told me that she had read every book that I had read.
So I started mentioning books I hadn't read and she had read those too.
I didn't know how someone in her late 20s found this much time to read so much.
But I was so impressed that I hired her right there and assigned her to international marketing, which was having problems.
This is why.
This is why I'm reading this whole section to you.
A job with a lot of moving parts benefits from a brain that has a lot of moving parts.
It wouldn't be possible to have read that many books without such a brain.
So do you see what I mean?
We start with Steve Jobs saying this is the most important thing that your role as the leader of the company and the founders do right.
And it's so important to study, and this is why I'm glad this question exists and why I'm glad that I took the time and I had the foresight to like hey, I should really organize my thoughts and notes, because there's no way I would have remembered all this without being able to search my read-wise right.
But you have Rockefeller saying this is what's important to me.
You have Bush saying this is how I hire.
Now you have Nolan Bush now saying, well, here's another weird thing that I learned.
Let me go through what Warren Buffett says about this.
So this is about the quality.
One thing that is consistent whether it's Jobs Buffett Bezos, Peter Thiel, this just pops up over and over again.
They talk about the importance of trying to find people that are better than you.
The hiring bar constantly changes. has to increase.
Now, obviously, the larger the company gets, that's impossible.
Steve Jobs has this great quote where he's like you know, Pixar was the first time I saw an entire team, entire company of A players, but they had 400 players.
They had 400 team members.
He's like, at the time, Apple had 3,000.
It's like, it's impossible to have 3,000 A players.
So there is some number. that your company may grow to, where you're just not.
You're not going to have thousands of A players.
In my argument, I don't even know if you get a 400.
I mean I'll take Steve's word for it on there and Pixar definitely produced great products, but it's probably a lot lower than that as well.
So Warren Buffett would tell you to use David Ogilvie's hiring philosophy.
And so Warren said Charlie, and I know that the right players will make almost any team manager look good.
Again, that is why it's the most important function of the founder.
Maybe directly next to the product or right above the product actually, because those are the people building your product.
We subscribe to the philosophy of Ogilvy and Mather's founding genius, David Ogilvy.
This is what Ogilvy said.
If each of us hires people who are smaller than we are, we should become a company of dwarfs.
But if each of us hires people who are bigger than we are, we shall become a company of giants.
David or Jeff Bezos, rather used a variation of Ogilvy's idea to.
Jeff used to say in Amazon, every time we hire someone, he or she should raise the bar for the next hire so that the overall talent pool is always improving.
They talk about this idea on Amazon where the future hires that we do should be so good.
That if you had applied for the job you already have at Amazon, you wouldn't get in.
That's a very interesting idea.
Take your time with recruiting.
Take your time with hiring.
There's this great book on the history of PayPal.
Actually, I've recently become friends with the author.
His name is Jimmy Soni.
And this is in his book.
And the most fascinating thing that I found was that PayPal prioritized speed.
So from the time they're founded to the time they sell to eBay, it's like four years.
Jimmy spent more time researching the book than – he spent six years researching the book.
I always tease him because, like you, took longer on a book than they took to start and sell their company.
It just speaks to like the quality he's trying to do.
Max Lutgen kept the bar for talent exceedingly high, even if that came at the expense of speedy staffing.
Max kept repeating A's hire A's, B's hire C's.
So the first B you hire takes the whole company down.
Let's read that again.
A players hire A players, B players hire C players.
So the first B player you hire takes the whole company down.
Additionally, the company leaders mandated that all prospects here's another idea for you all prospects must meet every single member of the team.
Now, the next one is the most bizarre.
It makes sense if you study.
I did this three-part on Larry Ellison, three-part series on Larry Ellison.
I should read those books again, because the podcast is like 50 times bigger than when I publish those episodes.
And he's just crazy.
So he would hire based on the self-confidence level of the candidate.
Listen to this.
I have tears in my eyes.
I don't know why I'm laughing.
Okay.
Okay.
Because you read about Larry Ellison and he's one of these people it's like really easy to interface with because you just know exactly who he is and what's important to him.
That's why I think it's so funny.
Ellison insisted that his recruiters hire only the finest and cockiest new college graduates.
When they were recruiting from universities, they'd ask people are you the smartest person you know?
And if they said yes, they would hire them.
If they said no, they would say who is and they would go hire that guy instead.
I don't know if you got the smartest people that way, but you definitely got the most arrogant.
And this is why.
The personality of the founder is largely the culture of the company.
Apple is Steve Jobs.
Apple is just Steve Jobs with 10,000 lives, right?
I was just texting a founder friend of mine.
He listens to the podcast.
I actually met him through the podcast.
And he's going through this process of self-discovery.
He's already started a bunch of companies that are really successful, but he's like I think I'm more of this type of founder than the other type of founder.
And that's good that he's doing that, because hopefully his next mission is his life's mission, you know.
And you can't get to your life's mission unless you figure out who you are.
Ellison knew who he was.
Ellison's swaggering combative style became a part of the company's identity.
This arrogant culture had a lot to do with Oracle's success.
Here's another odd idea for you.
Izzy Sharp, the founder of Four Seasons, actually could figure it out that in his business, which was hotels, right that hiring the right person could actually be a form of distribution for his hotel.
He gave me the idea because of what?
What do we know?
What do you and I know in our bones that history's greatest founders all read biographies?
They all read biographies of people that came before them and took ideas from them.
Izzy Sharp is trying to build Four Seasons.
What do you think he did?
He picked up a biography of Cesar Ritz, the guy that Ritz Carlton is named after, arguably the greatest hotelier of all time.
And when he realized oh shit Ritz, he says, remembering that Cesar Ritz made his hotels world famous by hiring some of the foremost chefs, we decided to do something similar.
So what is he talking about?
Cesar Ritz went out and partnered with August Escoffier.
What Cesar Ritz was to building hotels, August Escoffier was to French cooking.
And so what happened is you partner with world-famous chefs.
People come into your restaurant that's in the hotel because they're a world-famous chef, and now they know about your hotel.
That leads to more activity in your restaurant that you own, but also leads to more brand recognition of your hotel.
And then as a byproduct of that, more people staying at the hotel.
So hiring as a form of distribution, this is fascinating.
That is a fascinating idea.
Okay, here's the problem.
You can identify great people, right?
Maybe they even want to come work.
Like you've identified them.
You've sold them, hey, this is our mission.
This is what we're doing.
And yet humans have complicated lives.
They have spouses.
They have kids.
They have a reason.
Maybe they can't move across the country to work for you, even though they want to.
So there's a problem-solving element that you see in these books on you have to solve.
Like, you've already identified the person.
You've recruited them.
They can't go for some other reason.
Okay, well, the great founders are not going to take no for an answer.
I read in this book called Liftoff, which is about the first six years of SpaceX.
This is what Elon Musk did.
Right, because that's where SpaceX is at the time.
That he wants to hire.
So I heard you don't want to move to LA, and one of the reasons is that your wife works for Google.
Well, I just talked to Larry, and they're going to transfer your wife down to LA.
So what are you going to do now?
To solve this problem, Musk had called his friend Larry Page, the co-founder of Google.
The engineer sat in stunned silence for a moment, but then he replied given all that, he would come to work at SpaceX.
That's really smart.
There is another idea when you're promoting.
Are you going to promote from within or from without?
That's dependent on you, depending on what's going on.
I do think this is interesting, though.
There's this guy named Les Schwab who built this really valuable chain of tire companies in the Pacific Northwest.
I actually found out about him because Charlie Munger is like, hey, you should read this biography.
He didn't say it to me personally.
He said it in one of the Berkshire meetings.
Les Schwab had one of the smartest financial incentive structures of any company that Charlie Munger had come across.
So this is what Les Schwab did.
He did not want to hire people from other companies because they might come with bad habits.
He liked to train his own executives.
And so he says, in our 34 years of business, we have never hired a manager from the outside.
Every single one of our more than 250 managers and assistant managers started at the bottom changing tires.
They have all earned their management job by working up.
And then another thing if you're going to hire the best of the best and A players A players don't like to be micromanaged.
And so this came in Larry Miller's autobiography called Driven.
He owns like 93 companies all throughout Utah car dealerships, movie theaters, all kinds of crazy stuff.
But he also owned the NBA team, Utah Jazz.
And what was fascinating is he's trying to recruit Jerry Sloan as the coach at the point.
And Jerry Sloan would only take the job on one condition, and I really like it.
I really like this idea.
If you hire me, let me run the team in business, right?
That's what you're hiring me for.
One of the best things we had ever done was hire Jerry Sloan as coach.
At the time, he said, I'm only gonna ask you for one thing.
If I get fired, let me get fired for my own decisions.
If you hire me, let me run the team slash business.
Here's another idea from Thomas Edison that I think is fascinating.
Really, the way I think about a founder is like you're developing skills that you can't hire for.
You're going to hire for everything else, but you shouldn't be hireable.
And Edison wasn't.
Edison, expressing his views on the preeminent role of applied scientists, which that's what he considered himself, coined the expression I can hire mathematicians, but they can't hire me.
And so, when I read that paragraph for the first time, the note I left myself was develop skills that you can't hire for.
Capitalism rewards things that are both rare and valuable.
Estee Lauder would give you advice that you need to hire people aligned with your thinking and values.
Hire the best people.
This is vital.
Hire people who think as you do and treat them well.
In our business, they are a top priority.
So this idea is like, that seems kind of weird.
Like hire people... who think like you.
There's obviously not one right way to build a business.
I think that your business should be an expression of your personality and who you are as a person at the core.
And so I think there is an art to the building of your business.
And the reason I use the word art, I don't mean in like a hoity-toity, you know, pretentious manner.
That's not me at all.
I don't even care about art at all, really.
I mean that you're making decisions not just based on economics.
There are non-economic important decisions based on how you're building your business.
You could probably make more money doing decision A, but decision A goes against who you are as a person.
Or you just don't like it, or it's just not as elegant or beautiful, and so therefore you don't do it.
So that's what I mean about hire people who think as you do And for whatever reason.
When I read Estee Lauder say that, I was like okay, there's like this art to what she's doing.
One thing that's going to be helpful in recruiting, this comes from Peter Thiel.
I think this is the book Zero to One.
Understand that most companies don't even differentiate their products pitches to potential recruits and to hiring.
So therefore, as a byproduct of that, you're going to wind up with a lower overall talent base.
And so he says, what's wrong with valuable stock?
Smart people are pressing problems.
Nothing.
But every company makes these claims.
So they won't help you stand out.
General and undifferentiated pitches to join your company.
Don't say anything about why a recruit should join your company instead of many others.
So that idea of your pitch.
He would tell you you shouldn't be building an undifferentiated commodity business.
But even above and beyond that, the mission that you're trying to engage everybody to join you in, that pitch, that sale you're trying to make to potential recruits, should be differentiated.
If that person's applying to five other jobs, they may not like your mission, they may not like your pitch, but they shouldn't be able to compare it to anything else.
Another quote from Nolan Bushnell, hire for passion and intensity.
That's what he would do.
That's what he did when he found Steve Jobs.
If there was a single characteristic that separates Steve Jobs from the massive employees, it was his passionate enthusiasm.
Steve had one speed, full blast.
This was the primary reason we hired him.
And one thing all these founders have in common is that they know how important hiring is.
And when something's important, you do it yourself.
This is, again, Elon Musk on hiring.
He interviewed the first 3,000 employees at SpaceX.
That's how important it was.
One of Musk's most valuable skills was his ability to determine whether someone would fit his mold.
His people had to be brilliant.
They had to be hardworking, and there could be no nonsense.
There are a ton of phonies out there and not many who are the real deal.
Musk said of his approach to interviewing engineers.
I can usually tell within 15 minutes and I can for sure tell within a few days of working with them.
Musk made hiring a priority.
He personally met with every single person the company hired through the first 3,000 employees.
It required late nights and weekends, but he felt it was important to get the right people for his company.
And then, to close on this, we started with Steve Jobs telling us why it was so important and why it should be a large part of how you spend your time.
And now we'll close with what you do after.
What do you do after you hire the person?
This is what he says.
It's not just recruiting.
After recruiting.
It's building an environment that makes people feel they are surrounded by equally talented people and their work is bigger than they are.
The feeling that their work will have a tremendous influence and is part of a strong, clear vision process.
So that is the end to that 20-minute mini episode.
I just re-listened to the whole thing.
And it really does.
I think it's a perfect explanation and illustration of why I think Founders Notes is so valuable.
Because some of those books I haven't read in five, six years.
And just the ability to have a searchable database of all these ideas like this collected knowledge of some of history's greatest entrepreneurs to reference and then contextually apply to our own businesses.
It's nothing short of like it's magic.
That's really the way I think about it.
I think it's a massive superpower.
It gives me a massive superpower.
I couldn't make the podcast without it.
I also think if you have access to it, it'll make your business better.
And so if you're already running a successful business, I highly recommend that you invest in a subscription, and you can do that by going to foundersnotescom.
