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Malcolm Forbes, April 1979#

MONEY IS A BURDEN
Some of us are willing to shoulder some burden s.
MONEY’S FUN
when you have some.
Having none, ain’t none.
THERE ARE MORE FAKERS
in business than in jail.
 
Samples from the little green book called “The Sayings of Chairman Malcolm.” Dedicated, in all 13 pages of small type, to 2200 or so of his good friends, it will be a success even by Forbes’s standards, he deadpans, if it sells as well as the other Chairman’s sayings. The ones in the little red book.
That’s typical of Malcolm Forbes, poking as much fun at himself as he does at others, and laughing all the way to the bank, but most of all refusing to feel guilty about his inherited fortune, which he used as the foundation to create a many-times-larger fortune. Malcolm Forbes is undoubtedly one of the wealthiest men in America. Asked how he did it, he replies: “Through sheer ability (spelled i-n-h-e-r-i-t-a-n-c-e.)”
Forbes’s father began the business magazine that bears the family name in 1917, and Malcolm now serves as both editor in chief of Forbes magazine and president of Forbes, Inc. The magazine, with its circulation of 670,000—slightly ahead of Time, Inc.’s Fortune—is not a mass publication, but its audience of high-level business executives gives it an influence far beyond its sales figures. According to Forbes’s statistics, the magazine’s readers have an average net worth of over $550,000; one out of 13 is a millionaire; and altogether they own approximately 140 billion dollars’ worth of corporate stocks. A reporter estimated two years ago that the magazine’s profit may run in excess of $10,000,000 a year, and Forbes is the sole owner, as he is of all the other properties in the Forbes, Inc., empire. As he says, “Our annual stockholders’ meeting tends to be brief.”
In the inner circles of big business and Big Government, Forbes is well-known as one of America’s most influential businessmen, and probably the most outspoken advocate and defender of the capitalist system. “Malcolm knows more corporation presidents than anybody else,” says one of his aides. “Malcolm doesn’t talk to vice-presidents.”
That may be, but nobody has ever accused Forbes of being stuffy and taking himself too seriously. He has a reputation as an eccentric and flamboyant sportsman who loves fun even more than money. In 1973, only 15 months after he took his first ride in a balloon at the age of 52, Forbes sailed alone across the U.S., from Oregon to Chesapeake Bay. It took him 34 days and he was black-and-blue from head to toe from dozens of rough landings at about 25 m.p.h., but he set six world records for ballooning, won the Harmon Trophy and drew major press attention to ballooning for the first time.
Never satisfied with doing anything on a less-than-grand scale, he then began preparing for what he called “the ultimate trip.” He spent more than $1,000,000 on space-age technology and created a spectacular 60-story-high cluster of 13 balloons designed to carry Forbes and a copilot, riding in an Apollolike capsule at a stratospheric altitude, nonstop across the United States and the Atlantic Ocean. But a near-fatal accident caused by a failure in the ground equipment just a few minutes before launch aborted Forbes’s attempt to become the Charles Lindbergh of ballooning.
Forbes’s other favorite hobby is equally unlikely for an establishment rich man: motorcycling. But a few years ago, when he took his first ride and fell in love with biking, he responded in characteristic fashion. He bought a small motorcycle shop so he could acquire his machines wholesale, then aggressively turned it into one of the largest distributorships on the East Coast. Every year, he manages to crowd into his schedule bike trips through different continents, and his friends shake their heads in bewilderment at the notion that Forbes will lunch in his private dining room at his office—surrounded by Van Gogh and Rubens—with someone such as David Rockefeller, then dash off to ride the hottest new bikes with his young motorcyclist friends.
Forbes sees no paradox in that. Whether it’s business or pleasure, all he wants is the best of everything, and he gets it. He claims he’s not “Rockefeller rich,” but a quick list of just his most publicly visible holdings adds up to a sizable fortune by anybody’s standards: Forbes magazine, his motorcycle distributorship, a 40-acre estate in New Jersey, 250 square miles of land in the Sangre de Cristo Mountains of Colorado, a 20,000-acre cattle ranch in Montana (managed by his wife, Roberta), a 117-foot yacht, a Christopher Wren mansion in London, a palace in Tangier, a 3000-acre island in the Fijis (“Why did I want an island in the South Pacific? Doesn’t everybody?”), Zane Grey’s old home in Tahiti, a multimillion-dollar collection of Victorian paintings and possibly the world’s largest privately owned collections of Fabergé jewelry from czarist Russia. Asked once if he were a defender of the capitalist system, Forbes smiled and replied: “No. I’m a beneficiary.”
To find out what the world looks like to such a jaunty centimillionaire, and to get his views on money and capitalism and ballooning and motorcycling, Playboy sent writer Larry DuBois to interview Forbes. His report:
“I rendezvoused with Forbes at the Hyatt Regency in Los Angeles, where he’d rented a ballroom for the evening and invited a couple of hundred of L.A.’s business leaders for dinner and a showing of a documentary film written and produced by two of Forbes’s sons. The title of the film is ‘Some Call It Greed,’ and it turned out to be a slick, sophisticated paean to the capitalist history of America—primarily its triumphs, but acknowledging its failures. Not even Forbes can finesse the Great Depression.
“It was the 13th time in the past few months that Forbes had held this evening for the cream of the cream in big cities across the U.S., plugging, as he always does, Forbes magazine and the capitalist system at the same time. Almost immediately, I saw an example of his versatile personality. During dinner, he sat next to Roy Ash, cofounder of Litton Industries and Director of the Office of Management Budget during parts of the Nixon and Ford Administrations; but as soon as Forbes was free, he jumped up and found his friend, the young editor of Cycle magazine, and spent several minutes talking excitedly about motorcycles.
“He’s a friendly, unpretentious man with an engaging sense of humor, especially about himself, and I began learning the next morning how he’s been able to build his fortune and still have so much spare time for his hobbies: energy. The man is 59 and he’s still hard to keep up with. After 18-hour days in Vancouver, San Francisco and Los Angeles, we were racing off to the airport at 6:30 a.m., and the moment he got settled in his seat, he pulled out his Wall Street Journal and began circling and clipping articles, leaning over his shoulder to discuss his reaction to the news with Jim Dunn, the publisher of Forbes magazine.
“As soon as he finished reading the paper, he said he wanted to start the interview. I turned on the tape recorder as the plane was taxiing and Forbes answered my questions nonstop until the plane touched down five-and-a-half hours later. I didn’t even have time to notice my lunch. Reticent, Malcolm Forbes is not. Based on his principle of cramming everything he can into the time available to him, he wanted to do the whole interview in one sitting, get it over with and go on to the next project. It was an impressive performance, even though follow-up questions at a later date were required.
“The next morning, at 8:30, I arrived at the 79th Street Basin in Manhattan and boarded the Forbes yacht for a trip up the Hudson to the West Point football game, and there was Forbes, already lined up with his wife and two of his sons and a daughter-in-law, in a receiving line to greet their guests: the heads of 22 large corporations, their wives—and me. I had been asked to keep the yacht trip off the record, not because it involved anything sinister—I didn’t hear a capitalist conspiracy all day—but out of respect for his guests’ privacy.
“But I will say that it was a hell of a lot of fun being catered to in such high style—an exquisite luncheon on the way up, an exquisite dinner on the way back. Forbes had told me that he loved using his yacht for these football trips, because after spending 14 hours in such a relaxed environment with such a small group, you have a real feeling about almost everybody by the end of the day. And it was true. It was the perfect way for Forbes president Malcolm to sell the virtues of his magazine as an advertising medium, and at least one way for editor in chief Forbes to size up the corporate leaders he reports on.
“Tired but still buoyant at 10:30 that night, Forbes loaded his family and me into a big station wagon and we drove off to his estate in New Jersey. By now, I was ready to sleep in, but early the next morning Forbes woke me up to show me around the place. I could barely get out of bed.
“The landscape around his home is casually littered with balloon gondolas and one large garage is filled with the most beautiful motorcycles I’d ever seen. After the tour, we had a high-spirited family brunch, with some of the grand-children over to visit, and then Forbes was off again. Along with a 28-year-old friend who pilots his balloons and doubles as a security guard, we drove Forbes’s little Honda Accord into Manhattan, where he dropped me off at a friend’s apartment and then went straight to Kennedy Airport to take a flight to Casablanca. He was going to spend the next two weeks riding bikes through North Africa and Europe. Like his friends, when we said goodbye, I sort of had to shake my head in bewilderment, too, at this astonishing capitalist tool.”
 
Playboy: Let’s talk about capitalism.
Forbes: Great idea. One of my favorite subjects.
Playboy: We thought so, since you like to call your magazine a “Capitalist Tool.”
Forbes: That’s our slogan. Karl Marx probably wouldn’t appreciate my sense of humor, but he captured nicely the essence of my function and the function of the magazine. We are a capitalist tool. We are of use to people who want to succeed in a free-enterprise system. We praise success. We blow the whistle on failure. We are constantly needling. It sometimes makes us unpopular even with our own capitalist readers, particularly those who get poor report cards, but it’s all based on the premise that if you’re going to serve the system, you’d better be successful, and if you’re not, somebody better tell on you before you lose your stockholders’ money.
Playboy: It’s been said that you probably know more chief executive officers—CEOs in Forbes terminology—of corporations than any other man in America. What’s your impression of the quality of top management of American corporations today?
Forbes: You’d expect that the president of a big company should be pretty outstanding, and overall, the caliber of CEOs is top-rate, but there are more mediocrities in top positions than you’d expect. True, they tend not to last long, but how they get there always amazes me.
Playboy: How do they get there?
Forbes: There’s always factionalism and politics in corporations, and very often, you see a CEO who’s retiring pick a replacement who’s been satisfactory to him and for him, but being a good second man is different from being a good top man. It’s funny; sometimes the biggest failure of a CEO is in his choice of his successor. My father used to say that he never bought the stock of a company based on its balance sheet. He always bought management, based on his personal impression of the top man, the guy at the steering wheel. That’s the reason I make it a point to know all these guys. If they’re capable and have the qualities that fit the company and the era and the industry’s needs at the moment, that’s of far greater value to a potential investor than whatever reserves a company may have or how long it’s been in business. It’s easy to forget that the benefit or harm of decisions made today in corporations, particularly large corporations, may not be reaped for four or five years, so what you’d better know is the caliber of the man making those decisions now. Those are enormous chips they’re playing with, and if they don’t have the ability to make the right decisions now, the company is going to eventually get into trouble. You’ve seen that happen time and time again.
Playboy: In your opinion, how successful is the system as a whole these days?
Forbes: The number of jobs is at an all-time high. The average income is the highest it’s ever been. A greater percentage of Americans have an equity in this country than ever before—they have a piece of the action. There are more millionaires than ever before. For all its shortcomings, it’s providing more freedom and well-being than any other system in history. It sure beats the hell out of the alternative, which is having an economy managed by the Government, producing things to meet the needs of the state, not the people. In short, I’d say that business is doing much better than its general image.
Playboy: And its general image isn’t good, according to most public-opinion polls. Why?
Forbes: I wish more top executives would stop hiding behind their PR departments and speak out publicly. We need more respected spokesmen for the free-enterprise system. The public and business suffer from chief executives’ timidity. I mean, there are guys who’ll knock in heads in board rooms, but they’re afraid to make public statements that might become controversial.
In any case, profits shouldn’t be the sole measure of success. It’s also making sure that not too many people are getting screwed by the system, and that people understand that the system as a whole is working for the benefit of the most people. I’m not suggesting they do that just to be nice to everybody but to be damned sure the system survives, and it doesn’t help if everybody thinks he’s getting the short end of the stick.
Playboy: Surely it’s not just a matter of better public relations. Corruption in business also plays a part in the bad image corporations have. How do you react to the broad picture of overseas bribery by American corporations that has come out in the past few years?
Forbes: I think one of the stupidest things we did was to attempt to legislate our morality about bribery abroad. All it’s done is cost thousands of Americans jobs and add to the further imbalance of trade. In this country, we’re used to paying salesmen’s commissions. That’s the way it’s done. In the Arab countries and in Europe and in much of Asia particularly, you’re not dealing with a sales organization. There’s no middleman. You pay a commission to the fellow who orders your planes. The salesman is the buyer. He may happen to be the Minister of Aviation and he wants his commission on the sale. But for us to say that if you want to sell planes overseas you can’t pay a dollar to a salesman there—who also happens to be the buyer—all we do is lose the order to the French, the Germans or the British, who can pay it. Of course, we don’t want to encourage bribery, but for God’s sake, when that is the way that countries do business—well, they have to buy their systems from somebody and it’s stupid to say we can’t pay the same commission that everybody else does. It takes us out of competition.
Playboy: You seem to be advocating an everybody-does-it approach. And so, based on the example of bribery in Congress by South Korea—Koreagate—wouldn’t you guess that other countries are doing the same thing to our officials?
Forbes: I think not. For a simple reason. They expect to get money from our Government, not contribute to the men who run it. They expect it to be handed to them. They don’t have to bribe. All they have to do is have a stable government and they get handouts from us. Also, they’re too small and too greedy.
It was a damn fool thing for those Congressmen to take money from the Koreans, but Congressmen have to raise campaign money since we don’t allot them election funds, which is foolish. Usually, they get money from construction companies and other direct beneficiaries. But at least here, bribery is a serious crime; in those other countries, it may or may not be, but that’s the way business is done. When we say no to that, they’ll take second best, and all we’ve done is cut our own throats.
Playboy: What do you think is the most serious problem facing American business today?
Forbes: Inflation. No doubt about it.
Playboy: That’s certainly what’s on people’s minds. Why are we suffering this inflation?
Forbes: The cause of inflation is not some complicated piece of gobbledygook that nobody but an economist can understand. Very simply put: You have a Federal Government that for too many decades has spent more than it has taken in in taxes. So what does it do? It prints more dollars. If you print more dollars than you’ve earned, they become worth less, and that’s what we’ve been doing. When Franklin D. Roosevelt started this Keynesian economic philosophy, Government debt and spending had a genuine and important purpose in bringing us out of the Depression. But here we are, with the economy for the past few years healthier than it’s ever been, and the Government is still running record deficits. I don’t think Carter understood for a long time the ramifications of that for the economy, and I was nearly ready to give up on him altogether. Fortunately, I think Carter has finally realized the importance of working toward a balanced Federal budget.
Playboy: Do you expect the devalued dollar to make a comeback?
Forbes: To where it was, no. It will get to the point where it is no longer declining vis-à-vis other currencies, and in effect that will be coming back. But we will no longer lead the toboggan.
Playboy: What sort of report card would you give Carter at this point?
Forbes: He hasn’t failed yet. In the beginning, I was very supportive. We have only one President, and even though I’m a Republican, I couldn’t have been happier than to see him successful. But he wasn’t. He couldn’t get any legislation passed. He couldn’t get anything done. After a while, it looked as though he didn’t understand who he was and what the Presidency was. I mean, a closed mind belongs in the pulpit, not the White House, and he had to open his mind. He found that hard to do because his values were absolute, as born-again Christians are apt to be. Well, a conviction of righteousness may sustain you as a person, but it won’t do much for your Presidency if you carry it too far. He had to learn to settle for part of the loaf, rather than all or none, because there are a lot of guys a President needs, like House Speaker Tip O’Neill, who wants part of that loaf, too.
By the time of the Camp David Summit, I’d become quite critical of Carter. But Camp David was his resurrection. He won’t get all he wants—and his mediation efforts with Begin and Sadat may have been a near miss—but from his own new confidence, he’s going to be more Presidential, and that will carry over into his efforts to fight inflation. They’re going to have more teeth as a result of his new prestige. It’s funny, just before Camp David I was ready to grade Carter as a failure. I wrote an editorial predicting that Teddy Kennedy would beat Carter for the Democratic nomination in 1980, but I decided in a hurry after the Summit not to publish that. I thought Kennedy would beat the hell out of Ronald Reagan on Election Day, and then everybody in business, including myself, who had ridiculed Carter because he couldn’t get things done, would suddenly be regretting a President who could get things done. They’d be yearning for the good old Carter days, when nothing happened. Kennedy would be a disastrously effective President.
Playboy: What do you mean by disastrously effective?
Forbes: I think Teddy Kennedy has a deep conviction that business is greedy, nefarious and undisciplined.
Playboy: All businessmen are sons of bitches?
Forbes: That’s what his brother J.F.K. said during his confrontation with the steel companies, and Teddy’s the same way: Why, those sons of bitches! It’s the kind of attitude that one so often finds in people who inherited a lot of money. They feel guilty about their inheritance, and you’ve got to remember that Joe Kennedy made much of his money in gambling, in liquor, in areas that kept him from gaining real social acceptance in the WASP world. The boys were of it, at Harvard and Palm Beach, but not yet in it, and there was always a Kennedy chip on the shoulder toward business, particularly big business. If he were in the White House, Teddy would probably succeed where Jack failed in passing punitive measures and taxes, and putting so many restrictions and regulations on the conduct of business that it would jeopardize the whole economy. I think he’s a dangerous man. Not by intention; he’s a warm human being and his sympathy for the have-nots is real. But I don’t think you accomplish their betterment by hamstringing business, and I do think Teddy Kennedy is motivated partly by some malice in his heart. Look at Hubert Humphrey, by contrast. A liberal, Hubert was popular with businessmen even though he wasn’t espousing their cause. I had a good friendship with him, thought the world of him. He would have been a fabulous President. Sometimes he went overboard, but his knowledge, his enthusiasm, his genuineness were refreshing in somebody who aspired to the White House.
Playboy: Go on with your assessment of Carter.
Forbes: Well, as I said earlier, I think in the aftermath of Camp David his efforts to fight inflation, for instance, are going to have more teeth.
His veto of the defense bill—I thought that was a really smart move. Nobody’s ever done it before. But look at that aircraft carrier—how stupid can you get, tying up two billion dollars in a carrier in the age of missiles? One missile could blow the whole damn thing out of the water. They say it’s reasonably invulnerable. Sure it’s invulnerable—against the Vietnamese. And carriers can be valuable in bringing our power into play in peripheral situations. But against the Russians, it’s just a sitting duck, meaningless, a hostage to fortune. About as capable of withstanding a Russian attack as the Seventh Army in Europe. What that represents is a hostage—to overrun it means atomic war with the U.S. So Carter’s vetoing of that bill was a good thing.
It was the first glimmer of a gut-felt reaction, whereas before, he didn’t know how to compromise. Either he gave in on everything or he tried to sweet-talk or cajole Congressmen. That works to a degree, but only when they realize you’ll give them a left hook sometimes. There’s a lot of power that he’s beginning to learn how to use.
Playboy: How did you feel about his recognition of China?
Forbes: I was most enthusiastic. It would have happened under Nixon if he hadn’t been Watergated. For us to pretend that Taiwan was China is the kind of absurdity we kept up longer with China than with Red Russia after the 1917 Revolution. Pretending that they weren’t there wasn’t going to make their government go away.
Playboy: What’s your personal relationship with Carter like?
Forbes: Well, he’s the only President who ever came to call on us at the office. Obviously, it was long before he was President. Because I’m an old friend of Paul Austin’s, the head of Coca-Cola, I was asked if I’d see this ex-governor of Georgia who was running for President. My son Steve and I follow politics closely. He’ll inherit 51 percent of the stock and he’ll be running the business. Well, he loves politics. He can tell you what I lost each county by in every election. He’s a historian of some merit and one of the best economists on our staff. Carter came to see us in November, a few months before New Hampshire. He came with Jody Powell, whose name meant nothing to me then, and a fellow from Wall Street. We agreed to see him, but can you imagine? An ex-governor of Georgia taking himself seriously as a Presidential candidate? It was absurd. I had no editors in to meet him. We didn’t take his picture sitting in my office. Everybody and his brother signs my guestbook, and I didn’t even have him sign the guest-book, for crying out loud, and I have a big collection of Presidential autographs and letters. So now he’s the sitting President and I don’t have any autographs, any pictures, anything. I can’t imagine the IRS questioning whether he’s a deductible visitor. Anyway, he gave us his blueprint, and when he left the office, I said to my son, “Isn’t it amazing how a man can delude himself? That’s sad, because the guy is sincere and passionate.” I warned my son that that was what can happen to you when you become obsessed by politics. I thought it was the perfect example of sincerity and futility marching hand in hand. So my personal relations with him—well, we didn’t even get his picture or his autograph.
Playboy: How about your political ambitions? Having run for the office of governor of New Jersey in 1957 and lost, did you ever aspire to Presidential politics?
Forbes: Let’s just say I ran for governor, and if you scratch any governor, you’ve got a President. Hell, I’m glad I lost. Nothing could get me back into politics. As Carter and every President before him discovered, you can’t do what you want to do and you spend 80 percent of your time kissing ass, placating people, listening to opinions, many of which have little value. It’s so much more enjoyable to be giving advice than to be taking it.
Playboy: Whom would you advise the Republicans to run for President in 1980?
Forbes: I don’t know. Let’s put it this way. I’m not now convinced that Carter is a disaster and that any Republican would be better. In other words, I see hope for Mr. Carter doing the right thing. To me, his Camp David accomplishments cannot be exaggerated and I’m impressed with the way he finally bit the bullet on curbing inflation. If he ends up spending less and brings in a budget that is foreseeably in balance, I think the man may offer far more than some Republican candidates might. Time and again, I’ve found it hard to swallow a Republican candidate, and in the privacy of the voting booth, I didn’t always do it. The majority of people lean to the Democratic Party because it is a party of greater awareness and greater conscience, and the voice of the Republican Party is often the voice of reaction.
Playboy: Do you by any chance have in mind Ronald Reagan?
Forbes: Depending on how Mr. Reagan defines himself, he may not be the best answer for the country. And I’ll tell you that I thought Goldwater’s nomination was bad. I thought he was out of step with the times and his election would not have been good for the country. The Republican label is endangered, in my judgment, because often the people who call themselves conservatives are merely using a polite description for reactionary.
Playboy: How would you label yourself politically?
Forbes: An intelligent conservative, but in the normal sense of the nomenclature, I suppose that would make me a liberal. On social issues, for instance, I think that not legalizing abortion is an abortion. To outlaw that strikes me as a really arrogant political presumption. I can respect the beliefs of those for whom it’s a religious conviction, but it doesn’t have a place in law. It has a place in conscience. That’s a decision for people to make out of personal conviction, not legal necessity. In terms of the Government and the economy, I simply think that the way you conserve what you value is to anticipate change, and if you’re not in the vanguard, at least be flexible and open to the nuances. You don’t preserve by dropping roadblocks in the path of change. So that’s a long-winded definition of what I mean by liberal, which is really intelligent conservatism.
Playboy: Teddy Kennedy would label himself a liberal, too, yet you fear his approach.
Forbes: A lot of the costly things he advocates are desirable goals. But he would have us do vastly more good things than we can afford to do right now—that’s what got us into this inflationary jam we’re having right now. His national health-insurance program is an appealing idea until you weigh the costs against the benefits. And the $20,000-a-year wage earner is realizing that he wants to give the Government less, and get less from the Government. Kennedy’s health-insurance program, as well as being an administrative mess, would be leading us in exactly the opposite direction.
Playboy: But in theory, the poor would certainly benefit.
Forbes: That’s only in theory, to begin with, and I’m not advocating that the poor be ignored. Kennedy wants to help the poor and so do I, but I don’t think making them even more dependent on Government largess and inefficiency is the way to go about it. My concern for the poor is as real as anybody’s, if not more so, because when you have so much of this world’s goodies and have been blessed with so much of the best that this life has to offer, if you’re worth a damn, you’ll have heightened awareness of those who don’t have it so good. But fortunately, those numbers are getting smaller in this country. The percentage isn’t anywhere near as large as it was in Franklin Roosevelt’s day, when there literally was an ill-housed, ill-fed, ill-clothed one third of the nation. The system has responded to that, and even though the problems are still real and crying ones in urban areas and among blacks and chicanos and Puerto Ricans, the fact is that today in America, there are more people earning and spending money, and more goods and services available than ever before. The free-enterprise system basically works. And I don’t think you accomplish the betterment of those who are not yet sharing in its rewards by crippling the system either by overtaxation or by over-regulation of every move a business makes.
I think the overwhelming majority of people are coming to that same conclusion. They may disdain business, but they recognize that government is the problem. The threat is not the corporate guy; the threat is a government that leaves no income, that hamstrings our productive capacity by taxing away the incentive to develop it even more fully. There’s a revolt in this country against government spending, symbolized by what happened with Proposition 13 in California. People don’t want to pay as much tax, that’s all there is to it.
Playboy: Still, while most people may feel they are getting screwed by taxes, they also feel that wealthy people and large corporations can manipulate the tax laws—and benefit by them.
Forbes: It’s not a matter of manipulating the tax laws. It isn’t evasion of taxes by the rich. It’s that the rich can minimize their taxes by doing things they shouldn’t be discouraged from doing, even though it results in their paying, on a huge income, proportionately far less tax than what somebody pays on $20,000 a year. But that isn’t a result of machination or iniquity. There are sound social reasons for the deductions available to the wealthy, and let’s face it: Who the hell wants to pay more taxes than he has to? Only an ass. If you have money, you can give it away, for instance, to socially worthwhile causes, instead of having the government take it. You wouldn’t want to change the law on that, would you?
Playboy: Charitable contributions weren’t what we meant. We were referring to that feeling among the public that Carter captured in his attacks on the deductible “three-martini lunch.”
Forbes: There’s a social purpose behind any deductible expense. It furthers the purpose of the business. To knock out deductions that help a business grow is just grabbing the short-term buck, and nobody could succeed in business very long grabbing the short-term buck the way the IRS would like to. It’s a dumb approach. They say, “Gee, if you couldn’t deduct this and that, you’d pay more taxes.” Sure, but your business might be half as big next year and everybody’s worse off.
Don’t ever think the IRS is out to make it easy on the rich. It’s my experience that those guys are out to get you for every nickel they can. They go over my returns every year with a fine-tooth comb. It’s a constant battle in big business, even small business, and it’s reached the point where the amount of time spent in figuring out how to best structure your business, given the complexity of the tax laws, is probably greater than that spent in conducting basic business.
When the decisions made in a big company employing tens of thousands of people and involving the investment of huge amounts of capital are all related to the tax laws, then it’s almost self-defeating. It warps the whole economy. That’s why the reduction in capital-gains taxes was a good thing. Congress understood something that Mr. Carter didn’t, which is that this wasn’t strictly a rich man’s ploy.
Playboy: Would you agree, though, that most of the benefits certainly accrue to the rich, since they’re the ones with the capital earnings now being taxed at a lower rate?
Forbes: Substantial benefits will accrue to the rich and to those with the money to invest even if they are not really wealthy. But under the old law, people stopped selling something in which they had a profit coming because the tax was so high. That was warping the economy and knocking out some of our entrepreneurial drive. So it’s true that people of means get the most benefits. But the impetus to reduce the capital-gains tax came from middle-class groups—older people with small portfolios, home sellers—discovering their profit was taxed as normal income. A lot of smaller people wanted the law changed so that they could receive a return commensurate with the extra risk involved in their investments, rather than leaving their money sitting in banks. In short, the rich have very little clout on a popular issue in Congress, and Congress passed this despite the President’s flag-waving about the bill benefiting only the rich. And the reason Congress did that is because it discovered that the bulk of its constituents wanted it that way.
Playboy: The IRS statistics say that the majority of wealth in this country is controlled by about two percent of the population. Just as a matter of simple economic efficiency, don’t you feel the wealth in this capitalist system is too concentrated?
Forbes: That’s totally asinine. It was more concentrated back when you had a few men controlling the big outfits like U.S. Steel. Jesus! Who owns all the stocks in this country? Pension funds are the biggest stock-owning institutions. The concentration is not in the hands of individuals today; it’s in the hands of institutions. It’s nothing like it was at the turn of the century, when you had a few rich people, and through them interlocking boards of directors and a few key industrial concerns, such as the J.P. Morgan firm.
Playboy: The wealth may be in the hands of institutions, but that doesn’t answer the question about undue concentration of wealth.
Forbes: Insurance companies and trustees of pension funds and the like—these people control the bulk of stocks, but they’re not allowed to control the companies they invest in. They are only allowed to concern themselves with the soundness of the investment itself, and most of these trustees are not rich. They’re high-salaried but not wealthy in the old turn-of-the-century sense. It isn’t their money involved. It’s the money of millions of others.
Playboy: But the Rockefellers, the Du Ponts, the Mellons, the Hunts—you take a half-dozen families like that and wouldn’t you guess that they own or control many, many billions in assets?
Forbes: That’s no longer true. Those very families you’ve named no longer control a significant or appreciable percentage of the nation’s wealth. The foundations and special funds they set up to avoid confiscatory taxes changed all that. For instance, these foundations can no longer hold substantial equity in the stock of the company they were founded with. Under law, they have to decontrol. Take David and Nelson Rockefeller: Their prestige vastly, vastly exceeds any direct control that they or all the Rockefellers have. David may have more control than other wealthy people because he’s the head of a major bank. But he doesn’t get to go into the trustee department and tell them to buy and sell this and that. Most of the families you mentioned are not interlocked, not interrelated. They are often preying on one another when it comes to investments and control of companies. Remember, those families have now passed through two or three generations of inheritance taxes, and the only way any really big hunks of their money have survived is through trusts and foundations, and those are rigorously controlled by the Federal Government. Henry Ford is a perfect example. He doesn’t even agree with the direction of the Ford Foundation, but he can’t do anything about it. In short, this whole idea is a tribute more to a myth than to the facts.
Playboy: The image of capitalism, as ambivalent as it is today, has at least softened somewhat by comparison with what young people were saying about it in the Sixties. Why?
Forbes: During the Twenties, when everybody, including the shoeshine boys, was making money in the stock market, businessmen were seen as magicians. Before that, when they were “robber barons,” everybody was in awe of them. What they accomplished. Senators were elected by legislators in many states, and they could buy seats for their favorites.
Playboy: The best government money could buy.
Forbes: Right. Businessmen had the power. Then in 1929, all that collapsed because businessmen were largely blamed for unemployment, for the factories closing, for the policies—such as economic isolation—that contributed to the Depression. Businessmen never recovered from that plunge. During World War Two, our productive accomplishments gave them a new status, particularly when the production men were the heads of companies because they could organize the line that produced 7,000 airplanes a month. So businessmen’s reputations were somewhat rehabilitated. But then, during the late Forties and Fifties, there was a lot of sleight of hand that went on in the business world. Instead of the expected recession, there was growth, and the feeling that a businessman was, by definition, an exploiter grew, too. Profit was seen as something wrung from the sweat of workers. This sort of thing has been a prevailing philosophy of many people, especially those who teach. In the academic world, there was a great degree of mutual disrespect. A businessman was a grubby exploiter; the academician was the one who couldn’t earn a living, so he taught.
True to some degree in both cases, but what’s changed in the past few years is that more people are going to college, and with the growth of Federal education programs that made possible these new colleges, the administrators and professors suddenly discovered what businessmen had been talking about with regard to Government overregulation and interference. Academics suddenly discovered the merits of free enterprise, as it pertained to education. With this vast funding, Princeton could have its cyclotrons and Harvard could have a new department and city colleges could have scholarship funds. But it wasn’t long before some bureaucrat came along, saying, “Now, do you have equal facilities? Are you discriminating against blacks? What’s your minority mix?” All legitimate questions, but putting your subsidy program in danger unless you spend your energy worrying about this and that and every other thing. Strings follow money. And there’s nothing like curbing a department head’s freedom to make decisions to suddenly turn him into an advocate of free enterprise. Lots of guys moved right-ward on the spectrum after that happened.
Playboy: You seem to be suggesting it may almost be chic for young businessmen to quote General Motors president Charles Wilson, who once said, “What’s right for General Motors is right for the country.”
Forbes: Engine Charley was right; he just should have reversed the sequence. But now people understand better what he was trying to say. This great mass of professors, instead of deploring the obvious shortcomings and injustices of the system—and those are a percent of the whole—discovered the alternative, which has to be Government supervision, redistribution of wealth, socialism. I don’t mean socialism as a generic condemnation. It isn’t. There are some things that are properly public-owned. The Postal Service is a bad example, but the Government supposedly has to take the mails to the rural areas.
But more education gave people more faculties to dispute a professor’s ideas. That helped. And the biggest single thing that happened is that a greater percentage of Americans do have an equity in the country now. They have a piece of the action. The average income in this country is higher than it ever was. The number at the poverty level is smaller than it ever was. The number of jobs is greater than it ever was. The number of millionaires is greater than ever before. And there’s been publicity given to new overnight millionaires by such publications as Playboy, writing up the successful young guys, even the rock stars who are making more money than the president of Ajax Corporation ever did. What is it? It’s free enterprise. It’s incentive. It’s reward. It’s fun. It’s exciting. So every kid has a chance. He doesn’t have to be interested in business. He doesn’t have to want to step on all the feet and climb up the ladder to the top of a corporation. He couldn’t care less. But Jesus, he does like the idea that the music he’s listening to has made guys rich. He’s turned on by freedoms as never before. And he’s aware of his power and the importance of his freedom. The threat to him is not the corporate guy he deplores. The threat is a Government that leaves him no income, or says 80 percent of America has to be a public park and nobody can motorcycle in 79 percent of those parks. Jesus, this is his lifestyle they’re talking about.
Playboy: And your lifestyle, too. Although you don’t fit most people’s image of a devoted biker.
Forbes: I wasn’t until I was 50. It happened just by coincidence. One of the guys who worked for me, a chauffeur, a neat guy, wanted to buy a motorcycle and asked if he could borrow the money from me. Well, I told him what most people would have told him, that motorcycling is dangerous and foolish and that he shouldn’t do it. Being a sensible man, I tried to talk him out of it. But he went ahead and bought one anyway and he gave me a ride one day, and the next thing I knew, I was buying so many motorcycles for myself and my sons, I decided I’d better find a way to get them wholesale. So I bought a shop in New Jersey and, as well as saving me money on my own bikes, it’s become a sizable distributorship. So now I’ve got the best of both worlds. I sell them and I ride them. I love motorcycles.
Playboy: What is it you love about them?
Forbes: Traveling on a bike is invariably a delight. I love the exposure to the elements, being part of them instead of boxed off from them, the way you are in a car. It heightens every one of your senses. Your vision is better. Your concentration is better. You’re taking more in every moment. It’s terrifically invigorating. Your mind is working on a different beam—all your awarenesses are heightened in a way they aren’t in an office, at the desk, on the job. You’re like somebody skiing down a slope: totally turned on. I’ve done some of my best thinking on a motorcycle. The one problem, I’ve discovered, is that it’s rather difficult to jot down your thoughts on a note pad at 70 miles an hour, so the terrific new ideas you get are usually gone with the wind by the time you stop, but some of them stay. The people who work for me know they’ll be flooded with memos and queries about my brain storms—or brainless storms, as some of them would say—from my bike trips.
Playboy: How many miles did you cover on your last bike trip?
Forbes: Just about a thousand. I had two of my favorite bikes stored at my place in Tangier, and I wanted them moved up to my office in Munich for a trip I’m planning this spring, and I decided I’d just take a friend and move them on up ourselves. So we flew to Casablanca, picked up the bikes in Tangier and rode across Morocco and through Algeria. I especially wanted to drive through Algeria because I’d never been there before, and it’s a fascinating country, not connected to the Western world and not friendly with its neighbors. It’s like they’re suspended in time between what they have been and what they want to become. You get a greater sense of poverty there than in the rest of North Africa, because Algeria, having gone through a long and bloody revolution to get its independence and having a government that is virtually Communist, has less trade with the rest of the world. The shops are threadbare, with little in them other than necessities. There are very little of the luxury items we tend to take for granted. As in the Iron Curtain countries, production isn’t things for people; it’s things for the state.
Playboy: How did people react to a rich American motorcyclist?
Forbes: There don’t happen to be many Forbes magazine subscribers in Algeria, so my name doesn’t mean anything. The reaction I got was to being an American, not to which American I am, and their premise was that all Americans are suspect capitalists. Fortunately, most of us are. We’re accused of being what we’re happy to be. But the people were exceptionally friendly anyway. The bikes were a big turn-on for them because they’re big street bikes, and that’s a sight they rarely see. What motorcycles they do have there tend to be of low c.c.s.
Playboy: What were you riding?
Forbes: I had a big nifty black Harley—without saddlebags—running 1,200 c.c.s, a real hog. But cool. Mag wheels, all the latest.
Playboy: What do those bikes cost?
Forbes: Oh, I’ve got bikes that run up-wards of $12,000.
Playboy: To most people, that would seem like a lot of money for a motorcycle.
Forbes: It is. But it’s not just rich old goats like myself who have those wonderful machines. People who are into bikes are like people who are into rock music. They may not have much else, but they’ll have the top-of-the-line speakers, even if it means laying out a month’s wages. They’ll pay anything they can get their hands on for tickets to the best concerts. So the top-of-the-line bikes are bought, just as often as not, by people whose incomes are small, but this is their dream and their determination, and if you’re determined to get something, you do. You just pay the price.
Playboy: How fast do you travel?
Forbes: On the Harley, when you get over about 70, the magic fingers start beating you to pieces. It just vibrates like hell. At the end of the day, you’re not about ready to put a quarter in the hotel bed to get some shakes. You’ve been shaking all day. So as a practical matter, I had the Harley ceiling on me this last trip—just hanging on over 70, the vibes were such that I didn’t stay there long. But on the Gold Wing, which was the other bike we had, you can occasionally go in bursts of 110, 115 miles an hour. There’s no speed law in Germany and not much of one anywhere else in Europe, so it’s legal, it’s tempting and you do it from time to time.
Playboy: We heard you hit 130 once.
Forbes: That was on the Van Veen, the new twin rotary bike from Germany. I got it last summer and my son and I took it out on its first run with Cook Neilson, the editor of Cycle magazine, and I wanted to see what its limits were. Well, I got to the bottom of me before I got to the top of the bike, because when I finally worked up the courage to look down at the speedometer and saw what it said, I started getting nervous. And when that happens, you begin to think of little things like blowouts, and you begin to think that this is damned foolishness. Which, of course, it is. At that speed, being careful doesn’t do any good. If you have a blowout, you’ve had it. I didn’t stay at 130 very long and I’ll promise you and my insurance people right here and now that I’ll never do it again.
Playboy: Your motorcycling and ballooning have given you something of a reputation of a daredevil who likes to flirt with danger. Why do you do it?
Forbes: For the sense of the challenge and for the enjoyment. I’m not seeking danger. Sure, it exists, but you minimize it as much as possible, and that’s not hard to do. Some people say I must have a death wish, doing these crazy things, but I don’t. I’ll be the saddest man at my funeral. The last thing I want to do is die; the next time around I can’t possibly have it as good as I do this time, so what the hell would I want to check out for? I’ve got the best this world has to offer. I have no interest in leaving it. I’d never make a good racing-car driver because high speed per se isn’t even a source of great satisfaction to me. I don’t get that big a kick out of it, except, I’ll admit, that it is fun to say, “Gee, I did once go…that fast.” But not for any length of time. It’s just an occasional temptation. You look down that open road. There’s virtually no traffic. You’re trying to cover a long distance. You’re exhilarated. And you just find that speedometer creeping up and up. Speed grows on you.
Playboy: That’s ironic, because your other main hobby is one of the slowest forms of transportation known to man—balloons.
Forbes: The ballooning happened by coincidence, too. I just happened to read in the local newspaper where I live in New Jersey that there was a fellow offering balloon rides for a price. I had never seen a balloon or been in one, but it sounded like fun and it was right on the way to work, so one morning when we were driving in, I asked my chauffeur if he’d like to stop for an hour and go for a balloon ride. He said that sounded like a good idea, so we floated around the countryside for an hour and I was in the office by 8:30.
Playboy: Why did you do it?
Forbes: It was en route, it wasn’t going to interfere with the day’s activities and it sounded intriguing. I just wanted the experience. I wanted to see if I liked it. Vaguely, I thought it sounded like something I might be interested in pursuing, but only vaguely.
Playboy: How did you react to your first balloon ride?
Forbes: It was such a novel experience, a kind of Peter Pan thing. It’s so different from flying; it’s not flying. You’re right in the wind and the air and the clouds—all those forces in nature that come together and have an impact on you and the balloon. You’re floating and you’re never sure where you’re going. In a plane, you gun the engine and flip your flippers and you go up or down and right or left, and it’s an immediate response. In a balloon, your sole source of power is a blast of heat, and there’s a 15-second interval between the blast and when the heat reaches the top of the balloon and you float up. If you stop to think about it, it’s like driving a car that doesn’t accelerate until 15 seconds after you hit the gas. Try that sometime. Getting the feeling of the timing in a balloon is one of the extraordinary challenges, and one that captivated me that first day.
You have absolutely no control over your direction. As the wind goes, so go you. It’s a unique feeling, combined with the fact that you’re seeing a view of the landscape floating slowly beneath you that is different from any view you’ve ever seen. The whole thing is such a huge turn-on that I have not, with rare exceptions, found anybody who’s done it who doesn’t love it. You can float just above the treetops, everybody waves at you and yells up, wanting to know where you’re going. Well, you don’t know where you’re going, and even that’s an unusual sensation in itself.
On a motorcycle, you sense that not everybody is happy to see you and your mode of transportation going by, but a balloon turns everybody on, with no exceptions. It’s a happy thing. People on the ground enjoy seeing this beautiful, unusual thing floating by. What is it? The fact is, it makes no sense. It isn’t something to go anyplace in. You get in it and go no place in particular. With a balloon, getting there isn’t half the fun; it’s all the fun. The trip is the whole trip. The vehicle itself is the thing, the end in itself, not the means of getting somewhere. And all those sensations happen to you the first time you’re in one.
Playboy: Less than a year and a half after your first balloon ride, you set six world records in your cross-country flight. Obviously, you plunged into it.
Forbes: Sure. Once I got into it, I wanted to do the things that hadn’t been done. It wasn’t just competitive zest. I thought that if you’re going to do it at all, you might as well mobilize your resources and have more fun doing what nobody else has done. To keep flying day in and day out you have to have a lot of ground support. You don’t know where you’re going to land. You fly until you’re out of fuel, then you have to have trucks that can get to you. I was dropping tanks to reduce weight—they weigh 20 pounds even empty—and somebody had to retrieve those with a helicopter. Amazing lot of logistics. People can do it on a less expensive scale, but it’s harder and takes longer. And what we were doing was taking off from where we landed. That hadn’t been done before. You can say you’re going to go from West to East, but you can’t say you’re going from Milwaukee to St. Louis. You can’t pick your towns.
Playboy: How did your family react to what you were doing?
Forbes: Enthusiastically. It was an exciting adventure and everybody was in on putting the logistics together. Two of my boys filmed it. A guy named Tracy Barnes had gone cross-country over the period of a year, but it really hadn’t been done as a consecutive trip. It was pioneering. I decided it would be fun to try doing it and had the balloon built. The thing got a lot of press coverage because it excited people, and it was the kind of thing where day by day you could follow the progress, or the lack of it, and it did a whole lot to make people aware of the sport.
Wherever we were, large crowds would come out of the bushes and watch us land, or watch us launch. The most dramatic moment just happened to be when Jack Perkins from NBC News was there and they put it on TV. He was interviewing me at the midway point in some little town in Nebraska. My God, the kids came in their school buses, the whole town came out to watch us launch. We were behind some trees in a field and heating to take off. I’d forgotten a very simple thing: When the wind is rushing over a barrier—such as trees—it creates a false lift, so the balloon would lift before it’s hot enough to go, and you’re supposed to know that. I passed the question on the exam, but not in the field. I was launching from behind some trees, so we had this lift, saying goodbye to everybody as we rose up so gracefully; then we got up in the cold wind and we weren’t hot enough and it began coming down. And all this was recorded by NBC. We smashed into one car, bounced, smashed into another car and destroyed five automobiles before we finally lifted off. So Perkins ended up the commentary by saying, “And here are five people who are going to have to tell their insurance companies their cars were smashed by a hit-and-run balloon.” God, it was funny and it happened to be captured on film. All this sort of stuff brought a lot of publicity to ballooning. It created a lot of awareness and increased interest in the sport and the drama of it. I got the Harmon Trophy and all these awards that were not in any sense deserved on the merits or the significance; it’s just that balloons are such a turn-on.
Playboy: Your next big adventure was your project to float across the Atlantic. You put $1,200,000 into your equipment, didn’t you?
Forbes: Yeah. The key to making it across the Atlantic, as far as I was concerned, was to get above the weather, which was what aborted all the earlier attempts. We built a cluster of 13 balloons, sealed and pressurized, and a space capsule not unlike what the astronauts had, and we were going to climb straight to 40,000 feet and get into the jet stream, which at certain times of the year is narrow, swift and intensely reliable. It blows. And it blows where you want it to go. The jet stream really moves. I mean, it would have been a trip to end all trips. And it was all going to be up there in the stratosphere. We could have made it from California to the East Coast in two days and across the Atlantic in another two or three days, and I’ll tell you something I haven’t said before. I didn’t even tell my copilot, Tom Heinsheimer, because I thought he might have different thoughts on the subject, but once we got over France, if all the systems were functioning properly, I was ready to just keep on going, all the way around the world, if possible. What the hell’s the point of coming down if you don’t have to? I had this great fantasy of the meetings in the Kremlin when we got over Russia. There would be this capitalist-tool balloon floating over, and they’d have to decide whether or not to shoot us down. Then I ended up making the shortest voyage of all the attempted ocean crossings: about 20 feet. I should have known I was in trouble when I read my horoscope that morning. It said, “Find cheaper and faster forms of transportation.”
Playboy: Obviously, you can laugh about it now, but the accident at your launch that aborted the flight almost killed you. What happened?
Forbes: It’s the old thing about for want of a shoe nail. The whole launch scene was spectacular. It was the middle of the night at El Toro Marine Corps Air Station in California and the 13 balloons filled this immense hangar. The hangar was ringed with powerful searchlights, and the doors slid open and a crew of volunteers, including two of my sons, began rolling out the balloons in clusters of three. Each cluster was attached to a separate launching platform and had its own release mechanism holding the balloons down and preventing the balloons that had already been launched from jerking everything else up at once. Seven balloons were already in the air and the ring that held down the third cluster couldn’t take the pressure and it broke, and that cluster suddenly jumped up with this incredible premature lift, and the jerk ripped our gondola off its launching platform and started dragging it across the tarmac. Another few moments and the liquid-oxygen tanks would have ruptured and we’d have gone up in flames. We’d have made a trip, but it wouldn’t have been in a balloon. Thank God, our launch director had the presence of mind to act immediately, and he jumped on the side of the gondola and pulled the emergency release switch, and we rolled a few feet and stopped and the balloons shot off into the sky. They came down sometime later in the desert. Without the weight of the capsule, when they hit 40,000 feet they just kept on climbing until they burst and fell. The whole thing was fantastic, and to have the denouement to be dragged 20 feet across some cement was a heartbreaker. Unparalleled. It happened ten minutes before launch time. Another ten minutes and we’d have been on our way to one of the most totally spectacular trips in history. I really did think we might go around the world. That was one of the biggest disappointments of my life.
Playboy: Will you ever try it again?
Forbes: What’s the point now? It’s already been done. The guys from New Mexico made the trip and who wants to be second? Besides, I can’t try it again. I had hoped to make a second attempt once I was out of owning and running my business, but now, my life-insurance policies all have a clause in them saying they are inoperable if I die ballooning across any large bodies of water, and the company carries many millions of dollars of insurance on my life so they can pay the inheritance taxes on my estate. The insurance people decided that the risks of ballooning across the Atlantic contradict the longevity tables they use for insuring such high amounts.
Playboy: That brings us to the obvious question. With your magazine, and all your land, and your fishing camp, and your Moroccan palace, and your English mansion, and your French château, and your American estate, and your Fabergé collection, and your art, and your motorcycles, and your balloons, and your stock portfolio, and your money, and everything else, what does it all add up to? How much are you worth?
Forbes: Plenty! And happily, more so almost every day. I assume, of course, that you’re asking about money, not intrinsic value as a person.
Playboy: Yes.
Forbes: Good. Because that’s a whole different thing and I suspect that the definitive reaction to the latter is: very little. [Laughs] But I really don’t want to be on the record saying that I’m worth some far-out amount because I assure you that the people who collect death taxes will read this article and stick it into their dossiers. So if I claim that I’m worth some-odd hundreds of millions of dollars, then they’ll come around later and want to know why my estate lawyers claim that I died practically penniless. [Laughs] It would leave me with what you might call a credibility gap. Up until the day Howard Hughes died, he was worth billions of dollars, and then everybody was astonished when Merrill Lynch and the executors came in and said his estate was worth less than $200,000,000. You could say the executors and the estate-tax people were approaching their estimates from two different points of view.
Playboy: Let’s try that question another way. If there were no such thing as estate taxes, how much would you be worth?
Forbes: I can honestly say I don’t know. How do you place a value on Forbes magazine? There are so many different ways you could measure just that one asset. Ten times earnings? One or two times gross sales? At best, those are crude yardsticks. As for my land: We sold 30 percent of the land we own in Colorado and that’s $50,000,000 worth as it turned out. But from that you can’t say that the rest of it, therefore, must be worth a quarter of a billion, or that all the other land I own must be worth that much an acre. There’s no way to place a value on all these things. All I can say is: Thank the Lord, I’m solvent!
Playboy: You sure are. But it sounds as if you could reasonably say that the rest of the land in Colorado must be worth about a quarter of a billion.
Forbes: But so often it depends on what you do with what you have as to what you’re worth. At least as far as money is concerned. When we bought that land in Colorado, I planned to turn it into a game preserve that would have been the greatest game preserve in the U.S. So its value in money terms would have been negligible. The university people, the game-commission people in Colorado were very enthusiastic. I ordered a million dollars’ worth of fencing, but then the state attorney general ruled that the game on the land belonged to everybody, and that the only way we could do it would be to drive all the game off the property first, then stock it with our own. After a long and terribly disappointing struggle, we finally gave up and went into the real-estate business, selling the land in subdivisions. So it was a result of not being able to do what I set out to do, and being forced to do something else, that the land became worth many millions of dollars in sales.
Playboy: The attorney general forced you into all that profit, eh?
Forbes: [Laughs] I really should have cut him in for a commission, I guess. I should beatify him. At the time, I just wanted to beat him. But you see the complications in trying to evaluate my worth, and besides, its hardly the most important measurement. It happens to be one that Americans are fascinated by: How much money does this guy have? We’re a money-oriented nation. The idea used to be that if you’ve got bread, you must be good. But I think we’ve gotten over that silly notion. We know that a lot of bums get bread, and there are many nefarious means of getting it. Money doesn’t make the man.
Playboy: It helps.
Forbes: No question. Money is independence.
Playboy: You remember what Fitzgerald said to Hemingway: “The rich are different than us.” Do you agree?
Forbes: Of course. “They have more money,” Hemingway replied. But the thing is that money doesn’t make you different. It makes your circumstances different. Money enables you either to do more with your life or to insulate yourself more from life. Look at Howard Hughes, again. He had more money than damn near anybody and what’d he do? Locked himself up in hotel rooms and shot dope. His money didn’t make him different by protecting him from addiction to drugs; it just allowed him to get away with it and keep people from finding out. He’s the classic example of what I believe: that it’s not the money that’s important in a person’s life. It’s an immense facilitator if you allow it to be, but it still comes down to your capacity to enjoy: to eat, to love, to read, to see, to feel. All those things are no greater for a rich man than for a poor man.
Playboy: Easy for a rich man to say.
Forbes: Well, the variety might be greater for a rich man. The opulence might be greater. But my eyes can’t enjoy the view of my land in Colorado any more than the eyes of the guy who just bought five acres of it. He’s got exactly the same view and he’s standing on his own turf. It’s like the old saying: How much do you want to own? I don’t want to own anything except the land next to me. The land adjacent to mine, that’s all I want.
Playboy: You mentioned what you think is Teddy Kennedy’s guilt about his inherited wealth. Did you ever go through that guilt?
Forbes: No, no, no! I can never remember feeling guilty. I can remember feeling greedy. My father was a relatively wealthy man. We lived comfortably but not a Rockefeller-rich life. We lived near Bernarr Macfadden and I can remember complaining to my father that they had a swimming pool and we didn’t. Pools were very rare in the Thirties. I said, “They must be rich, they’ve got a pool.” My father said: “If they’ve spent the money, they don’t have it. It doesn’t prove they’re rich; it proves they’re spendthrifts.”
Inherited money is harder to make something of. Lots tougher. You have to overcome its disadvantages. But I didn’t inherit that much money myself. I inherited a piece of a well-founded business. It was only a fraction of the size it is today, but I did inherit the opportunity. And why should I feel guilty about that? Look at how much of my life I’ve put into getting the business thriving and running right. I could have made a success of myself without my father’s start; it just would have taken more time. I wouldn’t have had as much time to do the other things I wanted to do. But one thing about the capitalist system: If money is what you’re after, and the only thing you’re after, you can get it. It’s not difficult. But you can’t get it and still have time to do all the other things you may want to do.
Playboy: What about the Rockefellers? Would you say they’ve used their money well?
Forbes: The ones I know reasonably well—Laurance, Nelson and David—are each very admirable, industrious, hard-working guys who have a genuine sense of public service. They haven’t used their money with malice. They haven’t pulled a Stewart Mott, the G.M. inheritor who figures he has to espouse—and buy—every left-wing cause that comes along. The Rockefellers have supported very liberal causes; they have a deep social, public awareness, without thinking the system is lousy or needs destruction or total stifling or redirecting. They have supported the system and worked within it, but they have used what was once incomprehensible wealth—it’s less so now because as always these things get split up. But they have pioneered and supported early causes: population control; ecology; health, before governments got into the problem; so many areas that are so fruitful and so worth while. These guys, in my judgment and my experience with them, are more laudable than generally they’re given credit for. David, for instance, is a guy spending a lot of time with heads of states and governments on behalf of the broadest possible aspects of our national policy. He doesn’t always come away with a deposit for his bank, but the point is that his contribution is very real and it’s so easy to sneer at it and not give these guys credit for an extraordinary public life. Laurence was probably one of the earliest environmentalists and ecologists, before they even used those words and brand names. And very productively active. In short, I think these guys are a very good lot.
Playboy: You got off a snide remark about Stewart Mott, who espouses leftist causes. What makes people like him so contemptible to someone like you?
Forbes: Their motivations are so patent. They’re guilty about their money and they think that instead of giving it away, they’ll use it to change the system that gave them an inordinate amount of money. I just simply think that those guys ought to be preachers and back left-wing causes. I don’t think they do a lot of harm, because usually, a lot of what they put their money up for doesn’t reach anybody except those who are already converted. How do you explain those anarchists in Germany? The Weathermen here? You always have groups of radicals and it has nothing to do with economic strata; they act from conviction.
Playboy: So what’s wrong with convictions?
Forbes: In these cases, their motives usually make fanatics out of them. But there’ll always be fanatics, and whether you call them left or right, I see little difference in them. The fact that some of the very rich spend their money fanning flames that would destroy what gave them the money, that’s OK. They’re offset by people who came up from nowhere economically and had a ball and made it big. I think their contribution ends up being greater. And usually, those fellows don’t shed their awareness. In the old days of the robber barons, you found them endowing Carnegie libraries, the first extensive public libraries in this country. They recognized the needs and necessities and they responded. If it hadn’t been for wealthy men who expressed their gratitude—endowed scholarships, the arts—hell, you wouldn’t have public universities in this country. I think it’s a very important thing that there are liberal-arts universities in this country that are not totally dependent on the state for handouts. That came from people with money with their own views and conscience.
Playboy: Kurt Vonnegut once said that the trouble with getting rich was that suddenly he had all this money he had to baby-sit. You’re baby-sitting a hell of a lot more money than he—or almost anybody else—is. What’s it like?
Forbes: That’s a great phrase, baby-sitting the money. There are people who make lucrative careers out of baby-sitting money. That’s what Morgan Guaranty Trust is doing. That’s what estate lawyers are doing. They’re baby-sitting money for people who had it and had to leave it behind. But personally, I prefer to do as little baby-sitting as possible. My interest is in not managing my money. My interest is in having enough of it to go on doing the things I want to do. My son Malcolm, Jr., is a brilliant money man and he looks after much of the management, and I have an executive vice-president who, I always say, is in charge of keeping us solvent. Because I’ll take care of the reaping and the spending. Somebody else better make sure we don’t get too far ahead in either direction.
Playboy: Are you more, shall we say, cautious about keeping your financial empire solvent than your love of motorcycles and ballooning might seem to indicate? Do you drive Forbes at 110? Fly it off into the sky?
Forbes: Enjoying life is the only solvency, and in business as in life, the biggest risk is too much caution. That’s always the danger in business: when you stop charging. When you stop moving.
As soon as a business decides, this is how we used to do it and it worked so we’ll keep on without changing, that’s when it loses its momentum. Safety doesn’t lie in that. Just ask the Pennsylvania Railroad and the people who owned the Erie Canal bonds. Sure, I consider staying solvent important, but I believe it comes from keeping money moving. You know, planting money doesn’t do you any good. It doesn’t grow. So stashing it is not safety. Keeping it is not safety. Moving it, putting it to work, is safety.
Playboy: As one of the small number of people with the greatest vested interest in the safety of the capitalist system, do you ever worry about—
Forbes: Come the revolution?
Playboy: No, not the revolution but, rather, a serious collapse of the economic system, a sort of crash of ‘79, of the type Paul Erdman wrote about in his best-selling novel.
Forbes: There was a crash of ’29.
Playboy: So you’ve already lived through one. Do you ever worry about that kind of thing happening again?
Forbes: Of course, it’s a concern. But I don’t see it happening. If you keep a historical perspective, we’ve had fiscal panics, crashes, quick rich and quick poor in our history. We’ve had boom and bust periodically. The Depression following the stock-market panic of 1929 was one of the greatest economic wrenches in modern history. Change and turbulence is not confined to warfare and borders, and turbulence is just another word for the sharp ups and downs. So it’s silly to assume that we’ve discovered perpetual prosperity. We’ve had setbacks of a year or more and we probably will again, but overall, the health of the system has been burgeoning. It’s better now in this country than it ever has been.
The biggest threat of this year may turn out to be that things don’t slow down enough for inflation to be bridled. The consumer is still racing to run up his credit-card charges—so there’s more danger of short-term, unbridled growth than there is of a serious recession.
Playboy: But what about the potential weak link: energy? The Depression of 1929 was about the management and distribution of resources. It was systemic, thus subject to correction. What happens in ten years when we start running out of the resources themselves, such as petroleum?
Forbes: Energy is finite, that’s for sure. And it’s going to be one of our most pressing problems in the next decade. But every decade has had tough problems, and some that started off abysmally turned out to be all right. We’ve been through decades of hard times before, and you’re right, in due course, we’ll run out of oil. Maybe not for 50 years, and by then we’ll have harnessed other forms of energy. The world literally is energy.
Playboy: But that’s not much of an answer. Are you satisfied with how the governmental and corporate leadership in this country has responded to the energy situation?
Forbes: Oh, they’ve been clumsy and inept, but business has discovered that when energy is expensive, they can save a lot of money by using it more efficiently. And what motivated them? Trying to make a buck, and that same motivation is going to lead us to new and exciting solutions to our energy problems. The oil companies are already putting a lot of money into developing solar energy. If you can find the break-through in solar energy, it would be like inventing the electric light bulb.
Playboy: All right, so where does that leave us? Ralph Nader once said that the reason we don’t already have a significant solar-energy system is simple: Exxon doesn’t own the sun.
Forbes: To digress for a moment on the subject of Ralph Nader, I think he’s suffering from overkill on his own part. He’s diluted his influence because he’s tackled too much and shot from the hip. He has overstated his case on safety and ecology to the point where some of the things he’s pushed for would substantially inflate costs without a commensurate increase in lives saved or incidence of disease lowered. In short, he helped—by banging the drum and leading us into a new and terribly important area—but by now, he’s lost some of his heft because of exaggeration as to who the villains are and underestimation of the cost of total purity.
Playboy: Getting back to Nader’s accusation on oil companies and solar energy—
Forbes: All people are human, including the heads of companies, so there’s always an element of truth in any accusation.
Playboy: But only an element?
Forbes: An element. It’s well and good to say they don’t own the sun. Funny line. But nowadays, they don’t own most of the oil resources that used to give them their clout, either.
Playboy: But they control the production and distribution enough to make it amount to pretty much the same thing.
Forbes: Sure. But they’ll come along because they know one thing for sure: Their profit isn’t going to go up if they don’t find some way to provide the energy to keep the system moving. They won’t make much bread if we’re all living in huts again. And we shouldn’t knock the potential of atomic energy. It’s so cheap and so available. The resistance is largely psychological—it’s the atomic bomb, it’s atomic explosions.
Playboy: It’s more than that. It presents the problem of storing the wastes safely for about 20,000 years.
Forbes: That’s a helluva problem, I agree. Maybe we should put it in the fault out in California.
Playboy: That sounds like what got Barry Goldwater into trouble in 1964, when he suggested we saw off New York and float it out to sea.
Forbes: [Laughing] It was just a joke. Honest. But as to the dangers of atomic waste, the thing is, they haven’t solved the problem of storage, though it is solvable. In our lifetime—what I call the short view, the older I get—I don’t think that our problems are any greater, and are probably fewer, than in the preceding centuries. We have tremendous, exciting, wild things going on today. The world is as full of exciting solutions as it is of problems, and that’s not a Pollyanna view. Based on our accumulating knowledge and the rapidity of it, I personally feel that our short-run position is more hopeful than that of any generation ever before. And as somebody said, if you take the long view, in a hundred million years, nobody’s going to be here anyhow.
Playboy: Since you’ve got a lot more to lose than most people, it’s reassuring to hear that you’re comfortable with our economic hopes.
Forbes: Not comfortable, just optimistic.
Playboy: You always describe capitalism in very upbeat terms; in fact, you’re almost a cheerleader. But what would you say is capitalism’s worst excess right now?
Forbes: That’s a good question. [Pause] It has so many. I would say its worst excess right now [long pause] oh, God [pause] I guess it’s the large number of business people who are still trying to rip off the consumer, the employee or the stockholder. There are still a lot of guys out to grab the quick buck, and some of them get to pretty high positions, at least for a while. So I’d say capitalism’s worst excess is in the large number of crooks and tinhorns who get too much of the action. Incidentally, that’s what brings on Federal overregulation and thus inflation: the sins of some committed under the mantle of free enterprise.
Playboy: Now that you’ve got your empire running smoothly and you’ve got Malcolm, Jr., groomed to take over—
Forbes: I have no plans for early retirement.
Playboy: That’s where we were going.
Forbes: My son says he’s eager to give me a gold watch on retirement day, but he’ll have a long wait.
Playboy: But what keeps you from walking away from a job well done and having more of your time free for the bikes and the balloons and maybe other new adventures, rather than working as hard as you do for Forbes, Inc.?
Forbes: Because I’m doing what I want to be doing. I couldn’t get more pleasure out of the so-called pleasurable things than I do from running this business. I love writing my editorials. I love reviewing books. I love getting out around the country with my procapitalist film and enthusing people about a different understanding of our history. That’s exciting to me. There are times at the end of the day when I’m a little limp, but hell, I do get to motorcycle a lot. I’ve got probably five major trips planned for this year. I had four great ones last year. I can balloon on most weekends. When you have to squeeze them into a tight schedule, you do them with a greater enjoyment and a fuller intensity than if you were just trying to fill up a bunch of your spare time.
In other words, everybody needs a change of pace. But that’s not the same thing as quitting. The hardest work in the world, in my own observation, is no work. I think the toughest thing to deal with, and what kills more people than anything else in the corporate world, is retirement. If you can’t handle the hypertension, OK, get out of the kitchen. But if you’ve got your health—and I’m knocking on wood, who knows what can trip that up?—then you get your kicks doing what you get your kicks doing, and I get my kicks running this business and seeing it grow and fanning the flame and doing all those other things, too. Retirement, for me, would represent a challenge, all right, and one I’d dread facing.
Playboy: The press has called you “The Happiest Millionaire. “Are you?
Forbes: My kids are grown up now and they live nearby, two of them are in the business, the grandchildren are around and I’ve taken care of a smooth succession—which can be a big problem in a family business. So I guess you could say that I’m having a pretty…good…time. Nobody can have it all, but I’ve certainly had my fair share, and my attitude is simple: While you’re alive, live! Because who’s sure of the next trip? I’m not. As I say, I’m an optimist, because I’m not sure there is a life after death, and if there is, I’m not sure what my reward will be. But I can tell you that I’d like to be buried with a long extension cord to my air conditioner.

Ted Turner, August 1983#

What to make of a bawdy sailor who revolutionized cable television? How to react to a millionaire baseball-team owner whose antics get him more press attention than any of his players? What about this fast-living swashbuckler who wants to turn America into his own vision of goodness and family virtue? Who is this guy, anyway?
Those are but a few of the questions that lead one to the doorstep of Ted Turner, the Atlanta television-and-sports entrepreneur who turned the Atlanta Braves into winners and his Cable News Network into the wild card of television programing. He is the man Time magazine profiled last year when it chose a cover subject to explain the upheaval generated by the rise of cable TV and the fragmentation of the vast American television market. It was he who shook the broadcast community last winter with aggressive overtures to consummate a merger with one of the three major networks that would have made him the largest stockholder. And, as this interview suggests, Turner may not intend to limit his ambitions to television.
When Playboy first interviewed him in 1978, it was largely because of his athletic prowess as the skipper of the winning yacht in the 1977 America’s Cup race—and as the “Mouth of the South,” the fast-talking, colorful sybarite from Georgia who charmed or outraged nearly everyone he met. A man of very real athletic achievements who shocked the staid community of Newport with his carousing behavior, Turner was also the owner of an insignificant U.H.F. station in Atlanta.
The channel’s most popular show was a Saturday heft-and-hype spectacle called “Georgia Championship Wrestling.” News was treated as comedy and was aired at three or four A.M., when, as Turner explained to Playboy at the time, “We had a 100 percent audience share”—since there were no other Atlanta stations on the air all night.
Then Turner had the insight that has made him a hero to cable television and a visionary in his time: He discovered the geosynchronous orbit, the positioning of a communications satellite, or “bird,” in a permanent location above the earth so that, its transponders may be used on a 24-hour-per-day basis by anyone willing to pay the rent on the satellite. Turner instantly understood the bird’s extraordinary possibilities: A video signal rises to the satellite in a straight line but returns to the earth as if it were an umbrella-shaped rain shower that covered the hemisphere.
Turner hit upon the innovative and then-unproved trick of beaming his low-cost sports-and-entertainment fare to program-hungry cable systems around the country via the satellite. His programs were low-profit but hardy perennials: superannuated reruns from his library of 4000 movies and discontinued serials, plus lots of sports—chiefly his own two losing ball clubs, the Braves and the N.B.A.’s Atlanta Hawks. Suddenly, he was selling “Leave It to Beaver” and live baseball in such faraway places as Hawaii and Alaska. With typical bravado, he called his new national channel a superstation. Turner’s daring new step helped accelerate the spread of cable hookups throughout the country and eventually became the money source that financed the rest of his growing empire.
Yet few look Turner’s inroads seriously. During his first “Playboy Interview,” even he characterized his operation as a “nitwork,” a word he now gleefully uses to describe his adversaries, the three large broadcast networks. His hardware at the time consisted of the highest television tower in the Southeast, a billboard-painting operation on the back lot and a single earth-station microwave dish attended by a lone technician in a house trailer outside Atlanta; he drove our interviewer down a rutted road deep into the woods to show it off. Turner’s attitude toward news was that it was all bad and that the public was better off watching reruns of “Gilligan’s Island.”
Then came the Cable News Network. As he explains in this interview, Turner began to realize that with the cable channels saturated with movies and sports, one obvious product was not yet being marketed on a full-time basis to cable subscribers: news, perhaps the hottest entertainment of all. Typically, Turner defied conventional business wisdom—Time, Inc., had declined to get into full-lime news-casting because it was considered too costly—and decided to plunge headlong into Cable News Network within a period of months. He mortgaged the farm, so to speak, rerouting all his superstation profits into the development of a world-wide news network housed in Turner Broadcasting System’s new headquarters, a Taralike mansion that was once the center of a posh Atlanta country club. In June 1980, Turner put CNN on the air with bombast and fanfare, and it has never gone off since.
The man whose remarkable business odyssey has led him into this epic fray was born 44 years ago in Cincinnati, the son of an ambitious father whose own parents had lost their land in South Carolina during the Depression. Turner’s father encouraged his son’s sense of destiny by the very name he gave him: Robert Edward Turner III, a title worthy of a Confederate aristocrat/soldier and a tradition Turner has continued by naming his own first son Robert Edward Turner IV.
When he was a boy, Turner’s family moved South and placed him in military schools, which provided the background that has made him a lover of military tradition and war classics. He literally fought his way to prominence at Georgia Military Academy and at McCallie School in Chattanooga before moving on to Brown University in Rhode Island. There, he studied the classics over his father’s protest and was finally booted out of school for assorted outrages involving girlfriends and, once, for incinerating his own fraternity float.
It was Turner senior’s suicide when his son was 24 that set the course for the rest of the young man’s business life. Turner recovered the family billboard business that his father, deep in debt, had sold shortly before putting a gun to his head. He soon demonstrated the attributes of the riverboat entrepreneur that characterize him today: He purchased a failing Atlanta U.H.F. station but quickly had the wrestling-and-reruns market all to himself when the only U.H.F. competition concluded that Atlanta was a nonmarket. It was through the unlikely back channel of a station whose main studio set was a wrestling ring that Turner became one of the country’s most powerful media chiefs.
While many network executives still dismiss him as little more than a burr under their corporate saddles, they have also paid him the ultimate compliment of imitation, expanding their news programing into late-night hours and beginning their morning shows an hour earlier. Some have adopted the national call-in format pioneered by CNN. ABC even joined Westinghouse to mount a direct cable competitor, the Satellite News Channels.
But Turner is not content to take on the giants of the American communications industry with his slingshot alone; there is also his lip. The Mouth of the South has taken his act on the road and become the most caustic, and vociferous critic of the prosperous and entrenched broadcast industry in all its history. Turner’s sense of the histrionic has not failed him; he unhesitatingly compares his adversaries to the Gestapo and to those who deservedly lost their heads during the French Revolution.
While acting the role of pious spokesman in this self-scripted morality play, the rake of Newport attacks sex on television while mounting a new soap opera on his own superstation; the purveyor of 24-hour news debunks “gloom and doom” on the networks and insists on television programing’s showing only “the kind of people you’d like your kids to grow up and be like.”
To probe the inner workings of the new Turner, Playboy’s obvious choice as interviewer was Contributing Editor Peter Ross Range, who conducted our first interview with him in 1978. The man Range found this time was, indeed, different, and here is his report:
“Turner has changed. He is no longer the laugh-a-minute, expository motor mouth who sees a classic metaphor behind every man’s maneuvers. Yet he still often portrays his own zigs and zags through the corporate jungles in David and Goliath terms. He still relishes the role of underdog yet views his competitors not merely as bigger but as part of a dark conspiracy to do in Turner, his company and, for that matter, the whole of American civilization.
“He has also become, as many men in high position do, at least a partial victim of his own celebrity. When we first invited him to do the ‘Playboy Interview,’ while walking along the Newport waterfront in 1977, his response was, ‘Wow! Playboy! That’s the big time!’ Our interview was his first major national exposure outside sports publications, and he was duly impressed. Since then, he has appeared in virtually every medium and takes himself a great deal more seriously than before, especially since he appeared on the cover of Time and as the subject of a British Broadcasting Company television special called ‘The Man from Atlanta’ (which he unabashedly aired last spring on his own satellite network). Consequently, he agreed to the second ‘Playboy Interview’ only after a melodramatic groan and many months of abrupt cancellations and wasted trips.
“Even when he is at his least cooperative, tracking Turner remains a special kind of adventure—a high-speed chase over the real and figurative landscape of his life in cars, jeeps and airplanes and on foot. The chief difference between this year’s conversation and the one five years ago was that we did no talking on a sailboat—but we did a lot on the hoof, trekking briskly around his 5,000-acre plantation in the South Carolina low country, near Charleston. He lives there with his family on weekends between sorties into the national wars in Washington and elsewhere.
“Turner invited me to begin the interview with a visit to his plantation. We flew in from different cities to the Charleston airport on Friday night and began our conversation during the 35-mile drive to his house.”
 
Playboy: When we interviewed you five years ago, you were known mainly as the colorful sailor who had won the America’s Cup yacht race and as the owner of the worst team in baseball. Now the Atlanta Braves are winners, you’re a force in national television and you’ve even been on the cover of Time. Quite a change.
Turner: You know what you’re finding now? You’re finding that I’ve really made it. Much as you begrudgingly hate to admit it, you’re really impressed, aren’t you?
Playboy: Yes, but—
Turner: You bet your sweet ass you are. I’ve made it now and I’ve made it in television. We just finished a survey that showed unequivocally and undeniably, by a massive margin, that more than half the people who are even aware of cable television and have it in their homes choose Cable News Network as their source of news. I mean, ABC and NBC and CBS combined did not get as many votes as CNN. We’ve taken over news leadership from the networks. They had 30 years to do it and we did it in only two and a half.
Playboy: Can you really justify that claim? After all, most homes still don’t have cable.
Turner: Yes, I can. We’re putting it in ads and on our posters in the airports. Cable is now in nearly 40 percent of the homes and we’re in 75 percent of those. So we’re into 31 percent of the homes in America, and all those people also get the networks. And those are the people who responded to our poll. I’ll show you the figures. They’re simple—ten pages double-spaced. Even you can understand them.
Playboy: There has been a lot of talk lately of your merging with a major network or studio. What about the rumored MGM deal?
Turner: [Pause] Shut the machine off!
[Off-the-record discussion, then interview resumes.]
Playboy: There is no question that your news network and your WTBS “superstation” have made a big mark on American television. But you’ve spent a lot of time lobbying in Washington against increased rates for movies carried on WTBS. How have those rates affected you?
Turner: We’ve lost about 300,000 subscribers, which isn’t too bad, out of the 25,000,000 we signed up. We expected it to be much worse, but people are sticking with me. But this whole thing is too complicated for Playboy. It’s complicated, complicated, complicated! I mean, it’ll all be changed again by the time this interview appears in five months. Playboy operates on a five-month delay! Sixty Minutes operates on a two-month delay! Cable News Network operates on no delay, not even a ten-second delay! Playboy is just sleaze on some pages and outdated information on the others.
Playboy: Each to his own opinion.
Turner: Well, it’s the truth. You can put that in there. It’ll be edited out.
Playboy: Let’s wait and see.
Turner: You’ve got crotch shots of attractive women on one page and then you talk about your editorial integrity by having a six-month-old interview on another. Why don’t you get the magazine out faster?
Playboy: There’s actually about a three-month lead time, and it has to do with quality control of the color pictures—
Turner: Why? I mean, the dirty pictures can be shot six months ahead. Pussies look the same whether or not they are six months old. In fact, they could have been shot 60 years ago, if there had been color film. For someone who’s running as fast as me, this interview will be totally obsolete when it appears.
Playboy: Maybe you’ll be surprised—our interviews tend to last. Anyway, haven’t you been claiming that you’ve changed into a more serious person from the hell raiser you once were?
Turner: I have changed. I’ve gotten more serious, more concerned about the trends of the world—the overpopulation problem, the environment, the nuclear issue. Love Canal, unemployment, inflation.
Playboy: What do you do about them on your stations?
Turner: We do documentaries about them. We just finished a major series on the auto industry.
Playboy: Other media have done that.
Turner: Nobody’s done one on soil erosion, and we got a big award for it. No one’s done our documentary on population control. We got a UN award for that. Nobody had ever done a documentary on the Boy Scouts until we did one. In 30 years, the networks have never done a program on the Boy Scouts. I thought that was a devastating bit of information! That’s the sort of programing I want—shows that are uplifting, that support family values.
Playboy: Five years ago, you told Playboy that you only skimmed the front page of the newspaper, then went straight to the sports and business sections. You said you didn’t want anything to do with all that bad news on the front pages.
Turner: I still don’t read the news.
Playboy: What about TV?
Turner: I never watch television news.
Playboy: Including Cable News Network?
Turner: No, I watch CNN all the time. But at CNN, it’s balanced. CNN spends only about half the time on disasters, the other half on interviews, sports news, business, editorials, tips.…
Playboy: But your reporters cover disasters, too. You said a few years ago, “What do you want, how many children got killed in a school-bus accident in Chile?”
Turner: Well, that’s true. I still don’t think they ought to gleefully rub their palms and say, “Ha, ha, school bus overturned in Chile. And we can show the little crushed bodies of the children.” I still don’t agree with that. We do it, but at least we present what’s never been on television before—responsible news.
Playboy: What do you mean?
Turner: I mean, the way the networks covered the Vietnam war just sickened me. It was anti-American. They never showed the American boys getting medals or helping villagers or anything. I didn’t watch too much of it, but I know the military and our leaders were very unhappy about the way the war was covered.
Playboy: Are you saying that the opinions of government leaders should determine how the media cover news?
Turner: I think it should be balanced.
Playboy: You mean, for every flaming car on the streets of Beirut—
Turner: There could be an interview with Philip Habib on how we could bring peace to Lebanon. That would be balance.
Playboy: The networks do that.
Turner: No, they don’t. They don’t run a fraction of the interviews we do. They have Face the Nation and Meet the Press—one half hour a week. We have 25, 30, 50 hours of that type of programing. We spend one hour, from ten to 11 every night, on The Freeman Report. That’s five hours a week right there. You put out a magazine only once a month.
You know, I was really pissed off about my first Playboy Interview when it came out. You lied to me; you said you were not going to run anything like that.
Playboy: Like what?
Turner: We were going to leave women out of it. You know, I bared my soul. I gave you everything I had and only asked that you didn’t take any cheap shots.
Playboy: What cheap shots? At the time, you had recently created a scandal with your behavior in Newport during the 1977 America’s Cup race. We merely asked you to comment on press reports saying you had a reputation as a womanizer. You replied that you were a family man, then volunteered that you photographed nude women, and we went on to other topics.
Turner: Well, we were going to leave dirty language and women out of it, because everybody does it—99 percent or 88 or whatever. Do you know how many times I’ve been interviewed since then? About 10,000! I’m not really pissed, because I agreed to do the interview again, but hopefully you’ll be a little more intelligent in your editing this time. But if you ever do anything like that again, you’ll never see me again; and it’ll be your loss, because five years from now, you’re going to want to come back again—if I’m not dead. I’ve just reached the point where I’m really going to be able to do some really constructive stuff.
Playboy: It’s not our job to sanitize your remarks, but let’s go on: What do you mean by “really constructive stuff”?
Turner: Well, we’re already underwriting Jacques Cousteau’s program. I spent a week with him on the Amazon and took my sons along. I gave him $4,000,000 for his work this year. We’ll get four hours of programing out of it. Of course, I’m losing my shirt on it. That’s double the budget of network programs. But at least I’m going to keep Cousteau operating. He’s on my team.
Playboy: Nature seems to be one of your passions. Is your plantation part of that?
Turner: It’s a zoo. We’ll be there in a few minutes. I’ve got 5000 acres of land that used to be five plantations. At the outbreak of the Civil War, there were 500 slaves living here and probably about 100 other people. Now there arc more animals than people. We’ve got deer, duck, doves, geese, bison. I even have a cougar named Kenya. He took a swipe at me one day when I went into his cage. I’ve got two bears, too, except that one of them got away. Boo Boo’s gone.
Playboy: Boo Boo?
Turner: Boo Boo’s the bear. She’s out roaming around the woods now. [Boo Boo was later found and returned.] There’s the house—Hope Plantation.
Playboy: It’s a beautiful place. How did you get it?
Turner: Bought it from Yankees.
Playboy: How much did you pay for it?
Turner: None of your damn business.
[The following morning, after breakfast, the interview resumed as the family and some house guests gathered before the television set in the spacious but comfortable living room decorated with duck decoys and a tasseled overhead wooden fan. It was time for the CNN feed from Atlanta that Turner receives on the 15-foot satellite-receiving dish set up in his back yard. The program was about a Milan fashion house that was showing models in very revealing new designs.]
Turner: Look at those models! This is like watching those old Movietone newsreels; they’d always have a report on the latest fashions from Paris.
[During a break on Turner’s station, there was a reference made to Henry VIII.]
Turner: Henry VIII.… He didn’t get divorced, he just had their heads chopped off when he got tired of them. That’s a good way to get rid of a woman—no alimony!
[The fashion show resumed on CNN and a pair of models displayed see-through blouses. A voice in Turner’s living room remarked jocularly, “Blue television!”]
Playboy: Family stuff, eh, Ted?
Turner: Woo, woo! You know, it used to be that a woman wouldn’t even show her legs at the beach. But once you’ve seen a whole bunch of tits, they all look the same—no different from cows’ udders.
[Turner’s wife, Janie, admonished him, “This is going to be in the interview, Ted! Ted, be quiet! Just be quiet!”]
Turner: What’s the big deal? They’re no different from cows’ udders—mammary glands. Men have them, just more rudimentary.… You know, I like those dresses. Low-cut. Short on the top and the bottom. I like to see a lot of the woman, even if she’s a skinny, way-out woman, like those fashion models. I like the Playboy women better.
[Turner then led Range on a long walking tour of Hope Plantation, answering questions while pointing out flocks of doves, snipe and other wild fowl.]
Playboy: What gave you the idea for a 24-hour news network?
Turner: I actually had the idea before I started the superstation on satellite in 1976. I was thinking ahead, and at that time, Home Box Office was already on the Satcom satellite with older programs and sports. We had old movies and sports on WTBS, and I thought, Well, what’s the next channel? We already had plenty of sports and movies, so it seemed like news would be the next most logical thing to provide. But I knew it was going to be very expensive. And I never thought we’d be the one to do it, because we were a very small company and the superstation hadn’t proved itself yet.
Playboy: So why did you do it?
Turner: Well, Time, Inc., which owns Home Box Office, started sneaking around a little and found out that the major networks’ news budgets for only 60 hours a month were considerably more than $100,000,000 a year. Time figured it would cost at least as much to start a news network as it cost the networks. So I went up and talked with Time’s people and said, “If you guys want to do it, I’m not going to. But if you don’t want it.…” They said, “Go ahead. We’re not going to do it. We’re in business to make money.” So even though I couldn’t get the commitments up front that I needed within the cable industry, I went ahead and launched CNN in June 1980.
Playboy: Why did you think there was a market?
Turner: Because news has always been just a stepchild of the networks. The big money is in entertainment. There has never before been a first-class, in-depth news service on television.
Playboy: You don’t consider the major networks first-class?
Turner: They just bring you 22 minutes of gloom-and-doom headlines. Say the Pope gets shot. The networks all lead with the same story; they all run the news at the same time at the same length. The only difference is they’re trying to get the ratings. And they’ll do anything they can for that. The guy who heads up ABC News isn’t even a newsman, he’s a sports man. It’s just showbiz. It’s a personality contest. They build up their anchors with wise-seeming persons who get everyone’s confidence and give people advice—I think it’s just a bunch of bullshit.
Playboy: Would you say that about someone like Walter Cronkite?
Turner: Sure. I’ve said it dozens of times. I have never talked to Cronkite, but he kind of agrees. He always said the half-hour evening newscast was nothing more than the headlines.
Playboy: What’s wrong with that?
Turner: It’s become a ratings battle, and the networks have taken the yellow-journalistic route. You know, cover the spectacular, visual stories, like a hotel fire or a volcanic eruption, a major murder, the airline crash of the day.…
Playboy: That’s yellow journalism? An airline crash or the eruption of Mount St. Helens is yellow journalism?
Turner: In those 22 minutes, they don’t have any time for incisive reporting. They don’t cover business virtually at all. They just say, “The stock market is up.” Business is not a big ratings grabber, but that’s the kind of stuff we do. We cover everything. We’re like a newspaper of the air: We have news and editorials and a style section and in-depth sports coverage. The networks don’t do that.
Playboy: No sports coverage? What do the networks do all Saturday and Sunday afternoons?
Turner: I’m talking about sports news. Normally, they give the scores, but nobody ever had a half-hour news program just about sports until CNN.
Playboy: You’re making cable news sound like Turner’s gift to mankind. Except for the packaging, how is the news product your network delivers different from that of the networks?
Turner: What’s changed about magazine interviews except that you use a tape recorder instead of a pencil and a pad?
Playboy: At least we don’t go around claiming to have invented the wheel.
Turner: Well, I’m not claiming that we’ve invented the wheel—
Playboy: Close. When CNN went on the air, you called it “the greatest achievement in the annals of journalism.”
Turner: I really believe that. In the history of journalism, journalism has tried to accomplish two things: one, to report the news; two, to report it quickly. The newspaper that got out on the street first with the story was ahead. In television, we beat the networks all the time, because they won’t interrupt their regularly scheduled programing when there’s a bulletin—unless it’s a presidential-assassination attempt or something like that. We’re reporting the news as it happens, and that has never happened before in the history of the world on television. Never before. And you can’t get the news faster than when it’s happening. Time magazine runs on a one-week delay and Playboy runs on a six-month delay.
Playboy: Wait a minute—on the really big stuff, the networks will always interrupt programing. On the Reagan-assassination attempt, you were not the first one on the air with the story.
Turner: That’s because our cameras were inside the hotel, carrying his speech to the United Auto Workers—live. ABC’s cameras were outside, waiting to see if anybody would shoot him. So we carried his speech and they got his being shot because all they wanted for their newscast was him waving to the crowd as he walked out.
We cover the substance and all the other networks want is the sensational. While we carry his speech, they’re running soap operas or Charlie’s Angels.
Playboy: The traditional network view would be that you’ve got it all wrong: You’re in there covering a speech that maybe 12 people in the entire country care about while their reporters are sitting outside waiting for the one story that, if it happens, everybody will care about.
Turner: Do you know what you just said? You just said that only 12 people care about what the president says. That’s a sad, sad commentary.
Playboy: What if you have no interest in that speech at that moment? We’re busy in the middle of the day, and so are you.
Turner: If I’d had the time and had the choice between two game shows and a soap opera and the president speaking to the U.A.W., I’d have watched the president speaking to the U.A.W.
Playboy: That’s very high-sounding, considering that when you do get a hot story, you save it for your prime-time evening news show, just as the networks do. James Alan Miklaszewski’s exclusive report on American advisors’ carrying rifles in El Salvador was the biggest news scoop CNN has had so far. But it was held in secrecy for prime time, then was put on the air—pardon, on the cable—with great fanfare.
Turner: When you’re out in the field in a foreign country, you don’t always have access to an earth station [for satellite transmission] to get the story back. In a place like El Salvador, usually ABC and CBS and NBC are there and have their regular time scheduled on the satellite. But we might…that story didn’t have to be broken in the middle of the day.
Playboy: So you’re doing essentially the same thing that’s always been done.
Turner: We’re trying to make it as interesting and as exciting as we can.
Playboy: So is Van Gordon Sauter, the head of CBS News.
Turner: That’s true, but we’ve got a much bigger canvas to paint on than Sauter does. He’s painting on a little page and we’ve got the whole wall to paint on.
Playboy: You’ve said that the networks’ coverage of Vietnam was anti-American. Do you think Miklaszewski’s report was anti-American?
Turner: No.…
Playboy: Well, it amounted to the same thing—reporting news our government might not like. What’s the difference?
Turner: Balance. All you’ve got to do is ask Norman Lear. Ask anybody.
Playboy: Norman Lear, the producer? What does he have to do with it?
Turner: Norman Lear likes CNN. He told me so. He’s a pretty good man as far as judging the quality and fairness of TV.
Playboy: That’s not what we were discussing. Lear never complained that the networks were anti-American in their Vietnam-war coverage.
Turner: Well, anyway, the American people support me. CNN is good for the American people.
Playboy: Around the networks, they claim you bootleg satellite news footage.
Turner: Oh, that’s done all the time by everybody. The networks use our stuff, too. I think we have permission from ABC and NBC, and they have permission to use our stuff.
Playboy: In one case—an exclusive ABC interview with Lebanese president Amin Gemayel—it was said that you used ABC’s footage in promos for your own Prime News.
Turner: That’s possible.
Playboy: In another case, ABC sent you a telegram and said, “Cut this out.”
Turner: All right, that’s possible, too.
Playboy: So you didn’t have permission.
Turner: When you’re on 24 hours a day live, you’re going to.… You know, we have made some mistakes.
[Turner, who was suffering from a cold, became irritated with the questioning at this point and cut off the interview. It was agreed that he and Range would meet again the following week in Atlanta and would fly together to Washington to continue the interview on the airplane.
[When Range met him at the Atlanta airport, Turner was in a foul mood. “I’m not going to be interviewed tonight,” he said. “Be smart—don’t be a dummy. I’m not going to answer a whole bunch of technical questions. In many ways, I don’t know how the company works. I watch it; I like it. But if you’re just going to ask a whole bunch of negative questions, forget it. Go to ABC. I won’t do the interview.”
[During the flight to Washington, Turner’s mood fluctuated radically from friendliness to sudden hostility. He described as a kind of living hell his constant lobbying in Washington to fend off those who would make life harder for a cable programer. He seemed a driven, ravaged man, and yet a man who continually sought more of the same punishment. In the bad moments, he attacked the interviewer and rejected the interview: “I’ve been on the cover of Time. I don’t need your sleazy magazine.” At other moments, he became the voluble, charming and self-infatuated Turner of his public image. At the end of the flight, Turner had again mellowed, and after much friendly conversation that remained off the record, it was agreed that the interview would be resumed several weeks later.
[There were two trips and several abrupt cancellations before the interview was resumed. Turner finally invited Range to accompany him to Las Vegas and talk on the plane. Turner arrived at the Atlanta airport with his close friend and frequent traveling companion Liz Wickersham, the pretty hostess of the WTBS show The Lighter Side. The airline upgraded all three of their tickets to first-class, a courtesy Turner is often given. The interview picked up as the flight left Atlanta.]
Playboy: You caused a flurry in the television world last winter when you went to New York with the idea of merging your company, Turner Broadcasting System, with one of the major networks. We thought you kept that kind of talk secret.
Turner: That’s one of the problems. I haven’t started wearing disguises yet. I ought to wear a kind of Humphrey Bogart disguise—a trench coat with the collar turned up. Like Peter Sellers in The Pink Panther. I’d wear a hat pulled down and dark glasses. I’d grow a beard and shave off my mustache. I’d wear a stocking cap over my head and a sweater. And sneakers. And gloves.
Playboy: Did you have serious talks?
Turner: In the case of two of the networks, we were turned down. They just said they figured out that I would be the largest shareholder in the company, and that was all they needed to know.
Playboy: Turner Broadcasting System is worth only $200,000,000 to $300,000,000. How could you become the largest shareholder in a merger with a company ten times that size?
Turner: Because I own 87 percent of my company. Bill Paley [recently retired chairman of CBS] owns only about six percent of CBS’ stock, I think.
Playboy: But you still wouldn’t have the almost total control you now enjoy with your own company. Why do you want to merge with a network?

Turner: Because starting a really viable fourth network is a lot harder. The networks have those owned-and-operated stations in the biggest markets: New York, Chicago and Los Angeles. They reach one fourth of the American market right there. That’s why we’re also talking with Metromedia—it owns stations in the major markets. You’ve got to have money to stay in business.
Playboy: But isn’t taking over one of the major national networks a big leap for your company?
Turner: No. First of all, I’m already in the cable-network business. I have three cable networks, one radio network and two television stations. In number of hours, I think we’re already the largest syndicator of television programing in the United States. The figure is kicked up there by the overnight coverage in many places. But we can still reach only 31 percent of the homes in the country. We’re in the land of the giants. I’m just like a little mouse running around under a bunch of elephants, trying to be sure they don’t step on me.
Playboy: Would it be healthy to have the largest cable network in combination with one of the largest broadcast networks?
Turner: That’s what you’ve got now. ABC is in combination with Westinghouse to compete with us with the Satellite News Channel. Their combination with Entertainment & Sports Programing Network is against us in sports. ESPN started as an independent company. But then it began losing a lot of money, even though it was owned by Getty Oil, which is a multibillion-dollar company. So ABC took a 49 percent option and committed millions and millions to it.
Playboy: What’s wrong with that?
Turner: That’s how the networks really hurt us. When the United States Football League got started, it needed a major network contract. ABC said, “OK, we’ll carry your games.” We called the U.S.F.L. and said we’d like to bid, too. But it turned out that ABC had made it a condition of their carrying the games that if the U.S.F.L. were going to do any cable games, they had to be on ESPN, not on Turner’s network. By using its cable network, ABC made a deal with ESPN for cable rights. We were frozen out. We weren’t even allowed a meaningful bid. I’d like to have the ability to do that same sort of thing.
Playboy: Getting back for a moment to CBS and Paley, in an interview with Broadcasting magazine last year, you called Paley “a failure.” You said CBS was “a cheap whorehouse” that had been “taken over by the sleaze artists.” If you believe that, why would you want to merge with such a network?
Turner: If I was part of CBS, with billions of dollars behind me, then I would have size. I would be able to meet the others in the field with equal resources. I could fight a pitched battle with them. Right now, I can’t. It would be like getting supplies and getting reinforcements. I would like to come down out of the hills and meet them on the battlefields.
Playboy: But why did you call Paley, who built that billion-dollar empire, a failure?
Turner: I have to admit…it was easy to say that, never having met him, because he really is up in years now.
Playboy: Do you honestly feel that CBS is a cheap whorehouse?
Turner: I’m a human being, just like everybody else. I’m up some days and down others. Some days, I just refuse comment. If I’m feeling a little down, I won’t say anything. But if I’m really up, I’ll let it all hang out. I do have a slight propensity to put my foot in my mouth.
But those are extremely strong, strong words. You know, several years ago, I said that the network presidents were guilty of treason and all should be lined up and shot after a court-martial.
Playboy: Fairly strong stuff.
Turner: Is that strong, huh? I said it before 7000 members of the Veterans of Foreign Wars and they gave me a standing ovation. I said the worst enemies that the United States ever faced were not the Nazis and the Japanese in World War Two but were living among us today and running the three networks.
Playboy: Do you really believe that?
Turner: Well, when Paley was read those comments and was asked what he thought about Turner, he was very gracious and said I had done a good job. But he did not deny the charges. Why not?
Playboy: Do charges like that need denying? And what did you mean when you called CBS a cheap whorehouse?
Turner: I meant its sleazy programs, putting too much sensationalism in the news to win the ratings race. If you take a stop watch and time the negative stones in the evening newscasts, you will find that on the average night, about 70 to 80 percent of it is volcanoes, people being flooded out of their homes, Marines shooting people in Lebanon, congressional wrongdoing, lawsuits, murders, hijacking, plane crashes and that sort of thing. Barry Goldwater timed it and he said he got 85 percent; I get about 70 percent. It’s like the front page of the newspaper. But unlike the newspaper that has second, third and fourth sections—the way we do on Cable News—that’s all there is to the evening news. There’s no time for anything else. And in prime time, there are no choices on the networks. Only stupidity, sex and violence.
Television in this country has run amuck. It’s one thing to have concentration in the entertainment business, but news has got a special status, particularly since in the United States, unlike most countries in the world, television is not controlled by the government. The government can at least ensure that there’s some responsibility, that television can’t run amuck to the detriment of the society. And that’s what we have here.
Playboy: That sounds a bit like the editorial you taped personally last year for CNN denouncing the film Taxi Driver. That was in reaction to the verdict in the case of John Hinckley, the young man who shot President Reagan. Are you suggesting legislation regulating the content of movies and the content of television programs?
Turner: I didn’t say that. I didn’t say that.
Playboy: You said, “The people who produced this movie should be just as much on trial as John Hinckley himself.” And you advised viewers to write to their congressmen.
Turner: All that does is put pressure on people. I don’t think legislation should be necessary. I think self-regulation is the best kind of regulation.
Playboy: What about the free market place as a regulator?
Turner: I think that those who are producing programs should exercise reasonable responsibility.
Playboy: Isn’t one man’s reasonable responsibility another man’s censorship?
Turner: Taxi Driver went beyond the bounds of reasonable responsibility, in my opinion. And in the opinion of the people who made it. Nobody was proud of it.
Playboy: In his CNN commentary the next day, your own chief correspondent, Daniel Schorr, agreed with you about violence but disagreed about pressuring Congress. He said your approach might violate freedom of the press as defined by the First Amendment. How did you feel about that?
Turner: I thought it was great. That just proves what a loose, terrific company we have when somebody can take issue with the boss on the air. I think it’s great.
Playboy: Your editorial was shown ten or 11 times. Schorr’s rebuttal was taken off the air before it could run the customary second or third time for reasons that have never been satisfactorily explained. Did you have something to do with that?
Turner: I didn’t know anything about it. I didn’t even know he had done it. I just felt the inclination to tape my opinion one weekend in South Carolina. When I got back to Atlanta on Monday, Dan’s had run and had been lifted. The producer or whoever was running the station didn’t think it ought to run again. Somebody else made that decision. We have nearly 2000 employees now, and they are all running around doing their own thing. Hugh Hefner doesn’t know what you’re doing tonight, does he?
Playboy: No, but the editors do.
Turner: Well, it’s Hefner’s baby. Anyway, the whole thing at CNN is to allow people to take issue with one another.
Playboy: But you feel strongly about sex and violence on television, don’t you?
Turner: So does Dan Schorr. But you don’t have to agree with me about everything to work for me.
Playboy: What do you feel should finally be done about the things you don’t like in movies and on television?
Turner: Call attention to it and maybe it won’t be done again. I am unaware of any movie like Taxi Driver that’s been filmed since I broadcast my editorial.
Playboy: So you think you’ve become a moral force for movies, too? And if calling attention to it doesn’t work, do you believe a way should be found to make that kind of movie illegal?
Turner: Only as a last resort.
Playboy: Getting back to your comment about the networks’ running Charlie’s Angels during prime time while you run the news: You seem to have a real dislike for that kind of show, don’t you?
Turner: Yeah. That and The Dukes of Hazzard and Dallas. The networks are poisoning our nation with shows like that. And they are poisoning the whole world against us. Those sleazy programs are distributed all over the world. The three networks are failures. We’re approaching the 21st Century with the most powerful communications force the world has ever seen. And it’s being totally misused by three organizations that couldn’t care less about what happens to the nation. It’s insane.
Playboy: What would you do about it?
Turner: I’d like to get my hands on a network. I’d like to be the big guy for a while.
Playboy: And what would you do with it—fire the chairman and everybody in programing?
Turner: No. I wouldn’t even have to run the place. I’d run my division and someone else could be in charge. But I would try to make the entertainment programing more uplifting.
Playboy: What does that mean?
Turner: I’d try to slowly change the characters on those shows toward the kind of people that you’d like your children to grow up and be like. Listen, I know a station manager in Atlanta who told me privately that his own children were forbidden to watch his station. And in my merger discussions with the networks, one of the top officials said to me, “Ted, you criticize us for being immoral people, but if you knew us, you’d know that many of us are very moral in our private lives. We may have some programs on that aren’t good, but we’re very nice family people.”
Playboy: What was your reaction to that?
Turner: I said, “Well, you know, that won’t wash as far as I’m concerned. That’s exactly what the Gestapo and the people who ran the death camps said. When they went home after gassing people, they were very nice to their children and their dogs and their neighbors. But you’re in a position of responsibility. That doesn’t wash your hands.”
The networks need a truly competitive force that is being run by someone who cares more about the country than about the profits. I subscribe to the Rotary motto: “He profits most who serves the best.”
Playboy: How does that apply?
Turner: In my company, I’ve accepted short-term losses for long-term gains. The networks have been sacrificing long-term gains for short-term profits. If our country goes down the drain, the networks go with it. And if the network executives are blamed, they will be burned at the stake for being responsible. Like in the French Revolution.
Playboy: That brings us again to the question of whether or not you practice what you preach. Are you claiming you don’t care about making money?
Turner: I’m not motivated to make money.
Playboy: In a speech at Georgetown University last year, you said, “It almost makes me ill that [some] people are making $500,000 a year.” Aren’t you making that much?
Turner: You’re taking that out of context! I said that money shouldn’t be your primary motivation in life. I’m talking about materialism.
Playboy: But you’re not exactly hurting, right? A plantation, two islands—
Turner: I need to make the money so I can do the programing. It’s a means to an end, not an end in itself. Every nickel I can get my hands on, every time we get reinforcements, they’re being thrown right into the front line of the battle. All my property is being used for ecological purposes, too.
Playboy: But you’re not giving your salary away, are you?
Turner: I give away a tremendous amount. I contribute to a number of charities. I make tremendous amounts of political donations. I fly tourist on airplanes. I cut my own hair. I live without air conditioning in my homes. I drive a small car—
Playboy: Wait a minute. That’s your old PR. You drive one of the biggest, most expensive cars made in Japan. The company advertises on your network and it gave you the car—
Turner: That’s right. But I used to drive a small one. They are a big advertiser, so they wanted to give me a bigger one.
Playboy: And you haven’t flown tourist class since we’ve been with you—
Turner: I pay coach.
Playboy: But somehow you’re upgraded to first class?
Turner: If you get something for nothing, it’s pretty hard to turn it down.
Playboy: In that Georgetown speech, you mentioned that when you appeared on the cover of Success magazine, you held it up heavenward and said, “Well, Dad—”
Turner: “Is this enough?” What I was saying to those kids was that I now feel that I’m enough of a success that it no longer has to be the prime motivation in my life to prove myself to my father.
Playboy: Your father committed suicide when you were 24 years old. How did that influence the course of your life?
Turner: My father grew up in a different world—the depths of the Depression. He had watched his father go from being a farmer who owned his own land to losing it all and living the rest of his life as a sharecropper. So my father had a desperate, burning desire to be a success. In that time, America was more of a rugged, individualistic country. And my father was primarily interested in himself and in how much money he was going to make. But in retrospect, I think that was one of the things that led eventually to his committing suicide. Because when he made the $1,000,000 that he said he was going to make, he told me that it was hollow. It did not give him the satisfaction that he had thought it would. And that’s true of anybody who makes making money his primary objective in life. It should not be your main goal if you want to be happy and successful. How can you be successful if you’re not happy?
Playboy: You seem to be happiest when you’re fighting battles. Do you glory in being the underdog?
Turner: I am the underdog, so I may as well enjoy it.
Playboy: Yet, instead of enjoying it, you constantly complain about network discrimination against you.
Turner: We are discriminated against! They beat on us all the time. The networks are a cartel. They collude. Unofficially. You know how? They just agree. Why doesn’t ABC try to get the Super Bowl every year? Why are they content to let NBC get it one year and CBS the next and just move it around? The reason is that nobody wants to make the commitment to bid the price up enough to get the whole thing, because they’d all rather share it and keep the three-way old-boy system working. That’s why they all started their morning news at seven o’clock until we forced them into the early-morning segment. They didn’t want to escalate the battle, because in the past, they had limited competition. There were these unspoken rules, which they all agreed to play by. And in the market, they all raise their rates the same amount every year.…
Playboy: If they were colluding, wouldn’t the Federal Communications Commission have something to say about that? They’re the ones pushing deregulation.
Turner: Yeah, Mark Fowler, the FCC commissioner, wants to dereg me right out of business. He was a very strong attorney for the over-the-air broadcasters before he was hired by the FCC. He was in the pocket of the broadcasters.
Playboy: By broadcasters, you mean the over-the-air industry as opposed to the cable-television industry. Are the broadcasters your main adversaries?
Turner: Listen to this: The new president of the National Association of Broadcasters, Eddy Fritz, told my chief lobbyist in Washington, in so many words, “I’ve been instructed to oppose anything that will help you here in Washington.” And then he also said—this is one that he’s going to deny, I’m sure—“If there is some way Turner could promise to stop criticizing the networks and the affiliated stations that are running network programing, we could drop our opposition to him in Washington on some other issues.”
Playboy: What did you reply?
Turner: “Hell, no!”
Playboy: You told him that?
Turner: No. I just didn’t send a signal back or ask for a meeting. I’d rather have my heart buried at Wounded Knee.
Playboy: As usual, you make it sound like war.
Turner: It is like fighting during wartime. There are people being killed all around you. Actually, Fritz is a super guy. In fact, Jack Valenti, the head of the Motion Picture Association of America, which fought us on a number of things, is a super guy. But they’re both just hired guns, highly paid lobbyists representing a vast, multibillion-dollar industry. Valenti has a posh reception hall and a huge screening room where he’s always taking congressmen for cocktails and the latest movies. But me, I own most of my own company. I’m up there lobbying for survival, whereas they’re lobbying for their salaries.
Playboy: There’s a lot of talk that you’d really like to be in the movie business and become another Darryl F. Zanuck. True?
Turner: I don’t even know what a movie studio is supposed to be like. I’ve never really gotten a tour of a studio.
Playboy: Then what were you doing last fall walking around the MGM lot in Los Angeles? You were so upset when we alluded to that, you went off the record.
Turner: How did you know about that?
Playboy: Reporters have ears and telephones. It just hasn’t been reported before.
Turner: Well, I have to admit, there was some whispering in the hallways. I heard the custodian who was sweeping the place whisper to the receptionist, “Turner’s out here to buy MGM.”
Playboy: Were you?
Turner: I wasn’t there to buy MGM. I’m just a very colorful customer who buys a lot of product from the motion-picture industry. I had discussions with MGM about areas of mutual interest.
Playboy: All right, then, is your next dream to get into the movie business?
Turner: I just don’t think the movie business and I should be fighting any longer. I think the major battles are over. I have criticized the studio executives for some horrible movies that they’ve made. And some of them have privately admitted that they’re ashamed of movies like The Warriors, too. But I’ve also congratulated them for productions like The Winds of War, Gandhi and E.T.
Playboy: What about producing your own?
Turner: We’re already producing a mystery film for our network. The working title is The Q Factor. But I would love to have been responsible for the movie Gandhi and the movie E.T. I thought Gandhi was terrific. I cried during that movie. It’s in the top ten movies of all time in my book. It’s up there with Gone with the Wind. You know what is so great about Gandhi? It’s socially constructive. Gandhi shows that you can win through nonviolent operation. It shows you can accomplish what you want if you’re patient and friendly with the people you beat when you’re through. And that’s exactly what I’m trying to do with the networks. I’m trying to intimidate them and make them want to leave—like Gandhi made the British want to leave India. But stay friends when it’s all over.
Playboy: Who’s the Lord Mountbatten in this scenario? Someone like Paley?
Turner: Who’s Mountbatten? I mean, I know who he was.…
Playboy: We mean in the sense that, as viceroy of India, he was the one who finally saw the wisdom of Gandhi’s ways.
Turner: He was in India at the time?
Playboy: Yes. It was he who negotiated the British withdrawal. Who would play that role in your television wars?
Turner: I seriously doubt that it would be Paley. It may not happen in his lifetime. But, you know, in the last merger negotiations, I didn’t meet Paley. I’d like to.
Playboy: You mentioned The Winds of War. Would you like to have had that on your network?
Turner: Sure, but it cost $40,000,000, dummy. We cannot afford such high-budget things. That’s why I’m trying to get a network!
Playboy: Do you think the miniseries is the wave of the TV future in entertainment?
Turner: I think it’s going to hasten the demise of the networks. They’re committing suicide in a way with programs such as The Winds of War.
Playboy: How?
Turner: By disrupting the viewing habits toward their staple, which is the weekly series, the continuing series, such as I Love Lucy or Dallas, that people watch every week religiously. Just like people watch soaps every day or used to watch Cronkite. Once they break the weekly-series habit, then they’re free. And if the networks aren’t running a Winds of War, it’s over. If I have a baseball game on or a good older movie, the viewers come to me.
Playboy: That reminds us: You’re in a unique position as an owner in both professional baseball and television. As the owner of the Atlanta Braves, you also own their broadcast rights, and you own the satellite network that distributes those games to people all over the country who live nowhere near Atlanta. For starters, how did you come up with the notion of calling the Braves America’s Team?
Turner: The name was being fed back to us from people who lived in places like Idaho and Alaska, who didn’t have hometown teams. But I never would have adopted it if the team hadn’t started doing well. It’s pretty hard to call an also-ran America’s Team. I wouldn’t want to drag America’s good name through the mud.
Playboy: What has been the secret of your team’s surprising success?
Turner: Good management. When I bought the Braves in 1976, they were one of the worst organizations in baseball, one of the lowest-budget operations. The people who owned it were nice guys, but none of them was dedicated to winning and they didn’t spend anything like what the competition did, starting right at the bottom, with scouting. That was the first thing the guys running the team told me when I took over. So we tripled the number of scouts. Then they said the next thing we needed was good instructors in the minor leagues, so we got them. Then they said we needed more budget to sign the top draft picks, so we did that.
Playboy: Did it work?
Turner: Well, we finished in the cellar for the next four years, setting an all-time record for most consecutive last-place finishers in interdivisional play. Then we bounced up to fourth place and, last year, to first. Basically, we built a whole new ball club from our own organization. There are only three players on our roster today who were there seven years ago.
Playboy: Not bad for a guy who knew nothing about baseball.
Turner: I can do virtually anything that requires good management, intelligence, planning and hard work. I run the team the same way I ran my sailboat. If I had the time, I could definitely manage a baseball team.
Playboy: That sounds like your one-day foray into a uniform five years ago, which baseball commissioner Bowie Kuhn quickly stopped. How can you say that a guy who had never played the game seriously could be an expert?
Turner: First of all, I’ve watched more than 1000 games. I’ve seen our guys pitch dozens of times. And anybody who’s a real fan of a particular team can tell when a pitcher has suddenly lost it. Every serious baseball fan is an armchair manager.
Playboy: Do you try to run the team as George Steinbrenner runs the Yankees, sending messages to your manager?
Turner: Never during the game. I will ask him afterward why he didn’t take someone out. We run the club by committee, and I’m the chairman. I’m the skipper. When we’re making the final cuts of spring training, we have all the coaches; the general manager; the director of scouting; the executive vice-president; Henry Aaron, who’s minor-league director—maybe 25 or 30 people. And we evaluate everybody on the roster.
Playboy: Is the role of a good owner to support his team with bucks?
Turner: You’ve got to do that. The owner signs the pay checks.
Playboy: You’ve established a pretty liberal checkbook. After your bad experience a few years ago with some costly free agents who did not work out, you told us you weren’t going after any more hot players for “superbig loot.” Yet this year, your salary structure topped $9,000,000, putting yours among the top half-dozen payrolls in professional baseball.
Turner: Yeah, well, I told my guys that if they played championship ball, I’d pay them championship salaries.
Playboy: So you came in with the attitude of spending to build a better team.
Turner: You can’t make chicken salad out of chicken manure. But it’s not just the bucks that make the difference. We created an exciting operation where guys want to sign with us. In most cases, our people make less than they could make somewhere else.
Playboy: Could you ever pay for it all with just the gate? Could the Braves ever make a profit without their own TV outlet?
Turner: Absolutely not. We drew 1,800,000 fans last year, and that was just enough to break even. With our increased payroll this year, we would need to draw 2,800,000, and that we won’t do.
Playboy: So you need to compete hard—and very loudly—against the networks to televise professional sports.
Turner: I’m always talking about killing the opposition. But that’s like Ali talking before a fight—a lot of it is designed to build up the gate.
Playboy: How do the readers of this interview avoid the suspicion that all your rhetoric about the networks is just beating the drum for a competitive product? You’re condemning them as evil, not simply as competitors.
Turner: That’s right.
Playboy: Do you think it’s fair not only to claim you have a better product but, figuratively, to accuse the other salesmen of beating their wives? Because that’s what you often sound like when you get wound up about other people’s morality.
Turner: Well, I truly believe it. You’re asking the questions and I’m answering them. But don’t ask me. Ask [fundamentalist preacher] Jerry Falwell. Ask [conservative Senator] Jesse Helms. Ask General Westmoreland.
Playboy: What do Falwell and Helms have to do with it?
Turner: They think the networks are destructive and detrimental to our society, too. I’m not the only one. I’ve never met a college president who thought television was doing a good job for our nation. The trouble is that nobody dares blow the whistle on the networks because of their power. Somebody has to have the courage to stand up and say so.
Playboy: We don’t understand: You were studying your own ratings when we got on the plane. Don’t you need ratings to survive?
Turner: Yeah, but not the way the networks do. I know a lot of things I could do to get my ratings up.
Playboy: For example?
Turner: CNN could go the National Enquirer route instead of the New York Times or the Washington Post route. We could sneak cameramen in to take nude pictures of movie stars taking nude sun baths; we could dig up more dirt and scandal; we could run movies the networks won’t run, ones that are bloody and gory, such as Friday the 13th; we could do programs with frontal nudity; we could do soap operas—
Playboy: You did launch a soap opera on your own network—The Catlins. Isn’t that the same thing the networks do? Aren’t extramarital affairs and unwanted pregnancies stock in trade of soap operas?
Turner: I have to make some commercial sacrifices to get where I’m going. Christopher Columbus, when he set out for America, wasn’t sure he wouldn’t fall off the edge of the earth, either. Besides, Procter & Gamble, who are putting up the money for it, assured me there would be nothing in there I would be ashamed of.
Playboy: You mentioned that you could run nudity—but wouldn’t that cause the loss of the subscribers who you feel want uplifting programs?
Turner: We might lose some. But the way the networks have done it is to stay one step ahead of the people with sleazy stuff; then the people catch up. They’ve been dragging the quality of the programing down a little bit each year by staying six months ahead of the public, getting sleazier and sleazier. Fred Silverman [the former president of NBC] was the master of it. He took us one step beyond where we’d been as far as dragging us down.
Playboy: In what kind of shows?
Turner: More tits and ass. A little more tits and ass than the other guys have had.
Playboy: What about the advertising? Brooke Shields’s Calvin Klein jeans ads created a furor.
Turner: The networks are increasingly touchy about that because of all the pressure that’s been brought to bear on them.
Playboy: By Donald Wildmon? [Wildmon is the conservative minister who formed the hard-line Coalition for Better Television.]
Turner: By Donald Wildmon and Ted Turner. When I started criticizing the networks publicly about four years ago, I gave them the strongest and most effective indictments that had ever been made. In the past, they had always been able to write off their critics. Almost no senators or congressmen or presidents had ever criticized them really strongly. Nixon did it a little, because they tried to smear him. People in government are afraid, because they get re-elected based on the way they’re covered in the media. The corporations of America couldn’t criticize the networks, because if they did, Sixty Minutes would come after them. I mean, journalism takes cheap shots at everyone. And also, the networks can raise their advertising rates, because they charge one company more than another. So nobody in business can criticize them. They’ve intimidated any meaningful critics. In most cases, the newspapers own the television stations. So any young television writer who criticizes the networks too much, particularly about First Amendment considerations, is putting his own future in jeopardy.
There’s generally a tendency in the media not to criticize one another. It’s kind of an unspoken law, because nobody’s got lily-white skirts. You don’t blow the whistle on me, I won’t blow it on you. Besides, there are interlocking directorates among all those big companies. So the only criticism came from a few ministers and a few educators. And the networks were always able to dismiss them by saying they were a bunch of liberal kooks.
Playboy: Or right-wing kooks.
Turner: Depending on which group it was. Ralph Nader criticized them as much as anyone else. But because I was in the television business and was criticizing from the inside, they couldn’t very well call me an idealistic kook. I could use specific examples that I had learned inside the business, quoting them off the record. Nobody at the networks would have a conversation with Wildmon. They’d give him the widest berth possible, because he’d get information from them. No television person ever met with Wildmon the way they have with me and told him off the record that they were ashamed of the programing that they were putting on. But they told me. So when I blew the whistle on them, it was so effective that, as I told you, the president of the National Association of Broadcasters has offered to drop their opposition to us in Washington—trying to put us out of business legally—in return for my promise to quit being a media watchdog.
[During a brief break in the interview, Turner was engaged by an Atlanta passenger in a chat about the Braves’ prospects for 1983. At that point, Liz Wickersham, Turner’s companion, leaned over to our interviewer and only half-jokingly suggested that it would be fitting if she posed for the cover of the issue in which Turner’s interview appeared. Wickersham was Playboy’s cover model for the April 1981 issue.]
Playboy: We were talking about Wildmon and his attempt to impose his moral standards on TV. With network advertisers, his tactic is to threaten a boycott.
Turner: They’ve tried everything else.
Playboy: Then let’s talk about how consistent your standards are. Last Christmas, we watched WTBS and CNN a lot in Atlanta and saw what we considered quite provocative ads—for panty hose and lingerie—on your channels. The J.C. Penney lingerie ad was a kind of striptease, an absolute burlesque.
Turner: I don’t agree with you. I’ve never objected to the commercials, except maybe commercials for R-rated movies. I don’t think there’s anything wrong with a little bit of sex appeal.
Playboy: Then what do you mean when you attack sex on television?
Turner: I’m talking about gratuitous sex and homosexuality and philandering around. As long as it’s your wife or your girlfriend, I don’t think there is anything wrong with that.
Playboy: But you have specifically attacked the networks, saying they don’t have enough programs that show healthy family situations. The women are always out having affairs, you claim. What about The Catlins? The heart of soap opera is infidelity, isn’t it?
Turner: I don’t know. That’s what people tell me.
Playboy: Well, why are you showing it, then? Because it pays a good dollar?
Turner: Because I really need the money. You’re just coming back and trying to get an answer from me. I said that I do some things.… I never said I was perfect. I don’t just have my own personal standards that run my network. There are a number of things we are doing.… I don’t feel like I’m really compromising my principles.
Playboy: But you said you’re doing the soap opera for the money.
Turner: That is a consideration. That is a consideration.
Playboy: We raise the issue only because you are so vociferous in your criticism of others who do the same thing.
Turner: That’s right.
Playboy: The networks answer that they have the soaps because there are 45,000,000 women who want to watch them in the afternoon.
Turner: That’s true.
Playboy: Well, 25,000,000 people may want to watch something as spicy at night.
Turner: But there’s something else. I have to make more sacrifices than the networks do. If I were rich enough, we’d be even cleaner than we are today. But I’ve got to get where I’m going in order to do that. I’m not proud of everything we’re doing from a commercial standpoint. But our standards are a hell of a lot higher than theirs are!
Playboy: But can you raise your standards higher than what people want?
Turner: Oh, absolutely, you can. And if you do, you go out of business.
Playboy: Isn’t that what you’re trying to do? Trying to force people to come up to your standards?
Turner: I’m not trying to force them!
Playboy: Then you’re going to raise standards and hope that audiences follow?
Turner: [Pauses] You are about to lose the rest of your interview!
Playboy: I’m just asking—
Turner: Well, I’m tired of it!
Playboy: I’m sorry if you feel—
Turner: I am one second away from never asking [sic] you another question! I’m sick as hell of you!
Playboy: Now, Ted—
[A suddenly violent Turner snatched the tape recorder out of Range’s hand and smashed it to the cabin floor. “I heard a thump and thought, Oh, my God, what’s happened now?” remembered Eastern Airlines’ senior flight attendant Chris Mink later. In a belligerent rage, Turner then threw Range’s camera bag full of tapes into the aisle. He kicked it full force against the cockpit door, slightly bruising Mink as it hit her thigh.
[“We heard a bang against the door and didn’t know what was going on,” said Captain Albert Dean afterward.
[Swearing and shouting, Turner began to stomp on the bag. Tiny fragments of the plastic tape boxes were scattered about the cabin carpeting, like pieces of a shattered window. He then threw the bag at Range’s head while Range was retrieving the pieces of the smashed tape recorder. Another flight attendant began picking up broken cassettes and tape boxes.
[The passengers in the first-class cabin were stunned. The crew, equally shocked, attempted to soothe Turner. Flight attendant Mink later said she thought she saw Turner pick up something from the debris knocked out of Range’s tape bag and stuff it into his pocket. Turner then sat down next to Liz Wickersham. Some minutes later, he went past the forward galley into the lavatory.
[During Turner’s brief absence, Liz Wickersham confided to Range, “He’s under a lot of pressure. He did the same thing to me once, getting on a boat in Greece. He got mad and kicked me in the shins.”
[Turner returned from the lavatory and said to no one in particular, “It’s the same thing I did on the Tom Cottle Show. (During a taping of an interview show, Turner, displeased by host Cottle’s questioning, abruptly walked off the set. As he did so, he ripped up the release form he had signed, effectively preventing Cottle from airing the interview that had been completed up to that point.) Turner then turned to Range and said, “I’ll replace your tape recorder.” Range declined Turner’s offer.
[The flight reached Las Vegas an hour later. After the plane emptied, Range began a search for two missing tapes. Stewardess Mink then mentioned what she had seen Turner stuff into his pocket and also recalled seeing him put something into the galley trash bins.
[Range began a systematic search through the muck of the galley garbage. Several broken cassette boxes surfaced but no tapes. Finally, he turned to the first-class lavatory and searched in vain through the trash. During a final sweep of the galley garbage, his fingers closed around a tape box with its cassette still inside. The box was undamaged—but it had been under water for more than an hour.
On the return flight to Washington, Range dried the tape inch by inch. The following day, with the help of a stereo expert, he was able to unjam the cassette and play it successfully. The tape contained half of the three-hour airborne interview. The other missing tape, containing an opening conversation at the Atlanta airport, was never found. Turner denied taking any of the tapes from the airplane. The preceding interview was transcribed from the earlier tapes and from the tape that survived Turner’s assault.

Steve Jobs, February 1985#

If anyone can be said to represent the spirit of an entrepreneurial generation, the man to beat for now is the charismatic cofounder and chairman of Apple Computer, Inc., Steven Jobs. He transformed a small business begun in a garage in Los Altos, California, into a revolutionary billion-dollar company—one that joined the ranks of the Fortune 500 in just five years, faster than any other company in history. And what’s most galling about it is that the guy is only 29 years old.
Jobs’s company introduced personal computers into the American home and workplace. Before the founding of Apple in 1976, the image most people had of computers was of machines in science-fiction movies that beeped and flashed or of huge, silent mainframes that brooded ominously behind the closed doors of giant corporations and Government agencies. But with the development of the transistor and then the microprocessor chip, it became possible to miniaturize the technology of the computer and make it accessible to personal users. By the mid-Seventies, a starter computer kit, of interest mainly to hobbyists, was available for about $375, plus assorted parts.
In a valley south of San Francisco already known for a concentration of electronics firms and youthful start-up companies, two friends who shared a penchant for mischief and electronics set out to create a small computer of their own. Jobs, then 21, the adopted son of a machinist, had taken a job designing video games at Atari after dropping out of Reed College, while Stephen Wozniak, 26, worked as an engineer at Hewlett-Packard, one of the largest firms in the area known as Silicon Valley. In their spare time, the friends designed and built a makeshift computer—a circuit board, really—which they whimsically called the Apple I. It didn’t do much, but when they found that they had stacked up orders for 50 of the contraptions, it dawned on Jobs that there might be an actual grownup market for personal computers.
Wozniak’s interest was primarily technical; Jobs set about making the computer accessible to people. Together, they added a keyboard and memory (the capability of storing information) to the Apple I, and Wozniak developed the disk drive (a device to read and store information permanently) and added a video terminal. Jobs hired experts to design an efficient power supply and a fancy casing and, thus, the Apple II was born—along with an entire industry.
Apple’s rise was meteoric. From sales of $200,000 that first year in Jobs’s garage (the Silicon Valley version of Lincoln’s log cabin), the company grew into a giant firm with 1.4 billion dollars in revenues in 1984. Its founders became multimillionaires and folk heroes. Wozniak, who effectively retired from Apple in 1979 to go back to college and to sponsor music festivals, had relatively little to do after his creative contribution to the technology. It was Jobs who stayed on to run the company, to see 70 percent of home and school computers bear the Apple mark, to fend off efforts within Apple to unseat him and, most of all, to do battle with IBM when Big Blue, as the 40-billion-dollar colossus is unaffectionately known, decided to move in on the personal-computer business.
With an estimated net worth of $450,000,000, mostly in Apple stock, Jobs was by far the youngest person on Forbes’s list of richest Americans for several years running. (It is also worth noting that of the 100 Americans named by Forbes, Jobs is one of only seven who made their fortunes on their own.) Recently, with the drop in the value of Apple stock during troubled times in 1983, he lost nearly a quarter of a billion dollars on paper, so his net worth is today estimated at about $200,000,000.
But to hear Jobs tell it, the money isn’t even half the story, especially since he does not spend it very lavishly—and, indeed, claims to have very little time for social life. He is on a mission, preaching the Gospel of salvation through the personal computer—preferably one manufactured by Apple. He is an engaging pitchman and never loses an opportunity to sell his products, eloquently describing a time when computers will be as common as kitchen appliances and as revolutionary in their impact as the telephone or the internal-combustion engine. Hype aside, it is a fact that there are now more than 2,000,000 Apple computers—and an estimated 16,000 software programs—in classrooms, suburban living rooms, farmhouses, missile-tracking stations and small and large business offices throughout America.
In creating the vast market for computers, Apple also created an environment for competition, and companies by the score have entered the fray to capture the market Apple dominated from 1977 to 1982. But no other product has been as successful as the IBM PC, which quickly took 28 percent of the market, establishing a new standard. With its market share dropping, Apple introduced two new computers, the Lisa and the Apple III, to an unenthusiastic reception. By mid-1983, analysts were wondering aloud if Apple would survive.
Amid corporate infighting, Jobs took over the division of Apple that was building an entirely new computer, which he saw as Apple’s last, best hope. It wasn’t just parochial, he said; if they failed, “IBM would be left to dominate—and destroy—the industry.” After three years, the Macintosh was released with a $20,000,000 advertising campaign. Billed as a computer “for the rest of us,” it was hailed as a giant step toward making computers easy to use. With a paper-white screen, small pictures to represent program choices and a “mouse” (a small rolling box with a button on it) to make selections on the screen, the Mac was certainly the least threatening computer ever built. It was also criticized as being too much of a toy, unsuitable for serious business use. Although the arguments rage on, Apple has been busily manufacturing 40,000 Macintoshes a month and has plans to double that figure this year.
Depending on whom one talks to, Jobs is a visionary who changed the world for the better or an opportunist whose marketing skills made for an incredible commercial success. In jeans and worn sneakers, running a company that prides itself on having a mixture of Sixties idealism and Eighties business savvy, Jobs is both admired and feared. “He’s the reason I’ll work 20 hours a day,” says one engineer. Or, as Michael Moritz reports in “The Little Kingdom,” Jobs’s capriciousness—praise one day, scorn the next—nearly drove members of the Macintosh team to distraction. He also asked a wavering president of Pepsi-Cola, John Sculley, to take administrative charge of Apple, saying, “Are you going to keep selling sugar water to children when you could be changing the world?” Sculley accepted the offer.
To explore life and technology with the young (Jobs will turn 30 next month) father of the computer revolution, Playboy sent freelance journalist David Sheff to the heart of Silicon Valley. His report:
“This ‘Interview’ was one of the few in my life when I was always the one who was overdressed. I’d heard of Apple’s informality but, after all, I was interviewing the head of a billion-dollar company, so I wore a tie to our first meeting. Naturally, when I met Jobs in his office in Cupertino, California, he was wearing a flannel shirt and jeans. I still didn’t feel out of place—until I met John Sculley, the new president of Apple: He was wearing a T-shirt.
“The Apple offices are clearly not like most places of employment. Video games abound, ping-pong tables are in use, speakers blare out music ranging from The Rolling Stones to Windham Hill jazz. Conference rooms are named after Da Vinci and Picasso, and snack-room refrigerators are stocked with fresh carrot, apple and orange juice. (The Mac team alone spends $100,000 on fresh juice per year.)
“I spoke at length with Jobs both at work and on his only two vacations of the year, in Aspen and at a Sonoma health spa, where he was supposed to be relaxing. Unable to relent in his mission to spread the Apple word, he talked with solemn ferocity about the war with IBM—but then would punctuate his enthusiasm for an idea with ‘Neat!’ or ‘Incredibly great!’
“The ‘Interview’ was all but complete when I met Jobs at a celebrity-filled birthday party for a youngster in New York City. As the evening progressed, I wandered around to discover that Jobs had gone off with the nine-year-old birthday boy to give him the gift he’d brought from California: a Macintosh computer. As I watched, he showed the boy how to sketch with the machine’s graphics program. Two other party guests wandered into the room and looked over Jobs’s shoulder. ‘Hmmm,’ said the first, Andy Warhol. ‘What is this? Look at this, Keith. This is incredible!’ The second guest, Keith Haring, the graffiti artist whose work now commands huge prices, went over. Warhol and Haring asked to take a turn at the Mac, and as I walked away, Warhol had just sat down to manipulate the mouse. ‘My God!’ he was saying, ‘I drew a circle!’
“But more revealing was the scene after the party. Well after the other guests had gone, Jobs stayed to tutor the boy on the fine points of using the Mac. Later, I asked him why he had seemed happier with the boy than with the two famous artists. His answer seemed unrehearsed to me: ‘Older people sit down and ask, “What is it?” but the boy asks, “What can I do with it?”’”
 
Playboy: We survived 1984, and computers did not take over the world, though some people might find that hard to believe. If there’s any one individual who can be either blamed or praised for the proliferation of computers, you, the 29-year-old father of the computer revolution, are the prime contender. It has also made you wealthy beyond dreams—your stock was worth almost a half billion dollars at one point, wasn’t it?
Jobs: I actually lost $250,000,000 in one year when the stock went down. [laughs]
Playboy: You can laugh about it?
Jobs: I’m not going to let it ruin my life. Isn’t it kind of funny? You know, my main reaction to this money thing is that it’s humorous, all the attention to it, because it’s hardly the most insightful or valuable thing that’s happened to me in the past ten years. But it makes me feel old, sometimes, when I speak at a campus and I find that what students are most in awe of is the fact that I’m a millionaire.
When I went to school, it was right after the Sixties and before this general wave of practical purposefulness had set in. Now students aren’t even thinking in idealistic terms, or at least nowhere near as much. They certainly are not letting any of the philosophical issues of the day take up too much of their time as they study their business majors. The idealistic wind of the Sixties was still at our backs, though, and most of the people I know who are my age have that engrained in them forever.
Playboy: It’s interesting that the computer field has made millionaires of—
Jobs: Young maniacs, I know.
Playboy: We were going to say guys like you and Steve Wozniak, working out of a garage only ten years ago. Just what is this revolution you two seem to have started?
Jobs: We’re living in the wake of the petrochemical revolution of 100 years ago. The petrochemical revolution gave us free energy—free mechanical energy, in this case. It changed the texture of society in most ways. This revolution, the information revolution, is a revolution of free energy as well, but of another kind: free intellectual energy. It’s very crude today, yet our Macintosh computer takes less power than a 100-watt light bulb to run and it can save you hours a day. What will it be able to do ten or 20 years from now, or 50 years from now? This revolution will dwarf the petrochemical revolution. We’re on the forefront.
Playboy: Maybe we should pause and get your definition of what a computer is. How do they work?
Jobs: Computers are actually pretty simple. We’re sitting here on a bench in this café [for this part of the Interview]. Let’s assume that you understood only the most rudimentary of directions and you asked how to find the rest room. I would have to describe it to you in very specific and precise instructions. I might say, “Scoot sideways two meters off the bench. Stand erect. Lift left foot. Bend left knee until it is horizontal. Extend left foot and shift weight 300 centimeters forward…” and on and on. If you could interpret all those instructions 100 times faster than any other person in this café, you would appear to be a magician: You could run over and grab a milk shake and bring it back and set it on the table and snap your fingers, and I’d think you made the milk shake appear, because it was so fast relative to my perception. That’s exactly what a computer does. It takes these very, very simple-minded instructions—“Go fetch a number, add it to this number, put the result there, perceive if it’s greater than this other number”—but executes them at a rate of, let’s say, 1,000,000 per second. At 1,000,000 per second, the results appear to be magic.
That’s a simple explanation, and the point is that people really don’t have to understand how computers work. Most people have no concept of how an automatic transmission works, yet they know how to drive a car. You don’t have to study physics to understand the laws of motion to drive a car. You don’t have to understand any of this stuff to use Macintosh—but you asked. [laughs]
Playboy: Obviously, you believe that computers are going to change our personal lives, but how would you persuade a skeptic? A holdout?
Jobs: A computer is the most incredible tool we’ve ever seen. It can be a writing tool, a communications center, a supercalculator, a planner, a filer and an artistic instrument all in one, just by being given new instructions, or software, to work from. There are no other tools that have the power and versatility of a computer. We have no idea how far it’s going to go. Right now, computers make our lives easier. They do work for us in fractions of a second that would take us hours. They increase the quality of life, some of that by simply automating drudgery and some of that by broadening our possibilities. As things progress, they’ll be doing more and more for us.
Playboy: How about some concrete reasons to buy a computer today? An executive in your industry recently said, “We’ve given people computers, but we haven’t shown them what to do with them. I can balance my checkbook faster by hand than on my computer.” Why should a person buy a computer?
Jobs: There are different answers for different people. In business, that question is easy to answer: You really can prepare documents much faster and at a higher quality level, and you can do many things to increase office productivity. A computer frees people from much of the menial work. Besides that, you are giving them a tool that encourages them to be creative. Remember, computers are tools. Tools help us do our work better.
In education, computers are the first thing to come along since books that will sit there and interact with you endlessly, without judgment. Socratic education isn’t available anymore, and computers have the potential to be a real breakthrough in the educational process when used in conjunction with enlightened teachers. We’re in most schools already.
Playboy: Those are arguments for computers in business and in schools, but what about the home?
Jobs: So far, that’s more of a conceptual market than a real market. The primary reasons to buy a computer for your home now are that you want to do some business work at home or you want to run educational software for yourself or your children. If you can’t justify buying a computer for one of those two reasons, the only other possible reason is that you just want to be computer literate. You know there’s something going on, you don’t exactly know what it is, so you want to learn. This will change: Computers will be essential in most homes.
Playboy: What will change?
Jobs: The most compelling reason for most people to buy a computer for the home will be to link it into a nationwide communications network. We’re just in the beginning stages of what will be a truly remarkable breakthrough for most people—as remarkable as the telephone.
Playboy: Specifically, what kind of breakthrough are you talking about?
Jobs: I can only begin to speculate. We see that a lot in our industry: You don’t know exactly what’s going to result, but you know it’s something very big and very good.
Playboy: Then for now, aren’t you asking home-computer buyers to invest $3000 in what is essentially an act of faith?
Jobs: In the future, it won’t be an act of faith. The hard part of what we’re up against now is that people ask you about specifics and you can’t tell them. A hundred years ago, if somebody had asked Alexander Graham Bell, “What are you going to be able to do with a telephone?” he wouldn’t have been able to tell him the ways the telephone would affect the world. He didn’t know that people would use the telephone to call up and find out what movies were playing that night or to order some groceries or call a relative on the other side of the globe. But remember that first the public telegraph was inaugurated, in 1844. It was an amazing breakthrough in communications. You could actually send messages from New York to San Francisco in an afternoon. People talked about putting a telegraph on every desk in America to improve productivity. But it wouldn’t have worked. It required that people learn this whole sequence of strange incantations, Morse code, dots and dashes, to use the telegraph. It took about 40 hours to learn. The majority of people would never learn how to use it. So, fortunately, in the 1870s, Bell filed the patents for the telephone. It performed basically the same function as the telegraph, but people already knew how to use it. Also, the neatest thing about it was that besides allowing you to communicate with just words, it allowed you to sing.
Playboy: Meaning what?
Jobs: It allowed you to intone your words with meaning beyond the simple linguistics. And we’re in the same situation today. Some people are saying that we ought to put an IBM PC on every desk in America to improve productivity. It won’t work. The special incantations you have to learn this time are “slash q-zs” and things like that. The manual for WordStar, the most popular word-processing program, is 400 pages thick. To write a novel, you have to read a novel—one that reads like a mystery to most people. They’re not going to learn slash q-z any more than they’re going to learn Morse code. That is what Macintosh is all about. It’s the first “telephone” of our industry. And, besides that, the neatest thing about it, to me, is that the Macintosh lets you sing the way the telephone did. You don’t simply communicate words, you have special print styles and the ability to draw and add pictures to express yourself.
Playboy: Is that really significant or is it simply a novelty? The Macintosh has been called “the world’s most expensive Etch A Sketch” by at least one critic.
Jobs: It’s as significant as the difference between the telephone and the telegraph. Imagine what you could have done if you had this sophisticated an Etch A Sketch when you were growing up. But that’s only a small part of it. Not only can it help you increase your productivity and your creativity enormously, but it also allows us to communicate more efficiently by using pictures and graphs as well as words and numbers.
Playboy: Most computers use key strokes to enter instructions, but Macintosh replaces many of them with something called a mouse—a little box that is rolled around on your desk and guides a pointer on your computer screen. It’s a big change for people used to keyboards. Why the mouse?
Jobs: If I want to tell you there is a spot on your shirt, I’m not going to do it linguistically: “There’s a spot on your shirt 14 centimeters down from the collar and three centimeters to the left of your button.” If you have a spot—“There!” [he points]—I’ll point to it. Pointing is a metaphor we all know. We’ve done a lot of studies and tests on that, and it’s much faster to do all kinds of functions, such as cutting and pasting, with a mouse, so it’s not only easier to use but more efficient.
Playboy: How long did it take to develop Macintosh?
Jobs: It was more than two years on the computer itself. We had been working on the technology behind it for years before that. I don’t think I’ve ever worked so hard on something, but working on Macintosh was the neatest experience of my life. Almost everyone who worked on it will say that. None of us wanted to release it at the end. It was as though we knew that once it was out of our hands, it wouldn’t be ours anymore. When we finally presented it at the shareholders’ meeting, everyone in the auditorium stood up and gave it a five-minute ovation. What was incredible to me was that I could see the Mac team in the first few rows. It was as though none of us could believe that we’d actually finished it. Everyone started crying.
Playboy: We were warned about you: Before this Interview began, someone said we were “about to be snowed by the best.”
Jobs: [Smiling] We’re just enthusiastic about what we do.
Playboy: But considering that enthusiasm, the multimillion-dollar ad campaigns and your own ability to get press coverage, how does the consumer know what’s behind the hype?
Jobs: Ad campaigns are necessary for competition; IBM’s ads are everywhere. But good PR educates people; that’s all it is. You can’t con people in this business. The products speak for themselves.
Playboy: Aside from some of the recurrent criticisms—that the mouse is inefficient, that the Macintosh screen is only black and white—the most serious charge is that Apple overprices its products. Do you care to answer any or all?
Jobs: We’ve done studies that prove that the mouse is faster than traditional ways of moving through data or applications. Someday we may be able to build a color screen for a reasonable price. As to overpricing, the start-up of a new product makes it more expensive than it will be later. The more we can produce, the lower the price will get—
Playboy: That’s what critics charge you with: hooking the enthusiasts with premium prices, then turning around and lowering your prices to catch the rest of the market.
Jobs: That’s simply untrue. As soon as we can lower prices, we do. It’s true that our computers are less expensive today than they were a few years ago, or even last year. But that’s also true of the IBM PC. Our goal is to get computers out to tens of millions of people, and the cheaper we can make them, the easier it’s going to be to do that. I’d love it if Macintosh cost $1000.
Playboy: How about people who bought Lisa and Apple III, the two computers you released prior to Macintosh? You’ve left them with incompatible, out-of-date products.
Jobs: If you want to try that one, add the people who bought the IBM PCs or the PCjrs to that list, too. As far as Lisa is concerned, since some of its technology was used in the Macintosh, it can now run Macintosh software and is being seen as a big brother to Macintosh; though it was unsuccessful at first, our sales of Lisa are going through the roof. We’re also still selling more than 2000 Apple IIIs a month—more than half to repeat buyers. The over-all point is that new technology will not necessarily replace old technology, but it will date it. By definition. Eventually, it will replace it. But it’s like people who had black-and-white TVs when color came out. They eventually decided whether or not the new technology was worth the investment.
Playboy: At the rate things are changing, won’t Mac itself be out of date within a few years?
Jobs: Before Macintosh, there were two standards: Apple II and IBM PC. Those two standards are like rivers carved in the rock bed of a canyon. It’s taken years to carve them—seven years to carve the Apple II and four years to carve the IBM. What we have done with Macintosh is that in less than a year, through the momentum of the revolutionary aspects of the product and through every ounce of marketing that we have as a company, we have been able to blast a third channel through that rock and make a third river, a third standard. In my opinion, there are only two companies that can do that today, Apple and IBM. Maybe that’s too bad, but to do it right now is just a monumental effort, and I don’t think that Apple or IBM will do that in the next three or four years. Toward the end of the Eighties, we may be seeing some new things.
Playboy: And in the meantime?
Jobs: The developments will be in making the products more and more portable, networking them, getting out laser printers, getting out shared data bases, getting out more communications ability, maybe the merging of the telephone and the personal computer.
Playboy: You have a lot riding on this one. Some people have said that Macintosh will make or break Apple. After Lisa and Apple III, Apple stock plummeted and the industry speculated that Apple might not survive.
Jobs: Yeah, we felt the weight of the world on our shoulders. We knew that we had to pull the rabbit out of the hat with Macintosh, or else we’d never realize the dreams we had for either the products or the company.
Playboy: How serious was it? Was Apple near bankruptcy?
Jobs: No, no, no. In fact, 1983, when all these predictions were being made, was a phenomenally successful year for Apple. We virtually doubled in size in 1983. We went from $583,000,000 in 1982 to something like $980,000,000 in sales. It was almost all Apple II—related. It just didn’t live up to our expectations. If Macintosh weren’t a success, we probably would have stayed at something like a billion dollars a year, selling Apple IIs and versions of it.
Playboy: Then what was behind the talk last year that Apple had had it?
Jobs: IBM was coming on very, very strong, and the momentum was switching to IBM. The software developers were moving to IBM. The dealers were talking more and more of IBM. It became clear to all of us who worked on Macintosh that it was just gonna blow the socks off the industry, that it was going to redefine the industry. And that’s exactly what it had to do. If Macintosh hadn’t been successful, then I should have just thrown in the towel, because my vision of the whole industry would have been totally wrong.
Playboy: Apple III was supposed to have been your souped-up Apple II, but it has been a failure since it was launched, four years ago. You recalled the first 14,000, and even the revised Apple III never took off. How much was lost on Apple III?
Jobs: Infinite, incalculable amounts. I think if the III had been more successful, IBM would have had a much harder time entering the market place. But that’s life. I think we emerged from that experience much stronger.
Playboy: Yet when Lisa came out, it, too, was a relative failure in the market place. What went wrong?
Jobs: First of all, it was too expensive—about ten grand. We had gotten Fortune 500-itis, trying to sell to those huge corporations, when our roots were selling to people. There were other problems: late shipping; the software didn’t come together in the end as well as we hoped and we lost a lot of momentum. And IBM’s coming on very strong, coupled with our being about six months late, coupled with the price’s being too high, plus another strategic mistake we made—deciding to sell Lisa only through about 150 dealers, which was absolutely foolish on our part—meant it was a very costly mistake. We decided to hire people we thought were marketing and management experts. Not a bad idea, but unfortunately, this was such a new business that the things the so-called professionals knew were almost detriments to their success in this new way of looking at business.
Playboy: Was that a reflection of insecurity on your part—“This thing has gotten big and now we’re playing hardball; I better bring in some real pros”?
Jobs: Remember, we were 23, 24 and 25 years old. We had never done any of this before, so it seemed like a good thing to do.
Playboy: Were most of those decisions, good and bad, yours?
Jobs: We tried never to have one person make all the decisions. There were three people running the company at that time: Mike Scott, Mike Markkula and myself. Now it’s John Sculley [Apple’s president] and myself. In the early days, if there was a disagreement, I would generally defer my judgment to some of the other people who had more experience than I had. In many cases, they were right. In some important cases, if we had gone my way, we would have done better.
Playboy: You wanted to run the Lisa division. Markkula and Scott, who were, in effect, your bosses, even though you had a hand in hiring them, didn’t feel you were capable, right?
Jobs: After setting up the framework for the concepts and finding the key people and sort of setting the technical directions, Scotty decided I didn’t have the experience to run the thing. It hurt a lot. There’s no getting around it.
Playboy: Did you feel you were losing Apple?
Jobs: There was a bit of that, I guess, but the thing that was harder for me was that they hired a lot of people in the Lisa group who didn’t share the vision we originally had. There was a big conflict in the Lisa group between the people who wanted, in essence, to build something like Macintosh and the people hired from Hewlett-Packard and other companies who brought with them a perspective of larger machines, corporate sales. I just decided that I was going to go off and do that myself with a small group, sort of go back to the garage, to design the Macintosh. They didn’t take us very seriously. I think Scotty was just sort of humoring me.
Playboy: But this was the company that you founded. Weren’t you resentful?
Jobs: You can never resent your kid.
Playboy: Even when your kid tells you to fuck off?
Jobs: I wouldn’t feel resentment. I’d feel great sorrow about it and I’d be frustrated, which I was. But I got the best people who were at Apple, because I thought that if we didn’t do that, we’d be in real trouble. Of course, it was those people who came up with Macintosh. [shrugs] Look at Mac.
Playboy: That verdict is far from in. In fact, you ushered in the Mac with a lot of the same fanfare that preceded the Lisa, and the Lisa failed initially.
Jobs: It’s true: We expressed very high hopes for Lisa and we were wrong. The hardest thing for us was that we knew Macintosh was coming, and Macintosh seemed to overcome every possible objection to Lisa. As a company, we would be getting back to our roots—selling computers to people, not corporations. We went off and built the most insanely great computer in the world.
Playboy: Does it take insane people to make insanely great things?
Jobs: Actually, making an insanely great product has a lot to do with the process of making the product, how you learn things and adopt new ideas and throw out old ideas. But, yeah, the people who made Mac are sort of on the edge.
Playboy: What’s the difference between the people who have insanely great ideas and the people who pull off those insanely great ideas?
Jobs: Let me compare it with IBM. How come the Mac group produced Mac and the people at IBM produced the PCjr? We think the Mac will sell zillions, but we didn’t build Mac for anybody else. We built it for ourselves. We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research. We just wanted to build the best thing we could build. When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.
Playboy: Are you saying that the people who made the PCjr don’t have that kind of pride in the product?
Jobs: If they did, they wouldn’t have turned out the PCjr. It seems clear to me that they were designing that on the basis of market research for a specific market segment, for a specific demographic type of customer, and they hoped that if they built this, lots of people would buy them and they’d make lots of money. Those are different motivations. The people in the Mac group wanted to build the greatest computer that has ever been seen.
Playboy: Why is the computer field dominated people so young? The average age of Apple employees is 29.
Jobs: It’s often the same with any new, revolutionary thing. People get stuck as they get older. Our minds are sort of electrochemical computers. Your thoughts construct patterns like scaffolding in your mind. You are really etching chemical patterns. In most cases, people get stuck in those patterns, just like grooves in a record, and they never get out of them. It’s a rare person who etches grooves that are other than a specific way of looking at things, a specific way of questioning things. It’s rare that you see an artist in his 30s or 40s able to really contribute something amazing. Of course, there are some people who are innately curious, forever little kids in their awe of life, but they’re rare.
Playboy: A lot of guys in their 40s are going to be real pleased with you. Let’s move on to the other thing that people talk about when they mention Apple—the company, not the computer. You feel a similar sense of mission about the way things are run at Apple, don’t you?
Jobs: I do feel there is another way we have an effect on society besides our computers. I think Apple has a chance to be the model of a Fortune 500 company in the late Eighties and early Nineties. Ten to 15 years ago, if you asked people to make a list of the five most exciting companies in America, Polaroid and Xerox would have been on everyone’s list. Where are they now? They would be on no one’s list today. What happened? Companies, as they grow to become multibillion-dollar entities, somehow lose their vision. They insert lots of layers of middle management between the people running the company and the people doing the work. They no longer have an inherent feel or a passion about the products. The creative people, who are the ones who care passionately, have to persuade five layers of management to do what they know is the right thing to do.
What happens in most companies is that you don’t keep great people under working environments where individual accomplishment is discouraged rather than encouraged. The great people leave and you end up with mediocrity. I know, because that’s how Apple was built. Apple is an Ellis Island company. Apple is built on refugees from other companies. These are the extremely bright individual contributors who were troublemakers at other companies.
You know, Dr. Edwin Land was a troublemaker. He dropped out of Harvard and founded Polaroid. Not only was he one of the great inventors of our time but, more important, he saw the intersection of art and science and business and built an organization to reflect that. Polaroid did that for some years, but eventually Dr. Land, one of those brilliant troublemakers, was asked to leave his own company—which is one of the dumbest things I’ve ever heard of. So Land, at 75, went off to spend the remainder of his life doing pure science, trying to crack the code of color vision. The man is a national treasure. I don’t understand why people like that can’t be held up as models: This is the most incredible thing to be—not an astronaut, not a football player—but this.
Anyway, one of our biggest challenges, and the one I think John Sculley and I should be judged on in five to ten years, is making Apple an incredibly great ten- or 20-billion-dollar company. Will it still have the spirit it does today? We’re charting new territory. There are no models that we can look to for our high growth, for some of the new management concepts we have. So we’re having to find our own way.
Playboy: If Apple is really that kind of company, then why the projected twenty-fold growth? Why not stay relatively small?
Jobs: The way it’s going to work out is that in our business, in order to continue to be one of the major contributors, we’re going to have to be a ten-billion-dollar company. That growth is required for us to keep up with the competition. Our concern is how we become that, rather than the dollar goal, which is meaningless to us.
At Apple, people are putting in 18-hour days. We attract a different type of person—a person who doesn’t want to wait five or ten years to have someone take a giant risk on him or her. Someone who really wants to get in a little over his head and make a little dent in the universe. We are aware that we are doing something significant. We’re here at the beginning of it and we’re able to shape how it goes. Everyone here has the sense that right now is one of those moments when we are influencing the future. Most of the time, we’re taking things. Neither you nor I made the clothes we wear; we don’t make the food or grow the foods we eat; we use a language that was developed by other people; we use another society’s mathematics. Very rarely do we get a chance to put something back into that pool. I think we have that opportunity now. And no, we don’t know where it will lead. We just know there’s something much bigger than any of us here.
Playboy: You’ve said that the business market is crucial for you to conquer with Macintosh. Can you beat IBM at work?
Jobs: Yes. The business market has several sectors. Rather than just thinking of the Fortune 500, which is where IBM is strongest, I like to think of the Fortune 5,000,000 or 14,000,000. There are 14,000,000 small businesses in this country. I think that the vast group of people who need to be computerized includes that large number of medium and small businesses. We’re going to try to be able to bring some meaningful solutions to them in 1985.
Playboy: How?
Jobs: Our approach is to think of them not as businesses but as collections of people. We want to qualitatively change the way people work. We don’t just want to help them do word processing faster or add numbers faster. We want to change the way they can communicate with one another. We’re seeing five-page memos get compressed to one-page memos because we can use a picture to express the key concept. We’re seeing less paper flying around and more quality of communication. And it’s more fun. There’s always been this myth that really neat, fun people at home all of a sudden have to become very dull and boring when they come to work. It’s simply not true. If we can inject that liberal-arts spirit into the very serious realm of business, I think it will be a worthwhile contribution. We can’t even conceive of how far it will go.
Playboy: But in the business market, you’re fighting the IBM name as much as anything. People associate IBM with stability and efficiency. The new entry in the computer field, AT&T, has that one up on you, too. Apple is a relatively young and untested company, particularly in the eyes of corporations that might be customers.
Jobs: It’s Macintosh’s job to really penetrate the business market place. IBM focuses on the top down, the mainframe centric approach to selling in businesses. If we are going to be successful, we’ve got to approach this from a grass-roots point of view. To use networking as an example, rather than focusing on wiring up whole companies, as IBM is doing, we’re going to focus on the phenomenon of the small work group.
Playboy: One of the experts in the field says that for this industry to really flourish, and for it to benefit the consumer, one standard has to prevail.
Jobs: That’s simply untrue. Insisting that we need one standard now is like saying that they needed one standard for automobiles in 1920. There would have been no innovations such as the automatic transmission, power steering and independent suspension if they believed that. The last thing we want to do is freeze technology. With computers, Macintosh is revolutionary. There is no question that Macintosh’s technology is superior to IBM’s. There is a clear need for an alternative to IBM.
Playboy: Was any of your decision not to become compatible with IBM based on the fact that you didn’t want to knuckle under to IBM? One critic says that the reason Mac isn’t IBM-compatible is mere arrogance—that “Steve Jobs was saying ‘Fuck you’ to IBM.”
Jobs: It wasn’t that we had to express our manhood by being different, no.
Playboy: Then why were you?
Jobs: The main thing is very simply that the technology we developed is superior. It could not be this good if we became compatible with IBM. Of course, it’s true that we don’t want IBM to dominate this industry. A lot of people thought we were nuts for not being IBM-compatible, for not living under IBM’s umbrella. There were two key reasons we chose to bet our company on not doing that: The first was that we thought—and I think as history is unfolding, we’re being proved correct—that IBM would fold its umbrella on the companies making compatible computers and absolutely crush them.
Second and more important, we did not go IBM-compatible because of the product vision that drives this company. We think that computers are the most remarkable tools that humankind has ever come up with, and we think that people are basically tool users. So if we can just get lots of computers to lots of people, it will make some qualitative difference in the world. What we want to do at Apple is make computers into appliances and get them to tens of millions of people. That’s simply what we want to do. And we couldn’t do that with the current IBM-generation type of technology. So we had to do something different. That’s why we came up with the Macintosh.
Playboy: From 1981 to 1983, your share of the personal-computer sales slipped from 29 percent to 23 percent. IBM’s part has grown from three percent to 28 percent in the same time. How do you fight the numbers?
Jobs: We’ve never worried about numbers. In the market place, Apple is trying to focus the spotlight on products, because products really make a difference. IBM is trying to focus the spotlight on service, support, security, mainframes and motherhood. Now, Apple’s key observation three years ago was that when you’re shipping 10,000,000 computers a year, even IBM does not have enough mothers to ship one with every computer. So you’ve got to build motherhood into the computer. And that’s a big part of what Macintosh is all about.
All these things show that it really is coming down to just Apple and IBM. If for some reason, we make some giant mistakes and IBM wins, my personal feeling is that we are going to enter sort of a computer Dark Ages for about 20 years. Once IBM gains control of a market sector, they almost always stop innovation. They prevent innovation from happening.
Playboy: Why?
Jobs: Look at this example: Frito-Lay is a very interesting company. They call on more than half a million accounts a week. There’s a Frito-Lay rack in each store, and the chips are all there, and every store’s got the identical rack and the big ones have multiples. For Frito-Lay, the biggest problem is stale product—bad chips, so to speak. For Frito-Lay’s service, they’ve got, like, 10,000 guys who run around and take out the stale product and replace it with good product. They talk to the manager of that department and they make sure everything’s fine. Because of that service and support, they now have more than an 80 percent share of every segment of chips that they’re in. Nobody else can break into that. As long as they keep doing what they do well, nobody else can get 80 percent of the market share, because they can’t get the sales and support staff. They can’t get it because they can’t afford it. They can’t afford it because they don’t have 80 percent of the market share. It’s catch-22. Nobody will ever be able to break into their franchise.
Frito-Lay doesn’t have to innovate very much. They just watch all the little chip companies come out with something new, study it for a year, and a year or two years later they come out with their own, service and support it to death, and they’ve got 80 percent of the market share of the new product a year later.
IBM is playing exactly the same game. If you look at the mainframe market place, there’s been virtually zero innovation since IBM got dominant control of that market place 15 years ago. They are going to do the same thing in every other sector of the computer market place if they can get away with it. The IBM PC fundamentally brought no new technology to the industry at all. It was just repackaging and slight extension of Apple II technology, and they want it all. They absolutely want it all.
This market place is coming down to the two of us, whether we like it or not. I don’t particularly like it, but it’s coming down to Apple and IBM.
Playboy: How can you say that about an industry that’s changing so fast? Macintosh is the hot new thing right now, but will it still be in two years? Aren’t you competing with your own philosophy? Just as you’re after IBM, aren’t there small computer companies coming after Apple?
Jobs: In terms of supplying the computer itself, it’s coming down to Apple and IBM. And I don’t think there are going to be a lot of third- and fourth-place companies, much less sixth- or seventh-place companies. Most of the new, innovative companies are focusing on the software. I think there will be lots of innovation in the areas of software but not in hardware.
Playboy: IBM might say the same thing about hardware, but you’re not about to let it get away with that. Why is your point any different?
Jobs: I think that the scale of the business has gotten large enough so that it’s going to be very difficult for anyone to successfully launch anything new.
Playboy: No more billion-dollar companies hatched in garages?
Jobs: No, I’m afraid not in computers. And this puts a responsibility on Apple, because if there’s going to be innovation in this industry, it’ll come from us. It’s the only way we can compete with them. If we go fast enough, they can’t keep up.
Playboy: When do you think IBM will finally, as you put it, fold the umbrella on the companies making IBM-compatible computers?
Jobs: There may be some imitators left in the $100,000,000-to-$200,000,000 range, but being a $200,000,000 company is going to mean you are struggling for your life, and that’s not really a position from which to innovate. Not only do I think IBM will do away with its imitators by providing software they can’t provide, I think eventually it will come up with a new standard that won’t even be compatible with what it’s making now—because it is too limiting.
Playboy: Which is exactly what you’ve done at Apple. If a person owns software for the Apple II, he can’t run it on the Macintosh.
Jobs: That’s right. Mac is altogether new. We knew that we could reach the early innovators with current-generation technology—Apple II, IBM PC—because they’d stay up all night learning how to use their computer. But we’d never reach the majority of people.

If we were really going to get computers to tens of millions of people, we needed a technology that would make the thing radically easier to use and more powerful at the same time, so we had to make a break. We just had to do it. We wanted to make sure it was great, because it may be the last chance that any of us get to make a clean break. And I’m very happy with the way Macintosh turned out. It will prove a really solid foundation for the next ten years.
Playboy: Let’s go back to the predecessors of the Lisa and the Mac, to the beginning. How influential were your parents in your interest in computers?
Jobs: They encouraged my interests. My father was a machinist, and he was a sort of genius with his hands. He can fix anything and make it work and take any mechanical thing apart and get it back together. That was my first glimpse of it. I started to gravitate more toward electronics, and he used to get me things I could take apart and put back together. He was transferred to Palo Alto when I was five. That’s how we ended up in the Valley.
Playboy: You had been adopted, hadn’t you? How much of a factor in your life was that?
Jobs: You don’t ever really know, do you?
Playboy: Did you try to find your biological parents?
Jobs: I think it’s quite a natural curiosity for adopted people to want to understand where certain traits come from. But I’m mostly an environmentalist. I think the way you are raised and your values and most of your world view come from the experiences you had as you grew up. But some things aren’t accounted for that way. I think it’s quite natural to have a curiosity about it. And I did.
Playboy: Were you successful in trying to find your natural parents?
Jobs: That’s one area I really don’t want to talk about.
Playboy: The valley your parents moved to has since come to be known as Silicon Valley. What was it like growing up there?
Jobs: It was the suburbs. It was like most suburbs in the U.S.: I grew up on a block with lots of kids. My mother taught me to read before I went to school, so I was pretty bored in school, and I turned into a little terror. You should have seen us in third grade. We basically destroyed our teacher. We would let snakes loose in the classroom and explode bombs. Things changed in the fourth grade, though. One of the saints in my life is this woman named Imogene Hill, who was a fourth-grade teacher who taught this advanced class. She got hip to my whole situation in about a month and kindled a passion in me for learning things. I learned more that year than I think I learned in any year in school. They wanted to put me in high school after that year, but my parents very wisely wouldn’t let them.
Playboy: But location had something to do with your interests, didn’t it? How did Silicon Valley come to be?
Jobs: The Valley is positioned strategically between two great universities, Berkeley and Stanford. Both of those universities attract not only lots of students but very good students and ones from all over the United States. They come here and fall in love with the area and they stay here. So there is a constant influx of new, bright human resources.
Before World War Two, two Stanford graduates named Bill Hewlett and Dave Packard created a very innovative electronics company—Hewlett-Packard. Then the transistor was invented in 1948 by Bell Telephone Laboratories. One of the three coinventors of the transistor, William Shockley, decided to return to his home town of Palo Alto to start a little company called Shockley Labs or something. He brought with him about a dozen of the best and brightest physicists and chemists of his day. Little by little, people started breaking off and forming competitive companies, like those flowers or weeds that scatter seeds in hundreds of directions when you blow on them. And that’s why the Valley is here today.
Playboy: What was your introduction to computers?
Jobs: A neighbor down the block named Larry Lang was an engineer at Hewlett-Packard. He spent a lot of time with me, teaching me stuff. The first computer I ever saw was at Hewlett-Packard. They used to invite maybe ten of us down every Tuesday night and give us lectures and let us work with a computer. I was maybe 12 the first time. I remember the night. They showed us one of their new desktop computers and let us play on it. I wanted one badly.
Playboy: What was it about it that interested you? Did you have a sense of its potential?
Jobs: It wasn’t anything like that. I just thought they were neat. I just wanted to mess around with one.
Playboy: You went to work for Hewlett-Packard. How did that happen?
Jobs: When I was 12 or 13, I wanted to build something and I needed some parts, so I picked up the phone and called Bill Hewlett—he was listed in the Palo Alto phone book. He answered the phone and he was real nice. He chatted with me for, like, 20 minutes. He didn’t know me at all, but he ended up giving me some parts and he got me a job that summer working at Hewlett-Packard on the line, assembling frequency counters. Assembling may be too strong. I was putting in screws. It didn’t matter; I was in heaven.
I remember my first day, expressing my complete enthusiasm and bliss at being at Hewlett-Packard for the summer to my supervisor, a guy named Chris, telling him that my favorite thing in the whole world was electronics. I asked him what his favorite thing to do was and he looked at me and said, “To fuck!” [laughs] learned a lot that summer.
Playboy: At what point did you meet Steve Wozniak?
Jobs: I met Woz when I was 13, at a friend’s garage. He was about 18. He was, like, the first person I met who knew more electronics than I did at that point. We became good friends, because we shared an interest in computers and we had a sense of humor. We pulled all kinds of pranks together.
Playboy: For instance?
Jobs: [Grins] Normal stuff. Like making a huge flag with a giant one of these on it. [gives the finger] The idea was that we would unfurl it in the middle of a school graduation. Then there was the time Wozniak made something that looked and sounded like a bomb and took it to the school cafeteria. We also went into the blue-box business together.
Playboy: Those were illegal devices that allowed free long-distance phone calls, weren’t they?
Jobs: Mm-hm. The famous story about the boxes is when Woz called the Vatican and told them he was Henry Kissinger. They had someone going to wake the Pope up in the middle of the night before they figured out it wasn’t really Kissinger.
Playboy: Did you get into trouble for any of those things?
Jobs: Well, I was thrown out of school a few times.
Playboy: Were you then, or have you ever been, a computer nerd?
Jobs: I wasn’t completely in any one world for too long. There was so much else going on. Between my sophomore and junior years, I got stoned for the first time; I discovered Shakespeare, Dylan Thomas and all that classic stuff. I read Moby Dick and went back as a junior taking creative-writing classes. By the time I was a senior, I’d gotten permission to spend about half my time at Stanford, taking classes.
Playboy: Was Wozniak obsessed at certain periods?
Jobs: [Laughs] Yes, but not just with computers. I think Woz was in a world that nobody understood. No one shared his interests, and he was a little ahead of his time. It was very lonely for him. He’s driven from inner sights rather than external expectations of him, so he survived OK. Woz and I are different in most ways, but there are some ways in which we’re the same, and we’re very close in those ways. We’re sort of like two planets in their own orbits that every so often intersect. It wasn’t just computers, either. Woz and I very much liked Bob Dylan’s poetry, and we spent a lot of time thinking about a lot of that stuff. This was California. You could get LSD fresh made from Stanford. You could sleep on the beach at night with your girlfriend. California has a sense of experimentation and a sense of openness—openness to new possibilities.
Besides Dylan, I was interested in Eastern mysticism, which hit the shores at about the same time. When I went to college at Reed, in Oregon, there was a constant flow of people stopping by, from Timothy Leary and, Richard Alpert to Gary Snyder. There was a constant flow of intellectual questioning about the truth of life. That was a time when every college student in this country read Be Here Now and Diet for a Small Planet—there were about ten books. You’d be hard pressed to find those books on too many college campuses today. I’m not saying it’s better or worse; it’s just different—very different. In Search of Excellence [the book about business practices] has taken the place of Be Here Now.
Playboy: In retrospect, how did that influence what you’re doing now?
Jobs: The whole period had a huge influence. As it was clear that the Sixties were over, it was also clear that a lot of the people who had gone through the Sixties ended up not really accomplishing what they set out to accomplish, and because they had thrown their discipline to the wind, they didn’t have much to fall back on. Many of my friends have ended up engrained with the idealism of that period but also with a certain practicality, a cautiousness about ending up working behind the counter in a natural-food store when they are 45, which is what they saw happen to some of their older friends. It’s not that that is bad in and of itself, but it’s bad if that’s not what you really wanted to do.
Playboy: After Reed, you returned to Silicon Valley and answered a now-famous ad that boasted, “Have fun and make money.”
Jobs: Right. I decided I wanted to travel, but I was lacking the necessary funds. I came back down to get a job. I was looking in the paper and there was this ad that said, yes, “Have fun and make money.” I called. It was Atari. I had never had a job before other than the one when I was a kid. By some stroke of luck, they called me up the next day and hired me.
Playboy: That must have been at Atari’s earliest stage.
Jobs: I was, like, employee number 40. It was a very small company. They had made Pong and two other games. My first job was helping a guy named Don work on a basketball game, which was a disaster. There was this basketball game, and somebody was working on a hockey game. They were trying to model all their games after simple field sports at that time, because Pong was such a success.
Playboy: You never lost sight of the reason for the job: to earn money so you could travel.
Jobs: Atari had shipped a bunch of games to Europe and they had some engineering defects in them, and I figured out how to fix them, but it was necessary for somebody to go over there and actually do the fixing. I volunteered to go and asked to take a leave of absence when I was there. They let me do it. I ended up in Switzerland and moved from Zurich to New Delhi. I spent some time in India.
Playboy: Where you shaved your head.
Jobs: That’s not quite the way it happened. I was walking around in the Himalayas and I stumbled onto this thing that turned out to be a religious festival. There was a baba, a holy man, who was the holy man of this particular festival, with his large group of followers. I could smell good food. I hadn’t been fortunate enough to smell good food for a long time, so I wandered up to pay my respects and eat some lunch.
For some reason, this baba, upon seeing me sitting there eating, immediately walked over to me and sat down and burst out laughing. He didn’t speak much English and I spoke a little Hindi, but he tried to carry on a conversation and he was just rolling on the ground with laughter. Then he grabbed my arm and took me up this mountain trail. It was a little funny, because here were hundreds of Indians who had traveled for thousands of miles to hang out with this guy for ten seconds and I stumble in for something to eat and he’s dragging me up this mountain path.
We get to the top of this mountain half an hour later and there’s this little well and pond at the top of this mountain, and he dunks my head in the water and pulls out a razor from his pocket and starts to shave my head. I’m completely stunned. I’m 19 years old, in a foreign country, up in the Himalayas, and here is this bizarre Indian baba who has just dragged me away from the rest of the crowd, shaving my head atop this mountain peak. I’m still not sure why he did it.
Playboy: What did you do when you came back?
Jobs: Coming back was more of a culture shock than going. Well, Atari called me up and wanted me to go back to work there. I didn’t really want to, but eventually they persuaded me to go back as a consultant. Wozniak and I were hanging out. He took me to some Homebrew Computer Club meetings, where computer hobbyists compared notes and stuff. I didn’t find them all that exciting, but some of them were fun. Wozniak went religiously.
Playboy: What was the thinking about computers then? Why were you interested?
Jobs: The clubs were based around a computer kit called the Altair. It was so amazing to all of us that somebody had actually come up with a way to build a computer you could own yourself. That had never been possible. Remember, when we were in high school, neither of us had access to a computer mainframe. We had to drive somewhere and have some large company take a benevolent attitude toward us and let us use the computer. But now, for the first time, you could actually buy a computer. The Altair was a kit that came out around 1975 and sold for less than $400.
Even though it was relatively inexpensive, not everyone could afford one. That’s how the computer clubs started. People would band together and eventually become a club.
Playboy: What would you do with your makeshift computers?
Jobs: At that time, there were no graphics. It was all alphanumerics, and I used to be fascinated with the programming, simple programming. On the very early versions of computer kits, you didn’t even type; you threw switches that signaled characters.
Playboy: The Altair, then, presented the concept of a home computer.
Jobs: It was just sort of a computer that you could own. They really didn’t know what to do with it. The first thing that they did was to put languages on it, so you could write some programs. People didn’t start to apply them for practical things until a year or two later, and then it was simple things, like bookkeeping.
Playboy: And you decided you could do the Altair one better.
Jobs: It sort of just happened. I was working a lot at Atari at night and I used to let Woz in. Atari put out a game called Gran Track, the first driving game with a steering wheel to drive it. Woz was a Gran Track addict. He would put great quantities of quarters into these games to play them, so I would just let him in at night and let him onto the production floor and he would play Gran Track all night long.
When I came up against a stumbling block on a project, I would get Woz to take a break from his road rally for ten minutes and come and help me. He puttered around on some things, too. And at one point, he designed a computer terminal with video on it. At a later date, he ended up buying a microprocessor and hooking it up to the terminal and made what was to become the Apple I. Woz and I laid out the circuit board ourselves. That was basically it.
Playboy: Again, the idea was just to do it?
Jobs: Yeah, sure. And to be able to show it off to your friends.
Playboy: What triggered the next step—manufacturing and selling them to make money?
Jobs: Woz and I raised $1,300 by selling my VW bus and his Hewlett-Packard calculator to finance them. A guy who started one of the first computer stores told us he could sell them if we could make them. It had not dawned on us until then.
Playboy: How did you and Wozniak work together?
Jobs: He designed most of it. I helped on the memory part and I helped when we decided to turn it into a product. Woz isn’t great at turning things into products, but he’s really a brilliant designer.
Playboy: The Apple I was for hobbyists?
Jobs: Completely. We sold only about 150 of them, ever. It wasn’t that big a deal, but we made about $95,000 and I started to see it as a business besides something to do. Apple I was just a printed circuit board. There was no case, there was no power supply; it wasn’t much of a product yet. It was just a printed circuit board. You had to go out and buy transformers for it. You had to buy your own keyboard. [laughs]
Playboy: Did you and Wozniak have a vision once things started rolling? Were you both thinking about how big it could get and how computers would be able to change the world?
Jobs: No, not particularly. Neither of us had any idea that this would go anywhere. Woz is motivated by figuring things out. He concentrated more on the engineering and proceeded to do one of his most brilliant pieces of work, which was the disk drive, another key engineering feat that made the Apple II a possibility. I was trying to build the company—trying to find out what a company was. I don’t think it would have happened without Woz and I don’t think it would have happened without me.
Playboy: What happened to the partnership as time went on?
Jobs: The main thing was that Woz was never really interested in Apple as a company. He was just sort of interested in getting the Apple II on a printed circuit board so he could have one and be able to carry it to his computer club without having the wires break on the way. He had done that and decided to go on to other things. He had other ideas.
Playboy: Such as the US Festival rock concert and computer show, where he lost something like $10,000,000.
Jobs: Well, I thought the US Festival was a little crazy, but Woz believed very strongly in it.
Playboy: How is it between the two of you now?
Jobs: When you work with somebody that close and you go through experiences like the ones we went through, there’s a bond in life. Whatever hassles you have, there is a bond. And even though he may not be your best friend as time goes on, there’s still something that transcends even friendship, in a way. Woz is living his own life now. He hasn’t been around Apple for about five years. But what he did will go down in history. He’s going around speaking to a lot of computer events now. He likes that.
Playboy: The two of you went on to create the Apple II, which actually started the computer revolution. How did that occur?
Jobs: It wasn’t just us. We brought in other people. Wozniak still did the logic of the Apple II, which certainly is a large part of it, but there were some other key parts. The power supply was really a key. The case was really a key. The real jump with the Apple II was that it was a finished product. It was the first computer that you could buy that wasn’t a kit. It was fully assembled and had its own case and its own keyboard, and you could really sit down and start to use it. And that was the breakthrough of the Apple II: that it looked like a real product.
Playboy: Was the initial market hobbyists?
Jobs: The difference was that you didn’t have to be a hardware hobbyist with the Apple II. You could be a software hobbyist. That was one of the key breakthroughs with the Apple II: realizing that there were a whole lot more people who wanted to play with a computer, just like Woz and me, than there were people who could build their own. That’s what the Apple II was all about. Still, the first year, we sold only 3000 or 4000.
Playboy: Even that sounds like a lot for a few guys who barely knew what they were doing.
Jobs: It was giant! We did about $200,000 when our business was in the, garage, in 1976. In 1977, about $7,000,000 in business. I mean, it was phenomenal! And in 1978, we did $17,000,000. In 1979, we did $47,000,000. That’s when we all really sensed that this was just going through the rafters. In 1980, we did $117,000,000. In 1981, we did $335,000,000. In 1982, we did $583,000,000. In 1983, we did $985,000,000, I think. This year, it will be a billion and a half.
Playboy: You don’t forget those numbers.
Jobs: Well, they’re just yardsticks, you know. The neatest thing was, by 1979, I was able to walk into classrooms that had 15 Apple computers and see the kids using them. And those are the kinds of things that are really the milestones.
Playboy: Which brings us full circle to your latest milestones, the Mac and your protracted shoot-out with IBM. In this Interview, you’ve repeatedly sounded as if there really are only two of you left in the field. But although the two of you account for something like 60 percent of the market, can you just write off the other 40 percent—the Radio Shacks, DECs, Epsons, et al.—as insignificant? More important, are you ignoring your potentially biggest rival, AT&T?
Jobs: AT&T is absolutely going to be in the business. There is a major transformation in the company that’s taking place right now. AT&T is changing from a subsidized and regulated service-oriented company to a free-market, competitive-marketing technology company. AT&T’s products per se have never been of the highest quality. All you have to do is go look at their telephones. They’re somewhat of an embarrassment. But they do possess great technology in their research labs. Their challenge is to learn how to commercialize that technology. Also, they have to learn about consumer marketing. I think that they will do both of those things, but it’s going to take them years.
Playboy: Are you writing them off as a threat?
Jobs: I don’t think they’re going to be a giant factor in the next 24 months, but they will learn.
Playboy: What about Radio Shack?
Jobs: Radio Shack is totally out of the picture. They have missed the boat. Radio Shack tried to squeeze the computer into their model of retailing, which in my opinion often meant selling second-rate products or low-end products in a surplus-store environment. The sophistication of the computer buyer passed Radio Shack by without their really realizing it. Their market shares dropped through the floor. I don’t anticipate that they’re going to recover and again become a major player.
Playboy: How about Xerox? Texas Instruments? DEC? Wang?
Jobs: Xerox is out of the business. T.I. is doing nowhere near their expectations. As to some of the others, the large companies, like DEC and Wang, can sell to their installed bases. They can sell personal computers as advanced terminals, but that business is going to dwindle.
Playboy: How about the low-priced computers: Commodore and Atari?
Jobs: I consider those a brochure for why you should buy an Apple II or Macintosh. I think people have already determined that the sub-$500 computers don’t do very much. They either tease people to want more or frustrate people completely.
Playboy: What about some of the smaller portables?
Jobs: They are OK if you’re a reporter and trying to take notes on the run. But for the average person, they’re really not that useful, and there’s not all that software for them, either. By the time you get your software done, a new one comes out with a slightly bigger display and your software is obsolete. So nobody is writing any software for them. Wait till we do it—the power of a Macintosh in something the size of a book!
Playboy: What about Epson and some of the Japanese computer makers?
Jobs: I’ve said it before: The Japanese have hit the shores like dead fish. They’re just like dead fish washing up on the shores. The Epson has been a failure in this market place.
Playboy: Like computers, the automobile industry was an American industry that we almost lost to the Japanese. There is a lot of talk about American semiconductor companies’ losing ground to Japanese. How will you keep the edge?
Jobs: Japan’s very interesting. Some people think it copies things. I don’t think that anymore. I think what they do is reinvent things. They will get something that’s already been invented and study it until they thoroughly understand it. In some cases, they understand it better than the original inventor. Out of that understanding, they will reinvent it in a more refined second-generation version. That strategy works only when what they’re working with isn’t changing very much—the stereo industry and the automobile industry are two examples. When the target is moving quickly, they find it very difficult, because that reinvention cycle takes a few years.
As long as the definition of what a personal computer is keeps changing at the rate that it is, they will have a very hard time. Once the rate of change slows down, the Japanese will bring all of their strengths to bear on this market, because they absolutely want to dominate the computer business; there’s no question about that. They see that as a national priority.
We think that in four to five years, the Japanese will finally figure out how to build a decent computer. And if we’re going to keep this industry one in which America leads, we have four years to become world-class manufacturers. Our manufacturing technology has to equal or surpass that of the Japanese.
Playboy: How do you plan to accomplish that?
Jobs: At the time we designed Macintosh, we also designed a machine to build the machine. We spent $20,000,000 building the computer industry’s most automated factory. But that’s not enough. Rather than take seven years to write off our factory, as most companies would do, we’re writing it off in two. We will throw it away at the end of 1985 and build our second one, and we will write that off in two years and throw that away, so that three years from now, we’ll be on to our third automated factory. That’s the only way we can learn fast enough.
Playboy: It’s not all competition with the Japanese: You buy your disk drives from Sony, for instance.
Jobs: We buy many of our components from the Japanese. We’re the largest user in the world of microprocessors, of high-technology RAM chips, of disk drives, of keyboards. We save a ton of energy not having to make and design floppy-disk drives or microprocessors that we can spend on software.
Playboy: Let’s talk about software. What are the revolutionary changes in software development as you’ve seen it in the past few years?
Jobs: Certainly, the earlier programming, getting a programming language on a microprocessor chip, was a real breakthrough. VisiCalc was a breakthrough, because that was the first real use of computers in business, where business people could see tangible benefits of using one. Before that, you had to program your own applications, and the number of people who want to program is a small fraction—one percent. Coupled with VisiCalc, the ability to graph things, graph information, was important, and so was Lotus.
Playboy: We’re dropping a lot of brand names with which people may not be familiar. Please explain them.
Jobs: What Lotus did was combine a good spread sheet and graphics program. The word-processing and data-base parts of Lotus are certainly not the most robust that one can purchase. The real key to Lotus was that it combined spread sheet and graphics in one program, so you could go between them very rapidly.
The next breakthrough is happening now, thanks to the Macintosh, which brought that Lisa technology down to an affordable price. There exists, and there will be more, revolutionary software there. You generally want to truly evaluate a breakthrough a few years after it happens.
Playboy: What about word processing? You didn’t mention that on the list of breakthroughs.
Jobs: You’re right, I should have listed word processing after VisiCalc. Word processing is the most universally needed application and one of the easiest to understand. It’s probably the first use to which most people put their personal computer. There were word processors before personal computers, but a word processor on a personal computer was more of an economic breakthrough, while there was never any form of VisiCalc before the personal computer.
Playboy: Have there been breakthroughs in educational software?
Jobs: There has been a lot of very good software in education but not the breakthrough product, not the VisiCalc. I think that will come, but I don’t expect it in the next 24 months.
Playboy: You’ve stressed the fact that education is a high priority for you. How do you think computers are affecting it?
Jobs: Computers themselves, and software yet to be developed, will revolutionize the way we learn. We formed something called the Apple Education Foundation, and we give several million dollars in cash and equipment to people doing exploratory work with educational software and to schools that can’t afford computers. We also wanted Macintosh to become the computer of choice in colleges, just as the Apple II is for grade and high schools. So we looked for six universities that were out to make large-scale commitments to personal computers—by large, meaning more than 1000 apiece—and instead of six, we found 24. We asked the colleges if they would invest at least $2,000,000 each to be part of the Macintosh program. All 24—including the entire Ivy League—did. So in less than a year, Macintosh has become the standard in college computing. I could ship every Macintosh we make this year just to those 24 colleges. We can’t, of course, but the demand is there.
Playboy: But the software isn’t there, is it?
Jobs: Some of it’s there. What’s not there, the people at colleges are going to write themselves. IBM tried to stop us—I hear it formed a 400-person task force to do it—by giving away IBM PCs. But the colleges were fairly astute. They realized the software investment they were about to embark upon would far outweigh the hardware investment, and they didn’t want to spend all that software money on old technology like IBM’s. So in many cases, they turned down IBM’s offers and went with Macintoshes. In some cases, they used IBM grant money to buy Macintoshes.
Playboy: Will you name some colleges?
Jobs: Can’t. I’d get them in trouble.
Playboy: When you were in college in precomputer days, what did you and your classmates feel was the way to make a contribution? Politics?
Jobs: None of the really bright people I knew in college went into politics. They all sensed that, in terms of making a change in the world, politics wasn’t the place to be in the late Sixties and Seventies. All of them are in business now—which is funny, because they were the same people who trekked off to India or who tried in one way or another to find some sort of truth about life.
Playboy: Wasn’t business and the lure of money merely the easy choice in the end?
Jobs: No, none of those people care about the money. I mean, a lot of them made a lot of money, but they don’t really care. Their lifestyles haven’t particularly changed. It was the chance to actually try something, to fail, to succeed, to grow. Politics wasn’t the place to be these past ten years if you were eager to try things out. As someone who hasn’t turned 30 yet, I think your 20s are the time to be impatient, and a lot of these people’s idealism would have been deeply frustrated in politics; it would have been blunted.
I think it takes a crisis for something to occur in America. And I believe there’s going to be a crisis of significant proportions in the early Nineties as these problems our political leaders should have been addressing boil up to the surface. And that’s when a lot of these people are going to bring both their practical experience and their idealism into the political realm. You’re going to see the best-trained generation ever to go into politics. They’re going to know how to choose people, how to get things done, how to lead.
Playboy: Doesn’t every generation say that?
Jobs: These are different times. The technological revolution is more intertwined every day with our economy and our society—more than 50 percent of America’s gross national product comes from information-based industries—and most political leaders today have had no background in that revolution. It’s going to become crucial that many of the larger decisions we make—how we allot our resources, how we educate our children—be made with an understanding of the technical issues and the directions the technology is taking. And that hasn’t begun happening yet. In education, for example, we have close to a national embarrassment. In a society where information and innovation are going to be pivotal, there really is the possibility that America can become a second-rate industrial nation if we lose the technical momentum and leadership we have now.
Playboy: You mentioned investing in education, but isn’t the problem finding the fiends in a time of soaring deficits?
Jobs: We’re making the largest investment of capital that humankind has ever made in weapons over the next five years. We have decided, as a society, that that’s where we should put our money, and that raises the deficits and, thus, the cost of our capital. Meanwhile, Japan, our nearest competitor on the next technological frontier—the semiconductor industry—has shaped its tax structure, its entire society, toward raising the capital to invest in that area. You get the feeling that connections aren’t made in America between things like building weapons and the fact that we might lose our semiconductor industry. We have to educate ourselves to that danger.
Playboy: And you think computers will help in that process.
Jobs: Well, I’ll tell you a story. I saw a video tape that we weren’t supposed to see. It was prepared for the Joint Chiefs of Staff. By watching the tape, we discovered that, at least as of a few years ago, every tactical nuclear weapon in Europe manned by U.S. personnel was targeted by an Apple II computer. Now, we didn’t sell computers to the military; they went out and bought them at a dealer’s, I guess. But it didn’t make us feel good to know that our computers were being used to target nuclear weapons in Europe. The only bright side of it was that at least they weren’t [Radio Shack] TRS-80s! Thank God for that.
The point is that tools are always going to be used for certain things we don’t find personally pleasing. And it’s ultimately the wisdom of people, not the tools themselves, that is going to determine whether or not these things are used in positive, productive ways.
Playboy: Where do you see computers and software going in the near future?
Jobs: Thus far, we’re pretty much using our computers as good servants. We ask them to do something, we ask them to do some operation like a spread sheet, we ask them to take our key strokes and make a letter out of them, and they do that pretty well. And you’ll see more and more perfection of that—computer as servant. But the next thing is going to be computer as guide or agent. And what that means is that it’s going to do more in terms of anticipating what we want and doing it for us, noticing connections and patterns in what we do, asking us if this is some sort of generic thing we’d like to do regularly, so that we’re going to have, as an example, the concept of triggers. We’re going to be able to ask our computers to monitor things for us, and when certain conditions happen, are triggered, the computers will take certain actions and inform us after the fact.
Playboy: For example?
Jobs: Simple things like monitoring your stocks every hour or every day. When a stock gets beyond set limits, the computer will call my broker and electronically sell it and then let me know. Another example is that at the end of the month, the computer will go into the data base and find all the salesmen who exceeded their sales quotas by more than 20 percent and write them a personalized letter from me and send it over the electronic mail system to them, and give me a report on who it sent the letters to each month. There will be a time when our computers have maybe 100 or so of those tasks; they’re going to be much more like an agent for us. You’re going to see that start to happen a little bit in the next 12 months, but really, it’s about three years away. That’s the next breakthrough.
Playboy: Will we be able to perform all of those things on the hardware we have now? Or are you going to charge us for new machines?
Jobs: All? That would be a dangerous statement, using the word all. I don’t know about that. Macintosh was certainly designed with those concepts in mind.
Playboy: You take great pride in having Apple keep ahead. How do you feel about the older companies that have to play catch-up with the younger companies—or perish?
Jobs: That’s inevitably what happens. That’s why I think death is the most wonderful invention of life. It purges the system of these old models that are obsolete. I think that’s one of Apple’s challenges, really. When two young people walk in with the next thing, are we going to embrace it and say this is fantastic? Are we going to be willing to drop our models, or are we going to explain it away? I think we’ll do better, because we’re completely aware of it and we make it a priority.
Playboy: In thinking about your success, did you ever get to the point where you slapped your head and asked yourself what was happening? After all, it was virtually overnight.
Jobs: I used to think about selling 1,000,000 computers a year, but it was just a thought. When it actually happens, it’s a totally different thing. So it was, “Holy shit, it’s actually coming true!” But what’s hard to explain is that this does not feel like overnight. Next year will be my tenth year. I had never done anything longer than a year in my life. Six months, for me, was a long time when we started Apple. So this has been my life since I’ve been sort of a free-willed adult. Each year has been so robust with problems and successes and learning experiences and human experiences that a year is a lifetime at Apple. So this has been ten lifetimes.
Playboy: Do you know what you want to do with the rest of this lifetime?
Jobs: There’s an old Hindu saying that comes into my mind occasionally: “For the first 30 years of your life, you make your habits. For the last 30 years of your life, your habits make you.” As I’m going to be 30 in February, the thought has crossed my mind.
Playboy: And?
Jobs: And I’m not sure. I’ll always stay connected with Apple. I hope that throughout my life I’ll sort of have the thread of my life and the thread of Apple weave in and out of each other, like a tapestry. There may be a few years when I’m not there, but I’ll always come back. And that’s what I may try to do. The key thing to remember about me is that I’m still a student. I’m still in boot camp. If anyone is reading any of my thoughts, I’d keep that in mind. Don’t take it all too seriously. If you want to live your life in a creative way, as an artist, you have to not look back too much. You have to be willing to take whatever you’ve done and whoever you were and throw them away. What are we, anyway? Most of what we think we are is just a collection of likes and dislikes, habits, patterns. At the core of what we are is our values, and what decisions and actions we make reflect those values. That is why it’s hard doing interviews and being visible: As you are growing and changing, the more the outside world tries to reinforce an image of you that it thinks you are, the harder it is to continue to be an artist, which is why a lot of times, artists have to go, “Bye. I have to go. I’m going crazy and I’m getting out of here.” And they go and hibernate somewhere. Maybe later they re-emerge a little differently.
Playboy: You could take off. You certainly don’t have to worry about money. You’re still working—
Jobs: [Laughs] Because of guilt. Guilt over the money.
Playboy: Let’s talk about the money. You were a millionaire at 23—
Jobs: And when I was 24, my net worth was more than $10,000,000; when I was 25, it was more than $100,000,000.
Playboy: What’s the main difference between having $1,000,000 and having several hundred million?
Jobs: Visibility. The number of people who have a net worth of more than $1,000,000 in this country is in the tens of thousands. The number of people who have a net worth of more than $10,000,000 gets down to thousands. And the number who have a net worth of more than $100,000,000 gets down to a few hundred.
Playboy: What does the money actually mean to you?
Jobs: I still don’t understand it. It’s a large responsibility to have more than you can spend in your lifetime—and I feel I have to spend it. If you die, you certainly don’t want to leave a large amount to your children. It will just ruin their lives. And if you die without kids, it will all go to the Government. Almost everyone would think that he could invest the money back into humanity in a much more astute way than the Government could. The challenges are to figure out how to live with it and to reinvest it back into the world, which means either giving it away or using it to express your concerns or values.
Playboy: So what do you do?
Jobs: That’s a part of my life that I like to keep private. When I have some time, I’m going to start a public foundation. I do some things privately now.
Playboy: You could spend all of your time disbursing your money.
Jobs: Oh, you have to. I’m convinced that to give away a dollar effectively is harder than to make a dollar.
Playboy: Could that be an excuse to put off doing something?
Jobs: No. There are some simple reasons for that. One is that in order to learn how to do something well, you have to fail sometimes. In order to fail, there has to be a measurement system. And that’s the problem with most philanthropy—there’s no measurement system. You give somebody some money to do something and most of the time you can really never measure whether you failed or succeeded in your judgment of that person or his ideas or their implementation. So if you can’t succeed or fail, it’s really hard to get better. Also, most of the time, the people who come to you with ideas don’t provide the best ideas. You go seek the best ideas out, and that takes a lot of time.
Playboy: If you plan to use your visibility to create a model for people, why is this one of the areas you choose not to discuss?
Jobs: Because I haven’t done anything much yet. In that area, actions should speak the loudest.
Playboy: Are you completely virtuous or do you admit to any extravagances?
Jobs: Well, my favorite things in life are books, sushi and.… My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have is time. As it is, I pay a price by not having much of a personal life. I don’t have the time to pursue love affairs or to tour small towns in Italy and sit in cafés and eat tomato-and-mozzarella salad. Occasionally, I spend a little money to save myself a hassle, which means time. And that’s the extent of it. I bought an apartment in New York, but it’s because I love that city. I’m trying to educate myself, being from a small town in California, not having grown up with the sophistication and culture of a large city. I consider it part of my education. You know, there are many people at Apple who can buy everything that they could ever possibly want and still have most of their money unspent. I hate talking about this as a problem; people are going to read this and think, Yeah, well, give me your problem. They’re going to think I’m an arrogant little asshole.
Playboy: With your wealth and past accomplishments, you have the ability to pursue dreams as few others do. Does that freedom frighten you?
Jobs: The minute you have the means to take responsibility for your own dreams and can be held accountable for whether they come true or not, life is a lot tougher. It’s easy to have wonderful thoughts when the chance to implement them is remote. When you’ve gotten to a place where you at least have a chance of implementing your ideas, there’s a lot more responsibility in that.
Playboy: We’ve talked about what you see in the near future; what about the far future? If we’re still in kindergarten, and you start imagining some of the ways computers are going to change our lives, what do you see?
Jobs: When I came back from India, I found myself asking, What was the one most important thing that had struck me? And I think it was that Western rational thought is not an innate human characteristic. It is a learned ability. It had never occurred to me that if no one taught us how to think this way, we would not think this way. And yet, that’s the way it is. Obviously, one of the great challenges of an education is to teach us how to think. What we’re finding is that computers are actually going to affect the quality of thinking as more and more of our children have these tools available to them. Humans are tool users. What’s really incredible about a book is that you can read what Aristotle wrote. You don’t have to have some teacher’s interpretation of Aristotle. You can certainly get that, but you can read exactly what Aristotle wrote. That direct transmission of thoughts and ideas is one of the key building blocks of why we are where we are, as a society. But the problem with a book is that you can’t ask Aristotle a question. I think one of the potentials of the computer is to somehow…capture the fundamental, underlying principles of an experience.
Playboy: For example?
Jobs: Here’s a very crude example. The original video game, Pong, captured the principles of gravity, angular momentum and things like that, to where each game obeyed those underlying principles, and yet every game was different—sort of like life. That’s the simplest example. And what computer programming can do is to capture the underlying principles, the underlying essence, and then facilitate thousands of experiences based on that perception of the underlying principles. Now, what if we could capture Aristotle’s world view—the underlying principles of his world view? Then you could actually ask Aristotle a question. OK. You might say it would not be exactly what Aristotle was. It could be all wrong. But maybe not.
Playboy: But you would say it was at least interesting feedback.
Jobs: Exactly. Part of the challenge, I think, is to get these tools to millions and tens of millions of people and to start to refine these tools so that someday we can crudely, and then in a more refined sense, capture an Aristotle or an Einstein or a Land while he’s alive. Imagine what that could be like for a young kid growing up. Forget the young kid—for us! And that’s part of the challenge.
Playboy: Will you be working on that yourself?
Jobs: That’s for someone else. It’s for the next generation. I think an interesting challenge in this area of intellectual inquiry is to grow obsolete gracefully, in the sense that things are changing so fast that certainly by the end of the Eighties, we really want to turn over the reins to the next generation, whose fundamental perceptions are state-of-the-art perceptions, so that they can go on, stand on our shoulders and go much further. It’s a very interesting challenge, isn’t it? How to grow obsolete with grace.

Barry Diller, July 1989#

Let’s take Barry Diller, chairman and chief executive officer of Fox Inc.—which includes Twentieth Century Fox Film Corporation, Fox Television Stations Inc. and the Fox Broadcasting Company—out of his fraternally twin kingdoms of Los Angeles and New York. Let’s put him in someone else’s palace and principality—Caesars, in Las Vegas. Diller is with a friend. They stride through the casino and approach one of the craps tables. The friend is eager to gamble. “Not at this table,” Diller growls with the ferociousness of a pit-bull terrier. “This table is pathetic! This table stinks! This table has no heat!” They approach another. “This table has possibilities,” Diller decides. “This table has.…” But before he can come up with the word, he puts down his money, grabs the dice and quickly quintuples his stake. “There,” he announces to the friend and picks up his chips, once again knowing the precise moment to walk away a winner. “Heat.”
Another Caesars story:
Diller is sitting in one of the Palace’s giant booths with Diana Ross. Later that evening, she is to record a live album in the main room. Diller is bashful; the pit-bull voice is gone and in its place is a charmingly boyish one. “I hope you’re going to sing ‘Corner of the Sky’ from ‘Pippin,’” he whispers. “That’s my favorite song.” Ross sings it.
Which of the two stories is an example of Diller’s true nature—the pit bull or the boyish charmer? Ask around. They are equally true, for Diller is not an either/or kind of guy. He’s a pit bull, all right, but one you might risk petting.
His poker buddies: Steve Martin, Johnny Carson, Dan Melnick, Neil Simon.
His best-known former lover: designer Diane Von Furstenberg.
“His brain is extraordinarily precise,” says Jeff Katzenberg, chairman of Walt Disney Studios. “He is probably the smartest individual I’ve ever dealt with. He has an uncanny ability to go right to the core of an issue.”
Katzenberg got his start in the business when Diller, then chairman and CEO of Paramount Pictures, hired him at the age of 24 to be his assistant. “It was the worst job interview I’d ever given,” Katzenberg recalls. “I was totally out of control. Obnoxious. Cocky. I didn’t think I could possibly have landed the job. But, on the other hand, maybe being out of control was what made me hit a home run with him. Maybe he saw some of himself in me.”
Born in San Francisco in 1942, Diller grew up in Beverly Hills. His father amassed the family’s wealth following World War II by constructing tract houses. After dropping out of UCLA at 19, he asked Danny Thomas, father of his childhood friend Marlo, to use his influence with the William Morris Agency to get Diller a job in the mail room. Good at cutting to the core even then, Diller realized that to be successful in the business, he needed a foundation of knowledge—and where better to learn about the intricacies of entertainment than the William Morris mail room files?
His cars: Corvettes, a Jaguar convertible.
His addresses: Coldwater Canyon, Manhattan, Utah, East Hampton, Malibu.
Backtrack: One night, at a party given by Marlo Thomas, Diller met Leonard Goldberg, then the head of programing for ABC. They began to argue about the business and Goldberg was so impressed with the 23-year-old’s outspoken brilliance that he offered him a job as his assistant. (Goldberg now works for Diller as president and CEO of Twentieth Century Fox Film Corporation.)
At ABC, Diller was given the duties of buying packages of motion pictures from studios, deals that could run to $100,000,000. He quickly rose to vice-president of prime-time programing for ABC Television. He also introduced a form of programing that would forever alter television—the miniseries. He acquired “QB VII,” which became the first miniseries on network television, then secured the rights for “Rich Man, Poor Man” and “Roots.”
Even more important, however, was Diller’s creation of the revolutionary “Movie of the Week,” a 90-minute format to be broadcast each week in series form. Not only did he launch the venture, he was also given unprecedented control over the advertising, direction and promotion of the project. The form was so successful that in one year, ABC produced more than 50 original movies made specifically for television. What Diller had succeeded in doing, in fact, was create for himself a mini studio within a TV network.
While he was buying packages from the big studios, he came to the attention of Charles Bluhdorn, the late founder of Gulf + Western, the parent company of Paramount. In 1974, Bluhdorn was looking for a fresh face to run his troubled studio and gambled on the brash, young ABC vice-president. At only 32, Diller became Paramount’s chairman and CEO.
Diller was the first motion-picture executive to come from the ranks of the TV industry. (His protégé over the years, Michael Eisner, now chairman and chief executive officer of The Walt Disney Company, was the second such executive to make the lateral move when Diller brought him over from ABC to be president of Paramount.) Diller was not exactly welcomed by the moguls, but his success earned their respect. It was during his Paramount tenure that the Diller legend began to take shape. Its first facet is his uncanny ability to “green-light” (approve) films that combine commercial and critical success. A few of his decisions and their worldwide grosses to date: “Airplane!” ($154,000,000); “The Bad News Bears” ($59,000,000); “Beverly Hills Cop” ($286,000,000); “Flashdance” ($176,000,000); “48 HRS.” ($78,000,000); “Foul Play” ($85,000,000); “Grease” ($350,000,000); “Heaven Can Wait” ($132,000,000); “Looking for Mr. Goodbar” ($45,000,000); “An Officer and a Gentleman” ($170,000,000); “Ordinary People” ($76,000,000); “Raiders of the Lost Ark” ($340,000,000); “Reds” ($63,000,000); “Saturday Night Fever” ($260,000,000); “Star Trek: The Motion Picture” ($150,000,000); “Terms of Endearment” ($147,000,000); “Trading Places” ($105,000,000); and “Urban Cowboy” ($60,000,000).
Total box-office value of these decisions: almost three billion dollars.
The second facet of the Diller legend concerns his fiery temperament. Many fear him not only for his power but also for the way he wields it. Indeed, it is common to hear him referred to as the meanest son of a bitch in Hollywood.
“I don’t know why he has that reputation,” says Dawn Steel, who has been called some pretty rough names herself. She worked for Diller as a vice-president in Paramount’s merchandising and production departments, later becoming production president, and is now president of Columbia Pictures. “Sure, Barry is tough. Very tough. Sure, he fights for what he believes in. But he is always fair and never loses sight of the big picture. He created the ‘advocacy’ system within the motion-picture studios. He taught movie executives how to put some passion into their jobs. The business is a better place because of Barry. And movies are better, too.”
But back in 1984, Martin Davis, who became chairman of Gulf + Western after Bluhdorn’s untimely death, didn’t quite agree with Steel’s assessment. At the height of Paramount’s success, he thought there was a need for change. (Some say Davis was simply agitated that Diller’s annual $2,500,000 salary and bonus were higher than his own.) Having appointed Diller president of Gulf + Western’s entertainment and communications group, which also included Simon & Schuster and Madison Square Garden, Davis was making his unhappiness known throughout the company. Diller, ever the instinctive gambler, made the first move. He quit his job and accepted an offer from oilman Marvin Davis to take over the chairmanship of his recent purchase, Twentieth Century Fox. It was rumored that the $2,500,000 Paramount compensation was spare change compared with the deal Diller cut for himself at Fox, a deal that included equity in the company. Ultimately, Marvin Davis became disenchanted with the movie business and sold Fox to Rupert Murdoch, the Australian-born media baron.
When Diller arrived on the Fox lot, the company was in disarray, but he has steadily strengthened its many ventures. Third in motion-picture market share in 1988, Fox was labeled by The New York Times “the comeback studio of the year.” Two of last year’s top ten films were Fox movies—“Big,” with a domestic gross to date of $114,000,000, and “Die Hard,” with a gross of $86,000,000. Other hits since Diller came on board include “Broadcast News” ($53,000,000); “Aliens” ($88,000,000); “Predator” ($65,000,000); “Prizzi’s Honor” ($28,000,000); and “Wall Street” ($34,000,000). The company’s recent hit “Working Girl” has so far grossed $60,000,000 and there are high hopes for this summer’s release of “The Abyss.”
But it is the fledgling Fox Broadcasting Company that takes up most of Diller’s energy. Currently, Fox broadcasts only on Saturday and Sunday nights—Monday-night programing begins September 11—covering 90 percent of the United States with its signal, though many of its stations can be found only on UHF. During its first full year of operation, the company lost $94,000,000.
But, as Diller told Fox’s affiliates’ meeting back in January of this year, the company pulled in a profit of $400,000 for the six-month period that had at that point just ended. Some of its shows—“Married…with Children,” “America’s Most Wanted,” “The Reporters,” “The Tracey Ullman Show,” “It’s Garry Shandling’s Show” and “21 Jump Street”—though at the bottom of the national ratings, are at least breaking into the Nielsens with double-digit numbers. The Fox network, at first ridiculed for its audacity in going up against giants ABC, NBC and CBS, seems to have turned the corner. Once again, Diller has confounded the “experts.”
Private corporate fetish: discarded rubber bands.
Private corporate jet: Gulfstream G-II.
Playboy sent New York writer Kevin Sessums, who is also the executive editor of Interview magazine, to California to confront Diller in his lair. Sessums’ report:
“The first thing you discover about Diller is that, although he has a highly evolved intellect, he also has a primal instinct for human fear. If he senses for but an instant that you are intimidated by him—and just about everyone I spoke to off the record is—he’ll eat you for lunch. Diller respects strength; that’s his bottom line. Our interview is an example of what it’s like to have a meeting with him—the verbal sparring that takes place, the in-the-gut glee of battle.
“At one point, he came to New York on a business trip. We had dinner and I tried to persuade him to tell me some showbiz war stories. Famous for being press-shy, he was already having second thoughts about this interview and was trying to persuade me to drop the whole thing.
“He was quite agitated. ‘Why should I help you if I don’t want the thing to run?’
‘“Because it will be more of a portrait,’ I said. ‘Like switching to oils.’
‘“Well, you’ve got a great Polaroid as it is,’ he parried. ‘Polaroids are more revealing in their way. More candid.’
“‘That’s a great hook,’ I fought back, calling his bluff. ‘May I use that in my intro?’
“‘Sure. That’s what I do for a living,’ he said, grinning. ‘I take other people’s ideas and make them better.’
“The rest of our conversations took place during Christmas week in Los Angeles. Toward the end of my stay, I accompanied Diller to a couple of quintessential Hollywood parties. One was a Christmas party thrown by his good friend Sandy Gallin. Gallin, a Hollywood manager and producer, has become famous for his extravagant parties. That night was no exception. Man-made snow had been pumped onto his L.A. lawn. Dolly Parton greeted us at the door. In the entrance hall, a robed choir was stationed up the two staircases to serenade the guests with carols. Everyone was there: Sylvester Stallone, Barbra Streisand, Shirley MacLaine, Patrick Swayze, Pee-wee Herman, Jane Fonda, Bob Dylan, Madonna.
“One incident illustrated Diller’s power. Farrah Fawcett, there with Ryan O’Neal, bumped into Diller in a doorway. ‘Barry!’ she exclaimed in her best holiday voice and kissed him on both cheeks. ‘Happy birthday! I mean…’ she stammered, ‘merry Christmas!’ We all laughed, but Farrah’s switching of birthdays was a fair summation of the man’s position in that town. He may not be God in Hollywood, but he sure as hell is God’s Jewish son.”
 
Playboy: On the drive over to your studio office, we found the Los Angeles streets full of motorcyclists. It seems to be the trend here. Don’t you own a motorcycle?
Diller: Yeah. Lots. Well, not lots. Five or six.
Playboy: Which is it?
Diller: What do you mean, “Which is it?” Specifically? Exactly?
Playboy: Do you have five motorcycles or six motorcycles? Or do you have so many you can’t remember?
Diller: [Laughs] This isn’t an insight into anything; I just can’t remember. I have to count them up. They’re not all in Los Angeles. Some are in East Hampton. I’m hardly your image of “the biker.” I just started riding for the hell of it.
Playboy: No one would mistake you for a biker, but you do have the reputation for being a mean son of a bitch.
Diller: I know I have that reputation, but I don’t cultivate it. As a matter of fact, I’m surprised at it. Yet it’s clear that that’s what people think. I am difficult—that’s true. But I think difficult is good, especially if you’re dealing with the “creative process,” in which you have to make editorial choices. Editorial choices should be toughly made. That’s probably the first reason I’ve got that reputation.
Second, I think most business things are often adversarial—one side against the other. Give-and-take. To sell and to buy. All forms of commerce are adversarial. And in order for you to prevail with what you think is right, there is a psychological imperative that says, “I won’t do anything other than what I want.” That helps you get the things you want the way you want them. And, in the end, that comes out tough. It is tough, I guess. You just always try to prevail within your own boundaries.
Then other issues come up: Do you deal fairly? Do you deal straight? You must have standards. Listen, the only thing I care a lot about is this: All you really have to contribute is what you think. That’s all you have to contribute to any process. I respect people who approach problems in that way. There is not rightness involved, only being true to oneself.
Playboy: Hollywood is full of Barry Diller stories. Two of them show opposite sides of you. Will you tell us if they’re true or false?
Diller: Go ahead.
Playboy: The first one is that you were sitting in your office right after arriving at Fox and a producer walked by outside your window. You were having a meeting with some top executives. When you saw this producer, you started screaming, “I thought I told you guys I wanted that bastard off the lot! I want him thrown off now! Why is he still here? I don’t want to see his face again!” At that point, one of your executives told you that the guy’s latest movie was about to be released by Fox‚ and that he possibly had terminal cancer. The executive said, “Let his movie open and then we’ll change the locks on his office door.” At that point, you screamed, “I said I want him off the lot and I want him off the lot now!”
Diller: [Laughs] That’s absurd!
Playboy: But it’s a typical Barry Diller story. Did it happen?
Diller: Of course it didn’t happen. I mean, if I’d really said, “I want him off the lot!” in a strong, noisy voice, with which I do a lot of things—I’m not here to defend it—don’t you think the people in the room would have had the obligation to come over to my big white desk and turn it over on me?
Playboy: People don’t always meet their moral obligations—especially when you’ve succeeded in intimidating them.
Diller: But that’s the kind of monsterism that should be met by an action like turning over a desk. If it weren’t, then even I would be offended.
Playboy: The other story is the flip side. When you were running Paramount, a publicist in New York was dying of AIDS. He was very sick, in what turned out to be the last week of his life. You supposedly offered the company plane to fly his body home.
Diller: I wish that were true, as an antidote to the earlier story. But it isn’t. Although I did call up and ask what we could do, I didn’t go quite so far as that. You know what the probable truth is? That both of those stories are true up to the point that they get interesting. You know what I find odd? The stuff that I find the most interesting—I mean the really interesting, complicated stuff—never becomes a story.
Playboy: What do you consider the interesting stuff?
Diller: Oh, please. Do you think this is the forum I’d use for that? It’s just stuff that involves lots of texture and lots of emotion and lots of stuff. Come on, leave me alone.
Playboy: OK. What is it like to get your ass kissed all day long?
Diller: It’s been true for so many years, it really doesn’t affect me. I’ve had positions of influence since I was twenty-three, when I was assistant to the head of programing at ABC. I’m pretty inured to the ass-kissing process. That said, at times, I’m probably blind to it, also. But my history is that I’ve always wanted—and I’ve always had—strong people around me. Any time I’ve had anything but that, it’s usually been a nightmare.
Playboy: Do you ever have to kiss Rupert Murdoch’s ass? [Murdoch owns Fox.]
Diller: The term kissing ass is not sophisticated enough, because you’re dealing in sophisticated leagues. The only issue really is, do you use your charm to persuade people to do things? I suspect that anybody in any kind of structure does that.
If you’re going to deal in the world of ideas, you have to be, to some extent, a salesman. And you’re going to either sink or rise according to your ability to be a good salesman of ideas. The only thing that is important is, do you say what you believe? And do you try to use whatever you can to get people to do what you say? So what I’m interested in, again, is, what do people think? I’m interested in noisy exchange and conflict over that. It helps everybody, that process.
You learn things if you are able to listen. In my career, when I was in the position of working for people, I always did that. Always. I had a very “noisy” relationship with Charles Bluhdorn [the late founder and head of Gulf + Western, which owns Paramount Pictures]. I think there was great affection between us, which anybody could see. But that’s one of the places I learned you’d better be up for the fight.
Playboy: Why?
Diller: Charlie was a genius. He’s probably the only person I could ever call that. His was a brain you just couldn’t understand—at least I couldn’t understand it. It had extra senses. Of course, Charlie was also crazy, in his way. And he was a romantic. I don’t think the world has seen too many romantics who were businessmen. The energy you had to have just to function with him was immense. But more than anything, he and I had fun. At times, it was enraging, but fun. Battle as fun!
You know what the truth is, though? Nobody really knows. We start with that. I’ve always dealt from that point of view: No one really knows. None of the research people—who are really nothing but witch doctors—know. “The combined knowledge.” “The morning line.” Nobody knows. It’s really all just opinions argued forcibly. That’s all. Opinions are facts to me. Does all this sound bird-brainy?
Playboy: No. But let’s talk about how you got to be a movie mogul. You were a Beverly Hills brat, weren’t you?
Diller: I don’t know if I’d put it quite that way, but, yes, I grew up in a community that, oddly enough, was very small-town. Beverly Hills was the essence of a small town. It had a population of around thirty thousand, but its borders were rather confining. It was oddly rural-like‚ not in terms of what the eye could see but in terms of the sensibility. You knew everybody and everybody knew you. This was back in the late Forties, early Fifties, when there was no Rodeo Drive, no silly commercial thing for tourists to visit. There were barely even any cars.
Playboy: You were an only child?
Diller: I had an older brother who died.
Playboy: Your father was a wealthy builder. Was he upset with you later on, when you dropped out of UCLA?
Diller: I didn’t really drop out. In a way, I never went. The little time I did go, I wasn’t there, anyway; I sort of slid away.
Playboy: Why? Did you hate school?
Diller: Yeah. Always. Because it was boring. And because anything I ever learned, I learned because I was curious, not because someone asked me to learn something. When anyone did, I would resent it and rebel against it. I never was interested in the direct approach. But I read an immense amount of stuff for a little person.
Playboy: So you skipped college and went to work for the William Morris Agency.
Diller: Yeah. I was nineteen years old and I thought that was a great place to go and learn about the business. I was the only person who wanted to stay in the mail room, since I really didn’t want to become an agent. I was the only one who kept saying, “You mean I have to go be an agent now? I just want to stay here and read all this stuff.” I wanted to learn everything that was going on. I’d take these huge stacks of files and read every detail in them. I mean, you go to college to read; that’s what I was doing at William Morris. I read their entire file room. It took me three years, but I did it.
Playboy: Did you ever sneak anything home for night reading?
Diller: I did have a terrible early experience. I was very naïve. Somebody had stolen documents from William Morris and was leaking them to the press. The place was turned into a police state. I was called in to take a lie-detector test. First they asked me if I’d ever taken anything home and I said yes. They almost fired me right there. But that got the lie-detector guy going and he started asking me more questions—and the machine said I was lying about them. How do you protest to a machine when you are the only source on whether you are telling the truth or not? What do you do? It was tyranny! [William Morris would not confirm this account.]
Playboy: Sounds like a Fox television show.
Diller: What’s that supposed to mean?
Playboy: As in America’s Most Wanted.
Diller: [Laughs] You have nothing to fear from that show if you’re innocent—only if you’re guilty. Anyway, it turned out that the thief was a disgruntled press agent.
Playboy: Did you read the William Morris files alphabetically or did you go right to certain people’s files?
Diller: I was selective. I do remember it took me about a week and a half to read Elvis Presley’s file. I wasn’t overly interested in artist representation; I was interested in the process of what Elvis was doing. I enjoyed dissecting it—why was he doing this and what was the reason for that? I was like a huge sponge. The files for Elvis were about six feet high. It was fascinating. They contained his life. I learned about everything from those files at William Morris. I learned about people and personal relationships from them.
Playboy: That sounds scary.
Diller: You know what I mean: I learned about those things in a business sense. I knew more about William Morris than anybody who worked there, including the people who ran the company. But I didn’t learn how to be an agent—I completely missed that. What I did learn was the structure of that company, and how companies work, which fascinated me.
Playboy: Had you always wanted to be in the entertainment business?
Diller: Kind of always—yeah. I mean, I didn’t have any epiphanies at ten, if that’s what you mean.
Playboy: In school, were you more popular with the teachers or with other kids?
Diller: What is this all about? Are you trying to figure out my life? Are you doing some psychological inspection?
Playboy: Sure. With your cooperation.
Diller: I would say I was not a hit with my teachers, because I wasn’t overly interested in what they were doing.
Playboy: Were you a loner in school?
Diller: Not at all. But I wouldn’t say I was popular, either—popular is not the right word—I was compelling. People noticed me. That all sounds horrible, doesn’t it?
Playboy: Did you boss other kids around on the playground?
Diller: No, of course not. Please. You’re just trying to fit me into the little executive a-growin’.
Playboy: We were just wondering if you might fit the profile of the school nerd who becomes a success in business and spends his life confusing tough with mean.
Diller: Meaning what?
Playboy: That perhaps really tough men don’t compromise, which is the soul of business. Truly tough men can be found painting in a garret in Paris or working on an oil rig in the Gulf of Mexico. They aren’t behind a desk negotiating and compromising all day. Or so goes the theory.
Diller: Are you asking me if I agree with that theory? No, I don’t. I don’t think it’s as simple as compensating for early nerdiness. These things may or may not have anything to do with compensating. There are too many gradations.
Playboy: Tell us about your early days at Paramount.
Diller: Paramount was a big part of my life and it meant a lot to me in a lot of ways. I think about it only romantically. I see it only as…well, as something sweet. I never think about the struggle. And God knows there was struggle. But we were all young and it was our first time in the movie business. We were the television generation. I was the very first television person to go into the movie business. I was treated poorly. I was treated as less than scum. I remember being hurt a lot.
Playboy: Did you get even later, when you were in power?
Diller: No, that I don’t do, thank God. I’ve never been able to seek revenge. I have no list. There is no room for vindictiveness in the process. That’s neither good nor bad; that’s just the way I operate.
Playboy: You went from Paramount to Twentieth Century Fox, which was in deep trouble. What did you think when you got to Fox?
Diller: I felt horrible. I felt as if somehow, in my forties, I had gotten off a round earth and happened upon a flat earth. I was stepping off the end of it. I thought, I am now in this company that does not in any way work. I was incredibly frustrated.
Playboy: Were you afraid you might not be able to pull it off?
Diller: I was never afraid of any of that stuff. I never saw business situations as fearful. That goes back even to ABC, when I started movies for television, which everybody said would fail.
Playboy: At ABC and Paramount, you hired and became the mentor of two men who went on to make Disney such a success—Michael Eisner and Jeff Katzenberg. Why did you hire them?
Diller: Because I liked them both. Honestly, it’s all instinct. What connects. What appeals to you. You have to feel something going on between you and somebody else in a room; if you feel it, then you have to follow it. I don’t respond to people simply because they agree with me. Never. I respond to people who have something interesting to offer. Or are fun. Or…I don’t know‚ you know something? I really don’t know anything about anything. Shut that tape recorder off. This is all babble. It’s pure pretentiousness.
Playboy: It’s not babble. You’re a successful businessman in a glamorous business. People are interested in what you have to say.
Diller: My problem is that I have no powers of self-observation.
Playboy: But your outlook is less corporate than that of most businessmen. You socialize with the creative side of your business; you don’t hang out with other “suits.” Do you ever feel like a spy, working the other side of that desk? A kind of double agent?
Diller: [Laughs] I told you I didn’t even want to be an agent‚ now you’re making me a double agent. Maybe I could get a job at the CAA [Creative Artists Agency]. And triumph! I really don’t think about these things, but you’re pushing me to it. Let’s see: What I really do for a living is, I come into this office, I make a lot of noise, then I go home. But I have never been interested exclusively in one thing.
Let’s get down to basics. The truth of all truths in this business is: What is The Product? What is The Program? What is The Idea? That’s it. If you ever lose that or stray too far away, if you’re in some back room somewhere, flipping papers around and making deals and doing grand strategy for the Twenty-first Century and you lose “What is The Program?” from your prime sensibility, you fail. That’s it: You fail. So, to me, that pushes you in a certain direction.
I don’t think I’m an irresponsible executive. I’m better at some things than at others. There was a period when I really liked negotiating. It was fun for me. It was fun to figure it out. It was fun to win at it. It has not interested me in some time. I just evolved out of it.
Playboy: What holds your interest now? What are the challenges?
Diller: Fox Broadcasting. [points to the color chart of all the weekly network-TV shows by time slots] It’s funny. I look at the board even while I talk to people about the weather. I’m always looking at it. Often, I sit here in this room with people, having some meeting, and I catch myself studying that board. I’m running on a parallel track. It keeps drawing me back.
Playboy: You seem like the kind of businessman who would prefer creating a network to running one.
Diller: That has always been true with me. What has always interested me is building something. Once it gets built, I am less interested in it.
Playboy: Pardon the psychology, but you sound like you could be your father.
Diller: How?
Playboy: All this emphasis on building.
Diller: Yeah, well. Building tract houses is not poor-mouth work. But I kept wondering as a kid how people could live in those houses. They all looked the same. How did you know which one you lived in? I wouldn’t know where to take my bicycle. But I’m not poor-mouthing it. All I’m saying is building something is interesting.
Playboy: When do you expect the Fox network to start turning a profit?
Diller: We plan to break even within the next six months.
Playboy: But can you have number-one shows with the kind of stations affiliated with Fox—smaller stations, UHF stations?
Diller: If you had checked with Leonard Goldensen, the TV pioneer who started ABC from the floor up, and he had told you the stations ABC had at the time they started, you wouldn’t have given him a chance, either. They had thirty-five stations, I believe. Of course, they had a clear, strong signal.
But what happens is that your programs and your efforts mature those stations that carry your product. We see it. During the first period of the Fox Broadcasting Company, we’d take an action and there’d be no reaction. We’d say, “What happened? We put the show on the air. We spent millions of dollars promoting it. And nobody watched.” We couldn’t figure it out. Then, suddenly, this past summer, we started doing promotions for particular shows and we’d see a blip—it was like watching a baby—we’d see a little reaction. Two weeks later, you’d see even more of a reaction. So what happened was that while we thought nobody was watching, we were really laying the groundwork for this thing called Fox. It took that much time before people began to say, “Oh, yeah, Fox. I see. If I hear that idea, I must get it there.”
This maturing process is very satisfying. When we started, if you had asked anybody in America who was educated about television if it were possible for us to get double digits in the national ratings, they’d say, “No. It’s impossible.” Well, we’ve done that a few weeks in a row. [NBC’s programing chief] Brandon Tartikoff ridiculed our signal by saying it had the power of a coat hanger. Well, we’ve proved we are capable.
So the answer to your question is, sure, it’s possible to have number-one shows. In a year or two, these stations will be able to get ratings in the twenties—when they deserve it. And they’ll deserve it when we put shows on the air that people want to see. We cover ninety percent of the United States. The question is, do we cover that area with depth and clarity? Now, in some places, it may be difficult to get the signal—you may have to go to channel thirty-one or twenty-eight or thirty-seven. But with the advent of cable, it’s getting easier.
Playboy: What image do you want the Fox network to have?
Diller: Probably as an alternative to the networks instead of just an alternative. That’s a piece of it. These things are made up of little pieces, and until you have enough of the pieces that your personality begins to be reflected, then it’s sort of foolish to try to pigeonhole things. I don’t really do this very well. I didn’t do it very well at Paramount.
But there’s no question that after ten years at Paramount, there was definitely a certain personality to Paramount movies. As time goes by, you can look back on it with an even clearer vision. Back then, all those Paramount movies seemed pretty eclectic while I was dealing with them, but now I can see them as a whole. It will be true of this endeavor at some point, also. But if you asked me right now, “What is it?”—well, to use adjectives to describe it would sound as silly as the sound of my voice does to me right now.
Playboy: Some critics would say that Fox is responsible for the rash of lowest-common-denominator shows on television now.
Diller: Wait a minute. What you’re doing is the crime of the media. You have a little thesis and then you mightily shoehorn the facts into it so that they will fit. Look at the shows you’re excluding‚ Tracey Ullman, Garry Shandling, Duet, Beyond Tomorrow.

Playboy: But those shows are not as successful as your “blue-collar” ones, for lack of a better term. A Current Affair, Married…with Children, America’s Most Wanted, 21 Jump Street, The Reporters.
Diller: A Current Affair is not a Fox Broadcasting Company show‚ it’s Fox Television Stations’, a syndicated show.
Playboy: Joan Rivers is starting a new talk show that your old studio, Paramount, is going to syndicate. That’s ironic, considering what happened to her at the Fox network. Why couldn’t you come up with a show to fill that late-night slot?
Diller: We had one idea, which was Joan Rivers. It was a good idea. It succeeded for a while, then it eroded and failed. We had no other idea. You can’t audition on television. It doesn’t work.
Playboy: Arsenio Hall seemed to be working, but you pulled him off the air for The Wilton North Report. Now he, too, has his own show that Paramount is producing and syndicating.
Diller: Arsenio was fun. We got very lucky. That was rare luck. We would have kept him. In fact, we wanted to keep him, but unfortunately, we had the Wilton North train arriving in the station. We had no choice. We had to get the Arsenio train out of the way. The Wilton North train that arrived was a disaster. But, you know, I’m very proud of my failures. I’m perverse that way. You’re so interested in peeling off these personal things‚ there’s a good example of my ego coming out. I’m not shy about admitting my mistakes or failures.
Playboy: Do you think Fox treated Joan Rivers shabbily?
Diller: No, I don’t think we treated her shabbily at all. I watched an interview with her the other day and I thought that she was so vulnerable and sympathetic. Now, the person I went through a process with was not particularly vulnerable or sympathetic, but that may have just been because of the circumstances. What happened is that it didn’t work out. What do you do when something doesn’t work out? We didn’t act mean or rude or any other adverse way. At a certain point, we ended it, which was our responsibility.
Playboy: You also run Twentieth Century Fox Films, a company that produces not only movies but also television shows. How do you decide which Twentieth Century Fox pilot is sold to the three other networks and which is sold to the Fox network?
Diller: We’ve kept some walls up in the company, because we think it is the right way to do it. I guess it sounds strange; you want to say, “Oh, come on.” But if you asked people in the company, they would tell you that it is true. Fox Films has the integrity of its own operation. Sometimes, pilots will come to the Fox network, but the Fox Film Corporation believes that their charter is to first go to the three other networks; if there is anything left over, they will then come to Fox and other entities. They’re straight about it. I respect that and keep that wall as high as necessary. There are program departments all over this company. The thing is to keep them separated so they can generate what they believe in. We have an arm of this company that produces shows for one network and another arm that produces a show that may be in competition. But that’s just a healthy, sensible way to run the kind of business that I’m in.
Playboy: What makes a great movie? What makes you choose one script over another?
Diller: There’s only one thing: Does it interest you? Period.
Playboy: You don’t look at a script and say, “I don’t get this, but audiences will love it”?
Diller: I do not know what that means. When people use the word commercial, I want to take out a BB gun and wound them. Not kill them; wound them. It’s such an awful word. There’s only one thing you know: what you like. That’s all you know. That sounds simple, but so many times, people stray from that. Your instincts are educated by who you are. But the one thing you absolutely cannot do is say, “I don’t have any idea what this is about, but they’ll like it,” and then define “them”: “Kids’ll like it.” “Black people in ghettos will like it.” “White Protestants in Kansas will like it.” You can’t do that. All you can say is, “I like it.” “I hate it.” “I love it.” If you can keep it clean—and it’s very tough to keep that instinct clean, without much adornment—if you do that, you’ll probably tend to do OK. It’s a very broad avenue, this thing thought of as Main Street. Now, if you are interested only in esoteric things—in breaking the fourth wall or something—it’s pretty silly for you to labor away in mass media.
Playboy: You never order your production department to bring you scripts that can fit into conceptual categories?
Diller: No.
Playboy: Your movie line-up for 1989 at Fox is all over the map—there is no one driving sensibility.
Diller: But that’s good moviemaking!
Playboy: Then your personal tastes are all over the map.
Diller: Yes! The thing that always drove me crazy at Paramount was the way I was positioned as the executive who made the serious films—Reds, Ordinary People, Terms of Endearment. How did that happen to me? What happened to Saturday Night Fever? And Foul Play? And Heaven Can Wait?
Playboy: Your first two movies at Paramount were Bad News Bears and Looking for Mr. Goodbar. That seems like a summation of Barry Diller.
Diller: How interesting. Explain yourself.
Playboy: They are two opposite films. One is about innocence and competition and winning. The other is about power and sex. One is light; one is dark.
Diller: What are you saying? That I’m a schizophrenic?
Playboy: No. You can have those two sides to your personality and be healthy—if you admit to them.
Diller: Look at what you’re doing. Look at the positioning that you’re doing with me—“If you can admit to them.”
Playboy: You’re the one who said you were schizophrenic. Just trying to help.
Diller: Believe me, if you think the words “I am schizophrenic” have come out of my mouth, then you— 
Playboy: Are going to have a lawsuit?
Diller: [Laughs] No, you’re just not going to be able to walk.
Playboy: Then you’ll have a lawsuit.
Diller: I’ll defend it. I’m not worried.
Playboy: Why would those two films attract your attention?
Diller: I read a script of Bad News Bears and I simply loved it and we bought it within an hour. I remember, because we took it away from somebody else. It cost thirty thousand dollars. I was thrilled. Then we set out to make the movie. It was my first movie lesson, because we made that movie. We then took it to preview and the audience liked it, but they didn’t love it. Then we opened the movie and nobody went. I was crushed. I was not feeling well. I kept thinking it could not be—the movie was terrific. All the experts kept saying to me that once a movie opens and dies, you cannot resurrect it. I’ll have to admit that’s almost true. But we succeeded in bringing it back from the dead. We started by taking out a double-page spread in The New York Times. I remember Charlie Bluhdorn saying to me, “This movie has failed; how dare you spend this money to take out this ad?” He went on and on. But it cooked. It became a big, juicy early hit for me.
As for Goodbar, I hadn’t even read a script—just the book. I didn’t like the book—but I thought the story was great. It was one I hadn’t heard before. I’m always up for something that’s fresh and interesting. And Looking for Mr. Goodbar was a hot idea for a movie. It was made into a devastating movie by Richard Brooks. I’m not so sure that the movie I initially envisioned is the movie we got—but there it is.
Playboy: The story of British director David Puttnam is well known—how he came to town as the new head of Columbia, claiming he would revolutionize Hollywood by defying the packaging of movies by agents, slashing star salaries, making films at lower costs, etc., until he was dismissed. Isn’t that some of what you did at Paramount?
Diller: I had problems with…[laughs] I was going to say the Puttnam years, but maybe I should say the Puttnam months. That was a blowhard and a media manipulator at work. Puttnam has been doing it—attempting to manipulate the media—for years. My first experience with him was when we were making Reds at Paramount. We cared a lot about that movie. It was a very difficult movie to make, very controversial in a lot of ways. Here was Gulf + Western, this big bastion of capitalism led by Bluhdorn, and we were making this romantic movie about communism.
The plans for the movie were rough; it was unprepared, I admit it. It was rushed into production because the elements demanded it. That was the nature of the beast at the moment and it caused the picture to go way over its budget. But the budget wasn’t real, because you can’t budget a movie that’s unprepared. That happens from time to time if you push the production of a movie. It was very hard. Warren Beatty is a good friend of mine, and even we had a lot of difficulties with each other. There was a lot of conflict.
Playboy: Would you have made Reds if Warren had not been your friend? Did friendship get in the way of your business acumen?
Diller: The question makes no sense. It would not have been a film without Warren. The two things are not exclusive, but it was a highly charged situation. I’m not excusing anybody’s behavior, mine included. However, we covered the movie financially. Paramount was assured of not losing any money on the deal. I pride myself in that. But emotionally, Reds was a very difficult time for everyone.
Now, I’m giving you all this boring background against the following: One day, during the worst part of the process, a story appeared in the press from this person, David Puttnam, decrying big-budget Hollywood moviemaking as exemplified by the excesses of Reds. He even gave specific examples concerning our movie. While here he was, making Chariots of Fire, this wonderful little movie, for spit and polish. He made himself out to be the nice, honorable person compared with the Hollywood bad guys. It was a body blow to us.
None of us could figure it out. I kept wondering why this person would attack another movie. Why would he do this? I just couldn’t figure it out. Then I realized what he was doing. He had started his campaign early to win the Academy Award by putting our movie in a certain classification. That was brilliant. Everybody always says that Warren and I are so sophisticated about the business, but this train went right by us without our even seeing it. Then it was too late. But I thought, What a horrible thing to do. Honestly, what a rotten thing to do.
Playboy: Will Fox release Puttnam’s next movie?
Diller: [Laughs] Not likely. I think Puttnam has certainly made some movies that I’ve liked, but here is a person who came to town and made all of this noise. By the way, he had a unilateral right to spend a great deal of money, and he spent it. He was destructive to an awful lot of people who are decent and act honorably. When you asked me what I had done at Paramount, it did occur to me that we accomplished there what he was so busy talking about. And why, if you weren’t inherently fraudulent, would you talk about what you wanted to accomplish instead of accomplishing it?
Playboy: You talk more about the exercise of power than the making of movies. Is power very important to you?
Diller: It’s impossible for me to say, for a simple reason: I have had access to power for a very long time. I have asked myself how uncomfortable I would be without it. I can honestly say I don’t know. It has surely ceased to matter to me. It is complicated. I have never particularly seen my actions from outside myself. I’ve never had a very complete sense of being powerful. I know that sounds odd, but I’ve never had a sense of acting with power. I’ve never stood outside myself and said, “Oh, my God! Look at what I can do!” I’ve never done it. And I’ve always felt good about that.
Playboy: In a free-enterprise system, you are almost a titled person—chairman and chief executive officer. It’s like being royalty in a European country, except that you have even more power‚ you can act as king and queen.
Diller: I’ve got my eyes pressed against the glass panes just like everybody else: Things are only important or interesting depending on your vantage point. I’ve never had this conversation with anybody else who has had access to power, but the truth is that I’ve never looked at it from the point of view of someone looking in at it. I just don’t know what that’s supposed to feel like. I’m sure it’s supposed to feel like something, because I have the feeling about other things with other people. But I don’t have it about myself or my daily life. It doesn’t mean I’m not proud of my “tiering” in this world.
Playboy: Or your list of accomplishments.
Diller: That’s separate. That I’m very proud of.
Playboy: Which accomplishments are you most proud of?
Diller: Oh, I don’t know. I don’t know. When I think of them, I’ll write them down…like dreams.
Playboy: Do you get any kind of sexual feeling from power?
Diller: No.
Playboy: What do you seek in another person—or do you find all your satisfactions in your job?
Diller: Are we sliding into a morass here, a…I don’t know, the words escape me. I get too shy about it.
Playboy: About your personal life?
Diller: Yes.
Playboy: Give it a try.
Diller: I’m very eclectic. About everything. I have nothing very profound or interesting to say about this. If we weren’t sitting here doing this interview and you said, “Now, concentrate. What is it that attracts you to another person?” I still don’t know if I could do it.
Playboy: What has been the common characteristic?
Diller: There isn’t one! Line them up. You can’t find it, I don’t think.
Playboy: Have you ever lined them up?
Diller: [Laughs] Yes, I have. It’s an interesting picture.
Playboy: Is there a common characteristic?
Diller: You really want to know, don’t you? You’re not letting me off the hook. Let’s see. I guess, in the end—I do mean in the very, very end—they are all genuinely nice people. I do think that actually does distinguish them from other line-ups of other people. Let’s skip all of this.
Playboy: Why don’t you just let go and open up?
Diller: Why should I?
Playboy: It might be good for this interview; it might be good for your life.
Diller: Let’s concentrate on the second part. Explain to me why it would be good for my life.
Playboy: You are a corporate officer and all that that entails. You have to keep a lot of boundaries—a word you use—in your life.
Diller: I know what my boundaries are. What’s wrong with that? I do think that is what interests a person in other people—what are the boundaries.
Playboy: Aren’t people who live inside boundaries afraid of loss? What—besides your temper—are you afraid of losing?
Diller: I can’t talk about it psychologically and make any sense about it. But I do know this: I feel strongly about privacy. Now, it’s fair to ask me where this came from. But there is no question about it—anybody who knows me, any of my friends, anybody who is aware enough and is in the concentric circles of my life knows I care a lot about privacy. Privateness. I think acting with privacy is admirable. I respect privacy in other people and I expect them to respect it in me. That sounds really bird-brainy, but I believe it.
Playboy: As you evolve as a person, do some things that were once private in your life become public?
Diller: No, your sense of privacy remains the same. Embarrassments may change. Shynesses may change. One may become more outgoing. But the basic sense does not change.
Playboy: Should someone like Gary Hart have been given his privacy?
Diller: That is yet another issue. You’re going from what I personally feel to a question of media. We could wear out sixty-two tapes on how I feel about the media. Briefly, I think that Gary Hart tortured privacy. If you want to have a private affair, you can have one, even if you’re the president of the United States. But there are boundaries and rules and promises you have to keep.
Playboy: When you look back at the moguls who started this town—Adolph Zukor, Louis B. Mayer, Sam Goldwyn, the Warners—with whom do you identify?
Diller: I wouldn’t think any of them. They really built the movie business; it would be silly to put myself in the same category. Plus, they came out of such a different culture. Have you read this book by Neal Gabler, An Empire of Their Own? It’s really interesting. Very anti-Semitic, I suspect.
Playboy: No, just the opposite. Gabler makes the point that the Jewish men who started the studios were themselves anti-Semitic in their actions. They had a chance to present a humanist view to the public but, instead, codified a Christian one.
Diller: That’s so untrue. What they did was give an emotional base to Christianity. It is terribly sad, in a strange way, and I probably can’t say it right, but what those men did was interpret out of their own emotions these respectable and responsible emotional issues; they put them in a kind of American order. But all immigrants do that. It’s just more enhanced if you’re Jewish—there’s more Sturm und Drang. I mean, talk to immigrants. Gabler’s is a convenient theory. I’ll give him that. And the book is nicely anecdotal. But I’m not here to give you a book report. I’ll shut up.
Playboy: Do you think of yourself as a Jew? Do you have a Jewish identity?
Diller: [Laughs] No. Not really.
Playboy: The irony of Jewish anti-Semitism brings up another question. Some people claim that show business is run by homosexuals; others, that the business is homophobic. What do you think?
Diller: I don’t think you can say that the entertainment business is homophobic. That is at base untrue. It’s incorrect.
Playboy: Can an actor or an actress in this town live his or her life openly as a gay man or a lesbian and still get hired?
Diller: Well, you may have a point about the hiring of actors and actresses—but that’s a different issue, in which other things come into play that have nothing to do with phobias, homo or otherwise.
Playboy: Let’s talk about some of the big names in town. We’ll mention a few and get your response to them. Eddie Murphy.
Diller: What about him?
Playboy: You were at Paramount when he made 48 HRS., Trading Places and Beverly Hills Cop. Why did he become a star?
Diller: Why would he not be a star? He’s a funny guy.
Playboy: How did you develop a relationship with him?
Diller: Larry Gordon and Joel Silver, who produced 48 HRS., tell the tale that Paramount—meaning me—wanted to replace Murphy. I wasn’t there when they were seeing the dailies—I don’t know where I was—but somebody from Paramount supposedly said, “Get rid of this guy.” I don’t know. I like him a lot. I guess a lot of other people do, too. I haven’t the vaguest fucking idea why he’s a star. What an absurd question.
Playboy: Did Paramount, in fact, try to fire him from his first movie?
Diller: I truly don’t know. I think it’s kind of apocryphal. If it was during the dailies for 48 HRS., you certainly couldn’t tell that he was going to become such a big star. When we put him in 48 HRS., nobody had the foresight to say, “My God! This guy’s going to be the number-one movie star in America!” Nobody said that. Nobody ever says that. But after 48 HRS., we were alert enough to say, “Let’s take him.”
Playboy: Warren Beatty.
Diller: Warren Beatty is my friend. I wouldn’t ever talk about a friend.
Playboy: Madonna. Her movies fail. Why isn’t she a movie star?
Diller: I think she is a movie star. Whatever the reasons are, there have been bad choices made for her and by her. But she’s a movie star. How can she not be? She may be a movie star who’s never in a movie, but Madonna is a movie star. Thirty years from now, people will say, “Mmmmm…movie star: Madonna.”
Playboy: Mike Nichols.
Diller: I can’t talk about him. He’s a friend.
Playboy: Diane Keaton.
Diller: My friend.
Playboy: Bruce Willis.
Diller: I like Bruce Willis.
Playboy: Why did you give him a reported five million dollars to star in Die Hard? You supposedly toed the line against “star” salaries at Paramount.
Diller: I don’t know. What you do at a narrow moment of time for the reasons that you do does not necessarily prove anything. You can say you paid him too much, you paid him too little. The fact of the matter is that Die Hard made a lot of people a great deal of money. So who’s to say? There was a small window of time to make the movie and have it ready when we needed a movie to be ready. So Willis was available, and he said he wanted X amount of dollars to do it, and we said yes to it. Now, that was dumb or smart or some gradation in between.
Playboy: Diana Ross.
Diller: A friend of mine.
Playboy: Marvin Davis [former owner of Twentieth Century Fox].
Diller: He’s not a friend of mine. It’s interesting, I’m being pretty straight about this. I wouldn’t speak publicly about Marvin Davis. I’ve spoken too much privately.
Playboy: Martin Davis [chairman of Gulf + Western].
Diller: Probably the same. However, he’s done a great job at Gulf + Western.
Playboy: Which movies are you most proud of?
Diller: The most proud of? [laughs] There was this chimp movie at Paramount—Going Ape! Then there was…I see the images, but I’ve blocked out the titles…there was a Joan Darling movie with that little blond guy in it, First Love. That was great; I was very proud of that. [laughs] Oh, and, of course, Won Ton Ton, the Dog Who Saved Hollywood.
You know, when Diane Von Furstenberg and I got together, she used that awful movie as the symbol of our lives. We really began going out when we went to the preview of Won Ton Ton together. We were on our way to the country, so we dropped by this theater in the suburbs of New Jersey. It was in some mall somewhere. Just awful. The audience was full of motion-picture-exhibitor types and their fur-clad wives.
Playboy: You mean like the folks who watch the Fox network?
Diller: No, these were exhibitor types—believe me, they don’t watch nothing. They only know what they know. And there was Diane, watching Won Ton Ton with all these furs. She survived it, but she still says to me, “Well, you know, you can always go back to Won Ton Ton.” It was the lowest. To watch that movie in that huge theater with those people was an awful experience. What else? This is fun. Oh, yeah, 1900.
Playboy: Are you being facetious or serious? Some people think 1900 was Bernardo Bertolucci’s best film.
Diller: I saw the six-and-a-half-hour version of 1900, for which I gather I will have the undying enmity of Mr. Bertolucci. It was painful sitting there for that length of time. I had just arrived in Rome and was very tired. Maybe that had something to do with it.
Playboy: Seriously, which films have meant the most to you?
Diller: OK. Bad News Bears. Should I do this by years? Saturday Night Fever. I remember: Until the first hour of the first day of release, no one liked that movie. Heaven Can Wait, which was very emotional and a great turn. Days of Heaven, for sure. I’m just thinking of movies that were emotional for me. Reds.
Playboy: Which movies have you turned down that you wish you had made?
Diller: I don’t care about what I turned down. In the movie business, it has nothing to do with what you don’t do. It has to do only with what you do. What you don’t do that someone else has the alertness or the perception or the taste to do, and that turns out to be great, has nothing to do with you. It has to do with him. If you begin to define yourself by what you haven’t done, then you’re foolish.
There are people who say, “You read the script for E.T. and you turned it down? You bird brain!” But the truth of the matter is that any success you have is because you see something, not because you don’t see it. It doesn’t matter that someone else sees it. More power to him. But if you look at the movies—or any creative thing—you’ll discover that before they were fully realized and people could then react to them, an endless number of people didn’t initially “get” them. That’s fine. Thank God that happens. If that didn’t happen, then all you would need is some research firm that could do it all, figure it all out up front, plug it in one way and pull it out the other.
We’re very lucky that that’s not the case. For example, Warner Bros. turned down the script for Heaven Can Wait. Then I read it and thought it was wonderful. The reverse of that is that very early on, I read One Flew Over the Cuckoo’s Nest and didn’t want to make it. It’s only what you react to. But who cares if you’ve turned down a movie and other people went on to make a success of it? It doesn’t concern me.
Playboy: It is reported that your contract with Fox runs out next year. Will you sign up for another hitch?
Diller: Unfortunately, in terms of technical freedom, it’s not true about next year. It’s a little further in the distance than that. You know, I’ve probably had fewer, as they say, “jobs” than most people. I’ve really had only three. I went to school at William Morris. I was at ABC. And then Paramount. I really don’t think of Fox as a job.
Playboy: What is it, then?
Diller: I just don’t really think I work anymore. I have no need to work. I don’t have to pay the bills.
Playboy: Do you think you’re worth the money that Fox pays you?
Diller: How can anyone respond to such a question—whether you’re paid X or five hundred times X?
Playboy: How do you measure your worth?
Diller: There’s no way you can measure it in dollars, that’s for sure. Dollars have nothing to do with worth. You measure it in the things you ought to measure it in: What do you do? What do you contribute? What effect do you have on the people around you and the organism you have responsibility for? I don’t think you can put that in dollar terms. I’ve never asked any single person for any single thing. Well, wait—is that true? Let me think. Yes, it is true. I’m being honest here with you. As it relates to me personally, I’ve never done it. I’ve never said, “Pay me this and I’ll do that.” It’s an irrelevant issue to me. To me, Fox has nothing to do with money. I have more money than I would ever be able to spend in multiple lifetimes.
Playboy: Then why are you at Fox?
Diller: For a lot of complicated reasons. Because I’m still interested in the process. Because there’s still work to be done. In contrast to what I’ve done in the other phases of my life, the Fox companies are a challenge. But if somebody came up to me and said, “Would you be interested in running this movie company?” I’d look at him like he was crazy. I’ve been in the entertainment business for more than twenty years. If I were still interested in only running a movie company, I’d be a fool.
Playboy: You sound a bit bored. Would you ever leave the corporate world and just produce movies?
Diller: Never. No, no, no.
Playboy: Would you ever leave show business and do something different?
Diller: There’s nothing else I would do in the entertainment business than what I do now. And I doubt that I will be in the entertainment business for the rest of my life. I would presume that, I would hope. I’m just not sure what it will be, because I’m not finished with what I’m doing yet.
Playboy: How do you avoid burnout?
Diller: You reburn. By not burning the same stuff I was burning five years ago or ten years ago or fifteen years ago. I think you have to keep doing different things.
Playboy: Throughout the interview, you have tried to give us the impression that you are not a self-observant person, that you don’t contemplate your life. If that’s true, you are the only celebrated, successful person we know who does not look at his life as some sort of narrative flow. All successful people seem to have a sense of themselves as characters in their own lives.
Diller: But I never have, and I think that has a lot to do with the best parts of my life. I never have.
Playboy: Let’s give it one more try. At Paramount, you were known for championing high-concept films—those that could be summed up in one line. If you were going to sell The Barry Diller Story to a movie company, what would be the one sentence that would hook it?
Diller: [Laughs] Oh, God! You’ve been doing this all the way through this interview! You’ve kept coming up with these ultimate truths every time I say something. So you write the sentence; I can’t write it. I’m the worst judge of me. I do not do that well. I’ve told you that. Anything I would say would be utter noise. By the way, I’d love to be challenged, to be forced to do it so that we could laugh over it. Because we would really laugh. I would laugh hard.

Lee Iacocca, January 1991#

There was a time in this country, believe it or not, when nobody had ever heard of Lee Iacocca. Hard to imagine today, when the name is as recognizable in American households as McDonald’s, Frigidaire and MTV. Along with the original Henry Ford, he is the best-known figure in the history of American car building. From a scrappy car salesman toting flip charts up and down the Eastern Seaboard, Iacocca has risen to the number-one chair in the high-pressure chamber atop the Chrysler Corporation, along the way earning the status of national icon—a generic substitute for all that is right, or wrong, with the American automobile business.
But to millions of his countrymen, Lee Iacocca is simply the central character of an old-fashioned success story, a Fourth of July kind of guy who gives hard work a good name. His fairy-tale rise from the ashes of defeat—he was fired by the Ford Motor Company, for which he had developed the enormously popular Mustang, then saved Chrysler from bankruptcy—made him an almost mythic figure imbued with supposedly superhuman qualities.
By repaying Chrysler’s 1.2-billion-dollar Government-guaranteed bailout loan “the old-fashioned way”‚ seven years early‚ Iacocca became, in the eyes of many Americans, a genuine, hero in a world notably lacking in leaders of stature. It was a role that in 1984 made him a widely touted favorite for the Presidency. Many voters believed that a man who could save a sick company while making it look simple could bring the same bromidic solutions to the baffling problems of modern life and a Government gone wrong.
Iacocca still flirts with a foray into political life (“I should start a third party just to shake things up”), but whether he’s on the outside spitting in or simply raising hell on the international lecture circuit, he is a man of uncensored opinions who never shrinks from sharing them with the world.
Most recently, Iacocca has taken the lead in criticizing Japanese trade practices and calling for a fundamental rethinking of the American free-enterprise ethic, which he feels is dogmatically tied to old ideas of the Thirties. Japan has publicly winced at Iacocca’s allegations, singling him out as the most glaring symbol of American mismanagement. The son of Italian immigrants, he is also a roving superpatriot who last September helped cut the ribbon on the Ellis Island Memorial‚ the gateway to America through which his parents passed more than half a century ago. The ceremony was an ironic honor: Iacocca had chaired the committee that raised $350,000,000 to polish the skirts of the Statue of Liberty and refurbish Ellis Island, but was fired from the project’s advisory board after a conflict over how the money was to be spent.
The making of the Iacocca legend began with a reverse twist. After climbing to the presidency of Ford, he was unceremoniously dumped in 1978 by the company’s tyrannical chairman, Henry Ford II, in one of the most controversial firings in American history. Meanwhile, the Chrysler Corporation, then close to breathing its last breath, grabbed up Iacocca as its emergency surgeon. Iacocca promptly jawboned the U.S. Government into massive loan guarantees, then used a classic mix of chutzpah, hucksterism and high-profile salesmanship to make the Chrysler comeback one of the great business stories of the postwar period.
That’s when the unbridled public adoration began. Before long, Iacocca’s take-no-prisoners pitch was popping up on TV screens nationwide, projecting the image of the self-made American who could still do things right, still punch the clock according to an older generation’s work ethic. By personally going on air to hawk his wares (“If you can find a better car, buy it!”), Iacocca gave rise to a new era of highly visible corporate peddling. The tactic also lent him, the head of a car company with only an eight percent share of the U.S. market, visibility and influence far out of proportion to his actual business clout.
Within four years, Chrysler was back in the ring and competing with the auto industry’s leading heavyweights, while Iacocca continued his campaign to burnish the industry’s tarnished reputation for cranking out shoddy workmanship. By persuading the automobile workers’ union to take pay cuts—and by putting former United Auto Workers president Douglas Fraser on the Chrysler board—Iacocca ignited a spirit of teamwork not seen since the Fighting Irish had been asked to win one for the Gipper.
At Chrysler, Iacocca again stunned the world with a new concept in cars: the minivan. A roomy, stylish alternative to the family station wagon, the minivan has become a cash cow that other car companies, including those of the Japanese, are still struggling to match at a competitive price. For such successes, Iacocca has reaped ample personal rewards: His salary went from a symbolic one dollar in 1980 (a privation certainly eased by the $1,500,000 Chrysler paid to buy out his severance contract from Ford) to an estimated $20,500,000 in 1986—bonuses and stock sales included.
Then came the book: No shrinking violet, Iacocca agreed to write a memoir in 1984 explaining how he brought Chrysler back from the brink of ruination. Like its author, “Iacocca: An Autobiography “touched a nerve in the public. This was not just a car book; it was a combination morality tale and primer of shrewd business management. Consistent with Iacocca’s now-Midas touch, the book became a runaway best seller, with sales of 7,000,000 copies world-wide. His second book, “Talking Straight,” was published in 1988.
Born Lido Anthony Iacocca in Allentown, Pennsylvania, on October 15, 1924, the future business tycoon was one of a handful of Italian boys in a neighborhood jammed with Pennsylvania Dutch families. “We fought, but we assimilated,” Iacocca remembers of his immigrant upbringing. “Education was the key.” Iacocca’s father, Nicola, was a successful businessman who made most of his money in real estate, though he once owned part of a rental-car business. He was also a taskmaster who rarely allowed young Lido to slip below the threshold of academic excellence. “[When I finished] 12th in a class of 900,” Iacocca wrote in his book, “my father’s reaction was: ‘Why weren’t you first?’”
The hard studying paid off. Iacocca graduated with high honors from Lehigh University and accepted a graduate fellowship to Princeton, where he earned a master’s degree in engineering. Beginning his career at Ford with a rotation through several manufacturing jobs in Detroit, he realized within nine months that he was more of a salesman than a draftsman. The real action, he recognized, was in marketing and management. He promptly got a transfer.
The radical job switch meant sending Iacocca into the boonies of car selling‚ and into the teeth of an early-Fifties recession. Yet economic hardship only served to fine-tune Lee Iacocca’s sales savvy (he began calling himself Lee when he grew weary of long-distance operators laughing at the name Lido), and he thrived on the day-to-day challenges.
By the early Sixties, it was obvious to Ford’s top brass that Iacocca was a comer. His success in launching the sporty little Mustang spotlighted him as Henry Ford’s chosen protégé and front runner for the company presidency. But then came his monumental falling out with Ford, his jump to Chrysler and his subsequent rocket trip to folk-hero status.
Despite Iacocca’s success at resuscitating Chrysler in the early Eighties, today he finds himself once again facing trouble. After nearly a decade of steady profits, the company has just announced its second losing quarter since 1982, with profits down a whopping 65 percent in recession-prone 1990. Iacocca is faulted for a series of dubious moves, including the acquisition of the problem-ridden AMC (despite the popularity of the perennially best-selling Jeep), the production of a doomed Chrysler-Maserati luxury car and especially the failure to develop a new mid-sized car for the late Eighties‚ a shortcoming Iacocca pledges will be remedied within two years. There is also frequent talk of a Chrysler merger with a European white knight such as Volvo, Renault or Fiat. Iacocca insists that his company will remain solvent and that he faces nothing like the problems he had ten years ago, if only because he is sitting on four billion dollars in cash reserves that could help see Chrysler through some lean times.
To explore these and other critical issues with Iacocca (most importantly, his ongoing battle with the Japanese business establishment and the recent crisis over the politics and oil of the Middle East), Playboy sent veteran journalist Peter Ross Range to the Chrysler chieftain’s headquarters in Detroit. Range’s previous “Playboy Interview” assignments have included conversations with Sony Corporation cofounder and chairman Akio Morita and CNN owner Ted Turner. Here is Range’s report:
“Iacocca is at once larger and smaller than life as personified by the jut-jawed mug seen in his TV commercials. He’s a tall man who, on our first meeting, rose from behind a formidable desk covered with a yard-sale assortment of big black loose-leaf binders‚ sales reports from around the nation. He came toward me with a cigar in his hand and an impish grin on his face, as though this whole interview enterprise were a special lark that only the two of us knew about. ‘Finally got to me,’ he said, chuckling, explaining that he had held out for two decades before consenting to the ‘Playboy Interview.’ He was right on both counts: We had been dogging him for quite some time and, yes, now we’d finally nabbed him.
“As we held forth for our first scheduled 90-minute session—then stole an extra hour—I was struck by how much softer an impression Iacocca makes in person than when in public: The hard-charging, tough-talking executive surfaces only occasionally—most notably, when he embarks on charged topics such as Japanese trade barriers.
“But pensive or passionate, Iacocca never runs short of the energy to engage. He occasionally remembers to light his cigar—a Cuban-made Montecristo from a mysterious supplier he refuses to identify—but then it promptly goes out as he barrels into yet another lane of conversation. ‘You’re messing up my morning smoke,’ he complained at one point‚ then launched enthusiastically into his next tirade: on education, Japan, car safety and Government regulations.
“From the general clutter in Iacocca’s office—a football helmet behind his desk, a three-foot-high stuffed ram on the floor, a gallery of life-encompassing memorabilia on his walls—I soon got the impression that self-discipline is not Lee Iacocca’s middle name. But, clearly, instinct is. Although he is rigorously implementing a two-and-a-half-billion-dollar cost-cutting program at Chrysler, I sensed in Iacocca a businessman of the old school, a guy who smells the territory and goes with his gut. True to his now-familiar style, Iacocca has greeted the problems of the decade—and various new crises at Chrysler—with a roar rather than a whimper. As the Japanese share of the U.S. auto market has jumped to nearly 30 percent, he has been touring the country with a message of warning about Japanese market restrictions—a mission that has made him the lightning rod of controversy in the already touchy U.S.‚ Japan relationship.
“This seemed a good place to begin our conversation.”
 
Playboy: You’ve been storming the country this year, taking shots at Japan and claiming in television commercials that Chrysler cars are better than Hondas and Toyotas. Why the sudden competitive advertising?
Iacocca: I was going out on these trips and saying that our cars would beat the Japanese cars. I was just using Honda and Toyota as examples. If you keep beating that drum, in the end, the customer’s got to try your car. And when he does, he’ll decide whether you’re bullshitting him or delivering. I think it’s time to start beating the drums.
Playboy: But why the Japanese cars in particular? Honda is now considered the most popular car in America.
Iacocca: I always go after the leader. All my life, G.M. was the leader. So when I was at Ford, we went after Chevy. Now Honda’s the leader—the biggest-selling car—so I took them on. What should I compare myself with, the Yugo?
Playboy: Is Honda your toughest competitor?
Iacocca: We really don’t have any competition in the Jeep and minivans, unless you want to pay forty thousand dollars. But in the basic cars, I’d put Honda first and Toyota second. They are the two biggies. That’s why, when I advertise our cars, I never denigrate Honda or Toyota—I never denigrate any car—because their cars are good. I just say our cars have gotten a lot better. We shipped a lot of crap in 1980; by 1985, it was much better. We think we’re really pressuring Honda now.
Playboy: How do you try to match yourself with the leader?
Iacocca: We get their cars, drive ’em and then tear one apart—just rip it apart. Then we say, “Here’s where we’ve got to improve a little bit, and here’s where we’ve got Honda by the balls”—for instance, with air bags.
Playboy: We’ll talk about the air bags later. But let’s stick with the Japanese: You’ve been accused of pumping out ads that stoke American xenophobia toward the Japanese, of simply bashing Japan.
Iacocca: I’m not a Japan basher! Newsweek once put out a list of the top-ten Japan bashers and I didn’t even make the list. Still, I’m called a Japan basher. Why? Because I did this TV commercial saying that Americans are getting an inferiority complex and our cars are as good as Japan’s, so they call me a racist. Every time you turn up the volume in any way, the Japanese yell racist and everybody backs off. Why? Because we’ve got a guilty conscience in this country, and they know that over in Japan. They’re playing back to us what we don’t like to hear. It comes from our black-white problem. We’re carrying around this guilt. We had a civil war over slavery, remember? That’s the big stigma on our two-hundred-year record as a democracy.
Playboy: But do you ever just feel like bashing Japan?
Iacocca: Well, privately. But I’ve never bashed the Japanese people, and I’m going to stay clean on that. You don’t stoop to that level—my father told me that. So I never take on the Japanese people. If you look at anything I’ve ever said in a speech or especially in a commercial, you’ll notice I’ve never taken on a Japanese individual or taken a shot at their culture or the fact that they’re homogeneous. I’ve never used bad phrases. Yet all of a sudden, I’m the ogre.
Playboy: You use fiery words. In a newspaper column, you evoked images of the Forties, rekindling the anti-Japan sentiment of that era.
Iacocca: Once, in an interview, I was asked about the recognition of Chrysler products in Japan, so I said, “Jesus Christ, they certainly know the Jeep—they saw enough of them in World War Two!” You know what I really wanted to say? I wanted to say, “But they always saw the ass end of the Jeep—running them over.” Now, that would he Japan bashing, right?
Playboy: The actual wording in your column was, “They might be wiser men to look at why Japan is riding so high today. They should remember 1945, when America and the world owed Japan nothing but its contempt. And they should remember that Japan would be nowhere today without American generosity, humanitarianism, forgiveness and, yes, tolerance.”
Iacocca: You’ve got to point up the facts! You’ve got to remind them once in a while of our heritage—and theirs. You’ve got to remind them to play fair. After all, they made it by our opening up our markets. I don’t see why that’s Japan bashing.
These guys are aggressive. When you sting them and hurt them commercially, they fight back. It’s a war. If we get too thin-skinned about it, then this country’s got a problem. I’m a red-blooded American. I fight back.
Playboy: Your column was a reaction to the controversial book The Japan That Can Say No, by Sony Corporation chairman and co-founder Akio Morita and Japanese politician Shintaro Ishihara. Ishihara has accused America of anti-Japanese racism, and you wrote, “[Their] arrogance pours salt into an already open wound.”
Iacocca: That book is pretty bad, pretty bad. Morita took a powder and distanced himself from the book; he knew that Ishihara had gone off the deep end. For a while, they said they didn’t think it would be picked up in English.
Playboy: Weren’t they being naïve?
Iacocca: Now you’re being naïve. You think a high-ranking politician and the top industrialist in all of Japan would write something that vitriolic and not expect it to be picked up? This wasn’t Joe Tamimoto working down in the Ginza.
But I don’t think they expected such a violent reaction to their theories that the Americans are so racist that we dropped an atomic bomb on them just because they were yellow—and that we didn’t drop one on the Germans because they were Caucasians. We didn’t even have the atomic bomb before World War Two ended in Germany.
Playboy: In his Playboy Interview [October 1990], Ishihara said—
Iacocca: Listen. I knew you were going to bring this up, so I read the interview. Let me tell you: Ishihara is one of those revisionist guys who don’t want to remember what happened, OK? Anybody who can say the rape of Nanking [in 1937] was Chinese propaganda‚ he probably forgot the date of Pearl Harbor, but I remember the hour! I’m from that generation, goddamn it! He’s reading history and when it doesn’t suit his own bigotry, he changes it. Why should I respond to a guy like that? The fact that a thinking, grown adult could invoke racism proves that he’s a racist. I put Ishihara in the class of—to be polite—reactionaries. Everybody has his share of loose cannons and he’s a loose cannon. I would hope that he wouldn’t become the leader of the nation, because I don’t think he represents the mainstream of Japanese thinking today.
Playboy: What about his comments that American business leaders such as you are at fault for the dire economic situation in this country?
Iacocca: We’re all at fault, I guess, for going astray. You can’t point fingers. We must have done something wrong—our industrial policy is in disarray. The Government, the unions and the management—I give them all one third of the blame. That includes me on the management side. But to have these [Japanese] second-guessers pointing fingers and saying that because they’ve got their house in order economically, that makes them a superior race‚ well, I just don’t buy that shit. I never will.
Playboy: “Look at Mr. Iacocca,” Ishihara said. “He’s irresponsible, incompetent, dirty dealing, and he says different things at different times.”
Iacocca: You will not provoke…I’m not going to call him names. I could call him better names than that—they’d be dirty, but more original.
We work hard every day and we don’t like being called racists or bashers. The Japanese are feeling a little bit arrogant now. [Their charges] are all smoke screens—they’re red herrings, because they haven’t joined the free world yet when it comes to trade and business.
Listen, Morita’s own son was quoted in Forbes magazine [July 24, 1989], saying, “My father’s generation knew that they were playing by different rules from the West when it came to trade, but they pretended they didn’t understand the rules. That’s why they won.” Now, that’s according to the kid. I’ve never met [Akio Morita], but, believe me, we keep a book on the guy.
Playboy: In an article you wrote, you said that Japan has wrapped itself in a “Teflon kimono.” What does that mean?
Iacocca: “That’s just an expression used to talk about peeling back this veil they’ve wrapped themselves in. It shows that they don’t walk on water. They’re not superior. Don’t get an inferiority complex, Americans; they’ve got a lot of warts, too. Let’s look at their weaknesses and exploit them like they do ours. Let’s get together.
Notice: If I had written a similar article about Germans—who are much fairer in trade—and I said I wanted to peel back the Scotchgard Lederhosen, I wouldn’t have gotten one line of criticism in any press. Why? You tell me.
When I wrote that, I never thought mentioning a kimono would be any different from people referring to us as the guys with the three-piece suits‚ the gray-flannel syndrome. I would never feel offended by that. But the Japanese are touchy about everything, especially if you get to them on any commercial basis. Then they really turn up the heat.
Playboy: Is this reverse racism?
Iacocca: If you want to talk about racism, talk to a Korean [who lives in Japan]. Or talk to the Vietnamese boat people. Nobody took them in‚ but we took them, OK? But the Japanese are really pure; they don’t want any of those guys contaminating their society. Historically, the most bigoted countries are the ones with absolute, pure races. They really get racist. Whether it’s Adolf Hitler with his superior-race theory or the Japanese and the way they treat Koreans. We don’t go for that jazz. And yet they call our country too heterogeneous.
Playboy: You’re referring to the comments made in 1986 by former prime minister Nakasone, that American educational levels are pulled down by the presence of blacks and Hispanics.
Iacocca: That blows my mind. Our diversity makes this country great. Sure, we argue more, we sue more—I know all that. But that’s our damn strength. Our creativity comes from me and an Arab sitting down together. Yes, we get argumentative, but we’re both Americans, we’re citizens. But now I’ve got to hear this unadulterated crap that if you’re not homogeneous and pure, somehow you can’t resolve problems, you can’t compromise, you can never get consensus management. It bothers the hell out of me that people believe that.
This subject gets me right in the groin. When I helped open up the Great Hall on Ellis Island in September, it was to honor our seventeen million immigrant parents and grandparents—all different—and a hundred million of us offspring. I don’t think I have an Italian temper, but this gets me hot. It’s saying, somehow, we did it wrong. The unsung heroes of our industrial revolution are the immigrants.
Playboy: But hasn’t our diversity contributed to some of the country’s current problems?
Iacocca: Sure, there are conflicts. But with all our problems, this is still the kind of country I want to live in. This past century was our century totally. How did we do it? Diversity. Guts. Courage. We stuck with the program. That’s why the world is so great.
We’re the country that won the big war fair and square; the country that won the Cold War by hanging in there with your tax money and mine, until Gorbachev emerged and said, “That’s what we want, too.” And notice, when it comes to crunch time in the Persian Gulf, only the U.S. can pull it together. We’re the only guys who’ll play pivot. Who else would have stopped the madman, huh? Saddam Hussein, he’s like a Hitler. What’s Japan going to do as he lakes over all of Africa—protest?
Playboy: America did play the pivotal role in the Gulf crisis, but what about the cost? Can this country really afford such a huge commitment to the Middle East?
Iacocca: It’s expensive. The price of leadership for sending troops to the Persian Gulf was more than one billion dollars a month by October. [Secretary of State James] Baker says we’re there for the duration. OK, I agree with that. But understand, as somebody wrote in one of the newspapers, the true cost of sending the Navy and the troops back and forth over there is like paying eighty dollars a barrel for oil. So we’ve got to get some of our friends to help pay.
Look at this! [Removes newspaper clipping from briefcase] I cut this out of The New York Times—the reason I cut it out is that I couldn’t believe my eyes. It’s a story about Tokyo’s response to criticism that they’re not pulling their share in the Gulf. Jesus Christ, that’s the understatement of the year. But here’s the thing that killed me: It says that Japanese auto makers have agreed to let their government use ships taking Hondas and Toyotas to the U.S. to pick up war material they bought from us and take it to Saudi Arabia. On the way over, they drop their product here. In other words, we’ve got to keep the oil flowing so they can build the cars, ship them over here and contribute to our trade imbalance of forty-nine billion dollars. We spend a billion dollars a mouth on troops, supporting Japan’s ability to keep doing the same thing to us for another twenty-five years. And our Treasury borrows from the Japanese at [8.8] percent interest so they can keep sending the cars and make the imbalance worse. Pretty soon I say, “Oh, shit, I’m chasing my tail.” If a red-blooded American doesn’t respond to that, what the hell is he going to respond to?
Playboy: So what would you have them do? Fight in the Middle East?
Iacocca: No. They always invoke the name of Harry Truman, or the fact their constitution forbids them to send troops. I say, “You’ve got it wrong: We don’t want you to change your constitution and send soldiers. Just send money. Lots and lots of money.”
Playboy: What does the Gulf crisis mean for the car business?
Iacocca: The industry is on its ass, really down. Nobody’s buying anything and people are worried about their jobs. I’m seeing all kinds of layoffs. Let’s hope this doesn’t last more than a year.
Playboy: The last two times there was an oil crisis—in 1973 and 1979—you downsized your cars and switched to four-cylinder engines. But in the past ten years, the trend is once again toward heavier cars with larger engines. Can you again reverse the trend?
Iacocca: You can’t force people to buy anything. So far, there isn’t much change. You can’t downsize anymore. That’s like going on a diet and losing forty pounds, then the doctor says, “Lose forty more, then forty more.…” Then you’re dead. With all the technology, we might be able to get ten percent more fuel efficiency.
But it’s true that the American public still goes for bigger cars. It’s crazy; you have a four-thousand-pound car with a four-hundred-cubic-inch V-eight engine moving around a one-hundred-fifteen-pound woman. That’s wasting gas and putting fossil-fuel emissions into the air. At Chrysler, our biggest monster is a V-six three-point-eight-liter engine; but these Cadillacs and Lincoln Town Cars with five-liter V-eights are selling in great volume. Chrysler is poised to make a lot of four-cylinder engines. But if I took the lead in building those cars, my epitaph would read, “This guy was right, but he went bankrupt because he ignored his market. Much as I hate to say it, you still have to follow the market.”
Playboy: How does the country avoid getting itself into another oil crisis?
Iacocca: We have to get away from these continuous fluctuations in the price of oil. We’d be in less of a wrench if we had kept oil at twenty to twenty-five dollars a barrel instead of letting it fall to twelve dollars a barrel. What causes dislocations all over the world are these sudden, violent swings. I could be radical and say I don’t think we’d be having this crisis if we had an energy policy. I’ve been saying for ten years that we need to raise the gas tax. If I were a leader, I’d give the country a dose of castor oil right now and say it was due to one guy: Saddam Hussein.
Playboy: Do you think President Bush understands the concept of an energy policy and an industrial policy?
Iacocca: No. I think Republicans by nature don’t want to understand it. They define it as some bureaucrat sitting around in a room picking winners and losers. Reagan snookered us by saying industrial policy was a dirty word because it was used by Jimmy Carter and Walter Mondale.
Playboy: So, in a way, the Gull crisis and the renewed attention to conservation have vindicated Carter’s attempt to get Americans to save energy?
Iacocca: Yes, but Carter just didn’t say it right. He used the conservation ethic, turned down the thermostat and got blasted out of office. Sometimes it takes twenty or thirty years to prove that a guy was right. But at the time, it didn’t seem politically right.
Playboy: Getting back to the question of racism toward the Japanese, you have been accused of fanning those flames.
Iacocca: I get fucked by juxtaposition. I was in Monte Carlo a few months ago, watching Cable News Network in my hotel. Here comes a story: Racism is running rampant in the United States. West Los Angeles: people beating the shit out of Hispanics. Bensonhurst: white guys beating the hell out of a black. Somebody else is burning a flag. It’s a wild tape. It shows the Ku Klux Klan, then Adolf Hitler, then some skinheads. And right in the middle, they drop me! Just because I did a commercial saying we’re getting an inferiority complex and our cars are as good as the Japanese.
You journalists do it all the time. You can write something real bad and say, “Oh, by the way, not for attribution, but a guy said…” then you mention my name between two paragraphs. That’s the same as putting me between the skinheads and the Ku Klux Klan.
Playboy: OK. Then let’s get basic: What’s your real quarrel with the Japanese?
Iacocca: We don’t have free trade. We don’t have access to their markets. They’re beating our brains in! They are mercantilistic till hell won’t have it. They’re an island, a small enclave out there at the end of the world. But they’ve got to open up their thinking. These guys are dragging their feet. It’s been forty-five years since the end of the war. It’s time for them to join the big leagues.
The great free-trade dogma—you know, “Free trade forever”—is a charade. The Bush Administration took Japan off the unfair-trade list, but it kept India on. Can you believe that? What the hell’s going on? They’re still playing games down in Washington. And sure as hell, there’s going to be a trade war—retaliation—if we continue to argue about oranges one day, rice another.
Playboy: Specifically, how should they change?
Iacocca: For starters, they should open up their markets, open them up fully. Start playing fairly in that regard, OK, guys? It’s a huge market, that whole Pacific rim. We’re up to a fifty-billion-dollar trade deficit and they won’t even buy our world-class F-16 fighter jet, which has the highest quality at the lowest cost. You just can’t go on like that.
This Government under Bush, led by [Trade Representative] Carla Hills, says, “Oh, no, what we have to do is get our macroeconomics in order,” which means, “Let’s get our deficit down, then everything will be OK.”
I say to her, “I could change that fifty-billion-dollar trade imbalance; thirty-five billion dollars of it is cars. I, Lee Iacocca, could cut two billion dollars in the morning.”
“That’s great. One guy? How would you do that?”
“Honda has agreed to sell up to five thousand Jeeps. Give me a commitment for fifty thousand, I cut a billion off the deficit right there.”
Playboy: Has Honda agreed to sell up to five thousand Jeeps in Japan?
Iacocca: Yeah, they’re just now getting started. They don’t have a light truck, so it’s compatible with their product line. We asked our partner, Mitsubishi, to do it. They said, “We already built one, we don’t need you.” I said, “Yeah, but guys, remember, someday.…”
The U.S. already has nineteen thousand American entrepreneurs and dealers selling Japanese cars, and for a long time, we didn’t have one selling our cars in dual dealerships in Japan. The Ministry of Trade and Industry [MITI]—or someone—had put out the goddamn word not to do it. So Morita said, “Why doesn’t he come to Japan and sell Jeeps on his own?”
Playboy: Well, why didn’t you?
Iacocca: We tried it three years ago. We did one study of a small dealership in Tokyo. The land would have cost us twenty-three million dollars; Japan is a little island. By the time I bought the land and put right-hand drive in the cars [in Japan, vehicles are driven on the left side of the road], with the low sales volume I could have expected, I would have gone bust before I even started.
Playboy: But you solved that problem with a U.S.‚ Japan joint venture that recently opened Chrysler dealerships in three large Japanese cities. So what’s your problem now?
Iacocca: Well, we also have ten transplants—Japanese and Korean car factories that have opened in the U.S. and in Canada. Every one is loaded like a Christmas tree with tax benefits from the individual states. But nobody’s invited me to do a transplant over in Japan. I have a joint plant with Mitsubishi in Illinois, and that’s where I could get the other one billion dollars off the trade deficit.
Playboy: From one plant? How?
Iacocca: I could reverse the national content of the car we build there‚ the Laser, a very good car, by the way. Right now, it’s seventy percent Japanese content and thirty percent Chrysler content. So I just reverse it—put in one of my designs—so that seventy percent of the content is ours and not coming over in boxes from Japan. We’re going to talk with Mitsubishi about this. We’re hopeful it will work out. Otherwise, we’ll have a big, big argument over the thing.
Playboy: More than two thirds of the Laser is Japanese-built?
Iacocca: Yeah, and that brings up another job I think our Government should do to help us: There should be a truth-in-local-content law. When you say content, you’re trying to relate it, like unions do, to how many jobs you have. The Japanese pretty well control all the sophisticated stuff on these cars. What they use from us is the assembly labor and little automated stamping plant, and they buy the tires and batteries. Essentially, the rest of the stuff comes from them. And that’s the kick in the pants to me.
Playboy: Why?
Iacocca: Take just the car parts. How many parts do you think the U.S. car makers buy from Japan? We spend eleven and a half billion dollars a year! Morita and others ask why we buy so many parts from them. I say, “Well, that’s what free trade is all about: the best quality at the lowest price.” How much do you think they buy from us? Only five hundred million dollars! That’s an eleven-billion-dollar imbalance just in parts!
Playboy: Maybe the Japanese feel that your components aren’t up to their standards.
Iacocca: Then I say, “Don’t give us this crap that we’re not good.” [The American parts manufacturers] sell fifteen billion dollars a year to Germany, Europe and the rest of the world. If the U.S. can sell parts to Mercedes—like we did at Ford, with our speed control—that proves we have quality and competitive cost. G.M. and I are partners‚ we build the best four-wheel-drive equipment in the world. Truck transmissions. We are two powerhouses, two of the biggest companies in the world. And Japan doesn’t buy shit from us, OK?
Playboy: Do you really think that even if Japan fully opened its markets, we could sell them enough product to make a real dent in the trade deficit?
Iacocca: We will never sell a million cars in Japan. Never. But how about other products? And how about those F-16 fighter jets?
Iacocca: We will never sell a million cars in Japan. Never. But how about other products? And how about those F-16 fighter jets?
Playboy: The Reagan Administration signed a deal to build a joint fighter aircraft with Japan rather than sell them our F-16.
Iacocca: The new Administration inherited the deal from the Reagan Administration, and they know we got snookered. Take that as gospel. I was down at the White House one day talking to a high official—I won’t say who—and said, “Why don’t we just renege? The Japanese change their minds.” He said, “That would be like breaking a contract.” I said, “The Japanese break them when it suits their purpose.” But what I really think is that maybe they had us by the balls.
Playboy: How so? Do you know something we don’t know?
Iacocca: I can’t prove it, but I think maybe there was some Japanese pressure—somebody saying, “Hey, we’re buying all of these bonds and taking care of your debt. We may not come to your financial markets for a while. We could really put you in a tail spin, so you’d better talk turkey with us.” The U.S. was in a crisis then at the Tuesday bond auctions.
So what I worry about as an American is our financial destiny, which I think is floating somewhere out in left field. We’re just too dependent on those IOUs.
Playboy: Let’s get real fundamental. In the past twenty years, older companies such as Toyota, Sony and Honda started making great products and going for the overseas market—
Iacocca: And they said, “Screw our own market. We’ll send everything we have overseas. If we have to dump [sell below cost] to get our beachhead, we’ll dump.” And they did.
And look what happened next. In 1985, the dollar‚ yen exchange rate changed. After that, American products cost less overseas. My sales went up five thousand units in Korea, five thousand in Taiwan; we’re up to fifty thousand now in Europe. But how come I’m up only a thousand in Japan? How come Japan is the only country in the world that didn’t respond to the reduced costs of our cars? The Japanese market is rigged, I’m telling you. The son of a bitch is rigged! It’s rigged!
Playboy: OK, So if Japan opens its markets, what’s your second wish?
Iacocca: Simple: Get the cost of capital down. Do whatever it takes to get my interest rates from ten percent to seven percent. I would show you a lot of Chrysler car sales starting tomorrow. In Japan, the banks work very closely with certain companies and have very low interest rates. When I get up in the morning, I feel like I’m taking on Toyota, Honda, the Bank of Japan and MITI.
Playboy: But the U.S. is dependent on relatively high interest rates to finance its budget deficit, right?
Iacocca: Exactly. We give Japan our IOUs, which they take and say, “Hey, as long as we have them, you’d better keep that goddamned interest rate at nine or ten percent or we may go to Germany with our investment capital.” Or they say, “We have so many of your IOUs, we’d better swap some of them in. So we’ll buy Rockefeller Center.” And then everybody goes apeshit. Well, what are they supposed to do with the money? They can’t put it under a mattress.
Playboy: How much trouble is the United States really in with its twin deficits—trade and budget?
Iacocca: If I didn’t work at Chrysler, I’d tell you how deep. But every now and then, I go off the deep end and our dealers say, “Jesus Christ, people weigh your every word and you’re depressing them. You might create a self-fulfilling prophecy and cause a bigger depression.”
But I think our politicians are trying to conceal from us how bad it is. They said the S&L losses would be three hundred billion dollars; now they’re maybe five hundred billion dollars. They really cooked the books! They were even going to show a fifty-billion-dollar profit by having this mess. Talk about creative accounting. Now they’ve decided they’re going to put fifty billion dollars on the books and the other two hundred fifty or three hundred billion dollars they’re not going to show. It’s going off the balance sheet and they’re going to sell bonds. Well, who the hell are they bullshitting? It’s a liability on somebody’s books.
Playboy: So what do you propose?
Iacocca: The first thing is, we have to start living within our means. We should produce more and consume less. We should save more and borrow less. Geez, I sound like Ben Franklin. Anyway, for openers, let’s cut the budget deficit in half; interest rates will come down and we’ll have a boom. Then we can start digging our way out of this hole and not be so dependent on Japanese money. It’s one thing to get hooked on a Sony Walkman, or on a Toyota. But when you get hooked on their money, you’re hooked.
Playboy: Specifically, how do we cut the budget deficit in half?
Iacocca: You go where the money is. The same as Willie Sutton: Why did he rob a bank? Because that’s where the money was. I was on the National Economic Commission from 1987 to 1988 and we went to the Defense Department—that’s where the money was. This was pre-Gorbachev. We said, “Fake a five percent cut right off the top for inefficiency.”
Playboy: What about the thorny issue of income taxes and President Bush’s turnabout on his “No new taxes” promise.
Iacocca: I went to see George Bush at his house before he was elected. I’ve known George for a long time, he’s a good guy; I didn’t even call him Mr. Vice-President—just George. Anyway, I remember it well: He was seventeen points behind Dukakis at the time, and I said, “George, why would you want to be President and have the deficit nipping at you day and night? Kill it quick. Fake a good shot at it. It will make the next four years much more pleasant.” Then I said, “Look, why don’t you use the National Economic Commission as a sheet to windward? You can say these distinguished, bipartisan people came up with a wonderful program that you decided to present to the American people.”
Playboy: What was his response?
Iacocca: I’m not going to tell you everything that was discussed, but basically, he said, “I’ve got to get elected first.” Of course, I didn’t know he’d go way out on the cliff and say, “Read my lips.” That boxed him in.
Playboy: And he won the election.
Iacocca: Yeah, everybody was spooked by what happened to Walter Mondale when he mentioned taxes in 1984. Now the Republicans can say, “We got elected by saying no to taxes.”
It reminds me of Ronald Reagan. You’ve got to give him credit for one thing—he had a very simple message: “Everybody who wants a strong defense so that we stand tall in the saddle, raise your hands.” Everybody shouts, “Yeaaahhh!” “OK, I’m going to give you a defense budget of three hundred billion dollars, because Carter screwed it up. Now, anybody who wants their taxes reduced at the same time, raise your hands.” “Oh, that’s my man.” Talk about a communicator.
Playboy: Back in 1984 and 1988, people were talking about you as a potential Presidential candidate. In fact, polls once showed you beating both Bush and Dukakis. What about it? Would you run?
Iacocca: I think I should start a third party just to shake things up. I would never win, but I would like to get twenty-five percent of the vote and scare the living shit out of some people, bring them back to their senses. The problem is, I don’t believe in doing anything you know you’re not going to win.
Playboy: So would you run?
Iacocca: Not really. I’m not that dumb that I’d want to get into politics. I wouldn’t run for President, simply because the Lord’s already touched me and said, “I’m going to give you a taste of how bad it is: You are going to be head of the commission to restore the Statue of Liberty and Ellis Island.” It sounds innocuous, but it almost drove me nuts. I helped raise three hundred fifty million dollars, and they end up firing me.
Playboy: What for?
Iacocca: Because the guys down in Washington didn’t realize the American public was pouring out its heart. When they saw three hundred fifty million dollars coming in, they couldn’t wait to get their crummy little hands on it. They put out a new rule: A man who raises money should have nothing to do with spending it. I asked myself, If I’m having this much trouble doing something as beautiful as restoring a symbol—which should be fun—how would I like to live in Washington every day?
Playboy: So that scared you off.
Iacocca: It taught me a lesson. But if I died and went to heaven, what I’d like is this: to have a President come to me and say, “I need a Mr. Inside to be my C.E.O. while I’m chairman of the board.” I’d like to do that. I’d like to be the inside man. I’d like to run the economic side of the business. People say I’m a crisis manager. In a way, I am.
Playboy: Do you have some solid ideas about what this country’s leaders should do to turn things around?
Iacocca: Oh, hell, yes. For starters, I think the President ought to have one six-year term. Otherwise, all he’s thinking about in his first term is how to get re-elected. If I were President, I’d come in and say, “Here’s my plank, elect me for one term and I’ll deliver: One, educate everybody. Two, take care of the sick and the aged.” Any society that can’t take care of their aged or their handicapped is a sick society. And then I’d take one third out of the defense budget—despite the Persian Gulf crisis. And I’d be on TV every thirty days giving you a synopsis of how we were doing.
Playboy: Have these issues been overlooked by recent Administrations?
Iacocca: I once asked President Reagan, “What policies are there? What’s your monetary policy, what’s your fiscal policy, what’s your trade policy, what’s your tax policy, what’s your energy policy, what’s your environmental policy? Tell me in twenty-five words or less.” Of course, he didn’t know what the shit I was talking about.
Playboy: How has President Bush responded to your suggestions?
Iacocca: Oh, Bush knows my poems cold—he’s tired of hearing it from me. He likes me; he even tells his guys, “Listen to what he’s saying, because he knows how to say it and sell it.”
Playboy: What kinds of policies do you want to help formulate?
Iacocca: Industrial policy. I hate to use the words—they’re dirty words in our system. The Republicans say, “There’s no way we’re tampering with this wonderful system of ours”; but this wonderful system is losing! And when you’re losing, you say, “Hold it! Change your ways!” A good manager doesn’t sit around when he’s getting his brains knocked in.
Playboy: Do you think we need a MITI like Japan’s?
Iacocca: We need something like it. There are certain areas where we should not pick winners and losers but maybe pick industries that we think are important. We thought we were the world leader in microprocessors, but Japan has caught up with us, and now they’re going to pass us. We need a better organization at the highest levels of Government to understand what trade and commerce are all about.
Playboy: The notion of Government directing business sounds like heresy, coming from a captain of capitalism.
Iacocca: Look, let’s be honest. We’ve had industries that have always had a lot of subsidies, such as agriculture and aerospace. If biochemistry or medical breakthroughs are important, we should probably do more than just support the National Institutes of Health. If we want to rule the world in supercomputers and the seed money isn’t there, the Government should be subsidizing the launch.
How did Japan do it? We taught them. They had cartels before the war, and General Douglas MacArthur went in and broke them up. But now Mitsubishi—well, God, now they’re huge. Mitsubishi has an aerospace company, they have electronics, they have autos, they have the bank. If one of their people has a good invention or something, but he’s having trouble, they just call everybody together as a group. They say, “We’re going to take care of the poor black sheep of the family for a couple of years and eventually he’ll pay it back.” They’ve got a system of everyone protecting one another. Why don’t we work out something to help one another?
Playboy: So you think we should have zaibatsus—the old Japanese cartels? And Chrysler would have a bank and a shipbuilding company and consumer electronics and‚
Iacocca: I don’t think it’s in our nature to do that; that would be like changing the whole goddamned system. So I’ve got to watch what I say here.
We don’t have to have the zaibatsus or the interlocking managements. That would be heresy; it would go against our country’s history—our laws, the Sherman Act, trust busting, the railroads, the oil companies and the big robber barons. They got so much control that they were ruling the whole country and setting the prices. Still, our whole system has got to be redirected a bit to the stakeholders and not just to the stockholders. Somewhere in the Eighties, we lost our way. I think it came from Wall Street and the scramble for the fast buck. We’ve got to think about people’s jobs, the people who pay the taxes, and maybe those who don’t pay taxes when their plant is closed. Then a town like Detroit only gets seedier because there’s no tax base.
Playboy: But relying on the Government to come up with an industrial policy breaks with America’s laissez-faire business tradition. Why would you even consider this?
Iacocca: Because I’ve had experience with it. When Chrysler almost went bankrupt, the only way we could make it was by having an industrial policy—Government and management and labor in the same room saying, “We’re all going to sacrifice.” That’s when I said, “OK, the first year, I’ll work for one buck.”
Playboy: Fine, but you sure made up for it on the other end when Chrysler became a success: You earned more than twenty million dollars in 1986.
Iacocca: That was because when I came to Chrysler, I took a whole lot of paper—stock options—instead of salary. Chrysler stock was then at its lowest [three and one eighth dollars] per share. But we decided I shouldn’t get it at below par, so I got it at six dollars. I still have a lot of it. I’ve watched it go up and watched it become worthless again. When it hit fourteen dollars, I kept hearing, “Dump it, dump it. Take your fourteen dollars‚—that’s a hell of a profit from six dollars.” But I didn’t sell mine at fourteen dollars. Each year, I would just take a certain slug and cash it in. At its peak, with splits, it was up to one hundred dollars.
So I don’t apologize to the banks that rode with me. I don’t apologize to anybody for the fact that I had confidence in the company. Everybody who held on went up with me on that same tide.
Playboy: Not the guy on the assembly line. Even if he held on to his stock, he’s still in a different world. The fact remains that, under your contract—with salary and stock options—you made almost forty-six million dollars in a four-year period.
Iacocca: The board gave me that contract because they felt that I was a good ballplayer and they wanted to make sure they kept a no-hit pitcher. They also wanted to make sure I didn’t get rich fast and take a powder on them.
It’s tough to define making money to the guy on the line, because there’s no difference to him between one million dollars and one hundred million dollars. We’ve had some profit-sharing years, but now he’s making thirty-five dollars an hour with fringes. There aren’t many jobs elsewhere for thirty-five-dollars-an-hour workers.
And it is true that we’ve always paid executives fairly highly in the auto business. But our basic salaries are pretty nominal by U.S. standards.
Playboy: What do you call nominal?
Iacocca: Well, I’m up to eight hundred thousand dollars a year now. After forty years, that’s the highest I’ve ever been paid in salary. The auto business was always cyclical, boom or bust, and in the good years, you got a bonus that could equal your salary. You could make another eight hundred thousand dollars.
Playboy: Does making so much money play a big role in motivating you?
Iacocca: Not at all. After the first couple of million.…Anybody who is motivated by just trying to keep score, to see who’s the richest guy—well, I’m just not built that way. You can’t take it with you, so what’s the motivation? I was making good money when the Ford Mustang came out, because it scored. I was thirty-nine. I said, “Geez, I don’t know what I’m working for, but I do know I want to pay back society,” which I’m doing now with my left hand. I have the Diabetes Foundation, our education work with Reading Is Fundamental, and I started the Iacocca Competitiveness Institute at my alma mater, Lehigh University.
When you start out, you’re a materialist. There are certain nice little toys you want: a vacation house, a home with seven bathrooms, instead of one with two bathrooms like the one I grew up in. We don’t need seven bathrooms, but it’s part of the deal, right? I have a good standard of living, but I’ve never had an airplane or a horse or a boat.
Playboy: But you’ve had some nice cars along the way.
Iacocca: Oh, yeah. I just bought a Lamborghini Countach.
Playboy: Bought? Doesn’t Chrysler own Lamborghini?
Iacocca: Oh, yeah, but that’s a two-hundred-thousand-dollar car. Can you imagine me taking one as a company car? They’d be all over me!
Playboy: You come to work in a chauffeured Chrysler Imperial. Do you ever have time to drive your own cars?
Iacocca: Sure. I like to drive a minivan. Just the other day, I bought a knockout MG roadster—it’s red with wire wheels. I have a virtually new 1964 Mustang, blue and white, with the pony package, V-eight engine. My father gave me a Model A, an original, because he was in the Model A business.
Playboy: Where do you do your driving?
Iacocca: In Italy.
Playboy: That’s where you have your vacation villa and your vineyard. What do you do there?
Iacocca: Read. Rest. I just put up five hammocks. I also have a bocce court. Bocce’s good exercise‚ you get in big fistfights, but it’s good exercise.
Playboy: Do you find yourself returning to your Italian roots as you get older?
Iacocca: A bit, yes. When I grew up in Pennsylvania, my sister and I were trying to assimilate, so we didn’t talk Italian. But my daughter speaks and writes it fluently. I think we skipped a generation to go back to the roots. But it’s a shame we don’t have those big Italian Sunday dinners anymore, with fifty people around. There are no neighborhoods left, so where the hell are you going to find the people? They’re all on a jet going someplace. It’s a crime so much of our culture has been crushed.
Playboy: We’re told you like to cook Italian food.
Iacocca: I went to cooking school in Modena, Italy, with my daughter. We got pretty good. Knock you dead with some veal dishes—osso bucco and saltimbocca. If you want a great pasta dish, just make some semolina pasta. Then take a couple of cloves of garlic and olive oil—my olive oil, the best virgin olive oil. Maybe throw some greens on it now and then for flavor, or a hot pepper. You can eat that day or night. But I’ve got to watch my weight. That’s why I try to do the treadmill every lunch hour for thirty minutes.
Playboy: You’ve written that you lived in the lap of luxury at Ford—white-coated waiters, the works. What’s it like at Chrysler?
Iacocca: Tuna fish on rye at my desk.
Playboy: After the boom years of the mid-Eighties, the company now seems to be on the skids. You’ve taken losses in recent quarters, you’ve asked the unions to accept company stock instead of a pay increase, you’ve lost some of your highest executives in the past year. What happened?
Iacocca: Wait a minute, this sounds like it’s piling-on time. Sure, doing some extracurricular things like the Statue of Liberty project took my eye off the ball. But if I had thought that one guy had to watch everything in a company this size, a thirty-five-billion-dollar company.…
Listen, I delegated to Jerry Greenwald, who delegated to Hal Sperlich, who delegated to Bob Lutz. Then you say, “Well, your guys as a team didn’t score as highly as they might have.” OK, what did we learn from it? Let’s change it.
Playboy: Of the top men who left you last year, Gerald Greenwald’s departure was the most devastating. He was your heir apparent.
Iacocca: Yeah, Jerry’s leaving was a blow. He was more than the heir apparent, and he was making plenty of money, too. But he got an offer of nine million dollars for just ninety days of trying to put together the financing for the union buy-out of United Airlines. And then if that worked, he was to stay on as C.E.O. and get more than a million dollars a year. But that’s peanuts compared with stock he’d get from the union, which would be maybe up to twenty-five million dollars. When he flew over to Italy and laid the deal on me, he said it wasn’t the money alone—it was the challenge. I told him he’d have plenty of challenge at Chrysler. But nine million dollars is enough to give any reasonable or sane man pause—win or lose, you get nine million dollars. That’s a good summer’s work, right? [As of mid-October, the attempted union buy-out of United Airlines had failed.]
Playboy: Do you fault him for leaving?
Iacocca: Sure I fault him. Why not? He grew up with me. He’d been in the car business for thirty-two years, same two companies as me—Ford and Chrysler. Isn’t there anything sacred anymore? Isn’t there any loyalty to anything?
I told him, “Jerry, it’s the Nineties. The Eighties were this kind of thing; you should have done it then, and I would have written you off as caught up in the Yuppie movement. But that’s over. The mere fact that they can pay nine million dollars for ninety days shows that it’s go-go time again. After you’ve drawn your nine million dollars—and even if you become C.E.O.—you’ll still look back on all the friends you talked into coming with you to Chrysler, and it’s still an act of walking out on the gang. Easy come, easy go.” I even told him, “If you want to climb a mountain twice, do it with Chrysler.”
Playboy: How high is the mountain you have to climb right now? Is it 1980 and possible bankruptcy all over again?
Iacocca: No. That last mountain—the turnaround ten years ago—was like going up Mount Everest without any tools. That was climbing barehanded. Now I can relax at night, because I’ve got four billion dollars in cash reserves. I can meet payrolls and pay the suppliers on time. But I’d like to do more than just break even, which is all we’ve done for the past nine months.
Playboy: People have begun faulting Chrysler for the gaps in its car line: You don’t have a small-car successor to the Dodge Omni and Plymouth Horizon; you don’t have a mid-size car to compete against the Ford Taurus and Mercury Sable; your only real money-makers are the Jeep and the minivans.
Iacocca: What the hell’s wrong with our cars? I think we have a damned good product line out. The Spirit and the Acclaim are rated up there with the Hondas‚ we’re selling the shit, out of them. And even though I can’t advertise it, what gave me a real boost was Consumer Reports. Out of the fifty-nine cars they recommended in 1990, fifteen of them are Chryslers. OK, two are joint-design cars with Mitsubishi, and three others are Colts that we buy from Mitsubishi. But ten are Chryslers.
Playboy: What about a small car?
Iacocca: We can’t afford an Omni or a Horizon—we can’t build a small car and make a dime. We just came out with our America series at seven thousand five hundred ninety-nine dollars; we’ll get half the small-car drivers back that way. Everybody’s chasing the law of comparative advantage. Japan wants to build its small cars in Korea now; Korea is probably going to let some developing nation like Poland do it, if they can get dirt-cheap labor.
Playboy: And a mid-range car?
Iacocca: That’s coming for 1992-and-a-half. I’m the first to say I wish I had it today. But I made the decision—me alone—to develop the minivan first, a car that had never existed. We decided to do that as opposed to a new pickup truck. Each [vehicle] costs a billion dollars to develop, and I couldn’t do them all at once. After that, we felt it was important to take care of the full Jeep line. So what we’re missing is what is longingly called the pure middle and upper-middle end of the market—what we call our LH program.
Playboy: But it’s those decisions that left you with the gaps.
Iacocca: Look, there’s a recession on. Chrysler is the smallest of the big-three car companies, and the transplants are coming on strong. So people say we have lackluster product. Where’s the lackluster product? I go burn myself out on a six-city promotional trip that costs four million dollars; the press dogs me, led by the America bashers, the Japanese, beating my head in at every stop, saying, “How dare you?” I say, “Hey, I’m Willy Loman. I’ve got a smile on my face and a shine on my shoes. I’m out there hustling. I’m selling what I got. And what I got is pretty damned good! You want me to give up? Drop dead!”
Playboy: How much is the recession hurting you?
Iacocca: There’s no problem that a three-point drop in interest rates wouldn’t cure. But there are too many cars being built right now for the American market. You get rebates up to twelve hundred fifty dollars a car, just when we’re struggling to cut costs by two point five billion dollars at Chrysler. There’s too much capacity. Ford and G.M. are in the tank, too—most of their earnings over the past two years came from overseas sales. We’re to sell fifty thousand minivans in Europe this year.
expecting
Playboy: You’ve extended your contract to stay on as Chrysler chairman indefinitely. Is that because you’re on a crisis footing? Are you girding for war?
Iacocca: I’ve got to be honest with you. Given the voices of my mother, my daughters and my fiancée—all of them asking, “What the hell are you staying on for?”—I just want to see our program for the Nineties unfold right; we’ve got a great program and we’ve got to implement this baby right. I’ve said I’ll stay as long as it takes to get this thing back on the rails.
Playboy: Your planned joint deals with Renault and Hyundai fell through this year. Is it possible that Chrysler won’t survive—
Iacocca: This company will survive.
Playboy: Without a merger? Will there be a Chrysler-Fiat, a Chrysler-Hyundai, a Chrysler-G.M., for that matter?
Iacocca: We already formed a joint venture with G.M. on the four-wheel drive, so I asked them about doing a small car together. The country needs it. We both say we can’t make money; we go to Korea and Japan for our small cars. Of course, the antitrust guys might die. They’ll say, “Building a transmission together was one thing, but a whole car? Are you guys crazy?”
Playboy: But what about merging?
Iacocca: It’s a matter of time frame—after the year 2000. We talked with Renault, we’ve been talking with Fiat, and I made big news by talking with Volvo. They called us, by the way. But can you imagine a merger with Volvo? They represent eleven percent of the G.N.P. of Sweden. All these companies recognize that there’s going to be a consolidation of the world auto industry. They know that if you want to be a world player, you must have some presence in each of the big-three markets—the Pacific rim, North America and Europe. But you can’t be all things to all people in all markets. So we’re going to have to form alliances.
Playboy: What about your proposal to build a joint car with General Motors?
Iacocca: Well, at first, they didn’t throw it out. And it may come to pass one day, because the world is changing. But our laws are stupid; we’re stumbling in our underwear. G.M. and Toyota can get together to build joint cars at the NUMMI plant in Fremont, California, but I can’t [legally] do a joint small car with G.M., because I’m U.S.-based. You can do a deal with the enemy, but not with me. There are only three of us left in the U.S., so what’s the big deal?
I still dream about my “Global Motors” concept‚ say, a consortium of Chrysler, Nissan and Volkswagen where we pool our efforts on huge capital investments like engines. But it’s hard enough to slam together two companies that come from the same culture. A true merger—bringing together a Mitsubishi and a Chrysler—even after holding hands for twenty years‚ would be real tough.
Playboy: Because of exchange rates and import quotas, the price of Japanese cars rose dramatically throughout the Eighties. But you and the other American car makers didn’t take advantage of the import protection. You raised prices, too, and had a sales boom, but the consumer suffered.
Iacocca: Well, as usual, that’s poppycock. If you want facts as a journalist, take the facts. If you want to twist them into an opinion, then you got the pen in hand, not me.
The facts are, with all the currency changes in the past five years, imports—particularly German and Japanese—have gone up, on average, thirty-eight percent. Chrysler has gone up eight percent, which is less than the consumer price index; G.M., because of a richer mix, probably, has gone up about eighteen percent; and Ford has gone up about sixteen percent. You can see it on the sticker prices; but nobody wants to believe it. So we’re going head to head with Honda. We say the Spirit and the Acclaim have everything a Honda’s got, but for twenty-five hundred dollars less. And I throw in an air bag for free.
Playboy: Let’s talk about the air bags. Since late 1989, you’ve led the industry toward air-bag installation by putting a driver’s-side air bag in most of your U.S.-built cars, excluding the minivans. Why the sudden turnaround?
Iacocca: I adapt to facts. I try to preach to kids that when you get additional facts, you can change your position as life goes on. Don’t feel that you’re a goddamned hypocrite if you change your position every few years.
Playboy: Still, you were among those who practically said that air bags might cause accidents.
Iacocca: My record on safety is impeccable. I was gung-ho into padded dash-boards, deep-dish steering wheels and, especially, seat belts with the interlock system so you couldn’t start your car without being belted.
Playboy: Well, your record also includes a conversation in 1971 with President Richard Nixon—it’s on the famous White House tapes. You said, “Safety has really killed all of our business.” You were fighting air bags tooth and nail then.
Iacocca: I don’t recall saying that. Henry Ford and I went to Washington to say, “They’re moving too fast on air bags.”
Playboy: But it’s on the tapes—
Iacocca: I didn’t know we were being taped at the time in the Oval Office, but I do remember that, on the way out, the President of the United States got up from behind his desk [stands and waves his aims, Nixon-style] and said, “Well, I don’t want one of those goddamn things in my car.” I kiddingly said to Henry, “God, somebody should have heard that last line.” I remember that part clearly, because Nixon leaped to his feet.
But, hey, I’m like a [recovering] alcoholic. I’m a convert now to air bags.
Playboy: What took you so long?
Iacocca: We kept watching the air bags. Watched them go off, watched them fail. Watched them cost a thousand dollars. Electronic sensors weren’t reliable enough. But in the past few years, the air bags were becoming reliable and the cost was down to about eight hundred dollars. Meanwhile, Volkswagen invented the passive seat belt; then the belts became motorized. They cost only about two hundred to three hundred dollars to install. So my guys are saying, “We think we can get the price of an air bag down to where the cost over the spaghetti and the motorized belts is only a couple hundred dollars.” I said, “OK, it’s time to go with them.”
Playboy: Spaghetti? What’s that?
Iacocca: All the add-ons. So, anyway, I took a crap shoot on the air bags. But let’s be honest, I had to worry about liability. Suppose somebody gets killed—even with the air bag—and we have a court case. Drivers may get a false sense of security from the air bag and leave off their seat belts, which is a big mistake. Remember: If you’re not belted, the air bag isn’t enough. I mean, shit, at sixty miles an hour, you’re in motion, you can take a second hit!
I didn’t know they would succeed this well and I didn’t know putting them in would get to me emotionally. It’s incredible, the letters I’m getting. Of the six thousand air-bag deployments so far, so many seem to involve young girls.
But now I really feel bad inside. I wish I could have done them twenty years ago.
Playboy: Now everyone wants to know when you’ll start installing a passenger-side air bag.
Iacocca: I know, I know. Once you start advocating safety and using ads that show young girls being saved by an air bag on one side, it begs the question, “Well, what if I had my boyfriend with me on the right side?” Joan Claybrook [former head of the National Transportation Safety Board and promoter of air bags] recently came up to me at a big awards ceremony. She congratulated me on finally seeing the light. Then she said, “What have you done for me lately? Where’s the passenger-side air bag?”
Playboy: So, where is it? Honda has promised them by late 1993.
Iacocca: We hope to have them on our new LH car in late 1992. First we’ve got to redesign the whole instrument panel. It’ll cost about seventy or eighty million dollars a hit. Passenger-side bags are harder to design, because there’s no steering column and the seat is farther away. Knee blockers are the problem. You don’t want to submarine when that bag hits you.
Playboy: The time it took to implement air bags is just another example of the American automobile industry’s reputation for foot-dragging, for having to be dragged kicking and screaming—
Iacocca: For being monolithic. We were controlled by General Motors; we’ve marched in lock step to the big guy. It was an oligopoly of four guys‚ back when we still had American Motors. Now we’re down to three. But there is no question that G.M. set the pricing, they set all the levels. Everybody tried to imitate G.M., and they were building lousy quality. They didn’t do it on purpose, but we all said, “That’s the standard.” I’m a student of this—I lived through it. G.M. was so powerful. They were the biggest bank in the world, the biggest everything. They had fifty percent of the market. They were so damned big, they could do anything they wanted. We were really in the ring with a thousand-pound gorilla.
Playboy: What changed all that?
Iacocca: Looking back on it, foreign competition spurred on Chrysler and even big G.M.—starting with the German boutique houses of BMW and Mercedes. That began to change a lot of people’s minds. Then the Japanese came in and started showing quality just by selling ten or twenty thousand cars. You’d be a fool not to admit that free world trade and competition is good. Otherwise, we’d still be the monolithic follow-G.M. group, and the cars wouldn’t be as good. G.M. has taken the biggest hit. Their fifty percent market penetration is now down to thirty-five percent.
Playboy: Ford has been noted for a strong turnaround, with radically redesigned cars in the Eighties. What are they doing right?
Iacocca: Well, developing the Taurus and the Sable was a fresh, clean-sheet approach, not the usual Detroit way of building a car. They didn’t committeeize it. They put together a team, the same as we’ve now done.
Playboy: What was the usual Detroit way?
Iacocca: Sequential design. First the design guys work. Then they pass it on down the line to the manufacturing guys. Then the manufacturing guys say, “Hold it, we can’t build this son of a bitch. This design has eight different pieces, it’ll kill us.” And so forth.
Now we’ve reorganized the whole company. With our new LH car, we have everybody on one team right from the beginning: design, manufacturing, engineering, marketing. The car is theirs from cradle to grave. Even the suppliers are tied in early enough to give their input on how to save money, or how to do the vanity mirror for half the price.
We had a mixed-generation team in here recently, critiquing the minivan. Little kids lying all over the floor. One of them came up with a neat little design change. He suggested we take out the springs in the coin holders in the console and let gravity feed the coins down. It’ll probably save eight cents a car. But it’s so damned simple. One of the other teams came up with a car phone that is built into your sun visor, so you don’t have to look down and take your eyes off the road. It has a little microphone in it.
Playboy: What is going to save the auto industry?
Iacocca: Competitiveness. One, get the action back on the factory floor—make it a matter of pride to be running a plant yourself. And two, get good minds coming into industry from the scientific community. We looked at the farm system—the junior high and high schools—and nobody’s taking math or science. Ask the schools about that and they say there are no teachers—“The football coach does that shit.”
Playboy: Should the Government be involved in making this country scientifically competitive with countries such as Germany and Japan?
Iacocca: Sure. I’ve suggested a way to use the peace dividend for that. Look at the defense and aerospace contractors. They’re going to be laying off some of the best scientific minds in the country. These are guys who are used to working for Government pay. Why not let the Government pay them to work with us, for instance, in licking the national problem of carbon emissions?
Playboy: Is pollution control the great sleeper issue that will someday undermine the car business completely?
Iacocca: You can play word games all day long on that. I think the hotheaded environmentalists have gone overboard. They say, “We’re sure you can find a technological solution to car emissions. After all, ten years ago, you said you couldn’t make it and you made it.” I say, “Yeah, but all the cars got twelve hundred pounds smaller. If we take another twelve hundred pounds off, there will only be little shit boxes running around the country.”
But, yes, we’re certainly studying the pollution problem. Take Los Angeles: They’ve said that by the year 2008, they will effectively [eliminate the use of petroleum as fuel]. That means they will have outlawed the car as we know it, and we’ll have to have a breakthrough in battery technology for an electric car by that date. But what they haven’t figured out is where the energy will come from to power the batteries. Will it be coal or oil or nuclear? What the hell is it?
Playboy: You’ve called G.M.’s experimental electric car nothing more than a gussied-up golf cart. Obviously, you’re not optimistic.
Iacocca: Twenty-five years ago, at Ford, I gave the engineering guys in the lab a million bucks a year to come up with an electric car that could get me home and back—say, eighty miles round trip‚—without a recharge. “Go invent a battery and then we’ll build all the fancy cars around it.” And they couldn’t do it. So I said, “Get lost, busters.” Twenty-five years later, I don’t think there has been any movement at all. We have to work on flexible fuels, propane, a methane mix, plus there are storage problems.
Playboy: Does it burn you up that, while the U.S. concentrates on solving these kinds of problems, the Japanese spend their energy turning out better and more attractive cars?
Iacocca: Look, I say, why get mad at the Japanese when they’re just dealing in their own self-interest? I’ve always said we can learn from Japan just as they learn from us. Let’s copy them. Let’s get rid of antitrust, certainly. Then we can all get together in the same room and do things like pollution control at the lowest possible cost. They do it. They think that’s for the common good. To get cleaner air, they all pool their resources. They don’t make it a competitive, dog-eat-dog thing.
Of course, I don’t want to be like them in every way. I wouldn’t want to live in one of their tiny houses; I wouldn’t like their standard of living; I wouldn’t want to pay eight dollars for a melon or four dollars for an orange or never eat steak.
Playboy: What else do you admire about their society?
Iacocca: Well, one thing that always sticks in my mind is that while we have something like one lawyer for every ten people in our country, they have one engineer for every ten people in theirs. And that tells you a lot. There’s something wrong with a country that has so many lawyers. Chrysler builds a complex product that is sold world-wide, so we have a lot of liability cases. And sixty percent of all the money we’re spending—millions and millions of dollars—is going for lawyers’ fees. There’s something screwy there.
Somebody once said, “The best way to beat the Japanese would be to send them all our lawyers.”
Playboy: What’s going on with the business establishment of this country? The Donald Trumps, for instance.
Iacocca: I know Trump fairly well. Now that’s an ego that’s gone screw-loose, gone haywire. What the business establishment of this country has to do is get away from this new financial-transaction mentality. It used to be that Wall Street, the financial markets and the banks were there to promote and fund the companies that produced goods and created jobs. Now they’ve taken on a life of their own: “What’s the play? Where can we make a fast buck?” What we really need to do in this country is get back to the factory floors. Whether it’s Chrysler or McDonald’s or whatever, you’ve got to stand for making good stuff or you’re not going to win.
Playboy: Whatever happens, you’ve carved out a niche for yourself in history. What’s the secret? What has made you a national icon?
Iacocca: It started with being fired at Ford. When I did the Mustang, nobody really gave a shit. But when I was fired and then rose from the ashes like a phoenix—let’s be honest—that kicked it off. It’s the American feeling for under-dogism. I’m fired [from Ford], Chrysler is in the toilet and they come to me. I go to work and say, “Jesus, if I had known it was this bad, I wouldn’t have taken the job.” Then we get a break—we’re not geniuses, we just worked hard to get it. We had to go before the Congress and get abused in public. Then the Reagan years helped us. Let’s face it: The industry turned around a bit. Otherwise, we all would have died. Ford was in the toilet. G.M. was in the toilet.
Meanwhile, my personal life was moving very fast. My wife was dying. And she had always said, “Why don’t you write some of this stuff down? It’s a little fictional and nobody is going to believe it.” So I wrote my autobiography.
Playboy: How did that come about?
Iacocca: Well, in 1983, we paid back our one-billion-dollar loan—the old-fashioned way: seven years early. That hit a nerve with the American people. They said, “That’s what we’re made of—or would like to be made of.” So in 1984, I wrote Iacocca: An Autobiography. It sells seven million goddamned copies. How do I know it’s going to push Gone with the Wind? You think that’s why I wrote it? But it never did pass Jonathan Livingston Seagull, damn him.
Playboy: Why do you think it was so popular?
Iacocca: One day, at the Okura Hotel in Tokyo, all the busboys and girls were standing in line for my autograph. They spoke English, so I asked them why they’d bought my book. They said, “In our hierarchy, we can never mouth off the way you do. We can never be vocal to our superiors or elders. But inside, we’d like to be like you.” Another time in California, all these kids from the beach came up with my book. Said their parents had made them read it, but then they couldn’t put it down. I must have changed ten or twenty thousand lives. I get a lot of letters from guys in prison. I take them home and read them every night. And I still get more mail for my first book than for my second. You know the reason? Because it’s an autobiography, it’s a life.
Playboy: A lot of people have written books, but yours hit a national nerve. Why?
Iacocca: If I had to pick one thing, it’s this: If there were a lodge called the I’ve-Been-Fired Club, it would be a bigger organization than all the Catholics, Republicans or Democrats in the country. Because everybody at one time in his life has had his feet cut out from under him.
Playboy: Your television commercials have also helped your national appeal. You became a superstar on TV.
Iacocca: Thanks, but they are a pain in the ass to do. They’re not my bag. I’ve done my fill and I’ve destroyed my privacy. I want to hide now when I go out.
Playboy: People around Detroit and Chrysler are wondering if you’re ever going to retire.
Iacocca: Hell, yeah. I had a great plan to hand Chrysler over to a two-man management team last November first. But Greenwald, by leaving, knocked that on its ass. So I’ve agreed to stay awhile. I said to my top guys, “You want to do me a favor? In the next twelve months, make our program fall together and force me out of this company. I’ll be grateful to you.”
Playboy: Still, you give the appearance of a guy who doesn’t want to let loose. Are you one of those car men who, as they say, have gasoline in their veins?
Iacocca: Yeah, but I want to keep some blood in my veins, too.
Playboy: When all is said and done, and you’re looking back on all this, what do you want your legacy to be?
Iacocca: Oh, immigrant kid made good. Wrote a book. Unabashed patriot. Fixed up the Statue of Liberty.
After I retire, I want to devote myself to the Diabetes Foundation and working on education for kids. That’s certainly a bigger legacy than building Mustangs or minivans. After all, in the end, who’s going to remember whether we bent the sheet metal right?

Bill Gates, July 1994#

A youngish man who looks like a graduate student sits on the floor of his unpretentious dormlike room, spooning Thai noodles from a plastic container. His glasses are smudged, his clothes are wrinkled, his hair is tousled like a boy’s. But when he talks, people listen. Certainly no person on the campus can talk about the future, as he does, with the riveting authority of someone who not only knows what’s in store for tomorrow but is a major force in shaping that future as well.
Yet this is an office, not a dorm room. And while everyone calls the complex of 25 buildings a campus, it’s not a college or university. It’s the sprawling Microsoft headquarters in Redmond, Washington. And the speaker is no grad student. He’s William H. Gates III, chief executive and co-founder of the largest software company in the world, which made $953 million last year on sales of $3.75 billion. As Microsoft’s largest stockholder; he’s worth nearly $6.1 billion, making him this country’s second wealthiest man and, at 38, its youngest self-made billionaire. (Gates’ pal, investor Warren Buffett, is first, though they occasionally trade places depending on stock prices.)
“Microsoft’s wealth and power just grow and grow,” asserts “Fortune” magazine. “CEO Bill Gates could buy out an entire year’s production of his 99 nearest competitors, burn it, and still be worth more than Rupert Murdoch or Ted Turner. Microsoft’s $25 billion market value tops that of Ford, General Motors, 3M, Boeing, RJR Nabisco, General Mills, Anheuser-Busch or Eastman Kodak.”
With size comes power. Microsoft dominates the PC market with its MS-DOS operating system—the basic software that lets the computer understand your commands and carry them out. MS-DOS runs on 90 percent of the world’s IBM and IBM-clone computers. Microsoft has extended that presence with Windows, a graphics interface environment that runs on top of MS-DOS and will, according to Gates, replace DOS in future versions. Microsoft also supplies about 50 percent of the world’s software applications: programs such as Excel (spreadsheets), Microsoft Word (word processing) and Access (data bases). It is also in the business of networking. And multimedia. And CD-ROMs. And books. And as an early supporter of the Macintosh computer, Microsoft virtually owns the Mac application market.
The future looks equally promising. Gates recently announced that Microsoft and McCaw Cellular Communications will form a joint 840-satellite global communications network. At the same time, Gates also acknowledged that he was in high-level negotiations with AT&T about a series of ventures that could include interactive television, online computer services and software. This is in addition to a previously announced joint venture with Nippon Telegraph and Telephone, the world’s second-largest phone company, and with cable giant John Malone and his Tele-Communications, Inc. aimed at launching a digital cable TV network for computer users. Viewers would be able to interact with programs, download software and shop for products and services. Other partnerships loom as well, including ones with publishing companies and Hollywood studios.
Gates insists that Microsoft has to keep running full speed just to stay in place. But that hasn’t stopped his enemies from engaging in constant Bill-bashing. His competitors accuse Microsoft of unfair business practices, and his allies consider themselves fortunate to be on his good side. Given the fluidity of partnerships and strategic alliances in the computer industries, today’s friends could easily become tomorrow’s foes—and vice versa—if Gates thinks it advantageous.
Nor is Gates immune from official attack, as evidenced by a three-year Federal Trade Commission investigation into possible monopolistic tendencies stemming in part from the success of Windows over IBM’s OS/2—created in tandem with Microsoft. The FTC dropped the case but, uncharacteristically, it was picked up again, this time by the Justice Department. Gates insists “the hard-core truth is that we’ve done nothing wrong.” But the investigation continues, and Gates has other problems as well. Microsoft recently lost a $120 million lawsuit filed by Stac Electronics and is planning an appeal. Stac claimed Microsoft’s Doublespace hard disk compression utility infringed on its patents for Stacker, the compression utility Microsoft had originally wanted to include with its new versions of MS-DOS. (It’s worth noting, though, that Stac also had to pay Microsoft $13 million in damages for misappropriated trade secrets.)
Gates is part scientist, part businessman—and he’s surprisingly good at both roles. If he’s not flying off somewhere (he often travels coach despite his wealth), his day is an endless series of meetings. Gates cruises the Microsoft campus at a breakneck pace to check on the progress of his young, idealistic and fiercely competitive programming jocks—“Wired” magazine calls them “Microserfs.” He listens to presentations, praises some ideas and criticizes others as “the stupidest thing I’ve ever heard.”
Since founding Microsoft in 1975 with Harvard pal Paul Allen, Gates has been described as everything from a capitalist brainiac to a plain old nerd. “The New Yorker” wrote: “To many people, the rise of Bill Gates marks the revenge of the nerd. Actually, Gates probably represents the end of the word nerd as we know it.” Maybe that’s why a software competitor and friend once called him “one part Albert Einstein, one part John McEnroe and one part General Patton.” (“Must be somebody who likes me,” mused Gates.)
Bill Gates was born into a well-to-do Seattle family. His father, William H. Gates II, is a prominent attorney. His mother, Mary, is a University of Washington regent and a director of First Interstate Bank. Hoping to alter young Bill’s rebellious streak, his parents put him into Lakeside, an academically rigorous private school in Seattle. It was there that he met eventual business partner Paul Allen and discovered computers. Soon Gates was programming in his spare time and making money at it. He was in the eighth grade.
Gates entered Harvard in 1973, and dropped out two years later when he and Allen wrote a version of BASIC computer language that worked on the new Altair computer. He and Allen moved to Albuquerque, where the Altair was built, and started Micro-soft. In 1979, Gates and Allen moved the company, but not the hyphen, to Seattle. In 1980, when IBM turned to Microsoft in its search for an operating system, the modern PC era began in earnest.
Allen left the company a few years later when he was diagnosed with Hodgkin’s disease, but he has since recovered and reemerged. With his own Microsoft billions, Allen now owns the Portland Trailblazers basketball team, his own software company (Asymetrics), Ticketmaster and a large chunk of the America Online service.
We sent Contributing Editor David Rensin to Redmond to speak with Gates. Rensin, who wrote our Bill Gates profile in 1991, reports:
“A couple of years ago you checked in at Microsoft simply by giving your name to the receptionist. Now you type your name and destination into a Compaq notebook computer at the front desk and it prints out your building pass.
“However, not much had changed inside Gates’ office since my last visit. A poster for the Russian version of DOS 4.01 had been replaced by a poster of Intel’s Pentium chip. His coffee table had been cleaned up and the computer and monitor were different. Gates uses a Compaq 486/25 Lite notebook (he has docking stations at the office and at home) and is looking forward to getting a Compaq Concerto notebook. Otherwise, Gates doesn’t have lots of time to tinker with the newest computer hot rods.
“When Bill is talking about computers, technology, business strategy, biotechnology, or his vision of the future, you’re amazed at the amount of information in his head—and at his facility at sifting through it and drawing surprising conclusions. On his personal life, he can be somewhat defensive, reluctantly talking about his parents, his recent marriage to co-worker Melinda French and his life away from the campus.
“True to his reputation, Bill would rock furiously at times. Other times he would stand and pace or stare out the window. Once, as we were talking about his problems with IBM, he picked up a heavy ruler—some kind of paperweight or award—and slapped it repeatedly into his hand.
“I decided, at least for that moment, to stick with less controversial questions.”
 
Playboy: Let’s start small. Explain the future.
Gates: OK. [Laughs] Today, the PC is used as a primary tool for creating documents of many types—word processing, spreadsheets, presentations. But by and large, when you want to find a document, archive it or transmit it, you don’t really use the electronic form. You get it out on paper and send it. In the coming information age, access to documents, broadly defined, will be done electronically, just by traveling across a network that people now call an information highway. It’s also called “digital convergence,” a term popularized by John Sculley, and “information at your fingertips”—a term I use a lot. I’m quite confident this will happen. I could be wrong about how quickly.
Playboy: How soon?
Gates: Optimists think three years. Others think ten. I’m a convert. I’m spending almost $100 million a year to build the kind of software that will help make this thing work, make it easy to use, protect privacy in the right way. I think it’s possible that in three or four years we’ll have millions of people hooked up.
Playboy: Coming soon: a nation of couch potatoes?
Gates: You can already stay glued to the box. But this box is a facilitator. It can save time, which you can then put into the things you want to do. For a lot of people that will mean getting away from the box.
Playboy: Besides finding documents, what will we be able to do?
Gates: Say you want to watch a movie. To choose, you’ll want to know what movies others liked and, based on what you thought of other movies you’ve seen, if this is a movie you’d like. You’ll be able to browse that information. Then you select and get video on demand. Afterward, you can even share what you thought of the movie.
But thinking of it only in terms of movies on demand trivializes the ultimate impact. The way we find information and make decisions will be changed. Think about how you find people with common interests, how you pick a doctor, how you decide what book to read. Right now it’s hard to reach out to a broad range of people. You are tied into the physical community near you. But in the new environment, because of how information is stored and accessed, that community will expand. This tool will be empowering, the infrastructure will be built quickly and the impact will be broad.
Playboy: What about those who say things won’t change that much, that it’s mostly blue-sky?
Gates: It’s as blue-sky as the PC was six or seven years before it became a phenomenon.
Playboy: How will Microsoft participate in the information highway?
Gates: The current interactive user interface doesn’t consist of much. It doesn’t have the shared information and the reviews, the niceties that will make people want the systems. Microsoft is spending a lot of money to build software that we think is better. It will run in the box in your home that controls your set as you make choices. We’re involved in creating the much bigger piece of software at the other end of the fiber-optic cable, the program that runs on the computer, which stores the movie data base, the directory and everything else.
Playboy: The mainframe?
Gates: The successor to the mainframe. But its speed and data capacity go beyond what’s now used to do airline reservations or credit card data bases. Watching a movie doesn’t require much computer power. You’re just picking the information off the magnetic disc, putting it on the wire and sending it. But if you’re synthesizing a 3-D scene—kind of a virtual reality thing—with 20 people in a multiplayer game, then you have some computation. Or say the president is making a speech. Everybody in the nation gets to push little buttons to say yea or nay, and gathering all that information so it can be displayed within a second or two is tricky. But it’s all within the state of the art. You don’t have to be a dreamer to know that the technology will not limit the construction of the information highway.
Playboy: How will being able to respond directly to the president alter our system of government?
Gates: The idea of representative democracy will change. Today, we claim we don’t use direct democracy because it would be impractical to poll everybody on every issue. The truth is that we use representative democracy because we want to get an above-average group to think through problems and make choices that, in the short term, might not be obvious—even if they are to everybody’s benefit over the long term.
Playboy: Do you agree?
Gates: Yes. When making choices, or setting policies about the economy, education or medicine, society is best served by electing people who are particularly hardworking, intelligent and interested in long-term thinking.
Playboy: You’re giving our current elected officials a lot of credit.
Gates: What we have may be less than ideal, but it’s still better than direct democracy. Anyway, we’ll no longer be able to hide behind the excuse that we don’t have the technology to gather the opinions.
Playboy: What else is Microsoft involved in? We’ve heard about software that can control washing machines, for instance.
Gates: [Laughs] The washing machine example is extreme, but people do sometimes kid us that we see an opportunity to sell our software in broad areas. We are involved in a new generation of fax machines that we think will be better and easier to use. And a generation of screen phones [a standard phone with a minicomputer] in which the typically cryptic buttons are replaced with a graphics interface. We’re also working on software that runs in printers. We’ve worked with people on car navigation systems. And in the home environment, something you can carry in your pocket called the Wallet PC.
Playboy: In your pocket?
Gates: It’s a futuristic device unlike today’s personal digital assistants. Instead of using keys to enter your house, the Wallet PC identifies that you’re allowed to go into a certain door and it happens electronically. Instead of having tickets to the theater, your Wallet PC will digitally prove that you paid. When you want to board a plane, instead of showing your tickets to 29 people, you just use this. You have digital certificates. Digital money. It has a global positioning thing in it, so you can see a map of where you are and where you might want to go. It’s our vision of the small, portable PC of, say, five years from now.
Playboy: Do you use a PDA?
Gates: I carry a standard 486 portable machine with me whenever I travel, because I have my e-mail on it. I used one of the original Newtons for a week, and it’s available if you’d like it.
Playboy: What’s your problem with it?
Gates: It was supposed to do handwriting recognition. But based on the initial product, people are skeptical about whether handwriting recognition really works. They did some nice technical work on the product. Unfortunately, it’s not a useful device as far as I’m concerned, so it’ll probably set the category back.
Playboy: You’ve been meeting with people such as QVC head Barry Diller, Fox owner Rupert Murdoch, agent Mike Ovitz, John Malone of TCI and Gerald Levin of Time Warner to mastermind the future. Who sought out whom?
Gates: It’s a good mix. Ovitz called me. He understands the opportunities of the new media. He thought it would be valuable to see how our visions meshed. He wants to make sure that when he’s doing deals he’s reserving rights for his clients in the best way. He wants us to think about licensing rights as we’re doing titles.
Playboy: That’s what you can do for Ovitz. What can he do for you?
Gates: So many things. He can help us get the word out in Hollywood that we want to team up with people to do multimedia titles. Mike can help us create ways to explain how these new tools are the studio of the future.
Playboy: We hear so much about Ovitz, but never from him. What kind of guy is he?
Gates: It’s strange when you read a lot in the press about somebody before you meet him. I don’t know that much about Hollywood and its dynamics, so when I read this long piece on Ovitz in The New Yorker, it made me go, Whoa! I better be careful. Actually, he’s a pretty personable guy. And when you think about it, how could he be successful in that business without that kind of skill?
Playboy: One might think he would be intimidated by you.
Gates: Sure. Not that I hoped for that. We’ve had lots of long dinners, and I went down and saw Creative Artists Agency. It’s actually been almost two years since we first started talking with each other. We come from our own domains, where we’re clearly hardworking, focused, quite successful. The issue is, what’s the opportunity to work together? I’ve gotten to know a lot of these people over the past 18 months, and they are much more down-to-earth, practical, even humble, than you’d expect.
Playboy: For instance?
Gates: Murdoch’s a fairly quiet guy. Clearly brilliant, but quiet. Malone is straightforward in terms of talking about technology and strategy. He and I are damn similar. He worked at Bell Labs and understands both business and technology. We have a lot more in common than some of the other people these joint-venture things have exposed me to. I’ve met Diller several times. He came up here twice before landing at QVC, when he was just driving around and looking at the possibilities. He spent a lot of time here. He’s a very sharp guy. He asked good questions. Not everybody loves him, but they all respect the hell out of him. Apparently he’s a tough manager.
Playboy: Meet any movie stars yet?
Gates: No. [Pauses] Actually, I did. I went to this Golden Plate thing where there were quite a few movie stars: Barbra Streisand, Dolly Parton, Kevin—what’s his name?
Playboy: Costner?
Gates: That’s a mental lapse, just to completely embarrass myself. I talked to Michael Crichton quite a bit, but he’s not a movie star.
Playboy: Did any of the celebrities recognize you?
Gates: I don’t think so. But some of the scientists did. And a lot of the kids did, because kids tend to use computers more.
Playboy: They had no idea they were shaking hands with the second richest guy in America?
Gates: No.
Playboy: By the way, how much are you worth at this moment?
Gates: Well, remember, I don’t own dollars. I own Microsoft stock. So it’s only through multiplication that you convert what I own into some scary number.
Playboy: Are people more intimidated by your brains or your money?
Gates: Not many people are intimidated by either. Here at work we’re all just trying to get a job done. My people have the confidence of their convictions and they know their skills. And that occupies most of my time. The people I buy burgers from aren’t intimidated, either. [Laughs] We all suffer from being hyped up in the press. These markets are very competitive. When people say things like, “Bill Gates controls this” or “Malone controls this” or “Ovitz controls that,” I hope people don’t really believe it. Because every day we’re saying, “How can we keep this customer happy? How can we get ahead in innovation by doing this, because if we don’t, somebody else will?” If anything, people underestimate how effective capitalism is at keeping even the most successful companies on the edge.
Playboy: Since you and Paul Allen started Microsoft in 1975, the company’s capacity for renewal has been unerring and wildly profitable. If you could sum up the corporate ethos in one sentence, what would it be?
Gates: “Let’s use our heads and think and do better software than anyone else.”
Playboy: How soon did it become more business than fun?
Gates: Pretty early, when I hired four guys and one of them didn’t come in for a couple days. I said, “Damn it, we’re not going to get this stuff done. People are going to be upset. I’ve got salaries to pay.” Fun became a serious responsibility. Back then I used to compute how much software we had to sell each day. I was directly involved in everything. I knew at ten in the morning if I’d already sold that day’s worth of software. If I had, then I wanted to take care of a week’s worth of sales.
Playboy: A true businessman.
Gates: I have to admit that business-type thoughts do sneak into my head: I hope our customers pay us, I hope this stuff is decent, I hope we get it done on time. The little additions and subtractions that one has to do. Take sales, take costs and try to get that big positive number at the bottom.
Playboy: Do you dislike being called a businessman?
Gates: Yeah. Of my mental cycles, I devote maybe ten percent to business thinking. Business isn’t that complicated. I wouldn’t want to put it on my business card.
Playboy: What, then?
Gates: Scientist. Unless I’ve been fooling myself. When I read about great scientists like, say, Crick and Watson and how they discovered DNA, I get a lot of pleasure. Stories of business success don’t interest me in the same way.
Playboy: How come you’re not in a lab coat somewhere?
Gates: Part of my skill is understanding technology and business. So let’s just say I’m a technologist.
Playboy: If business is ten percent, how does the other 90 percent break down?
Gates: [Blows a big raspberry]
Playboy: Come on——
Gates: This gets far too ephemeral and private. It is an interesting question, I will admit. But applying it to myself in a public way is probably——
Playboy: But you brought it up.
Gates: I did. OK. Ninety percent to all other.
Playboy: [Blows raspberry]
Gates: This percentage thing is too hard because you always forget something important. “Whoops, I forgot about my family.” I mean, come on, this is too difficult.
Playboy: It’s hard to believe we found something too difficult for you.
Gates: There must be another metric to explain what I mean when I say that business is not the hard part. Let me put it this way: Say you added two years to my life and let me go to business school. I don’t think I would have done a better job at Microsoft. [Stands] Let’s look around these shelves and see if there are any business books. Oops. We didn’t find any.
Playboy: How do you define smart?
Gates: [Rolls his eyes] Oh, come on. It’s an elusive concept. There’s a certain sharpness, an ability to absorb new facts. To walk into a situation, have something explained to you and immediately say, “Well, what about this?” To ask an insightful question. To absorb it in real time. A capacity to remember. To relate to domains that may not seem connected at first. A certain creativity that allows people to be effective.
Playboy: Whew. Are you smart?
Gates: By my own little definition I’m probably above average.
Playboy: Why do some of your critics say you—and by extension, Microsoft—are not innovative, that you are evolutionary rather than revolutionary? Here’s a quote: “Bill is just a systems guy who has been able to fund a wider range of me-too applications on the basis of one extremely lucrative product—MS-DOS—practically handed to him ten years ago by IBM. All he’s done since is hang in.”
Gates: [Smiles] DOS has been as much as 25 percent of our profit. But believe me, those profits go to the bottom line. If the company weren’t profitable you could say, “Ah, DOS—they’re using it to fund the other stuff.” The fact is, everything is very profitable here. And we’re doing so many innovative things now, even my harshest critics will never say that again.
Playboy: Perhaps. But why did they say it in the first place—that, along with vision, luck, timing and an unrelenting need to win, you’ve succeeded by picking up the fumbles of your competitors? You were given the right to license MS-DOS by IBM because it thought the future was in hardware, not in software or operating systems.
Gates: [Stands, paces] So here’s our management meeting: “Well, I don’t know what we’re supposed to do. Has anybody fumbled anything recently?” I mean, come on! “Hey, Digital Research: I hear they’re fumbling something. Let’s go do something there.” What was the first microcomputer software company? Microsoft. The very first! Who were we imitating when we dropped out of school and started Microsoft? When we did the Altair BASIC? When, early on, we did CD-ROM conferences and talked about all this multimedia software? And who were we imitating when we did Microsoft Word? When we did Excel? It’s just nonsense.
Playboy: It’s said that you have nothing less than industry domination in mind.
Gates: But what does it mean to win? If I were a guy who just wanted to win, I would have already moved on to another arena. If I’d had some set idea of a finish line, don’t you think I would have crossed it years ago?
Playboy: Do you want to dominate the software industry?
Gates: No. We’re only healthy if the industry as a whole is healthy and thriving. Most types of software aren’t appropriate for us to do. For those that are, we’ll always have competition. It’s so simplistic. Whenever a company is successful, people say it’s out to dominate. Take Disney. It’s a wonderful company, but there are people within the entertainment industry who wonder about Disney’s goals. Or IBM’s, when it was successful. People impute all sorts of ridiculous motives and plans.
Playboy: Such as Disney being called Mauschwitz because of the tough deals they drive?
Gates: They do great products and they’re good businessmen. In our industry, some people are afraid of us because we’re so good. Outside the industry people say, “Wow! This software stuff is confusing. You bet I want to go with a company that’s going to be around and has proved it has things that work together and are pretty good.” Actually, that scares successful companies in the industry. You get a good enough reputation and you’re like an incumbent.
Playboy: And vulnerable to incumbent-bashing?
Gates: Yes. The industry press has been tough on us for as long as we’ve been the largest company. We’re involved in setting some fairly key standards and people are afraid of us because they think, Geez, they are quite capable. It’s daunting, I suppose.
Playboy: You suppose?
Gates: One thing people underestimate is how markets don’t allow anyone to do anything except make better and better products. There’s not much leeway. The world is a lot more competitive than most people think, particularly in a high-technology area. If a company takes its eye off improving its products, if it tries to do anything that would be viewed as an exercise of power, it’ll be displaced very rapidly.
Playboy: You’re not suggesting you’ve never exercised your power.
Gates: OK, so we tried to get everybody to write software for Windows. If we discouraged people from writing software for Windows we would be hurting ourselves a lot.
Playboy: And now Windows is so popular in the stand-alone-PC market that you’ve blown away competitors like IBM’s OS/2 and HP’s New Wave. Has Windows won?
Gates: If you define the term narrowly enough, you could say yes. Windows has a substantial share of the volume on DOS-based PCs. But we keep doing versions. And despite its current success, unless we keep the price low and keep improving the product dramatically, then it will be supplanted. Of course, we think there are enough improvements in the next version, 4.0, code-named Chicago, to extend Windows’ success another couple of years. And then we’ll have a version after that.
Playboy: Do you have an unfair advantage over your competition because your systems people—who do things like MS-DOS and Windows—exchange data freely with your applications programmers, thereby breaching the Chinese wall, the ethical boundary that’s supposed to separate them? It’s been an oft-repeated charge.
Gates: [Strongly] Chinese wall is not a term we’ve ever used. And companies often have more than one product. Kodak makes film and cameras, and those two parts of the company can work together. IBM makes computers, some peripherals, and software and applications. Ford not only makes cars, it makes repair parts. The day it thinks of a new car, it doesn’t call in all the other repair-parts companies to build those repair parts. We’re actually more open than any other company that has multiple products. We take lots of affirmative steps to help other companies. Naturally, our applications group is the most committed to Windows. In the early days they didn’t hesitate when I said, “Hey, we’re going to do Windows.” Other companies did, even though we begged them to write for Windows. That gave us a leadership position, which we’ve continued to increase over the years. We bet the company on Windows and we deserve to benefit. It was a risk that’s paid off immensely. In retrospect, committing to the graphics interface seems so obvious that now it’s hard to keep a straight face. But the big beneficiary of the whole PC phenomenon has been the users. Individuals can now get these tools at very low prices. This is the market working exactly as it should. And yeah, that’s been tougher on some producers, and it means we have to keep working hard. We can’t rest for a second.
Playboy: Let’s talk about the recent government investigations. Last year the Federal Trade Commission concluded a three-year look into Microsoft’s affairs. During that time many of your competitors complained about alleged Microsoft strong-arm business tactics and monopolistic practices. After two votes the FTC decided not to proceed with any action. Now the Justice Department has picked up the ball. Is Justice asking questions different from the FTC’s?
Gates: It’s the same stuff.
Playboy: Why don’t you just refer them to the FTC files?
Gates: That’s millions of pieces of paper.
Playboy: Did these investigations take you by surprise?
Gates: At some point, with the kind of success we’ve had, it’s both expected and appropriate for one government agency to review what’s going on in the industry. The fact that we have a second one doing it, sort of double jeopardy, is unprecedented. But fine, we’ll go through another one. It may take many years.
Playboy: Are you hoping that it takes many years?
Gates: No. It would be better if it were over soon.
Playboy: What was the toughest part of testifying before the FTC?
Gates: No real problem. I was quoted once—I think the quote was misinterpreted—as answering the question “What’s the worst case in your dealings with the FTC?” with, “Well, if I trip on steps when I’m walking in and break my head open, that’s the worst case.”
Playboy: It does seem rather cavalier.
Gates: It does. What I meant was that you multiply low-probability events by their probability. That’s how you judge them. You don’t just take this one-in-a-billion thing and spend everybody’s time elaborating on it. In any case, we had no problem with a company as successful as Microsoft, in an industry as important as ours, being looked at by a government agency to make sure we’re competitive and that things work the right way. In fact, we spent three years providing the FTC with millions of documents and explaining our industry so that it could be sure the status quo was being maintained. That’s perfectly legitimate.
Playboy: Does the FTC have to go through all that trouble to understand your industry?
Gates: Yeah. It takes some time. But if it hadn’t looked at the software industry, then the status quo still would have been maintained.
Playboy: This also happened to IBM and AT&T, with the latter being broken up. Do you fear that?
Gates: No. The government decides when something’s important enough to look into. Then it allows all your competitors to call it up and say, “Please hold them back this way. Please make it harder for them to create good products in this way. Please tell them not to compete with us anymore.” Microsoft makes a little mouse, so we had these guys who make mice saying, “Why don’t you tell them not to do mice. They do Windows and they do mice.” Some guy who does Arabic software layers complained that he didn’t like the way we were doing Arabic software layers. The government looks at all the mud that gets thrown up on the wall. We did have one competitor who launched a paranoid political attack against us with the FTC in an attempt to persuade the government to help it compete.
Playboy: Everybody knows that was Ray Noorda, chief executive of Novell.
Gates: That was disappointing.
Playboy: Careful word, “disappointing.” Didn’t it piss you off when you thought Noorda was working against you?
Gates: To the degree that he failed, we can be magnanimous about it.
Playboy: Was the outpouring of negative sentiment hurtful?
Gates: No. This is a very competitive business.
Playboy: You’re blasé about it.
Gates: It’s cheap for a competitor to pick up the telephone and say, in effect, Please hurt my competition in the following way. It’s straightforward. It’s absolutely to be expected.
Playboy: Is there nobody you’d like to restrict or retaliate against? For instance, one of your most vocal critics is Borland chief executive Philippe Kahn. It seems he goes out of his way to attack you.
Gates: When we got into the Apple lawsuit, he said, “Oh, Windows—it’s like waking up and finding out that your partner might have AIDS.” That was his quote in Time. In another magazine, I think it was Business Week, he chose to compare us to Germany in World War Two.
Playboy: And your response?
Gates: That was so extreme. I don’t think it will mislead people in any way. People who do that discredit themselves. It’s so outrageous and so offensive and inappropriate. Just think back to the Holocaust and all the tragedy. But what bothers me more is when facts are twisted so that people can’t tell what’s right or wrong. You won’t find us ever doing anything like that with any of our competitors. Philippe is a smart guy. I’ve been critical of his company’s inability to make more money, but that’s something I do to his face. Everything I’m saying to you about Philippe, I’ve said to him directly.
Playboy: Mitch Kapor, founder of Lotus, says Microsoft has won and now the industry is the “kingdom of the dead.”
Gates: I have immense respect for Mitch. We’ve agreed and disagreed on many things but stayed friends through the years. After he said that, I saw him and asked, “Hey, Mitch, what was that?”
Playboy: Had he really said it?
Gates: He has strong opinions, and I think that the remark was taken out of context. He’s given us good feedback on our software for a long time.
Playboy: Is Microsoft so big that you never go on the offensive?
Gates: Never. And as we move onto this information highway, believe me, most of the companies involved are far bigger than we are. We’re dealing with the German telephone company and with British Telcom. We’re dealing with NTT, the world’s highest-valuation corporation. Are they going to compete with us? Work with us? We’re a small, small company in that arena. There may be some point when we feel that somebody is using market muscle against us and wish we had a way to avoid it.
Playboy: How long do you anticipate staying active with Microsoft?
Gates: At least for the next ten years, I see myself being in very much the role I am in today. Then there will be a point where somebody younger—probably younger—should be given the prime role here. I’d still have a role, but it wouldn’t be as CEO.
Playboy: Does depending on someone else’s vision make you nervous?
Gates: No, I just have to pick the right person.
Playboy: Would that have to be somebody like you?
Gates: No. You have to be open-minded. Somebody could do it differently and still do it well. You can’t have this bias that they need to do things the same way. Of course, it’ll be somebody who understands technology very well and has high energy and likes to think ahead. There are certain requirements.
Playboy: Like your management style? We hear you’re brusque at times, that you won’t hesitate to tell someone their idea is the stupidest thing you’ve ever heard. It’s been called management by embarrassment—challenging employees and even leaving some in tears.
Gates: I don’t know anything about employees in tears. I do know that if people say things that are wrong, others shouldn’t just sit there silently. They should speak. Great organizations demand a high level of commitment by the people involved. That’s true in any endeavor. I’ve never criticized a person. I have criticized ideas. If I think something’s a waste of time or inappropriate I don’t wait to point it out. I say it right away. It’s real time. So you might hear me say “That’s the dumbest idea I have ever heard” many times during a meeting.
Playboy: What do you mean when you say something is “random”?
Gates: That it’s not a particularly enlightened idea. [Sarcastically] So how do you have a successful software company? Well, you get me and Microsoft executive vice president Steve Ballmer and we just start yelling.
Playboy: Do your employees stand up to you?
Gates: Oh, sure.
Playboy: In the beginning, why did you and Paul Allen decide to do only software—when everyone else was doing hardware?
Gates: Paul and I believed that software would drive the industry and create substantial value. And we understood it best.
Playboy: Didn’t Paul originally want to do hardware?
Gates: Hardware and software, and I thought we should do only software. When you have the microprocessor doubling in power every two years, in a sense you can think of computer power as almost free. So you ask, Why be in the business of making something that’s almost free? What is the scarce resource? What is it that limits being able to get value out of that infinite computing power? Software. Another way to look at it is that I just understood a lot more about software than I did about hardware, so I was sticking to what I knew well—and that turned out to be something important.
Playboy: Your big move into operating systems was when you did the 16-bit MS-DOS operating system.
Gates: We always knew that we were going to do operating systems, though we initially thought just high-end. When we were helping to design the original IBM PC hardware, the question was whether we would do the operating system.
Playboy: And now MS-DOS runs on more than 90 percent of all personal computers, or about 100 million, and it made Microsoft. Was the partnership the key to winning?
Gates: Our restricting IBM’s ability to compete with us in licensing MS-DOS to other computer makers was the key point of the negotiation. We wanted to make sure only we could license it. We did the deal with them at a fairly low price, hoping that would help popularize it. Then we could make our move because we insisted that all other business stay with us. We knew that good IBM products are usually cloned, so it didn’t take a rocket scientist to figure out that eventually we could license DOS to others. We knew that if we were ever going to make a lot of money on DOS it was going to come from the compatible guys, not from IBM. They paid us a fixed fee for DOS. We didn’t get a royalty, even though we did make some money on the deal. Other people paid a royalty. So it was always advantageous to us—the market grew and other hardware guys were able to sell units.
Playboy: By 1986, DOS had won.
Gates: Right. Subsequently there were clone competitors to DOS, and there were people coming out with completely new operating systems. But we had already captured the volume, so we could price it low and keep selling.
Playboy: Has DOS peaked?
Gates: I don’t know. DOS continues to be sold on a high percentage of PCs. But within a few years it will be replaced by a next-generation operating system. This is a case where we’re obsoleting our own product—I hope. Or somebody else will. Actually, it would have been obsolete some time ago if we hadn’t come along with Windows and sort of built it on top of DOS, to renew its capabilities. The fact that we did that as an add-on to DOS allowed people to keep running DOS applications. We thought that would be of some benefit to people.
Playboy: And to yourself. Perhaps to buy time.
Gates: No. People wanted to run their DOS applications. Believe me, it would have been a lot easier to write Windows so it didn’t run DOS applications. But we knew that we couldn’t make the transition without that compatibility. In fact, the next version of Windows further enhances our ability to run DOS applications.
Playboy: What happened to IBM? According to one book, you supposedly told a group of Lotus employees—over too many drinks—that IBM would fold in seven years. IBM is still here, of course, but it’s restructuring and streamlining. So you were partially right.
Gates: In this business, by the time you realize you’re in trouble, it’s too late to save yourself. Unless you’re running scared all the time, you’re gone. IBM could recover, but in terms of what it was, it’ll never have a position like that again. It was during the glory years, its years of greatest profit and greatest admiration, that it was making the mistakes that sowed the billions of dollars of losses that came later.
Playboy: What were those mistakes?
Gates: The idea of how you run software development properly is not something you can capture in a few sentences. It’s how you hire people, organize people, how you plan the spec, how you let it change, how you do the testing, how you get feedback from customers. IBM’s only real software success had been with mainframes, where they were the only choice. Consequently IBM didn’t develop those processes very well.
Playboy: Could that be happening to Microsoft now? In terms of corporate power, your company has been called the new IBM.
Gates: I’ve thought about that, but I don’t think so.
Playboy: That’s what IBM said.
Gates: That’s right. But did IBM try to renew its vision, did it really look at the early signs that things weren’t going right? Did management really focus on those things, or did they let themselves get a little complacent about their success? Were they working hard, were they hiring new people? And remember, when IBM was run by its founder it thrived—and for several generations of management after that. When you have a founder around, or if that founder picks the right successor, companies can do well. But we have to prove ourselves. I can’t prove that decay hasn’t set in. Five years from now you can call me and say, “Well, Bill, it looks like the decay didn’t set in.” At least I hope the evidence will show that.
Playboy: What was your first meeting like with Lou Gerstner, IBM’s new chief?
Gates: It was my chance to tell him what Microsoft is.
Playboy: He didn’t know?
Gates: I’m not saying that. I wanted to talk more about the company. It was a bit awkward because when I went there they said, “Thank you for coming, Mr. Manzi.” [Laughs] Jim Manzi [current head of Lotus, a Microsoft rival] and I don’t look alike, so that set me back a little. Then we went into this room, the famous Tom Watson Library, a place I’d been probably a dozen times and know the history of pretty well. Gerstner took some time explaining it to me, though I already knew. I wasn’t sure whether I was supposed to stop him or not. We eventually talked about the business. I did not endeavor to give him any advice. He knew I’d been talking to the board and chided me a little about that.
Playboy: Do you expect to get along?
Gates: Microsoft and IBM are perfectly complementary companies with the exception of one small group IBM has that does PC system software.
Playboy: Where does the relationship stand today?
Gates: IBM is our best customer. It’s porting a lot of its key software into the Windows environment. Every month we find more and more things we can do together.
Playboy: Over the years, have your youthful looks been more help or harm?
Gates: It’s hard to say. If you’re asking whether I intentionally mess up my hair—no, I don’t. And certain things, like my freckles, they’re just there. I don’t do anything consciously. I suppose I could get contact lenses. I suppose I could comb my hair more often.
Playboy: We are talking about knowing that your youthful—or can we say nerdish?—looks would throw potential competitors and partners off balance and give you an advantage going in.
Gates: [Smiles] I think that my looks were a disadvantage, at least back then. But once our competitors had to admit we knew what we were doing, they had a hard time knowing what category to put us in. We were young, but we had good advice and good ideas and lots of enthusiasm.
Playboy: You recently got married, an event many of your competitors have fervently wished for. Now, they say, you’ll concentrate less on work.
Gates: They’re just joking. If they really think I’m going to work a lot less just because I’m married, that’s an error.
Playboy: Isn’t there a kernel of truth in any joke?
Gates: Married life is a simpler life. Who I spend my time with is established in advance.
Playboy: You were one of the world’s most eligible bachelors. No doubt there are many women would love to be in Melinda’s place.
Gates: What? They want to do puzzle contests with me? They want to go golfing with me? How do they know it’s interesting to be around me? They want to read the books I read?
Playboy: What was it that attracted you to Melinda?
Gates: Oh, I don’t know. That’s probably too personal. Even before I met Melinda, if someone asked me a question like that I’d always say I was interested in people who are smart and independent. And I’m sure I’ll continue to meet lots of interesting, smart, independent people.
Playboy: Something about Melinda must have made you turn the corner. Don’t tell us you’re just getting older and it was time.
Gates: There’s some magic there that’s hard to describe, and I’m pursuing that.
Playboy: Can you describe how she makes you feel?
Gates: Amazingly, she made me feel like getting married. Now that is unusual! It’s against all my past rational thinking on the topic.
Playboy: We know you’re kidding—and not kidding. Let’s go back farther. Which parent most influenced you?
Gates: My mom was around more, but my dad had the final say on things. They were both major influences. I was raised pretty normal. We didn’t get to watch TV on weeknights. We were encouraged to get good grades. Our parents talked a lot about the challenges they were dealing with and treated us as though we could understand and appreciate those things. My parents took us around and traveled some. When we were young our grandparents read to us a lot, so we got into the habit of reading. My sister is two years older than I am and we learned a lot of stuff together.
Playboy: How were you encouraged to get good grades?
Gates: We got 25 cents for an A. It was kind of funny because there was a whole period when I got terrible grades and my sister get straight A’s. That was until I was in eighth grade. Then my sister discovered boys. She never got straight A’s again. My grade point average went from a 2.2 to a 4.0 over the summer. I wanted to get straight A’s. I decided to get straight A’s.
Playboy: Why?
Gates: There was no reason. It takes a little bit of effort. I guess I didn’t want people to think I was dumb. And when you get straight A’s once, it’s easier.
Playboy: Were you a discipline problem?
Gates: People thought I was a goof-off, a class clown at times. That was OK, not really a problem. Then I went to private school, and there was no position called the clown. I applied for it, but either they didn’t like my brand of humor or humor wasn’t in that season. In fact, I didn’t have clear positioning for a couple of years. I was trying the no-effort-makes-a-cool-guy routine. When I did start trying, people said, “Whoa, we thought he was stupid! Better reassess.”
Playboy: Did your parents wonder if you might be stupid?
Gates: Oh, no. They just thought I was underachieving dramatically. When I did get into trouble in school, they sent me to this psychiatrist. He gave me a little test and books to read, and he would talk to me about psychological theories—just getting me to think about things. He said some profound things that got me thinking a little differently. He was a cool guy. That’s why I always liked the movie Ordinary People, because this guy was just like the psychiatrist in that movie. I only saw him for a year and a half, and never saw him again, and I haven’t been to anybody like that since. But my mind was focused appropriately.
Playboy: What did he say to you?
Gates: I said, “Hey, I’m in a little bit of a battle with my parents.” He said, “Oh, you’ll win, don’t worry.” I said, “What? What’s the story here?” He said, “You’ll win. They love you and you’re their child. You win.”
Playboy: And the implication was?
Gates: That if you think you need to put more effort into winning with them, don’t. It’s a fake battle. It’s ridiculous. It was enough to get me to think, Hmm, that’s interesting. He also had me read all this Freud stuff.
Playboy: How old were you?
Gates: I was 11. But he was an enlightened guy. He was always challenging me. He would ask me questions, but he would never tell me whether my answer was right or not. He would say, “That’s an OK answer.” Then our time would always be up and he’d give me more stuff to read.
Playboy: Ever wonder what might have become of you if you had gone to public school instead of Lakeside, where you met Paul Allen and fell in love with computers?
Gates: I’d be a better street fighter.
Playboy: When did you know you had something special to offer? When did you become aware you were different?
Gates: [Big raspberry] I have something special to offer, Mom! Mom, I just figured it out: I have something special to offer! So don’t make me eat my beans.
Playboy: You know what we mean.
Gates: When I was young we used to read books over the summer and get little colored bookmarks for each one. There were girls who had read maybe 15 books. I’d read 30. Numbers two through 99 were all girls, and there I was at number one. I thought, Well, this is weird, this is very strange. I also liked taking tests. I happened to be good at it. Certain subjects came easily, like math. All the science stuff. I would just read the textbooks in the first few days of class.
Playboy: Even though your parents are well off on their own, how have they reacted to your extreme wealth?
Gates: I don’t show it to them. I hide it from them. I have it buried in the lawn. It’s bulging a little bit, and I hope it doesn’t rain.
Playboy: Bad bet, living in Seattle.
Gates: My money is meaningless to them. Meaningless. It has no effect on anything I do with my parents. [Pauses] If somebody’s sick we can get the best doctors, so it has that impact. But we talk about things that money doesn’t affect.
Playboy: We’re not suggesting that you talk only about money.
Gates: We never talk about money.
Playboy: Does your net worth of multi-billions, despite the fact that it’s mostly in stock and the value varies daily, boggle your mind?
Gates: It’s a ridiculous number. But remember, 95 percent of it I’m just going to give away. [Smiles] Don’t tell people to write me letters. I’m saving that for when I’m in my 50s. It’s a lot to give away and it’s going to take time.
Playboy: Where will you donate it?
Gates: To charitable things, scientific things. I don’t believe in burdening any children I might have with that. They’ll have enough. They’ll be comfortable.
Playboy: You’ll give them only a billion, maybe?
Gates: No, no—are you kidding? Nothing like that. One percent of that.
Playboy: But they’ll grow up thinking, Gee, if Dad leaves me some of the money.…
Gates: I’ll make it clear that it’ll be a modest amount.
Playboy: So you want them to be as self-made as you?
Gates: No, that’s not the point. The point is that ridiculous sums of money can be confusing.
Playboy: In general, or only to the young or inexperienced?
Gates: I think to anyone.
Playboy: Is it confusing to you?
Gates: I’m very well grounded because of my parents and my job and what I believe in. Some people ask me why I don’t own a plane, for instance. Why? Because you can get used to that kind of stuff, and I think that’s bad. It takes you away from normal experiences in a way that is probably debilitating. So I control that kind of thing intentionally. It’s one of those discipline things. If my discipline ever broke down it would confuse me, too. So I try to prevent that.
Playboy: So why not give the kid a billion dollars and let him try to control it as well?
Gates: Not earning it yourself, knowing you have it from a young age, being so different in that respect from the other kids you grow up with, would be very confusing.
Playboy: Won’t your being their dad be confusing enough?
Gates: I will seek to minimize that in every way possible. I’ll be as creative as I can. That experience is bad for a kid.
Playboy: How do you entertain yourself with your money?
Gates: I swallow quarters, burn dollar bills—that kind of thing. I mean, when I buy golf balls I buy used golf balls, and that entertains me. Ha, ha, ha.
Playboy: Seriously.
Gates: I’m building a house. It has serious functions, but entertainment is most of it. It has a screening room. And I’m putting in these huge video screens and buying the digital rights to the world’s masterpieces and all sorts of art. I guess that’s indulgent.
Playboy: Rumor has it the house is mostly underground.
Gates: Completely false.
Playboy: When will it be done?
Gates: I thought it would take four years. It will take five—then I’ll move into the project.
Playboy: What else entertains you?
Gates: I like to learn. I like puzzles. I’ve even played some golf the past year and a half, because everybody else in my family does. Actually, right now I’m a little addicted. I get a kick out of being out there on the green grass. I’m just getting into the 90s now.
Playboy: We hear you don’t watch TV.
Gates: I do watch television. I don’t have any TVs with their over-the-air receivers connected in my house. But when I’m in a hotel room or other places that have a TV, then I turn it on and flip the channels just like everybody else. I was watching cartoons on Nickelodeon on Sunday. It’s amazing.
Playboy: What was on?
Gates: Ren & Stimpy and Rugrats. Great! Cartoons have improved a lot since I was a kid. I’m not immune to the lures of television. I just try to stay away from it because I like to read.
Playboy: What do you read?
Gates: The Economist, every page. Also The Wall Street Journal and Business Week. And I read Time. If I’m traveling, every once in a while I’ll pick up an issue of People. I read USA Today.
Playboy: What’s the most random thing you read?
Gates: Fiction. That’s true randomness. My older sister has read all the trashy books. So, occasionally, I have her recommend one. Otherwise, I’m in the same traffic as everybody else. I’m in the same airplane delay as everybody else. I sit in the same coach seat as everybody else. Yeah, I’m here in meetings all day. Here at Microsoft I work hard.
There are a lot of experiences I haven’t had. There are a lot of sitcoms I haven’t seen. I haven’t had a child yet. There are religions I don’t belong to. I think we all have our own slice of life. I eat at McDonald’s more than most people, but that’s because I don’t cook.
Playboy: You’re back to eating meat?
Gates: Yes. That was only a three-year period when I was proving to myself I could do it. But in terms of fast food and deep understanding of the culture of fast food, I’m your man.
Playboy: Jack-in-the-Box? McDonald’s?
Gates: Well, McDonald’s is more pervasive around here. We also have Jack-in-the-Box. I’m not the kind of guy who decides that just because a few people got sick, it’s necessarily going to happen to me. It wasn’t very crowded for a while, but I thought that was fine.
Playboy: The recent biographies of Bill Gates and Microsoft, Gates and Hard Drive, both explore the mythology that’s developed about your quirks, habits and exploits. We’d like to sort the actual from the apocryphal.
Gates: Fine.
Playboy: We’ll start with an easy one. It’s always written that you rock compulsively in your chair, and we can attest that you’re doing it now and have been for most of this interview.
Gates: Right.
Playboy: What about your penchant for driving fast and accumulating speeding tickets?
Gates: [Smiles] I get fewer speeding tickets than I used to.
Playboy: Did you once get a cop fired for giving you a speeding ticket?
Gates: That’s false.
Playboy: What about the story that while driving from Albuquerque to Seattle, you got three speeding tickets in one day from the same cop?
Gates: No, no, no. I’ve always told the truth about that one. I got two speeding tickets from the same cop. Two. Not three. I got three tickets on the drive, but only two from the same cop. But I don’t think anybody ever suggested that I said I got three from the same cop.
Playboy: There’s the story that your mother chooses your clothes and helps you color-coordinate by pinning them together—this from a former girlfriend, who seems to repeat it without incurring your disapproval.
Gates: There was one point in my life when my mother was trying to explain to me about what color shirt to wear with what ties. But this goes way back. And I think people listen to their mothers’ advice when it relates to fashion. It’s not an area in which I claim to know more than she does. And it’s not that much effort to pick one shirt versus the other. I don’t look down at the color I’m wearing during the day. So if it pleases other people that I know a little bit more about which shirt to pick with which tie, that’s fine. At that time I didn’t know much about it. I think I know a little bit about it now, but below average.
Playboy: Is it true that you cornered the market in McGovern-Eagleton buttons after Eagleton was dumped as a running mate?
Gates: It’s certainly true that I made a lot of money selling McGovern-Eagleton campaign buttons. I’ll be glad to show them to you, but I don’t think it matters how much I made. It doesn’t aggrandize me when things get less and less accurate the farther they get from the source.
Playboy: Next: the $242 that you supposedly paid for a pizza to be delivered one night.
Gates: That is just reporter’s randomness to the max.
Playboy: Did you have a million-dollar trust fund while you were at Harvard?
Gates: Not true. [Throws up his hands, stands and starts pacing] Where does this randomness come from? You think it’s a better myth to have started with a bunch of money and made money than to have started without? In what sense? My parents are very successful, and I went to the nicest private school in the Seattle area. I was lucky. But I never had any trust funds of any kind, though my dad did pay my tuition at Harvard, which was quite expensive.
Playboy: How did he feel when you dropped out?
Gates: I told him it was a leave of absence, that I was going back.
Playboy: Nice move.
Gates: Hey, if I had completely failed I would have gone back, of course. Harvard was willing to take me back. I was a student on leave.
Playboy: When you were at Harvard, did you frequent the Combat Zone, home of hookers, drugs and adult films?
Gates: That’s true. [Laughs] But just because I went there doesn’t mean I engaged in everything that was going on. But I did go there. It’s easy—you just take the subway. And it’s pretty inexpensive. I ate pizza, read books and watched what was going on. I went to the diners.
Playboy: Ever take LSD?
Gates: My errant youth ended a long time ago.
Playboy: What does that mean?
Gates: That means there were things I did under the age of 25 that I ended up not doing subsequently.
Playboy: One LSD story involved you staring at a table and thinking the corner was going to plunge into your eye.
Gates: [Smiles]
Playboy: Ah, a glimmer of recognition.
Gates: That was on the other side of that boundary. The young mind can deal with certain kinds of gooping around that I don’t think at this age I could. I don’t think you’re as capable of handling lack of sleep or whatever challenges you throw at your body as you get older. However, I never missed a day of work.
Playboy: Here’s the wildest rumor: You once trolled Seattle in a limo looking for hookers.
Gates: No, no, that is not true. A Korean friend of mine in high school rented a limousine one night, and we went to Burger Master. He liked one of the girls there, so he thought it would be fun to pull up in a limousine and leave a big tip at this drive-in place. But that is quite a metamorphosis—from this nice hamburger girl to something more lurid. This isn’t the rock-and-roll industry. The computer industry doesn’t have groupies like rock does.
Playboy: Really? You’ve been described by one of your own people as “Bill Gates, rock star.” Wasn’t there a young woman in Mensa, from Atlanta, who said she needed some software for her Mac—which you delivered personally?
Gates: Who told you that? I sent it to her. There are elements of truth in all mythology, along with a good dose of exaggeration that I have not contributed to. Here’s the point: People think, Hey, here’s this guy, he’s single, has all this success—isn’t he taking advantage of it a little bit? I mean, geez, just a little bit?
Playboy: And the answer?
Gates: Those people wouldn’t be completely disappointed. They’d be somewhat disappointed because at night they’d find me sitting at home reading the molecular biology of the gene or just working late, or just flying around doing new deals and things like that. My job is about the most fun thing I do, but I have a broad set of interests—going places, reading things, doing things.
Playboy: And when you do fly, you fly in coach.
Gates: It’s quite a mix there. I fly coach when I’m in the U.S. on business. But when I fly to Europe, I fly business class. When I go to Trailblazers games with Paul Allen, I fly on the plane he owns. I also drive my own car.
Playboy: Does privilege corrupt?
Gates: It can, I’ve noticed. It’s easy to get spoiled by things that alienate you from what’s important.
Playboy: Are you afraid it would look bad to the people at Microsoft?
Gates: No, it’s for me personally. I wouldn’t want to get used to being waited on or driven around. Living in a way that is unique would be strange.
Playboy: Do the rumors bother you?
Gates: Rarely. But it’s difficult. Microsoft being well known and having people know we do great software and getting people enthused about new things—that’s an important part of Microsoft, challenging these new frontiers. It’s natural for a company to be associated with its co-founder and leader. But as far as my personal life goes, it’s kind of a drawback. Even so, my experience with being exposed to the public is nothing like that of really well-known people.
Playboy: Are you ready for celebrity?
Gates: No. I haven’t even taken the introductory course.
Playboy: Why not write your own book?
Gates: [Sighs] That some degree of oversimplification occurs is unavoidable. It’s not like I’m complaining. Actually, my only complaint is that I wish somebody had written a decent book. And perhaps in the future somebody will. I just don’t happen to like the ones that exist. They’re incredibly inaccurate. Worse, they don’t capture the excitement, the fun. What were the hard decisions? Why did things work out? Where was the luck? Where was the skill? You just don’t get a sense of it. In fact, at one point we wanted to encourage a writer of reputation to do that, but we decided against it because we didn’t want to put the time into it.
Playboy: Don’t you think people would want to read your Iacocca?
Gates: [Peeved] Now what does that mean? I think the answer is no to all such things. And when I do, I’ll do it a hundred times better than any book done so far. But right now I don’t want to be huger. I’m huger than I want to be. I’d like to shrink a little.
Playboy: Then why are you talking with us?
Gates: For the message that personal computers can do neat things, that software is great stuff, that there’s an exciting opportunity here and Microsoft is involved in it—that’s a worthwhile message for Microsoft to get out. And if you want to just put “Microsoft spokesman” next to all those comments, that would be fine—except I know that people are more interested in human stories than they are in what technology can do for them.
Playboy: Perhaps that’s a strong clue to what should be done with emerging technologies.
Gates: That’s true. We should let people communicate with other people.
Playboy: Communicate with us: Who is Bill Gates?
Gates: I don’t think there’s a simple summary of anyone.
Playboy: That said, give it a try.
Gates: [Laughs, then grudgingly, almost by rote] I like my job because it involves learning. I like being around smart people who are trying to figure out new things. I like the fact that if people really try they can figure out how to invent things that actually have an impact. I don’t like to waste time where I’m not hearing new things or being creative.
Playboy: Like these questions?
Gates: Some of them I’ve heard before. Certainly the history of the company has been widely discussed.
Playboy: We mean questions about who you are.
Gates: Nobody’s ever asked me the question in that form before. Who are you? Just get right to the meat of the issue. Let’s make it multiple choice.
Playboy: Make it a free-association test. It must conjure some thoughts.
Gates: [Long pause] No, I don’t know if I’m thinking of anything.
Playboy: Try again.
Gates: OK, I have a nickname. My family calls me Trey because I’m William the third. My dad has the same name, which is always confusing because my dad is well known and I’m also known. If they’d realized that would occur, they wouldn’t have called me the same name. They thought I’d be unknown so they said, “Hey, just use the same name, what the heck.” When people say “Bill,” that’s work, mostly, and I think of all the stuff I should be doing. When people call me Trey, I think of myself as the son. I think of myself as young. I think of my family, of just being a kid, growing up.
Playboy: Do you like the public Bill that we’ve described to you?
Gates: I think the observations about me are all over the map, so it’s hard to respond to that. When I got engaged, the Star said that I had a little contest for Melinda and that as soon as she finished the contest, I asked her to marry me. And then she said, “Yes, oh yes!” I find that humorous because it’s so unreal and so ridiculous. The National Enquirer hired an astrologist I’d never met to say various things about me. That struck me as ridiculous. Forbes does this whole thing about who’s wealthy and what they think. I thought what they wrote about me was silly, but this year they had a nice article on my friend Warren Buffett that I thought was pretty good. So I guess it’s easier reading about other people. My guideline has always been to avoid a focus on me personally. Not because of any deep, dark secrets. Rather just a sense of privacy. I guess it’s kind of silly in a way.
Playboy: People see what you have wrought and want to know what kind of person becomes a guy like you.
Gates: You mean if they have the same kind of personal life then maybe they’ll become like me?
Playboy: Come on. Isn’t this whole information highway based on wanting and having access to more information?
Gates: Yeah, but there are lots of things you can be interested in.
Playboy: And this is one of them.
Gates: But it’s sort of prurient, isn’t it?
Playboy: Maybe only to the guy who’s the center of attention.
Gates: When we have the information highway, I’ll put it out there. Everybody who wants to pay, I don’t know, one cent, can see what movies I’m watching and what books I’m reading and certain other information. If I’m still interesting, I’ll rack up dollars as people access that part of the highway.
Playboy: How many buildings are on this campus? Have you visited them all?
Gates: Twenty-five. Yeah, I’ve been to all of them, but there are a few I’ve been to only once.
Playboy: Do you wander around here late at night?
Gates: Actually, I’ll do that tonight. It’s Friday and I have no plans.
Playboy: Do you look in people’s offices?
Gates: I see if people are around, see what they put up on the walls. I want a little sense of what the feeling is, how lively, how much people personalize things. They put industry articles up on the walls, ones that are particularly rude to us or particularly nice to us. They put up their progress—their number of bugs or new things that work. And you run into people. Even on a Friday night there’ll be a bunch of people here, and I’ll get a chance to ask what they’re thinking.
Playboy: Let’s start to wrap up with a more global perspective. What should our attitude be toward the Japanese?
Gates: This Japanese-bashing stuff is so out of control. It’s almost racist the way people have these stereotyped views of why Japanese companies are successful, without gathering many facts.
Playboy: Even though they’re in a slump now, why have the Japanese been so successful?
Gates: For good reasons. Great products. A long-term approach. Focus on engineering and what it takes to turn products around quickly. Being able to adapt to what’s necessary to sell effectively in markets around the world. Believe me, they have some challenges ahead. But what they did with no natural resources and, essentially, no world power is a miracle.
Playboy: And we did none of the above? What were our mistakes?
Gates: Actually, America has also done pretty well during this period. Some American companies made mistakes, and there are things we could do to improve our products. For instance, we could improve our education system. Also, get rid of short-term thinking. Focus on product engineering instead of financial engineering. We could fine-tune. But we’ve contributed a lot, too. America and Japan are the two leading world economies in terms of technology and innovative products. And in software, information-age technology and biotechnology—our second most important business—the U.S. has an amazing lead.
Playboy: Our auto business is recovering. We’re finally focused on making better cars instead of on holding down Japanese imports. But what in the American psyche let our lead slip away?
Gates: I don’t think it’s the American psyche. We don’t have to dig that deep to find rot. The way those car companies managed their engineering process and their manufacturing process was wrong. It was out of date, and it took an unbelievable amount of time to get those processes reformed. It really took Ford to set the pace.
Playboy: Does Microsoft follow the Japanese model?
Gates: There are aspects. Look, our workers are all Americans, so we don’t sing company songs and things like that. The idea of taking a long-term approach, taking a global approach—many fine American companies have done that, and have that in common with the Japanese. But in no sense would I say we’re following some broad set of Japanese approaches.
Playboy: How should our society think about the future?
Gates: More optimistically. As there is progress, which is partly advances in technology, in a certain sense the world gets richer. That is, the things we do that use a lot of resources and time can be done more efficiently. So people wonder, Will there be jobs? Will there be things to do? Until we’re educating every kid in a fantastic way, until every inner city is cleaned up, there is no shortage of things to do. And as society gets richer, we can choose to allocate the resources in a way that gives people the incentive to go out and do those unfinished jobs.
Playboy: One story about you suggested that if Microsoft manages to write and deliver the software running inside the box it will, on the most basic levels, influence how we interact with the information highway. How does it feel to know you can have the same impact in the next 20 years as you had in the first 20?
Gates: Because we’ve had leadership products, we’ve had an opportunity to have a role. But this would have happened without us. Somebody would have done a standard operating system and promoted a graphics interface. We may have made it happen a little sooner. Likewise, the information highway is going to happen. If we play a major role it’ll be because we were a little bit better a little bit sooner than others were.
Playboy: If you don’t take the next step, are you concerned about falling from the heights you’ve achieved?
Gates: There may be a better way to put it. If we weren’t still hiring great people and pushing ahead at full speed, it would be easy to fall behind and become a mediocre company. Fear should guide you, but it should be latent. I have some latent fear. I consider failure on a regular basis.
Playboy: Personally, are you slowing down any?
Gates: I used to take no vacations. I used to stay up two nights in a row. I don’t do that anymore.
Playboy: What about keeping up with the technology? Overwhelming?
Gates: No. But it’s harder than when I was young.
Playboy: What’s the last thing you didn’t understand?
Gates: The quantum theory of gravity. [Laughs] Look at this office. Who can read all this stuff? Maybe tomorrow I’ll return the hundreds of e-mail messages that are in my in-box right now.
Playboy: People might find it hard to believe that you just barely keep up.
Gates: How would they know? I can tell them that’s the truth. The same with the degree of success I have had. I never would have predicted it. I didn’t set out to achieve some level of wealth or size of company. I remember in 1980 or 1981 looking at a list of people who had made a lot of money in the computer industry and thinking, Wow, that’s amazing. But I never thought I’d be on that list. It’s clear I was wrong. I’m on the list, at least temporarily.
Playboy: Temporarily?
Gates: I’m waiting for the anticlimax. I hate anticlimax. In terms of being able to do new and interesting things, I would hate to lose that. That’s partly why I work as hard as I do trying to stay on top of things.
Playboy: Is the one success of Microsoft enough for you?
Gates: Microsoft has had many, many successful products. It’s like saying to somebody who’s been married 50 years, “Well, hell, you’ve had only one wife. What’s wrong with you? You think you can do only one?” I mean, I’m committed to one company. This is the industry I’ve decided to work in.
Playboy: An interesting metaphor you choose, the wife thing.
Gates: You’re welcome to print it.
Playboy: Put it this way: You’re 38, a billionaire, you co-founded the world’s largest software company and transformed the industry. What do you want to do for an encore—if there is one?
Gates: Encore implies that life is not a continuous process, that there’s some sort of finite number of achievements that defines your life. For me, there are a lot of exciting things in front of me at Microsoft, things that we want to see if we can make happen with technology. There are great people here who are fun to work with. And in the next decade the most interesting industry by far will be information technology, broadly defined. We have a chance to make a major contribution to that. It’s very competitive. We won’t know until late in that period whether we did it right or not. I’m excited about that. And we’re still on a pretty steep curve in terms of making even better word processors or figuring out how an electronic encyclopedia or movie guide should work, figuring out what sort of tools for collaboration we should offer to people. That will be my focus for the foreseeable future.
Playboy: What about tomorrow? Any plans for Saturday?
Gates: [Smiles] Work.

David Geffen, September 1994#

His office on Sunset Boulevard in West Hollywood is tastefully furnished with white couches, a vase filled with tulips and, appropriately, many telephones. Using one, David Geffen tells a secretary to hold his calls, “except,” he says, “anybody calling back about tomorrow night.”
During the next three hours, he hears from a number of the most powerful people in the entertainment industry: Michael Ovitz, Lew Wasserman, Steven Spielberg, Barry Diller, Jeffrey Katzenberg, Ted Field, Mo Ostin.
After talking business or chatting about families, Geffen informs each caller of a meeting the following night. “The president will be passing through,” he says. “He would like to get together with a small group of us.”
It’s no surprise that Geffen is Bill Clinton’s point man for the evening. In the past three decades, Geffen has become one of the entertainment world’s most influential—and wealthiest—men, a Hollywood business genius who has created and run two highly profitable record companies, has made a series of successful films and has backed a host of hit Broadway plays. He is also a political heavyweight and perhaps the most powerful openly gay man in America.
Geffen has never written a song or a screenplay, but he has an unerring ability to spot talent in others, and he helps them use their talents to the fullest. Few agents have forged creative partnerships the way Geffen has, and fewer still have moved from agent to mogul with such ease.
As a movie producer, Geffen is behind such films as “Risky Business,” “Beetlejuice,” “The Last Boy Scout,” “Defending Your Life,” “After Hours,” “Lost in America,” “Little Shop of Horrors” and “Personal Best.” The plays he has helped produce include “Cats,” “Dreamgirls,” “Miss Saigon” and “M. Butterfly,” which was also made into a Geffen film.
But Geffen’s influence has been most felt in the music business. In 1970 he formed Asylum Records, which quickly became one of the most successful record labels in the industry. The California rock sound of that era featured such Asylum artists as Linda Ronstadt, Jackson Browne, J.D. Souther and the Eagles (the top-selling band for several years). Geffen now runs Geffen Records, which has turned out to be even more successful. With an artist roster that includes Guns n’ Roses, Nirvana, Don Henley, Peter Gabriel and Aerosmith, Geffen Records had sales last year of $400 million.
At the age of 18, Geffen worked as an usher at CBS Studios. He landed a job in the mailroom at the William Morris Agency two years later, earning $55 a week. Within five years he was an agent making $2 million.
From initial clients such as the Association and Joni Mitchell, he came to represent many of the stars who would define a generation of music: Crosby, Stills, Nash & Young, Janis Joplin, James Taylor, Bob Dylan. But Geffen was more than an agent and manager—he became a driving force in his own right within the music world. Joni Mitchell based her song “Free Man in Paris” on Geffen and his life.
In 1990 he sold his company to MCA, the entertainment conglomerate that owns Universal Pictures. His take was 10 million shares of MCA stock. When MCA was acquired by Matsushita, Geffen’s stock was suddenly worth more than $700 million. The year he cashed it in, he reportedly paid more taxes than any other American. He still serves as his company’s chairman and earns a salary of $600,000 a year, which he donates to his foundation, a charitable organization that gives away millions annually.
As his bank accounts grew (he is now reportedly worth more than $1.2 billion), Geffen was nearly as visible as the stars he backed. He had a torrid romance with Cher—which began while she was still doing “The Sonny and Cher Comedy Hour”—and he later dated Marlo Thomas. By 1980, however, he had come to terms with his homosexuality, and by 1992 he had become one of the most important forces in the gay rights movement. At an AIDS Project benefit in Los Angeles, he and Barbra Streisand were honored for their contributions. “The Advocate,” the nation’s leading gay publication, named him Man of the Year. When President Clinton was forming a policy regarding gays in the military, Geffen was a strong voice against a ban. He lobbied Washington and took out full-page ads in newspapers.
Geffen in known to be a tough but generous boss. A loyal secretary retired and reportedly received a check for $5 million. Geffen treats himself well, too. He purchased, for $47.5 million, the Beverly Hills Georgian mansion that once belonged to Jack Warner of Warner Bros. He flies around the world in a $20 million Gulfstream IV jet that is decked out like a hotel suite, and he owns a beach house in Malibu and an apartment in New York. He also has a museum-worthy collection of paintings by such artists as David Hockney, Willem de Kooning, Jasper Johns, Jackson Pollock, Roy Lichtenstein and Andy Warhol.
In a city known for its rich and powerful people, Geffen is about the richest and most powerful person in town. Contributing Editor David Sheff, who last interviewed the Who’s Pete Townshend, met with Geffen. He reports:
“There was a lot going on around Geffen when we met up at Geffen Records in Hollywood. His label had just launched the latest Guns n’ Roses LP, and there was a controversy because the album included a song written by Charles Manson. More Geffen records were coming from such heavyweights as Nirvana, the reunited Eagles and Peter Gabriel. His movie company, meanwhile, had announced ‘Beavis & Butt-head’ and ‘Barney’ movies. It had begun ‘Interview With the Vampire,’ directed by Neil Jordan. Fans of Anne Rice’s novels were protesting the choice of Tom Cruise to play the main character, the vampire Lestat. And the death of River Phoenix had caused a last-minute cast change, with Christian Slater taking over Phoenix’s role as the interviewer. The was also disarray because of a renovation in progress, and movers were attempting to force a large desk around a tight stairway corner.
“Nonetheless, Geffen was affable and relaxed. In his blue shirt, khaki pants and sneakers, he comes across as youthful and mischievous. A reporter once described him ‘in cap and T-shirt, padding around his mansion like some mid-life version of Kevin in “Home Alone.”’
“Despite his laid-back demeanor, I found Geffen to be candid, direct and fearless. Of course, anyone who makes $700 million in one business deal cannot be easily intimidated, even by the toughest questions.”
 
Playboy: Is it true that one must be extremely tough, even ruthless, to make it in Hollywood?
Geffen: People who are fools don’t get to be successful, and they don’t get to be successful if they are worried about their popularity.
Playboy: A Hollywood executive said that you will do anything for your friends but, as he put it, “If you are his enemy you might as well kill yourself.” True?
Geffen: If you’re successful, people talk about you. There’s nothing you can do about it. People make up stories. At the end of Liberty Valance, it says something like, “When the legend is bigger than the man, print the legend.” The bullshit is more interesting than the truth.
Playboy: But do you go after people? The executive who said that claims he lost his job because of you.
Geffen: I had nothing to do with his losing his job. The fact is I got him that job.
Playboy: The implication is that you get revenge.
Geffen: My mother used to tell me when I was a kid, “You never have to get revenge. All you have to do is live long enough.”
Playboy: So is show business just another business?
Geffen: It’s more interesting—to me. But somebody else might think it’s just another business.
Playboy: Isn’t there more of a microscope on show business than on others?
Geffen: There has always been a tremendous obsession with television and movie stars, and with the people involved with the business.
Playboy: Is that attention a burden?
Geffen: I don’t view it as good or bad. To complain about it would be silly.
Playboy: How accurate is media coverage of Hollywood?
Geffen: The reporters who cover this business for the big papers and magazines are often inaccurate. The gossip columnists print lies, misinformation, innuendos, untruths and half-truths that are irresponsible and mean-spirited.
Playboy: Recently it was reported that you tried to stop the publication of Obsession, the tell-all biography of your friend Calvin Klein, by offering the publisher $5 million. Is that accurate?
Geffen: They said I did it because I am such a loyal friend. Well, I’m not that good a friend. [laughs]
Playboy: So it’s untrue?
Geffen: It’s such a hilarious charge. I wouldn’t offer $5 million to stop a book about me! It’s absurd. People will do anything for attention.
Playboy: Who exactly?
Geffen: The writer, Steven Gaines, spread that rumor to get publicity for the book, which is an utter and complete piece of shit. The fact that anyone would take it seriously is astounding to me. I was accused by this jerk of getting Putnam not to publish the book. Well, Putnam likely dropped the book because a high-class publisher would not want to market this kind of crap. For the record, however, I have never met or spoken to the publisher and I have never made any effort to influence her one way or another—and could not have if I had tried.
Playboy: The press also had a field day with your latest movie, Interview With the Vampire. What drew you to this project?
Geffen: I loved the book, and I thought a wonderful movie could be made from it. I got Neil Jordan, director of The Crying Game, to write a script, which is absolutely extraordinary. I’m very excited about this one.
Playboy: Do you agree that Tom Cruise is an odd choice to play the vampire Lestat?
Geffen: It’s a different kind of character than he’s chosen to play in the past, but he’s an extraordinary actor and is capable of playing all kinds of parts. And I don’t give a shit that some people don’t like the idea.
Playboy: The people who are most upset are the diehard fans of the Lestat books—and Anne Rice.
Geffen: I get all these letters from people in Anne Rice’s fan clubs who are unhappy about Cruise playing Lestat. They wanted Julian Sands. But the director casts the movie, not the fans.
Playboy: Rice wanted Sands, too. Do you feel bad that the creator of a work is unhappy with what you are doing?
Geffen: I don’t feel bad about it at all. People were outraged when Vivien Leigh was cast in the role of Scarlett O’Hara. Today it is unthinkable that anybody else could have played it. The fact that someone writes a good book doesn’t mean their ideas for the movie are good. Margaret Mitchell had nothing to do with the movie version of Gone With the Wind, or Hemingway with that of For Whom the Bell Tolls. They sold the rights. That’s the way it works. And all the worry about Tom in this part will disappear when people see the movie. He is astounding. I guess all the criticism inspired him to do his best work.
Playboy: When you hired David Cronenberg to direct M. Butterfly, you said you would leave him alone until the film was completed—
Geffen: And I did.
Playboy: Isn’t that risky?
Geffen: Very. However, I’m a great believer in David Cronenberg, and I was happy with the movie. I would have made different choices, particularly in casting John Lone as Song Liling. He was not believable as a woman, and the audience had difficulty believing that Jeremy Iron’s character could be fooled. But I had faith in Cronenberg—win, lose or draw.
Playboy: If you disagreed with a director, would you override his decision?
Geffen: It depends on the circumstances. I would actively campaign for my view, but in the end I would prefer to let a director make the movie that he wanted to make.
Playboy: Didn’t you fire the director of Personal Best, Bob Towne, because you didn’t like the way the movie was going?
Geffen: No. I closed down the movie because it was going wildly over budget, and he was out of control at that time. In the end, though, he finished the movie. There have been times when I’ve become more involved in the content of movies. I changed the end of Risky Business. In the original script, Tom Cruise’s character, Joel Goodson, did not get into Princeton. I made them change that. I believed that if you got Princeton’s admissions director laid, you’d get into Princeton. Also, I thought the audience would want that, so we changed it. It’s a process. Sometimes you disagree and sometimes you find yourself unable not to get involved. But I don’t aspire to be involved in the process other than when I put it together and then, perhaps, at the end, during editing.
Playboy: Have you become better about knowing which of your movies will be hits?
Geffen: I’m always amazed. When we made Risky Business, Warner Bros. didn’t think much of the film and decided not even to open it at some of the best theaters. Cujo, which it released the same day, got all the best theaters because it was thought it had a better chance of being successful. And Risky Business ended up being a classic of the Eighties and made Tom Cruise a star. Beetlejuice was also enormously successful, but we had no idea it would be. The movie was completed, and the director, Tim Burton, and I sat in the screening room and looked at each other and shook our heads. We thought that we had gotten away with something we liked very much but which was pretty wild. We were working on the movie right until the end. We had to invent a whole new beginning and a whole new end.
Playboy: What was the problem?
Geffen: Nothing much, other than the fact that the story didn’t make sense. So we fixed it up and held our breaths and put it out. I didn’t even stick around for the opening. It opened on Easter weekend, and I took off—I went on a boat trip Steve Ross [former chairman of Time Warner] to the Caribbean. We called in and were told it was the biggest Easter opening in the history of the movie business. We were stunned. It went on to gross an enormous amount of money.
Playboy: Do your movies reflect your taste?
Geffen: In a way. I try to choose things that will make interesting movies that won’t lose money. I don’t even say that a movie has to make money, but the bottom line is that it has to at least break even. I don’t want to be responsible for failure.
Playboy: Do you have to believe in a movie to make it?
Geffen: Yes.
Playboy: Are there exceptions?
Geffen: The Last Boy Scout. I’m kind of embarrassed to have my name on that one because of the violence and bad taste. It’s not the type of movie I want to make.
Playboy: Then why did you make it?
Geffen: Someone who once worked here believed in it. And, although it’s not my kind of movie, it did make money. Because of it, I was able to give away about $2 million to charities, which is probably the best thing about The Last Boy Scout.
Playboy: Would you make a movie that would probably lose money if you felt strongly about it?
Geffen: No, because it doesn’t affect just me. I don’t want the people at Warner Bros., who finance my movies, to be in trouble because of some decision I’ve made. So far I’ve given them excellent films, and even the ones that haven’t been very successful haven’t lost a lot of money.
Playboy: How did you get into the theater business?
Geffen: At the invitation of Michael Bennett, who was a close friend. At the time he was putting together a workshop of a show that he called Big Dreams, which we changed to Dreamgirls. That got me started. I had a lot of fun and I loved working with Michael, who was one of the most talented people I’ve ever met.
Playboy: What are the major differences between the theater, record and movie businesses?
Geffen: There are a zillion differences. There’s very little that’s similar. The music business is by far the most progressive because it costs less money to make a record.
Playboy: Why does that make it more progressive?
Geffen: Because artists who are just starting their careers get to make records, and there’s much more room for experimentation. Movies cost millions of dollars to make and to market, so fewer people get a chance to do them. As many records get put out by the industry in a month or a week as movies get made in a year. If we put out a record and it doesn’t do well, no one gets fired. But if you make a movie for $40 million or more and it fails, people lose their jobs.
Playboy: Is the record company your greatest passion?
Geffen: It takes up most of my time, but at any given moment I’m passionate about whatever project I’m working on. My mother taught me to love my work.
Playboy: Was she the one who trained you for business?
Geffen: I learned everything about business from her. I watched her sell, work with suppliers, do the books, pay the bills, make the deals. She enabled me to have a successful life because of it. She started a business sewing undergarments in our house and then moved it into a small shop. We used to go there to eat lunch and dinner, because she was working all the time—we almost lived at the shop.
Playboy: Did you always have enough money?
Geffen: We had enough to eat and be clothed, but we didn’t have much money. I was never able to have clothes that fit me. They were always bigger, so I could grow into them. Since I was quite small and thin, I often looked ridiculous.
Playboy: What did your father do?
Geffen: He almost never worked, which is why my mother took the responsibility of supporting the family. She didn’t want to be on welfare.
Playboy: Why didn’t he work?
Geffen: It’s not that he didn’t want to work; he wasn’t successful at it. He couldn’t seem to keep a job, and he wasn’t highly motivated. He liked to read, and he read in many languages. He was kind of an intellectual and eccentric, maybe a little lazy. He died when I was 18.
Playboy: Were your mother and father immigrants?
Geffen: She was from Russia and he was from Poland, but they met in Palestine. When he was young my father worked as a telegraph operator, saved money and went on a world tour. He met my mother, who had made her way to Palestine after the Russian Revolution. She had fled and never again saw her family except for a sister who, years later, wrote to my mother about what had happened to the rest of her family. It gave my mother a nervous breakdown and she was institutionalized for about six months.
Playboy: Was her family killed in the Holocaust?
Geffen: Not exactly. They lived in the Ukraine, and as the Nazis were crossing into Russia from Europe, the Ukrainians went on a rampage in the town where my mother’s family lived. They killed all the Jews they could get their hands on before the Nazis arrived. My mother’s sister survived because she wasn’t home and my mother because she had already left for America.
Playboy: How old were you when your mother had the nervous breakdown?
Geffen: I was six, and the whole episode was confusing and terrifying for me. We went from having a mother who ran her own business to having a mother who was in a hospital where we visited her. It was embarrassing because all my friends thought she was crazy. It was frightening because her business shut down, but when she got out six months later, she went to work and eventually everything got back to normal.
Playboy: Did she resent your father?
Geffen: I’m not sure. But my brother and I were disappointed in him. We blamed him for all the things we couldn’t have and all the things we thought he should be doing. But in the end he did the best he could, I’m sure.
Playboy: Were there fun times, too?
Geffen: I went to the movies a lot, which was magic for me. I remember seeing Singin’ in the Rain over and over again one day. My mother called the police because I didn’t come home, but I was mesmerized by it. I guess it was a sign of what was to come.
Playboy: According to your yearbook, you were going to be a dentist.
Geffen: You had to say you were going to be something, and my mother would have liked me to be a dentist, a doctor or a lawyer. But there was no chance. I was a lousy student. I went on to flunk out of two colleges before I got my first job in show business, as an usher at CBS. I began ushering for The Judy Garland Show, The Danny Kaye Show and The Red Skelton Show. I loved it. I thought, I would pay them to be able to watch this stuff.
Playboy: So you decided that show business was for you?
Geffen: Well, I was a poor kid from Brooklyn with no talent. It never occurred to me that I could be in show business. But I looked for other jobs on the periphery of show business. I worked as a receptionist at a production company and then got a job in the mailroom at the William Morris Agency. Instantly I knew I was in the right place.
Playboy: How did you know?
Geffen: As I delivered the mail, I listened to the people in the offices talking on the phone, making deals. I thought, like that song in A Chorus Line, “I can do that.” They just bullshitted on the phone. When I went to the doctor or the dentist, it never occurred to me that I could be a doctor or a dentist. I knew I couldn’t. I knew I wasn’t smart or studious or dedicated enough. But I could be an agent. I knew it in a day. And getting there became the most important thing in my life.
Playboy: Is the story that you lied on your application to William Morris true?
Geffen: Yeah. Thirty-one years ago I lied. I said I had graduated from UCLA, because a college degree was a requirement for the job. I’d been there a week and was excited about the possibilities for my life for the first time, and another guy in the mailroom was fired. When I asked him what happened, he said that he had lied on his application about going to college. I got sick to my stomach. From that day on, I got in early every morning and went through every single piece of mail that came into the agency, looking for the letter from UCLA saying they had never heard of me. I told that story to The New York Times for the 87th time, and all these people wrote letters to the editor that said my career is based on a fraud. Some people just don’t get it. If a lie alone would make a career, everyone would do it.
Playboy: It’s odd that you need a college degree to work in the mailroom in the fist place.
Geffen: It’s obviously silly. Here I am, one of the most successful graduates of the William Morris Agency.
Playboy: How does one climb from mailroom clerk to agent at William Morris?
Geffen: You do just that; you climb the ladder. A job opened and I went for it. I was a secretary to one of the agents, typing and taking dictation. Then I became an assistant to another agent. I quickly figured out that the way to be most successful was to be a signer, a person who brought talent into the agency. So, almost immediately, I went out and started signing people.
Playboy: How do you do that if you’re not yet an agent
Geffen: You recognize the talent, then try to convince them that they want you, and then you have to convince the people at the agency that they want the artists. You have to be realistic. You’re certainly not going to be able to go after a major star when you’re 21 years old. I went after people who were brand-new and who I thought were talented.
Playboy: Did you find anyone who became a major star?
Geffen: By the time I became an agent, I had signed Jesse Colin Young, Joni Mitchell and the Association, which was big at that time because of Windy. It was the biggest act I brought to the agency at that point. We used to go to clubs every night, the Cafe a Go-Go and the Bitter End. In those days, you could find the Lovin’ Spoonful at one club and Bill Cosby at another, Bob Dylan hanging out in the Village and Joni Mitchell at a coffeehouse.
Playboy: Were you blown away by these artists?
Geffen: Completely. When I look back on that period, from 1965 to 1975, I was working with the people I mentioned, plus Crosby, Stills, Nash & Young, the Eagles, Laura Nyro, Jackson Browne, Linda Ronstadt, Janis Joplin, James Taylor—so many. It was very exciting. I couldn’t believe the life I had. I couldn’t believe the people I was talking with on the telephone.
Playboy: As those artists emerged, did you have a sense you were involved in a completely new kind of entertainment?
Geffen: Not at the time. I was just working, frankly. But I can remember when I had Jimi Hendrix and Buddy Miles and Stephen Stills in my apartment in the Sixties. In my apartment. I couldn’t believe it. Another time Jackson Browne, Jimmy Webb, Laura Nyro and Joni Mitchell were in my living room. The day Martin Luther King was killed, I was in a limousine with Leonard Cohen, Joni Mitchell and Laura Nyro, going to Joni’s concert at Bryn Mawr. She was the opening act. People were spitting at the limousine and there was rioting in the streets. It was scary.
Playboy: You were the free man in Paris Joni Mitchell wrote about. How do you feel about that song?
Geffen: It’s a great song, but at the time she wrote it, I was embarrassed by it. I didn’t want her to record it because it seemed like an invasion of privacy. It was so personal and revealing.
Playboy: Were you a free man in Paris? What did that mean?
Geffen: Joni and I went to Paris with Robbie Robertson [of the Band] and his wife. Joni saw something that I didn’t see. She heard me saying that I’d had enough of all this. I was getting to the point where I had had it with all the deals and the people. I was ODing on the music business. I was ODing on pop stars. I just couldn’t take much more of it. Now, when I listen to the song, I realize how prescient she was. I didn’t see it until much later.
Playboy: When some of the artists that you discovered became stars, were you proud?
Geffen: Oh, God. Yeah. I remember when I went to see Crosby, Stills and Nash do their first concert. It was at the Greek Theater. Joni Mitchell was their opening act. From there they were flying to Woodstock, which was going to be their third gig. Yeah, it was incredible that I was part of it in some way. Joni Mitchell wrote Woodstock in my apartment. I was there when she wrote it.
Playboy: Did you go to Woodstock?
Geffen: No. When we got to La Guardia Airport and read in the Times that 400,000 people were there, sitting in mud, I said to Joni, “Forget it. Let’s not go.” We went to my apartment, and while we were there she wrote Woodstock.
Playboy: Had you made your first million dollars by then?
Geffen: I’d made $2 million. As Laura Nyro’s manager, I owned half of her publishing rights and I sold her catalog for $4 million, which gave me $2 million.
Playboy: Did you tell your mother about that deal?
Geffen: Sure. She asked me how I did it, and I told her I advised people on their careers. She looked at me, puzzled, and said, “You?” A million dollars was more money than anyone in my family had ever even dreamed existed.
Playboy: How did it affect you?
Geffen: In just five years I’d gone from making $55 a week in the mailroom to making $2 million. It was a quick ride. It gave me a lot of confidence and it gave me what people refer to as “fuck you” money. It wasn’t as if I’d never have to work again, but I felt sure I would never be poor again. I could do what I wanted, and I could genuinely be fearless about the future. That’s when I started Asylum Records.
Playboy: What inspired you to start the company?
Geffen: I was managing Jackson Browne and couldn’t get anyone to sign him; nobody thought he could sing. [Atlantic Records chief] Ahmet Ertegun suggested that if I really believed in Jackson as much as I said I did, I should start a record company and record him myself. So I started the label, and within a short time I’d also signed Joni Mitchell, the Eagles, Linda Ronstadt, J.D. Souther, Ned Doheny and Judy Sill. It became successful almost immediately.
Playboy: Did Asylum appeal to artists because it was an alternative to the major labels?
Geffen: That appealed to them, but the main thing was that we were excited about them when other record companies simply weren’t.
Playboy: A lot of people are probably kicking themselves now.
Geffen: Everybody kicks themselves when they turn down something that turns out to be successful. We’ve all done it. But the problem isn’t what you’ve passed on, it’s what you haven’t passed on. Well, at Asylum we had everybody. It was unbelievably successful. I sold Asylum in 1972 for $7 million. Seven million plus the money I had in the bank gave me $10 million. I thought I would be secure forever. Selling it was a stupid mistake, by the way—a mind-boggling, idiotic decision.
Playboy: Why?
Geffen: Because a year later, it was worth $50 million.
Playboy: At the time, did you think you would never work again? That you’d retire?
Geffen: No. But I knew I would never have fear again.
Playboy: Whereas $2 million didn’t do that?
Geffen: Two million would have done it, but it didn’t feel that way to me. I didn’t feel rich until 1972. Two million wasn’t enough—it had to be bigger than that. It’s not about reality. It’s about how you feel. But when I had more than $10 million, I no longer could tell myself it was about money, which was a blow, by the way. It was difficult because as long as I believed money was the answer, I could work harder and make more, and I’d get to the answer. So when I had all this money and still didn’t feel quite right, I crashed. I thought, Oh shit. Money isn’t the answer. This, of course, is a revelation when you grow up poor and assume that money will solve everything.
Playboy: Is that what Joni Mitchell had seen, this revelation?
Geffen: Yes. I was staying at the Inn on the Park Hotel in London. I’d smoked a joint and was lying on my bed, looking at the ceiling. That was when it hit me, and it was an enormous shock.
Playboy: Money wasn’t the answer to what?
Geffen: To being happy. It’s not that I was miserable, but something was missing, and so I went into analysis. I was 29 years old and I had about $12 million, and I wasn’t happy.
Playboy: What was your life like outside the record company?
Geffen: I was alone. My life was work. It wasn’t fulfilling enough.
Playboy: What kind of therapy did you begin?
Geffen: Five-day-a-week analysis. It helped me tremendously.
Playboy: Without trivializing it, what did you discover?
Geffen: Well, I began to realize that I had to take care of me. It wasn’t enough to take care of Jackson Browne, Joni Mitchell, CSN&Y and the others, and it wasn’t enough to amass a great fortune. There was little David, whom I had been ignoring completely, to take care of. I realized I had no dealt with a lot of my demons, the shit that you acquire growing up. So I started dealing with that, and I had to deal with my sexuality. I genuinely wasn’t certain if I was straight or gay. In therapy I decided that I wanted to be straight, and I seriously began to date women.
Playboy: Until then—
Geffen: I was sort of not doing anything. I was working. I had dates, but that was not a priority.
Playboy: Many gay men say they knew about their sexuality when they were very young. You didn’t?
Geffen: I knew I was interested in men, but I never had made the connection in my own head that I was gay.
Playboy: Was the idea too threatening?
Geffen: It was a different time. I never allowed myself to consider it seriously. Obviously I thought it was a possibility, but it was a frightening possibility.
Playboy: Was it frightening enough to repress?
Geffen: Absolutely. I did not want to be gay, or, I should say, I did not want to be what I had been conditioned to believe a gay man was. I had had sexual experiences with men early in my life, but I never thought or acknowledged to myself that I was homosexual. Then I decided I was straight, which is not the same thing as being straight.
Playboy: Did you begin dating women?
Geffen: In 1973 Lou Adler and I started the Roxy. It was opening night for my client Neil Young. I was sitting at a table with Bob Dylan when Lou came over and asked, “Is it all right if Cher sits with you?”
Playboy: So Cher comes over and joins you and Dylan. Only in Hollywood.
Geffen: It gets better. Cher sat down next to me, and we talked all night. After, I invited her to have dinner at my house. And within three days we were living together.
Playboy: Was this after Sonny and Cher were over?
Geffen: She was married to Sonny, and we fell in love—genuinely.
Playboy: Was this your first time in love?
Geffen: Yes. She moved in with me, two blocks away from her house where she was living with Sonny, who was living with another woman in the same house he was living in with Cher. Their relationship as a legitimate married couple was over, but they were keeping the scam together for the public because they had the biggest television show in America—as a happily married couple.
Playboy: And you’re gay!
Geffen: I hadn’t figured that out, so not only am I in love with a woman, but I’m in love with Cher. And she’s in love with me. And it’s all secret. You can’t imagine how romantic it was. We couldn’t be seen in public.
Playboy: Was that part of the romance?
Geffen: Oh my God. Sure.
Playboy: And it was Cher. Could it have been Jane Doe?
Geffen: It wasn’t Jane Doe. It was Cher. Cher. And it was the most exciting year and a half of my life. Every morning I woke up and pinched myself. I could not believe that this was my life. Asylum Records, I’m living with Cher. I’m one of the richest men in town. It was just too much. And as it turned out, it really was too much. Because one day I discovered that Cher, my beloved, was screwing somebody behind my back—the bass player in the Average White Band. It was extremely painful for me, one of the most painful experiences I’ve had in my life. I never knew that that level of pain was possible.
Playboy: Did you think you had a monogamous relationship?
Geffen: Cher had never been dishonest with me. She wanted me to allow her to have whatever experiences she needed. She had been in the relationship with Sonny from the time she was quite young. But for me it was like scraping a can opener over my brain. I became scared, mistrustful, paranoid.
Playboy: Was that the end of your relationship?
Geffen: No. The end of our relationship was when I took her to the Troubadour to see Gregg Allman. In the middle of the show, a note was delivered to her, which wasn’t unusual; people were always passing her notes. She said she was going to the bathroom. She was gone for a while. The show ended, and as we were leaving the club, Gregg Allman walked by and said to her, “I’ll see you later.”
I said, “What was that?” Cher told me the truth, which was that she had gone back to see him and she was interested in him. Once again I felt as though my heart had been ripped out.
Playboy: Why did you let it happen again?
Geffen: I didn’t. I knew that going through that experience again would be too detrimental.
Playboy: She had had this other relationship, ended it and you were back together?
Geffen: We had never really come apart. I let her go through it the first time, and that relationship came to an end naturally. But when she told me she was interested in being with Gregg Allman, I left. I couldn’t take it. She didn’t want me to leave. She wanted me to let her have these experiences, but it was too much for me, so I moved out. I moved into Warren Beatty’s house. He helped me get through that period. It was the worst decline of my life.
Playboy: We don’t think of Warren Beatty as the most sensitive guy to hang out with after a devastating breakup.
Geffen: Warren was incredibly kind and supportive. We’ve been close friends for more than 25 years.
Playboy: Then what happened?
Geffen: To make it worse, the newest issue of Esquire appeared with Cher on the cover. The cover line was, “Who’s Man Enough for This Woman?” The story was about my relationship with Cher, but it was over! Who is man enough for this woman? Clearly I wasn’t. It was the most embarrassing, humiliating thing that could possibly happen to anybody, right? I was crazy, nauseated, and I left the country. I went to Brazil. I returned and I was still crazy. I was seeing my therapist every day and speaking to him by telephone on weekends. I lived at the Beverly Hills Hotel in a bungalow. By then I was responsible for Cher beginning her solo career with the Cher show. I had put together the first three episodes, which were going to air, and she was with Allman. I had to watch the shows. And every time I picked up a magazine, she was on the cover, and I’d feel sick. I picked up an issue of Time and, in it, responding to a question about going from Sonny to me, she says, quote: “I traded one short ugly man for another.”
Playboy: Ouch.
Geffen: Yeah. You can’t imagine how painful that was for me. That was her idea of humor; she wasn’t sensitive enough to understand how painful it would be for me. We’re friends now, but it was hell.
Playboy: Did your therapy help?
Geffen: Of course. My therapist kept me from going insane. I was in so much anguish that a friend of mine suggested I go to est. A year earlier, [movie executive] Peter Guber had suggested that I go to est, and I looked at him like he was nuts. But, during that period, if somebody had suggested that my pain would go away if I became a Catholic, I would have become a Catholic. I would have done anything to get rid of the pain.
Playboy: What did est do for you?
Geffen: It was an amazing experience. I realized, for the first time in my life, that I was responsible for everything that had happened to me. I was responsible for my life. I wasn’t victim, and I had no one to blame. It sounds trite, but it is an incredibly important lesson.
Playboy: You have also been involved in other New Age self-help programs, such as Course in Miracles and Lifespring. How are they similar or different?
Geffen: They’re completely different, but they both involve ways of dealing with your stuff, whatever it is.
Playboy: How did you get involved with Marianne Williamson and her Course in Miracles?
Geffen: I went to a lecture and found it quite compelling. I returned a number of times and listened to her tapes and found some value in what she was saying. If someone says to me, “I tried this and it was valuable to me,” I’ll try it.
Playboy: What does that say about you?
Geffen: I’m looking to get better, not to be right.
Playboy: Many people view all that stuff as flaky.
Geffen: People who are cynical about those kinds of things are cynical in general. Well, they get to have their cynicism. I aspire to be better. It’s hard to judge the value of things you have not tried yourself. I might try something and decide it’s a waste of time. But more often I think I get something valuable out of these experiences.
Playboy: All toward being happy?
Geffen: No, toward getting somewhat better. You die unhealed. If you work on yourself your whole life you will still die unhealed, but you’ll have a better life if you continue to work on it. If you can heal some of the damage that comes from life, I think that’s good. If you don’t see it as valuable, then it won’t be.
Playboy: How did it help you get over things when Cher went off with Gregg Allman?
Geffen: All this work I did changed my life from that point forward. I was able to unburden myself of my pain over Cher. It still hurt, but I was able to move on. Soon after that I got fixed up with Marlo Thomas on a blind date, and within days we were in love with each other, and soon we were living together.
Playboy: So you were still trying to be straight?
Geffen: It took until the end of that relationship for me to realize that I couldn’t be straight.
Playboy: Why did it take so long?
Geffen: It was a mind-boggling realization that came at the same time I was diagnosed as having a tumor. I was in the hospital waiting to find out whether it had spread, whether I was going to have to be mutilated or whether I would die. It all sank in then. I realized there is no time to waste in life. You have to live your life one day at a time. But I had been living a lie. Trust me, when someone tells you that you have cancer, it changes your life in a profound way.
Playboy: How did it change your life?
Geffen: I thought, I’m going to live my life and see who I really am and what I really like, because I don’t know. I had been trying to be something else, but from that point on I had to be who I was. Cancer made it imperative not to waste any more time.
Playboy: What happened with your cancer?
Geffen: After four years I was told that I had been misdiagnosed. I had spent four years believing I could die, and so I understood that the future is an illusion.
Playboy: Were you working during those four years?
Geffen: I had sold Asylum to Warner Bros. and tried working in movies at Warner Studio. My contract with Warner went through 1979, but I didn’t like the movie business. They told me I could leave the studio but that they held me to my contract, which meant that they were paying me not to work. Basically, they didn’t want me to work for a competitor. It was horrible, but I made the best of it. I went to New York, hung out at Studio 54 a lot during its heyday and had a good time. Then finally my contract was over, and at the same time I found out I had been misdiagnosed.
Playboy: How did that feel?
Geffen: I was relieved, of course. I had sort of lived my life with one thing in my head, and all of a sudden there was a new piece of information. It was like a second chance. So I quickly decided to go back to work. I founded Geffen Records.
Playboy: Why the record business again, given all the other choices?
Geffen: I love the record business. It is the thing I do best, and I wanted to work. There was something Paul Simon had said to me. He said, “Begin with what you know. You never know where it will take you.” So I went back into the record business by starting a record company. The film company came next, then the theater company.
Playboy: Who were your first acts on Geffen Records?
Geffen: The first three acts I signed were Donna Summer, John Lennon and Elton John. Donna had left Casablanca Records at the peak of her career. When I got her, she had just become a born-again Christian, and her music changed radically. Her career went steadily down-hill. But with Donna and then Lennon and Elton John, it was a good start.
Playboy: Since then, Geffen Records has become one of the most successful record companies. Do you still personally sign artists?
Geffen: No, I have other people at the label do that now.
Playboy: Who signed Guns n’ Roses?
Geffen: Tom Zutaut, who works at my company, heard them and signed them. It was a very good move.
Playboy: How do you feel about some of their controversial lyrics, particularly the homophobic lyrics in One in a Million?
Geffen: I spoke with Axl Rose about the song before he put the record out. I told him I thought it would cause him a lot of trouble, but he wanted it released. It ended up getting a lot of negative reaction, which was certainly deserved.
Playboy: Does the fact that the song is homophobic bother you?
Geffen: I don’t believe Axl Rose is homophobic. I know him.
Playboy: But he has said that he was homophobic. He attributed it to abuse when he was a child.
Geffen: But he wasn’t when he made the record. He was writing about an experience early in his life.
Playboy: Some Guns n’ Roses songs are misogynistic. Don’t you consider that objectionable?
Geffen: Yes, of course I find misogyny objectionable.
Playboy: It was reported that you were shocked when you heard that Axl Rose put a Charles Manson song on the latest Guns n’ Roses LP. Didn’t you know about it in advance?
Geffen: No. I heard about it when I was on vacation in Barbados. I was watching CNN with the TV on mute. I saw a picture of Charles Manson on the screen, and then I saw these lyrics. Under them it said, “From Geffen Records.” I went crazy.
Playboy: Did you consider removing the song from future copies of the album?
Geffen: We don’t have the right to remove it. The band has, among the many rights in the members’ contracts, complete control of its material. It’s one of the biggest bands in the world. People at my company, as well as the other members of the band, had urged Axl to eliminate the song from the record, but he wouldn’t. It related in a meaningful way to a relationship that was important to him.
Playboy: Would you have stopped the record from being put out with that song had you known about it in advance?
Geffen: No, but I would have made arrangements regarding the song’s royalties prior to its release. Our concern was that it should not enrich or reward Manson in any way, so we arranged for all of the money to go to the child of one of the people who was killed by Manson’s family. Axl made the decision to do that afterward. But it would have made much more sense to have arranged this prior to the release of the album.
On the other hand, I dropped Def American Records, a label we distributed, because it was consistently putting out records I found offensive, such as Andrew Dice Clay, Slayer and the Geto Boys. It reached a point where I could not continue to put out offensive material that was recorded by artists we hadn’t even signed, and so I dropped the label. I’m not interested in making records about murdering women and fucking their dead bodies, cutting off their breasts—shit like that. That was actually on a Geto Boys record. So even though dropping the label meant losing artists I didn’t want to lose, like the Black Crowes, it was a choice I had to make. I’ve read interviews with Rick Rubin, who runs Def American, in which he talks about how he left Geffen Records. He didn’t leave, I threw him out. I couldn’t stand being associated with a lot of the records he was putting out.
Playboy: How do you feel about the violence in rap music?
Geffen: We don’t put out rap records. Look—you can make money all kinds of ways. Some people make money selling drugs. I find some rap records extraordinarily offensive, and I don’t want to profit from them.
Playboy: Do the sentiments expressed in the music trouble you?
Geffen: It troubles me that there’s as much violence in the streets as there is, that so many people are being killed and that there’s poverty and a lack of hope. All these things trouble me, and I realize rap music is a reflection of that. But these records aren’t going to help. They hurt. Some are inflammatory, and I won’t be part of it.
Playboy: But since the music reflects something that’s going on in the culture, shouldn’t those bands have a forum to express it?
Geffen: Absolutely. I didn’t say they shouldn’t be able to make records.
Playboy: But if all the record company executives used your criteria, many people wouldn’t have a voice.
Geffen: But other record company executives don’t feel that way. They put the stuff out.
Playboy: How well did you know Kurt Cobain?
Geffen: I knew him though not well. He was a lovely, gentle guy.
Playboy: Was it a shock to hear that he killed himself?
Geffen: Of course. Life was obviously extremely painful for him. He wasn’t the first person I’ve known who has killed himself. I’m not sure if there’s any way you can intervene when people are determined to die, and that’s sad.
Playboy: Recently, it was reported that Aerosmith is leaving your label for Columbia. Does that upset you?
Geffen: Not at all. When artists leave, it’s not personal. It used to take an enormous toll on me, but now it’s like a mosquito bite that you can’t quite scratch. Aerosmith is leaving because it was offered much more money than I thought made sense. I don’t blame them.
Playboy: What do you think of the high-stakes deal in which Viacom bought out Paramount, and all the other big acquisitions of studios over the past few years?
Geffen: These are management-intensive businesses that have to be run as such. They cannot be run in the same manner as manufacturing businesses. And often the prices are ridiculous. When Sony bought Columbia and Matsushita bought MCA, both overpaid tremendously. But the prices in the Paramount deal now make those prices seems like bargains. It’s all madness. And the chickens may come home to roost one day.
Playboy: Sony and Matsushita bought American movie studios because they felt they needed to have access to software, not only hardware, in the future.
Geffen: You don’t have to buy companies to have access to software. Software is and always has been available. And the truth is, if Sony sold its software companies, Matsushita would probably sell its software companies, because the return on the investment in the movie and television business hasn’t been great. They all talk about the synergy of owning it all, but the only synergy that has come out of these deals is a huge amount of debt and elephantine companies that are hard to manage.
Playboy: With some much ballyhooed new entertainment forms—new kinds of CDs, expanded cable, interactive media—it’s apparent that the entertainment industry is changing. Where do you see it going?
Geffen: The people who are telling us what the future is going to be are completely full of shit. I don’t think anyone can see the future better than you or I.
Playboy: So are the people who are betting on the future going to lose their investments?
Geffen: Some might be right about it. More likely, they’re not. All this investment in cable television, for instance, may turn out terribly because cable may soon be obsolete. The signals may be broadcast digitally. Who knows? I surely don’t. But I know that everybody who’s saying they know where things are going is doing so based on self-interest. They have no better crystal ball than anybody else.
Playboy: How will Al Gore’s information superhighway affect your businesses—when there are 500 TV channels?
Geffen: It won’t affect them at all. If there are new ways to deliver movies, Broadway shows and albums, great! It doesn’t matter to me whether I deliver them on CD, record, videocassette or by some cable system with 500 channels. Everybody claims to have a crystal ball about this stuff in the future. I don’t have a crystal ball.
Playboy: How about when it comes to the country? In what direction do you see things going, particularly since you worked so hard to get President Clinton elected?
Geffen: I think it’s wonderful to have a Democrat in the White House. It’s good that there is a group of people who are concerned about health care, crime, unemployment, a woman’s right to have an abortion and many other serious issues. It isn’t a cure-all, but there is someone who will listen.
Playboy: Have you ever been disappointed that things aren’t changing faster?
Geffen: An ocean liner doesn’t turn on a dime. But I think the president and Mrs. Clinton care about issues that affect most Americans. They are concerned about the environment, about poor, disadvantaged people—the least powerful people in America. They are concerned about making a fairer and safer America.
Playboy: How does it feel to have a direct line to the White House?
Geffen: It’s great to feel that there’s someone you could conceivably talk with, that there’s an intelligent person at the other end of the conversation who’s going to listen to what you have to say. But that’s not to say that I have any influence.
Playboy: You don’t think so?
Geffen: No. And I don’t want to present myself as a person who has influence. I neither have it nor seek it.
Playboy: But you do lobby for things you care about. You have campaigned to allow gays in the military, for example. You have worked hard to make AIDS a national priority. There are other issues—
Geffen: I care about a lot of the things that this administration is at least willing to listen to.
Playboy: Were you disappointed with the don’t-ask-don’t-tell compromise on gays in the military?
Geffen: Of course I was. But I think they did the best that could be done, unfortunately.
Playboy: Do you believe that? Do you view it as a broken promise?
Geffen: I know there are very strong forces in America against the advancement of civil rights for anybody, let alone gay people. There is a very strong conservative Christian right wing in this country that would like to send us back to the Dark Ages. It takes a long time to change.
Playboy: You are involved in gay politics beyond the military issue. How do you feel about the tactics of the radical gay groups such as Act Up, which has attempted to call attention to AIDS by disrupting the opera in San Francisco, and by throwing condoms in a church in New York?
Geffen: I have nothing to say about what they do. They do what they do, and I do what I do. I have no opinion about them. People with AIDS have a very different agenda than I do. They’re dealing with a time bomb. I’m very concerned about it. If I were infected, it might be the only thing I would think about. I don’t know what I would do. I do know that I want to make a difference.
Playboy: When did you begin to be open about being gay?
Geffen: It was never a secret. Years ago people didn’t talk publicly about being gay, and I didn’t. But there was nobody who knew me who didn’t know my story. It wasn’t like I was lying about it. I just thought that making a public statement about my sexuality was kind of tacky and inappropriate.
Playboy: Was it significant for you when, in 1992, you came out publicly at the Commitment to Life Awards ceremony honoring you and Barbra Streisand for your work on behalf of people with AIDS?
Geffen: The idea that I decided to come out is wrong. At that event, a third of the tickets were given to people who were dealing with HIV or AIDS, and I felt that I couldn’t get up in front of that audience and not acknowledge that I was gay. It didn’t seem like a big deal to me. Other people made a big deal about it, but I sure didn’t think it was a big deal.
Playboy: But, for gay rights organizations, it was a big deal that such a prominent person was acknowledging his homosexuality.
Geffen: I was happy to do it. It was no problem for me.
Playboy: What did it change in your life?
Geffen: Nothing. There wasn’t one person who knew me who said, “Oh my God. David Geffen is gay.”
Playboy: But you were criticized by radical gay groups for waiting so long to come out.
Geffen: I don’t care what they think.
Playboy: You disapprove of outing.
Geffen: I think it is terrible. People’s lives have been ruined, not because they are gay—being gay is not a ruinous condition—but because it was made to seem like a bad thing by those supposedly proud gays doing the outing. It has been used as a weapon. Look, all of us lead individual, singular lives. We all make our own choices. It might just be that a closeted gay person is keeping it a secret because of a career, a parent, his or her children. We do not live in a perfect, enlightened world—and until we do, none of us should sit in judgment. Empathy works both ways.
Playboy: Did you ever fear that being gay would hurt you?
Geffen: No, because, as I said, I don’t think there’s a person who knows me or who has known me over the past 20 years who doesn’t know my story. Whenever I was dating a guy, he was with me if I went to a premiere, or if I went to a dinner party. So no one was misled about me. It has never affected my business whatsoever, because people are interested in whether I’m good at what I do, not who I’m sleeping with. The people I worked with—Steve Ross, Mo Ostin, Ahmet Ertegun—always knew I was gay. In fact, they were surprised when I ended up going out with women. They couldn’t figure out what all that was about, because people think you can only be one thing or another. But that’s nonsense. People go through a world of discovery in their lives and try this or that to see whether it is something that works for them. I’ve gone out with men I didn’t like and women I didn’t like, and men I liked and women I liked.
Playboy: So are you gay or bisexual?
Geffen: Right now I’m completely, 100 percent gay. But I’d be lying if I said that it’s inconceivable to me that I might meet a woman and fall in love with her. I might. I’m not looking to, and I’m not planning on it and I don’t hope that I will, but I might. Because that’s real life.
Playboy: But don’t you know a lot of gay men who would say it’s inconceivable to fall in love with a woman?
Geffen: Yes. It was inconceivable to me until it happened. So nothing is inconceivable to me today. Every time I see Demi Moore walk in front of my beach house—we’re neighbors—I think, Whoa, she’s really hot! I’m not saying that because I want to present myself as anything other than gay—it’s the truth.
Playboy: Let’s talk about the impact of AIDS on your industry.
Geffen: It has impacted every industry—every American. An enormous number of people are dying, most of them young, who still have a lot to contribute. There’s no aspect of it that’s not tragic. I’ve lost a tremendous number of friends, acquaintances and associates—how could it not affect me? I would hope that it would affect everybody emotionally. Every person who has a conscience should care about AIDS.
Playboy: When did you begin to see that AIDS was affecting the gay community?
Geffen: One of the first people who became infected was the best friend of a friend of mine. It was before any knowledge of this thing called AIDS. People were developing illnesses that usually affected old people. No one could figure out what was going on. Then we began to hear there was a disease that affected gay people. Naturally, I thought, Oh shit! Maybe I have it. Then in the early Eighties I thought maybe everybody had it. Who knew? It was very frightening. Eventually I took the test and found out I was negative. That was, of course, a relief. Lots of people were not so fortunate. A great many friends of mine are infected, and a great many friends have already died. I save all the Rolodex cards of friends if mine who have died, and now I have hundreds of cards with a rubber band around them.
Playboy: You said that when you were a kid you couldn’t imagine knowing a millionaire. Is it any different being a billionaire?
Geffen: I live my life pretty much the same way I’ve always lived my life.
Playboy: If money is power, and a million dollars is a certain amount of power, is a billion dollars an unbelievable amount of power?
Geffen: No. It’s an illusion. It’s all an illusion.
Playboy: What do you mean?
Geffen: I mean, powerful with whom, with what?
Playboy: Obviously you can do what you want. You have enormous clout. You can buy what you want, do what you want, employ who you want, get people to do whatever you want, presumably.
Geffen: Well, I can do what I want, though I’ve been able to do pretty much what I want most of my life. But where am I? I’m still in my office. I’m at work every day. I’m no longer motivated to make money for myself, because I have enough money. So now the best part of the money is that I can do a lot of good with it. Our foundation has given away millions of dollars every year since 1990.
Playboy: When you’re not working, how do you spend your time? Do you go to rock shows?
Geffen: I’ve seen enough rock shows to last me for the rest of my life. Now I go as little as possible. I prefer listening to the albums.
Playboy: Whose concert would you still go see?
Geffen: If you told me that Elvis Presley and Buddy Holly and the Beatles were all going to get together one more time, I’d say, “Let me hear the album.” I went to so many concerts at the beginning of my career and sat there with my eardrums bursting, with all the agents and promoters, all the people backstage. Now I like albums.
Playboy: Are you currently involved with someone?
Geffen: No, but I’m always looking. Know anybody?
Playboy: You’ve talked about the women you have dated, but not the men.
Geffen: Because people are interested in Cher, or Marlo Thomas. They are not necessarily interested in the guys I go out with because nobody has ever heard of them. If I were going out with a famous man, you’d be asking me, “So, what about James Dean?”
Playboy: Has the work you have done on yourself, through therapy and the rest, paved the way for a long-term relationship?
Geffen: Absolutely. Each time, you’re better at it. I’d like to learn to be more loving, more compassionate, a better person in every regard, and I’ve come a long way.
Playboy: Do you think your success has gotten in the way of your relationships?
Geffen: No. It’s how hard I work and how much time I invest in my work.
Playboy: Are you a workaholic?
Geffen: I have learned how not to be. I take weekends off. I don’t encourage people to call me after work about business. I take vacations. I have good friends and lots of interests.
Playboy: After all the searching, have you figured out the key to happiness?
Geffen: I don’t think it’s possible to be happy if you are not being yourself.
Playboy: Are you?
Geffen: I’m a happy guy, if that’s what you’re asking. But I feel there’s more you can do to make yourself better. You constantly have to work on issues in your life. That is what a healthy person does. It’s a struggle, but it’s very rewarding.
Playboy: What do you still want to accomplish?
Geffen: When I see a movie like Schindler’s List, it reminds me how much we, in this business, can do. I’ve always thought that movies and music and television have an extraordinary opportunity to educate people, to enlighten them, to elevate them. I have always wanted to make the great movie. I don’t know that I’ve come close to making a great one, but I still hope to. People who do good work get to feel really good about it. It’s like a high-water mark that you can shoot for. It’s about striving to do good work and accomplishing something lasting and important, something that makes a difference. It’s always worth striving to do more.

Jeff Bezos, February 2000#

A brilliant computer scientist and would-be entrepreneur named Jeff Bezos was huddled with his cronies, sipping lattes and crunching biscotti, plotting and planning. The setting was ironic: a cozy café in the Barnes and Noble store in downtown Seattle. Why ironic? Because Bezos and his friends were conspiring to nuke this and every other Barnes and Noble store. What Bezos didn’t realize at the time is that they were creating a way of shopping that would change business forever.
In 1994 the revolution Bezos was plotting would have sounded fanciful to almost any eavesdropper. The plan was to start a bookselling business in an alternative reality, a place Bezos called cyberspace. There would be no shelves, no inventory, not even stores you could physically enter. What’s more, Bezos had quit a good job to hatch this cockamamie idea.
But the funniest part was yet to come. Four years later, Bezos’ firm, Amazon.com, is one of the fastest-growing companies in history, valued at $22 billion, a third more than stalwart Sears. In that short amount of time, Bezos almost single-handedly launched e-commerce—a way of doing business that represents a larger and larger segment of all buying and selling—and he set a standard for all comers to the world wide web. In the process, he got rich. Really rich. Depending on the day one does the calculating, Bezos’ 41 percent share of Amazon.com is worth between $8 billion and $10 billion. He is richer than Ross Perot, David Rockefeller or Rupert Murdoch.
It’s difficult to remember that cyberspace, the site of Bezos’ store, was unknown to most of us as recently as five years ago. To show how wild the idea was, consider that Bezos hatched his plan for Net domination before the official founding of either Netscape or Yahoo, the browser and the search engine that helped popularize the web. At the time, few people had modems, and those who did slogged along at a 2,400-baud rate. E-mail was beginning to take off, but most people still used the U.S. Postal Service or, when there was a rush, Federal Express or fax machines.
Bezos began with a list of 20 products to sell on the Internet and narrowed it down to books. Then he set up shop in Seattle in the garage of his rented home, with four employees. Bezos wrote the software for the bookselling operation as the rented furniture was being delivered.
Since his garage was uncomfortable (no heat, stuffed with computers and myriad cables and extension cords), he held business meetings at the nearby Barnes and Noble store because it was convenient, not to spy on the enemy. He launched the website in July 1995 and advertised by word of mouth. Orders for books (mostly obscure titles at first) trickled in from a handful of customers, then hundreds of customers, and soon thousands of customers each day. For a start-up on the relatively unknown world wide web, Amazon.com’s sales of $511,000 in 1995 were impressive, but they were minuscule compared with the growth over the following years. In 1996 sales reached $15.7 million. In 1997, when there were 614 employees on the payroll and the company had moved to a 17,000-square-foot office, sales topped $147 million—an 841 percent growth from the year before.
Finally sniffing the threat, Barnes and Noble launched its own online bookstore in May of that year. George Colony, chief executive of Forrester Research, acknowledged that Amazon.com had had a good run but declared that the free ride was over. He dubbed the company Amazon.toast as Barnes and Noble sued Amazon over its original slogan, “The earth’s largest bookseller.”
Colony and other doomsayers were wrong. Amazon grew faster than ever, trouncing Barnes and Noble and other booksellers that arrived on the Net. It not only sealed its position as the largest bookseller online but became a powerful force in off-line bookselling, barking at the heels of the number one and two book sellers, Barnes and Noble and Borders.
Meanwhile, Amazon.com’s valuation based on its stock price was ten times higher than that of Barnes and Noble. Bezos took the company public in 1997, and it shot up from $18 a share to $100 a share a year later. A year after that, the price doubled again. (It has now split three times.)
Amazon.com’s stock performance is particularly unusual given the fact that the company has yet to make a nickel in profit. Bezos has been consistently unapologetic about this, pointing out he is investing in infrastructure, marketing and expansion, but some analysts have predicted that Amazon.com’s bubble will burst.
Besides its lack of profitability, Amazon.com has also been criticized for its unconventional sales and marketing techniques. Publishers are rankled by the computerized ranking of books and the site’s reviews (some negative) of titles. There have also been complaints that publishers were paying for recommendations of their books.
Rather than cut back, Bezos added more product lines to Amazon.com, including music, toys, electronic products, video games, videos and DVDs. In 1999, he added auctions and zShops, a section of the site where large and small web retailers sell everything from buffalo meat to a $6,000 bottle of Château Margaux (Amazon.com takes a cut of all sales). The combination of new and old business will account for sales of $1 billion this year.
It should come as no surprise that as a child Bezos was isolated and interested in science fiction and model radio kits. He played football and baseball, but only because his parents made him. His summers were unusual: He lived at his grandfather’s ranch in Cotulla, Texas, where he mended fences and herded, branded and castrated cattle. But when he wasn’t cowboying, Bezos built circuit boards, robots and assorted science fiction experiments. Later, when the family moved to Houston, he discovered a computer at his high school and used it to play Star Trek games.
When Bezos headed to Princeton in 1982, he planned to major in physics, but he switched to electrical engineering and computer science when he realized other students were more likely to become the next Einsteins.
After graduating, he worked at Fitel fiber optics as associate director of technology and development. Next, he created systems for managing investment funds at Banker’s Trust. After that, he was a computer specialist working in hedge funds at D.E. Shaw & Co. in New York.
He viewed his successive jobs as training for what he wanted to do all along: start his own company. He didn’t know what type of business to start until, in 1994, he read that the web was growing at a rate of 2,300 percent each year. Nothing else grows that fast, he thought. Further research convinced him that the web would totally change shopping.
Bezos fretted over leaving his high-paying job, but decided to do so after he concocted something he calls a regret minimization system. Basically, he looked at the decision and tried to predict if he would regret it later in his life. “I thought there was a real chance that I would regret not having tried to participate in this thing called the Internet. That’s how I decided.”
When he decided to sell on the Internet, Bezos left New York with his wife, MacKenzie, a writer he met at D.E. Shaw & Co. (she was an administrative assistant working on her first novel).
The couple headed to Seattle and Bezos founded Amazon.com. Five years later, it has become the big kid on the Internet block, with new titles added almost daily. Besides the new products and stores within his store, his recent investments include Drugstore.com, Pets.com, HomeGrocer.com, and the Internet Movie Database. Bezos’ businesses boast 12 million users—a number that is still growing.
With web shopping growing in popularity, Playboy sent Contributing Editor David Sheff to meet with the father of e-commerce. Sheff, whose last Playboy Interview was with Congressman Barney Frank, headed to Amazon.com’s Seattle headquarters. Here’s his report:
“For a billionaire, Bezos is surprisingly laid-back. He is affable, funny and relaxed. He only recently upgraded his car, from an aging Honda to a practical Volvo. He dresses in khaki pants, shirt sleeves rolled up.
“While Bezos clearly enjoys talking about the Net, he also seems inspired by his childhood. He wistfully recalled when he hung out on his grandfather’s cattle ranch in Texas, where the temperature often reached 100-plus degrees in the shade. He is most passionate when he talks about business, of course, but few people know that he has a great sense of humor. He startles people with his frequent laugh—a loud honking sound. And yes, he’s more than a bit nerdy. After all, who but a true egghead would name his dog after an obscure Star Trek character?”
 
Playboy: Amazon.com is the most successful store online, but it has yet to show a profit. How long can you go without making money?
Bezos: We are famously unprofitable. Many companies expect to be unprofitable at first. We think it would be incredibly shortsighted to try to optimize for short-term profitability when we face innumerable opportunities, all of which require investment.
Playboy: But at some point, investors will insist on profits.
Bezos: Which will come.
Playboy: How far in the future?
Bezos: When they will come is fairly straightforward. You have to look at the ratio of mature businesses to new opportunities at Amazon.com. When that ratio starts to get higher, it begins to make more sense to focus more on short-term profitability. Right now, we have one business that is semimature, our U.S. book business. But we are investing in the UK, Germany and other countries; in music, videos, toys, electronics; and in completely new business models with auctions and our zShops. There is more coming that we haven’t yet announced. Investing in all these new opportunities is good business, as far as I’m concerned.
Playboy: You started off as a bookstore. Now you’re selling everything from toys to food. What won’t you sell?
Bezos: Firearms. Living creatures. Body parts. [laughs] Actually Pets.com, which is not Amazon.com but is a company we work with, is going to start selling fish. Apparently they can be delivered safely and reliably. So there will in fact be living creatures. But still no body parts.
Playboy: Why not firearms?
Bezos: We don’t want to sell them. There are a lot of things to sell. We’ll let other people sell guns.
Playboy: How did you decide to branch out from books? Did you always plan to sell toys and music and other products?
Bezos: If we were very successful, we thought we would try other things. But at first, all we knew is that we were going to sell books.
Playboy: After books, how did you decide which products to sell?
Bezos: We do something really revolutionary: We ask our customers. We do! [laughs] We occasionally send an e-mail message to a thousand or so randomly selected customers. We ask what they would like to see us sell. We find that if we improve their lives in one dimension, they give us permission to help them in another dimension.
Playboy: Is it possible to diversify too much? Can you be all things to all people?
Bezos: It’s important to understand what type of business we are. It’s reasonable to be confused by our strategy if you assume that we are trying to be a bookstore and a toy store and a video store and the rest. We’re not. We are trying to be a customer store.
Playboy: One that sells books, music, movies—
Bezos: Here’s the way it works: If you put you at the center of the universe, you need a vast collection of things, because you are not just about books. Books may be an important part of your life, but it is not all you are about. We want to be there to help you make purchasing decisions. We’ll provide some of the products ourselves, but not everything. A lot of what we will do is find and discover things for people. There are huge numbers of third-party sellers that come through Amazon.com, whether through our auctions or our zShops. We also have partnerships with companies like Drugstore.com, HomeGrocer.com and Pets.com.
Playboy: Why would people go to Amazon.com for anything other than books? Why wouldn’t one go to specialty websites—eToys or Toys R Us for toys, eBay for auctions, CDNow for music?
Bezos: People underestimate how richly varied e-commerce will be on the Internet. We call all these businesses “Internet companies” now, but in ten years they’ll just be companies. People will shop in different ways. Companies of all shapes and sizes, using many different strategies, with different focuses on different customer segments, will thrive. It’s just like in the rest of the world. There are department stores and chains and independent stores and big stores and small stores. All these companies can be successful. The Net will be just as—or even more—varied.
Playboy: How will the online world change the physical world? You once said that there will be no strip malls in the future.
Bezos: Strip malls are a symbol for marginal, low-experience stores that nobody really wants to go to. Over time, say within ten years, maybe 15 percent of commerce will move online. Will that have a big impact on the physical world? Absolutely. What will that effect be? It will force stores to get better. The ones that don’t get better will go by the wayside. Stores will have to have better-trained people. They will have to be cleaner and better lit. They will have to provide something unique. The stores no one wants to go to will disappear. I don’t say everything will change, though. People will still go out. They like to interact with other human beings. The Net is pretty cool, but the physical world is the best medium ever. There are many things you can do with physical stuff that you can’t do with a computer. So the environments are going to coexist nicely. And it’s all good news if you are the customer. More choices, more competition, better service.
Playboy: Aren’t you trying to become the one-stop shopping place online—that is, the Wal-Mart of the Net?
Bezos: In trying to figure us out, people say we are the fill-in-the-blank of the Internet. The truth is we are and aspire to be the Amazon.com of the Internet. There is no analogue in the physical world. Are we a department store? Department stores have a very limited selection. A big mass merchandiser like a K-Mart or Target will have maybe 120,000 different products in a store. That’s actually not very many. We are limitless. We have virtually every product that exists because we are not constrained by physical limitations. Next, we can do something that no physical store can do. We can personalize our store for you. They can’t do that in a physical store; They can’t run around and rearrange the shelves to accommodate every customer who walks in. But you can do that on the Net. That’s another thing that makes Amazon.com fundamentally different. If we have 12 million customers, we can have 12 million stores. Another difference is that our core business isn’t selling things. Our core business is helping people make purchase decisions.
Playboy: In other words, you are trying to sell them things.
Bezos: It’s more complicated than that. Look at the reviews we have with our listings of books. We’ll duplicate and modify that system for the other products—toys, whatever. We review products negatively, and we publish negative reviews by customers. When we started doing this, some people—especially book publishers and the occasional author—were incensed. I got hostile letters that said, “Maybe you don’t understand your business. You make money when you sell things.” They asked, “Why in the world would you allow negative reviews?”
Playboy: Why do you?
Bezos: Because over time people figure out that the reviews are a good way to help them make the right purchasing decisions. People like that; they come back because of it. Some of my proudest moments are when customers tell me that we talked them out of buying something. It’s a huge service for customers. With most things, the amount you pay for the product isn’t the biggest cost; it is the time you spend with the product afterward. You can spend $20 on a book, but that’s nothing compared with the eight hours of your life that you are going to give to this thing.
Playboy: But how trustworthy are your reviews? People can manipulate the reviews, including the number of stars that books are given.
Bezos: Obviously the reviews have to be trustworthy to be useful. When someone posts one that isn’t sincere, you usually can tell. Some are very funny. We had God review the Bible. J.D. Salinger chimed in about The Catcher in the Rye, which I find highly unlikely. Charlotte Brontë reviewed Jane Austen and said she was pissed off that Austen had two movies and a miniseries in a single year and she had nothing. We clean out the fake ones. Our customers usually notice them and tell us. But most people are honest when they write the reviews.
Playboy: How about when the people reviewing have a vested interest in selling the book or product?
Bezos: When people have a vested interest, they often say so. We encourage authors to weigh in on their own books. One of my favorite reviews started out, “This is the best book my brother ever wrote.” Of course there are exceptions, but you can usually tell whether a review is thoughtful, flippant or biased. There are going to be a few people who are sophisticated enough to organize campaigns, but that will be the exception.
Playboy: There were complaints that publishers were paying you to recommend their books. Isn’t that enough to make customers distrust your recommendations and reviews?
Bezos: First of all, we have never been paid to put up good reviews. Reviews have always been and remain independent. What happened was that we initially accepted payment for placements on the site. That is, a publisher could pay us to prominently feature a book. It’s standard practice in the book business. Still, in response to feedback, we now disclose when people pay for a slot on a page. No other stores disclose that. There’s no indication that bookstores are paid to place a book by the cash register or in the window, but we thought, What’s wrong with disclosing it? Now we do.
Playboy: How does the engine for book recommendations work?
Bezos: By collaborative filtering. It is a statistical technique that looks at your past purchase stream and finds other people whose past purchase streams are similar. Think of the people it finds as your electronic soul mates. Then we look at that aggregation and see what things your electronic soul mates have bought that you haven’t. Those are the books we recommend. And it works.
Playboy: You talk a lot about the customer experience, but isn’t price the key factor when it comes to where people shop on the Internet?
Bezos: We have data indicating that customers rank selection as our most valuable asset. Ease of use and convenience are second and price is third. Anything that’s in the top three is important—price is super important, but selection is most important.
Playboy: How important is your brand name? People argue whether brands are more or less important on the Net.
Bezos: The companies that rely on brand loyalty are insane. Customers will be loyal to you because you don’t take them up on it. It is one of those paradoxes. There is no resting on your laurels. If you assume anything, you are doing a disservice to your customers and they shouldn’t be loyal to you. Our customers are loyal to us right up until the second that somebody else offers them better service. We live or die based on the customer experience. Here’s the thing: Online, the balance of power shifts away from the company and goes toward the customer. Our secret is that we have not been competitor obsessed. We have been customer obsessed, while our competitors have been Amazon.com obsessed.
Playboy: But were you at least a little nervous when Barnes and Noble, the number one bookseller, decided to challenge you on the Net?
Bezos: Not that nervous, because small companies have one huge advantage over big companies, which is that they have nothing to lose. It’s one of the things that we try to hold on to as we get bigger. I mean, in the scheme of things, we are still a tiny company.
Playboy: Tiny? With sales of $1 billion?
Bezos: We are big for an Internet company but tiny for a real-world company. We have to be careful, though. As companies get bigger, they have something to lose. When they do, the natural tendency is to get risk-aversive. They lose their boldness. They lose the spirit to innovate. They lose their pioneering qualities. I am bound and determined not to let that happen to Amazon.com.
Playboy: But the arrival of the major booksellers on the Internet had to worry you. When Barnes and Noble went online, George Colony said that you were Amazon.toast.
Bezos: Some people thought we were toast, and they had a logical argument. Amazon.com had two good years—most companies don’t get a two-year window without any real competition—but then the fun was over. We were about to get creamed by the big guys. Barnes and Noble had a powerful, trusted brand name. Also, they had huge purchasing power. We were tiny. We had 125 employees and 340,000 customers and our revenues were 50 times smaller than Barnes and Noble’s. To put it in perspective, they had 30,000 employees and 10.7 million customers. Now we are only three times smaller than Barnes and Noble in terms of revenue. It’s because we didn’t look over our shoulder. We looked ahead, focused on our customers and obsessively did whatever we could to make them happy. I ask our folks here to wake up scared every morning with their sheets drenched in sweat. But I also ask them to be precise about what it is they are scared of—not our competitors, but our customers.
Playboy: You say you’re not the big guy, but that’s not how many small bookstore owners feel. How guilty do you feel about putting them out of business?
Bezos: That question is a little bit like, “When did you stop beating your wife?”
Playboy: The point is that before Amazon.com, small bookstores were in fear of Barnes and Noble, Borders and the other superstores. Now many blame you for pushing them out of business or at least making it tougher.
Bezos: I would debate that they think that. The biggest competitive threat to independent booksellers is big chain bookstores that open right across the street. E-commerce is a tiny fraction of sales today.
Playboy: But it is growing quickly.
Bezos: And I would argue that we are much more competitive with the big chains than with the independents. In fact, I consider us to be an independent. We think like an independent. We are one store.
Playboy: One independent bookstore owner says, “For Bezos, books are product. For us, books are passion.”
Bezos: That person doesn’t know me. Books are definitely a passion for me, too, though they are not the reason that Amazon.com started with books.
Playboy: Why did you start with them?
Bezos: When I decided to do this, there were only a few types of Internet companies. There were ISPs, people helping other people get online. There were tool companies like Netscape. And there were the first content companies, like HotWired. Yahoo had started but it was just two guys at Stanford doing this directory because they didn’t really want to work on their Ph.D.s. It seemed to me that the next stage would be transaction-based companies. So I thought, Let’s do a retail company. I made a list of 20 different products to sell online.
Playboy: What was being sold online at that point?
Bezos: Not much, though there was the Internet Shopping Network, which was selling computer stuff. There was already a bookstore called Future Fantasy Books out of Palo Alto, which sold science fiction. In fact, the first online bookstore started 17 years ago. Someone set it up in Chicago on 300-baud modems. It was way too early.
Playboy: What changed?
Bezos: In 1994 we passed the elbow in the curve and millions of people were shortly going to have access because of the web and Netscape. I looked at popular products in mail order and saw that books were way down the list. Why? If you were to print a catalog with all the available books, it would be larger than 50 New York City phone books. You are not going to mail that around 12 times a year. Yet here was a technology that could put the whole catalog in the hands of customers. The largest physical superstores have about 170,000 titles; Amazon.com, even when we launched, had over a million. Today we have over 18 million items, including toys and electronics and out-of-print books and on and on. So the notion of infinite shelf space became key. With books, I decided I could create true value for customers.
Playboy: You were working as a banker. How risky was the move?
Bezos: Well, my boss and good friend David Shaw was very respectful but said Amazon.com might be a good idea for somebody who didn’t already have a good job. We went for a walk in Central Park in New York and he asked me to think about it for 48 hours. I went away to be alone and was trying to figure out how to think about this kind of life decision. Once I found the right framework, the decision was incredibly easy.
Playboy: What was the framework?
Bezos: I call it regret minimization. You project yourself to age 80 and look back on your life. You want to minimize the number of regrets. In the short term, you can get confused about small stuff. I was walking away from my Wall Street bonus. But then I thought, At 80, am I going to remember whether I did or didn’t get my Wall Street bonus? No, but I thought there was a real chance that I would regret not having tried to participate in this thing called the Internet. That’s how I decided.
Playboy: So you headed west. Why did you choose Seattle?
Bezos: The two primary factors in deciding where to go were that I wanted to be near a major book warehouse and near a pool of technical talent. Seattle had both.
Playboy: Were you married by then?
Bezos: Yes, I was. I came to Seattle with my wife.
Playboy: You allegedly went on a lot of blind dates. Is that how you met her?
Bezos: No. I met her after all those blind dates.
Playboy: Why the blind dates?
Bezos: I am not the kind of person women fall in love with. I sort of grow on them, like a fungus. I need to either work alongside somebody or take a series of classes with her—you know, get to know her over a period of time to let her see that my goofiness is actually an attribute, not a fatal flaw. But I did go on a lot of blind dates, none of which were successful because of this problem. Over time, I developed a set of criteria. At the top of the list of important traits was resourcefulness. I learned that if you tell people you want resourcefulness—which is an abstract idea—they don’t really get it. So I had to figure out a way to explain resourcefulness.
Playboy: Which you did how?
Bezos: I told my friends that my future wife would have to be able to get me out of a Third World prison. People got it.
Playboy: So then how did you meet MacKenzie?
Bezos: At work. It was a more comfortable way to meet and get to know each other. Part of the problem with blind dates is that it’s hard for both sides to be completely relaxed. And if you are completely relaxed, it’s in this weird sort of way, almost like job-interview relaxed. It is not great.
Playboy: Would MacKenzie be able to get you out of a foreign prison?
Bezos: Yes. The people trying to keep me in wouldn’t have a chance.
Playboy: We read that she is a writer. Fiction or nonfiction?
Bezos: She is working on her first novel.
Playboy: Which will be displayed prominently on Amazon.com?
Bezos: I would make no such presumption. If there were any undue influence, she would kill me.
Playboy: But she was pleased to come to Seattle?
Bezos: Yes. We flew to Fort Worth, where my dad gave us a 1988 Chevy Blazer. I wrote the first draft of the business plan in the car on the way. I initially incorporated under the name Cadabra.
Playboy: As in abracadabra?
Bezos: Yes, but I called my lawyer to give him the name so he could file the incorporation papers. He said, “Cadaver?” I knew that would be a bad name right away. Things are alphabetized online, so I wanted an A word. I went through the A’s in the dictionary. I wanted something that conveyed size, too, and Amazon is the earth’s biggest river.
Playboy: How did you initially fill the orders?
Bezos: We thought we would sell a book a day for a long time. But the wholesalers have a ten-book minimum. I tried to persuade them to waive the ten-book minimum, but they said no, it was too much work to send out less than ten books. But we found a loophole. Their systems were programmed in such a way that you didn’t have to receive ten books, you only had to order ten books. So we found an obscure book about lichens that they had in their system but was out of stock. We began ordering the one book we wanted and nine copies of the lichen book. They would ship out the book we needed and a note that said, “Sorry, but we’re out of the lichen book.” One of these days we’re going to get all those lichen books dumped onto our front lawn.
Playboy: Is it true that you had your business meetings at Barnes and Noble?
Bezos: Yes, because our office in the garage was not an appealing space. We didn’t really want to bring people there, so we would go to a local café, which just happened to be inside Barnes and Noble. We weren’t trying to be cute.
Playboy: In the beginning, how did people learn about Amazon.com?
Bezos: By word of mouth. Before we opened for business, we did a six-week beta test. About 300 friends and family members ordered real stuff and we charged their credit cards and tested the system. On July 15, we sent e-mail to those 300 friends and family. We said to them, “Thanks for helping us test the system.” Until then, we had asked them to keep it secret. Then we said, “Please tell everyone you know.” They spread the word. At that time, there wasn’t that much on the Internet. If something new and cool appeared, everybody knew about it. Within a week, I got an e-mail message from Jerry Yang or David Filo at Yahoo, saying they had run across our site and thought it was really cool. Whichever one called asked if we minded if it was put up on Yahoo’s “What’s Cool” page. We said, “Sure.” They put it on and that generated a lot of traffic. Because the name started with the letter A, it was at the top of the “What’s Cool” page. Word of mouth is incredibly powerful online because of list servers, which enable people to send e-mail to massive numbers of recipients. Some professor somewhere maintained a mailing list that went out to 50,000 people. He told them about us. That kind of word of mouth. And Usenet news-groups. Online, word of mouth changes. In the old world, someone might tell five people, but in the new world, you can tell 5,000. But be careful, because it works both ways. If you make a customer unhappy, he can tell 5,000 people, too.
Playboy: Who actually did the shipping for the books?
Bezos: We did, and killed ourselves doing it. We would do our normal jobs and then go down in the basement and pack and ship books. Eventually we moved to a real office with a 400-square-foot warehouse. Four hundred square feet is about the size of a one-car garage. We’d order the books from the distributors—along with the lichen books when we needed to do that—and the books would show up the next day on our loading dock. Then we would take them into the basement and get down on our hands and knees and pack them all. I bring up the hands and knees part because it is an example of how stupid I was in the middle of this. It was killing us. Our knees were getting raw. I said to someone, “God, this is killing my knees.” That person said, “Yeah, we’ve really got to do something about this.” Finally I said, “I know what we should do! We need knee pads.” He looked at me like I was from Mars, like, “Oh my God, our CEO is a complete moron.” He said, “How about some packing tables? “Ahhh.” [laughs] It was the most brilliant idea I had ever heard. The next day we got a bunch of packing tables.
Playboy: What were people ordering?
Bezos: Obscure books at first. But then people saw how convenient it was to order less-obscure books and they came to Amazon.com for those, too. It kept growing and growing. If anybody had predicted what has actually happened, he would have been institutionalized. No reasonable person would have predicted this.
Playboy: In 1997, you went public, and your stock took off. How has its roller-coaster ride affected you?
Bezos: The stock of Internet companies in general and Amazon.com in particular are incredibly volatile. I encourage people here to spend no time thinking about the short-term stock price. If our stock goes up 30 percent in a month, there’s the danger that you’ll start to feel 30 percent smarter. That kind of arrogance can lead to the downfall of companies. The volatility works in both directions. When the stock goes down 30 percent, you’re going to have to feel 30 percent dumber. That won’t feel good. So in general, it’s better not to think about it.
Playboy: Is it realistic to ask your employees to ignore the stock price when a major part of their benefits are options?
Bezos: It is realistic to ask. I’d rather have them focused on value. Options are a long-term deal. Especially with the web, it is way too easy to check stock prices every minute and it is a complete waste of time. Related to this, I think it’s unfortunate that so many people have taken up day trading. In a bull market, it is easy to convince yourself that you are smart. But it’s just gambling. Most of those people are going to lose a lot of money over time.
Playboy: When Amazon’s stock has been at its peaks, the valuation was enormous—more than Sears, Roebuck, more than Barnes and Noble. Does that concern you?
Bezos: It’s meaningless except for investors. I don’t believe Amazon.com or any Internet company is an appropriate investment for any short-term investor. If you are a small investor, the number one factor in your investment portfolio should be your ability to get a good night’s sleep.
Playboy: Some analysts insist that the Internet has brought with it a whole new paradigm. There are relatively fewer limitations.
Bezos: I actually believe that the Internet is a whole new paradigm. It’s a bigger deal than people realize. Over the next 100 years, it is going to turn out that the Internet changes one or two things society-wide. When you dramatically improve the ability of people to communicate, you have to expect important things to happen. But I’m not stupid enough to ignore the past. I know it will take time. New technology comes out and people always overuse it. When desktop publishing first became available, everybody started making their own newsletters. Because you could use a hundred fonts, people did, and the newsletters looked like crap. Now PowerPoint presentations often get overused in the same way. Just because you can have everything swirl and twist, should you? People will learn.
Playboy: Even during the stock market dips, your on-paper worth is in the billions. Does it amuse you to have more money than Ross Perot, Rupert Murdoch or David Rockefeller?
Bezos: I do?
Playboy: According to Forbes, yes.
Bezos: Here’s what I think about that: All those figures go immediately to zero for everybody who has Amazon.com stock if we don’t continue to do a good job. I think it’s very useful to keep that topmost in mind. [laughs] I bought a really nice house, which is pretty great, but nothing has changed fundamentally. I think people overestimate the degree to which lottery winners’ lives change. Certainly people at Amazon.com, including me, were a kind of lottery winner. But since people’s personalities are largely set by the time they’re 25, winning the lottery doesn’t change them that much.
Playboy: Does it make a nerd less nerdy?
Bezos: I’m afraid not.
Playboy: Were you always a nerd?
Bezos: I was much nerdier when I was a kid. I got somewhat better as I got older.
Playboy: What form did it take?
Bezos: I had a Radio Shack 101 Electronics Kit. It made a big impression on me when I was a kid. It’s a board that’s about two feet long and one foot wide with a bunch of components set into these little spring things. With a bunch of wires, you can make all these different circuits. For whatever reason, I was always interested in science. I always participated in the science fairs and different science projects at school. I wanted to be a physicist. When I was younger, I watched Star Trek instead of Sesame Street. I’m still nerdy, but I’m less socially awkward. When I was in elementary school, I was painfully awkward. I got beat up a lot.
Playboy: For?
Bezos: I would always tell people what I thought, even if they were much taller and stronger. I was truly clueless about many things. To counteract this, my parents forced me to play Little League football, which in Texas is a big deal. I was dead set against it, but I actually enjoyed it. They forced me because they wanted me to do something, not just to be in my room reading. Little League baseball, too.
Playboy: But you preferred—
Bezos: Star Trek, definitely. With my friends, I would play Star Trek.
Playboy: Were you Captain Kirk?
Bezos: No, I was always Spock. If I couldn’t be Spock, I would also settle for being the computer. Kirk says, “Computer” and the computer—me—would say [in a perfect imitation of the voice of the computer on Star Trek] “Working.” Then Kirk would ask a question and the computer would answer it in that sculpted voice. My dad made little wooden phasers for us that shot rubber bands. We made communicators. My dog today is named after a minor Star Trek character from The Next Generation, Kamala. It is from an episode called “The Perfect Mate.” Kamala was the perfect mate. And my dog is a very sweet dog.
Playboy: Did you ever get into trouble?
Bezos: Sure, but I was hard to punish as a child because I was very happy to go to my room and read. They couldn’t say, “You can’t go to your room. You’re not allowed to read!” The cognitive dissonance in that would be overwhelming for a parent. My parents were generally supportive of whatever I was doing. My mom was incredibly hardworking. She’d herd my brother, sister and me all around. Some days she drove me to Radio Shack multiple times. A familiar rant would be, “Won’t you please get your parts list sorted out before we go so I only have to take you once!”
Playboy: You worked at McDonald’s. What did you learn there?
Bezos: It was my first real job. I was an acne-faced 15-year-old, and they didn’t let me anywhere near the cash registers. I always worked in the back with the cook, which was sort of fun. I was surprised how hard the job was. The buzzers would go off and you had to run. You were juggling a lot of stuff. McDonald’s technology has improved. You’d have to run over and pull out the french fries, and then the toaster buzzer would go off and the buns were ready, and then you would have to flip the burgers. Every once in a while, all the buzzers would go off simultaneously. So that was my McDonald’s experience.
Playboy: Which made you want to head to Princeton to study particle physics—
Bezos: I went to Princeton to be where Einstein was. It is an extraordinary department. I learned a valuable lesson there: I learned that I am not smart enough to be a good physicist.
Playboy: Was it crushing?
Bezos: No. But it was good to figure out early. At first I did well in physics, but the class narrowed from about 300 people to 40. It was the group of people who really wanted to be physicists. I looked around one day and realized that there were at least three people in the class who were going to be the ones who would do something extraordinary. They were wired differently. The things I had to work so hard on came so easily to them. I am sure they went to places where their unusually large and well-wired brains are helpful.
Playboy: What led to computer science?
Bezos: I was taking computer science and electrical engineering classes and really loving it. So I switched. I had a real passion for computer science.
Playboy: Did you plan to go into computer science as a job?
Bezos: By the time I graduated from Princeton, I knew I wanted to be an entrepreneur. I even thought about starting a company straight out of school. By the way, I think that is a really bad idea, if anyone is interested. It has worked for a few people, but it’s a losing gamble.
Playboy: So your better sense prevailed.
Bezos: Yes. Mostly I didn’t have any good ideas. But other people graduating in my class were starting companies that I could have joined. I did interviews with Intel, Bell Laboratories and Andersen Consulting but decided that the right thing to do was try to get some experience in a small company. I went to a start-up in New York City. I found a company with 11 people and joined. It made a system for helping to clear and settle the transactions after a stock trade is made. It wasn’t a great success, though it wasn’t a dismal failure, either. I stayed for two years and then went to a big company, Banker’s Trust.
Playboy: How did your computer science background apply?
Bezos: I was basically on the technology side, working on a product called BT World, the portfolio-analysis workstations used by the bank’s major pension-trust clients. That was a unique business in that it was easier to do the work than explain to people what I did. Then I left Banker’s Trust and went to D.E. Shaw & Co., the fund company, where I worked with an incredibly smart group of people. David Shaw is one of the smartest people I have ever met. I was there for about four and a half years and loved it. Loved the creativity and the energy and the brightness of the people. I left to start Amazon.
Playboy: Was there a seminal moment at which you decided?
Bezos: There was a moment. It was discovering the startling fact that web usage was growing at 2300 percent a year. Things don’t grow that fast. It just doesn’t happen. When I read it, I didn’t believe it. I was skeptical, so I delved into the methodology of the report. It was the spring of 1994. The web growth hadn’t broken into the mainstream media at that point. It was just about to. Believe it or not, it was illegal to do commerce over the Internet in the spring of 1994. There was already a plan to remove that restriction, but it shows how early it was in the development of the Net. So I decided to try it. And here we are.
Playboy: Besides Amazon.com, what other net companies have done it right?
Bezos: Microsoft has done a fantastic job. They’ve taken some criticism for some of their Net efforts, but not for the important ones. It’s amazing how quickly they adapt. I have a lot of respect for that company, mostly because they’ve done such a great job of hiring. The depth of the team they’ve built stands out over time—brainy people all the way down.
Dell has also done a great job online in a different way. Dell had more traditional methods of distribution and came online and did it right. Michael Dell gets it. He built a team of people who get it.
By and large, most companies that have done a good job in the physical world—well-managed companies—have not done a good job online. The reason is pretty simple: The set of skills and competencies you need to be a fantastic physical world company are completely different than the ones you need to be a fantastic online retailer.
Playboy: What’s a good example?
Bezos: There are several examples, but I’ll decline to mention them.
Playboy: Besides e-commerce, in what other ways will people make money on the Net? Will subscription sites work? Advertising?
Bezos: All of those models will work to one degree or another and probably some new models that haven’t yet been figured out. Everything is going to work, but the question is how much. Subscriptions haven’t worked well yet, though there are a few exceptions, including the Wall Street Journal. Long term, however, there will be subscriptions to valuable content. Advertising won’t completely pay the bills, so customers will pay for certain types of content.
Playboy: Thus far, Microsoft’s Slate magazine is a famous failure.
Bezos: People are used to paying for content in physical form. Psychologically they’re not used to paying for it in electronic form. Though it’s irrational, I expect my content on the web to be free. But look at TV. People certainly thought it should be free, but now people don’t think about paying for premium content such as HBO. It took some time before people were willing to do that and it will take some time on the web. Also, content providers haven’t done a great job transporting their content into a form that is highly usable online. There’s a lot of free stuff, so the information you provide has to be ten times better. It can’t be 50 percent better. It has to be a lot better. The companies that have been successful charging for content online have content that just isn’t available off-line. Also, the display technology isn’t as good. I’d much rather read The Wall Street Journal on paper. It’s easier on my eyes, it’s portable and I can sit back and drink a cup of coffee while I’m reading. On the other hand, when you’re traveling, it might be easier to read the Journal online.
Playboy: Does this mean you disagree with those who say print is dead?
Bezos: It’s not a question of if, it’s when. Paper will go away eventually, but it will take a lot longer. It goes back to display technology. It has a long way to go. For instance, I read magazines when I’m on the StairMaster. It’s still a lot easier to read them in paper form. When they make something flexible that you can roll up and stuff in your back pocket and the screen is better than paper, I’ll use it.
Playboy: Will computers become unessential for web surfing?
Bezos: They already are in some ways—with PDAs, for instance. It’s really semantics. It depends on your definition of a computer. PDAs are a type of computer. Cell phones that can connect to the web are a type of computer. But I think there will be everything, including general purpose machines like the computers on our desktops. There also will be web tablets. You might have two or three that are full-time Internet access devices. Instead of calling for movie times on the phone, you’ll immediately check the movie times on an instant-on web pad.
Playboy: Will books be downloaded instead of delivered in their paper form?
Bezos: Not immediately but eventually. The generation of electronic books available today is not the generation that’s going to work. In fact, it’s probably the generation before the generation before the generation. It’s just a question of when. There are two things holding it back, both quite rational. One is fear of piracy on the part of the publishers, and the other is the display quality. Paper is a great display device. It’s high resolution, high contrast. It doesn’t require batteries and is highly portable. You can write on it. It has these great features, and computer displays are not there.
Playboy: What other technologies are coming?
Bezos: Everything you can imagine is going to happen to one degree or another. Whatever comes along—more sophisticated techniques for personalizing the site, agents to help do the shopping for you at more sophisticated levels—will be used if they have value for customers. When I meet somebody new, my first question is, “How can we make the experience better for you?” It takes a significant amount of effort to get people to say negative things in person; they want to be polite. But I’ve learned how to get people to tell the truth. Still, the best way to get people to tell you the truth is to solicit their input by e-mail. E-mail turns off the politeness gene in the human being.
Playboy: Because it’s anonymous?
Bezos: Even if it’s not anonymous. I’ve found that people can be more rude in e-mail than in regular mail. In a letter they can be rude, but a letter is a little more formal. You edit yourself and say, “Do I really want to be that nasty?” But you pound out e-mail and send it off. I am convinced that we have received more honest feedback from customers in four years than probably any other company has received in 20 years.
Playboy: Can you give us an example of the feedback?
Bezos: Two or three years ago, I got a message from an 80-year-old woman. She said, “I love your service, but I have to wait for my son to come over to open the packages.” We used to use a material that was very strong to protect the books, but opening the packages was like breaking into a bank vault. We set about figuring out a way to have the packages arrive securely while ensuring that a mortal could open them without using a jackhammer.
Playboy: Was “one click” a response to a customer?
Bezos: No. That one was planned. Our number one goal is to be the earth’s most customer-centered company. The traditional meaning is what you would expect: listening to your customers, figuring out what they want and giving it to them. We do that, I hope. But the next step is to innovate on their behalf. It’s not their job to tell you what they need. After that comes finding a way to serve customers that is specific to the Internet. Increasingly, we will put each customer in the center of his or her own universe. In personalizing, we are two percent of where we will be ten years from now.
Playboy: What will be different?
Bezos: What we do now is to greet someone when they return. “Welcome back, so-and-so.” We can offer them some recommendations based specifically on their interests, which we’ve learned from a buying history. But instead of having a small piece of our store like that—individualized—every page should be customized like that. We’re getting better at it. There may be some important books that you should read—books that would resonate with you and have an impact on your life. If the crucial books were the same for everyone, there would be no problem. But everyone is different. We will develop the technology necessary to let people have that kind of deep discovery experience on our site. The goal is to accelerate the discovery process. Humans have the powerful need to discover, explore. If we can accelerate the discovery process, we’re providing a great service.

Larry Ellison, September 2002#

 Larry Ellison, the fifth-richest man in the world and chief executive officer of Oracle, the second-largest software company after Microsoft, is in the news again. He is ranting on Chris Matthews’ Hardball show on MSNBC. Things have changed since the days of Thomas Jefferson, Ellison says, especially after September 11. The nation needs a voluntary national ID card, and Oracle will donate the database software to run such a system. “Privacy is an illusion,” he insists.
Ellison later makes local headlines when he moves his Gulfstream V jet from San Jose International Airport, despite his court victory overturning what he called the airport’s “wacky” curfew laws, which he routinely ignored. He maintained that his jet’s BMW Rolls Royce BR 710 turbofan engines were quieter than those of many smaller jets with no such curfew, but he moved the jet to another airport nonetheless.
When Ellison addresses a crowded room of Wall Street analysts at Oracle’s headquarters in Redwood Shores, California, it does not take long to see that he has his own agenda. He disses competitors’ products (IBM’s new database is “a real piece of crap,” he says) and lambastes his archnemesis, Bill Gates (a “convicted monopolist”). Ellison even attacks the analysts themselves. Referring to a list of companies that took off during the dot-com craze but are now in or near bankruptcy, Ellison says, “You guys recommended their stocks, and you think I’m stupid?”
It’s all business as usual for Larry Ellison, who is famous for excess and not known for his modesty. (A biography about him is titled The Difference Between God and Larry Ellison. The answer: God doesn’t think he’s Larry Ellison.)
For a few days in 2000, when Oracle’s stock, a bellwether on the Nasdaq, was racing, Ellison was the richest man in the world. This year, after the crash, he is only number five, according to Forbes’ annual tally. His stash is less than those of two Microsoft billionaires (Gates and Paul Allen) but more than the wealth of Kirk Kerkorian, George Soros, Michael Bloomberg and Ross Perot combined.
An impressive sum by any standards, the money is actually one of the least interesting things about Ellison. He has built a formidable company from scratch. He is both loved and loathed by those who work or have worked for him. He is a jet-setter who actually flies his own jet and has the ear of presidents. Like Ted Turner before him, he is determined to win the America’s Cup race, and he plans to spend $161 million to do it. Ellison, who Steve Jobs has called “the outrageous CEO poster child,” is nearing completion of a $40 million mansion built in the style of a 16th century imperial Japanese residence.
Ellison, 58, founded Oracle in 1977 after working for a number of California technology companies. He read a white paper from IBM that presented what was then a new concept, a relational database. Database technology was already ubiquitous, but whereas a database stores volumes of information in one place, a relational database links many libraries of data. It allows, for example, customer orders to be coupled to inventory and factory output, and a personnel department’s hiring records to 401(k) balances. It sounds obvious now, but it was a radical idea at the time and IBM had rejected it. Ellison, along with two partners, left their jobs to found a company based on the idea. Earlier, Ellison had created a database for the CIA code-named Oracle, and he borrowed that as the name for his start-up.
His long-shot bet paid off. Now most companies rely on relational databases, and almost all of those are made by Oracle. In 1986 the company went public, days before Microsoft. Since then, Oracle’s stock has shot up 41,000 percent. Even though Microsoft’s main product lines are for personal computers and Oracle’s are for companies, Ellison has said he will not be content until Oracle replaces Microsoft as the world’s largest software company. (Analysis say that’s not likely to happen anytime soon.) Ellison’s attacks on Microsoft escalated when the Justice Department began its investigation of Gates’ company. When Ellison discovered that the Redmond giant was trying to influence public opinion by funding pro-Microsoft “consumer groups,” he hired private investigators to go after the firm. Searching through Microsoft’s garbage, they found evidence that Microsoft made payments to the supposedly independent groups.
In the Nineties, Oracle had its own accounting scandal, which almost destroyed the company. “Oracle is run by adolescents, and that includes me,” Ellison said at the time. Oracle recovered and grew steadily through 1997, when it branched out beyond databases into the $20 billion applications software market.
While Oracle is still unchallenged as the database leader, it suffered in the technology crash of 2001 and has been slower to recover than other companies. There is mounting competition in the crowded applications business, and Oracle has had a series of bad quarters this year. Oracle has also been in the news recently because the California state’s attorney general is investigating a donation the company made to Governor Gray Davis around the same time Oracle won a large contract from the state. Both the company and the governor have denied wrongdoing. Oracle, meanwhile, remains a powerhouse. At the peak of the dot-com bubble, the company had billboards boasting that 93 percent of dot-coms ran on Oracle software. Its database is still used by almost every large company, from American Airlines to Sara Lee to Pacific Bell. With Ellison firmly at Oracle’s helm, its income tops $10 billion a year.
According to his biographers, Ellison’s obsessive nature may be an attempt to prove his worth to the man who raised him. Ellison never knew his real father and his unwed mother gave him to an aunt and uncle. (The family name was given to them when they arrived at Ellis Island from Europe.) His adoptive father, an auditor, once told Ellison, “You’ll never amount to anything.”
Ellison learned computer programming in high school and enrolled at, and dropped out of, the University of Illinois and then the University of Chicago. In the early Seventies he moved to California to work for PC companies such as Ampex. After he founded Oracle, Ellison’s notoriety grew along with the company and his personal fortune. Part of it was his conspicuous consumption and his personal adventures. He tried to buy a Russian MiG fighter for $20 million. He broke his arm in 28 places in a biking accident. He nearly died surfing. He also nearly died in a December 1998 boat race. With a crew of 23, he sailed his 80-foot yacht, Sayonara, in a 630-mile race from Australia to Tasmania. En route, the boats ran into a hurricane that generated 50-foot waves. Six sailors drowned. But Ellison is going back for more. He plans to win the America’s Cup by sailing two boats outfitted with top-secret technology. Hundreds of monitors on the boats will send data to a central system every second. The numbers will be crunched by computers and the boats’ captains will be advised how to proceed.
Ellison’s personal life has been stormy, too. He’s been married three times, and Fortune has called him the “playboy of the wired world.” There are websites by women obsessed with him. He fought back against an Oracle employee who accused him of threatening her job if she wouldn’t have sex with him. She was convicted of perjury and falsifying evidence. Ellison recently announced his plans to marry novelist Melanie Craft.
Ellison is more private about his sizable charitable efforts. He gives away hundreds of millions of dollars to charities and smaller amounts to political candidates. His main interest is in biotechnology, and he donates about $100 million a year to the pursuit, largely through Quark, his biotech company, and the Ellison Medical Foundation, which has contributed $250 million to fight infectious diseases in Africa.
When Playboy decided to interview Ellison, we tapped Contributing Editor David Sheff for the assignment. Sheff, whose past subjects have included technology leaders Steve Jobs and Jeff Bezos, met with Ellison at Oracle’s corporate headquarters. Here’s his report:
“Ellison has a decidedly varied reputation as a manager. While he can rally his troops with passion and uncommon leadership practices—he once awarded gold ingots to employees—he is said to have a brutal side, too. He is ‘infamous for cavalier firings,’ according to Forbes, having ‘burned through 10 top lieutenants.’ Some of them have gone on to found competing companies. Thomas Siebel of Siebel Systems has said, ‘Ellison has a knack for taking the best and brightest and then he tries to destroy them,’ Craig Conway, chief executive of Peoplesoft, refers to him this way: ‘When you alienate everybody, you become someone no one wants to play with.’
“The press might see Ellison as a flamboyant-raconteur-daredevil-heartless-playboy boss, but I found him to be sincere, thoughtful and fiercely bright, with strong and complex opinions on issues as diverse as health care, education and Japanese gardens. Most surprising, he was warm and self-effacing. The interview began just as the nation’s economy was showing signs of life after dipping into a recession. It seemed like the logical time to begin an interview with one of America’s most important business leaders.”
 
Playboy: After the tech crash and recession, what is your prognosis for the economy?
Ellison: I’m wildly optimistic.
Playboy: Even after the recent corrections we’ve seen?
Ellison: Yes. I’ve seen the madness before. I knew that the dot-com thing was madness.
Playboy: Oracle did well by it, though.
Ellison: We enjoyed that wave on the way up, and I admit that it has been less fun on the way down. But dot-coms represented 18 percent of our business. Most of our companies are not ephemeral. General Electric, Deutsche Bank, Sony—they aren’t disappearing. I knew that many of the dot-coms would. A little less than a couple years ago, a tiny company called Ariba, which enabled you to log on to your personal computer and issue a purchase request, was worth more than all of Daimler-Chrysler. A company that brought groceries to your house was worth more than the largest supermarket chain in the United States. When I was a kid, someone delivered milk, eggs and sour cream to our house, but that service couldn’t compete with supermarkets; it’s expensive to load the milk into the truck and hand deliver it. So what’s changed? You still need trucks. You still need delivery people. Instead of filling out a sheet of paper to place your order, you type it into a computer, which is actually more expensive. It’s bizarre. A company that delivered Kitty Litter was considered an idea so grand that there were many such companies. In retrospect, it all looks absurd. But everyone believed it while it was happening. At the height of the craze, with a couple friends I started a website called HeyIdiot.com. We sold only one product: HeyIdiot.com stock. The plan was to auction it off. You had to bid higher than the previous price, so everyone would become wildly wealthy. The scheme was explained at the HeyIdiot.com website. The horrifying thing was that we got messages from people: “This site doesn’t work. We’re trying to buy the stock and it’s not working.” We got a call from a guy who wanted to buy our website name. He thought that in itself was worth hundreds of thousands of dollars. More madness.
Playboy: Was the hype surrounding the Internet itself a form of madness?
Ellison: Any new technology brings a certain euphoria. I asked Michael Dell how many PC companies there were in the U.S. at the height of that craze. I said, “There must have been at least 50.” He said, “Fifty? There were 500.” Now there are Compaq and HP, which have merged, Dell, Gateway, Apple and IBM—five or six. A couple of them, including IBM, aren’t even making money with PCs. The number will probably decline further. Every new technology inspires hundreds of companies that will manage to survive. In the case of the Internet, it was thousands.
Playboy: But the Internet was pitched as a force that would change life as we know it. Was that hype, too?
Ellison: No. The Internet is the most important new technology since the telephone. Just because companies have failed doesn’t mean the Internet will fail. The Internet is more popular and more broadly used than ever.
Playboy: What is the most important change heralded by the Net?
Ellison: Unbelievably cheap global communication. I can send any form of data from here to Beijing for next to nothing. Data can be anything: numbers, words, pictures, movies, music, live communication. The implications of that are far more profound than any one of us can fathom. At a certain point, we bet Oracle’s future on the Internet, switching our products from ones that were based on client servers [high-end stand-alone computers] to ones based on the Net. It was a risk, but now every technology company I know of has given up on the old model. Even Microsoft has come aboard, though they call it Net, their own version of the Internet. They gave it its own name and are trying to make it proprietary, which is what they always do.
Playboy: Might they succeed?
Ellison: They have no chance whatsoever. Almost every company is building applications on Internet standards as opposed to Microsoft standards. Microsoft is late to the party. That doesn’t mean they won’t keep making a lot of money selling Office and Windows, but they are having a difficult time co-opting the Internet and converting it into the Microsoft version of the Internet. Microsoft, if they could, would co-opt English. We would be speaking to each other in MS English—Bill’s English. Bill would explain why MS English is better than English and he’d make it available to everyone at a very low cost. By the time he finished talking, a dollar for Microsoft per conversation would seem reasonable. To have this conversation, we’d have to send Bill a dollar.
Playboy: Is it dangerous to underestimate Gates?
Ellison: Microsoft is the most ruthless company around. And they are talented. I would never underestimate them. However, it will be difficult for them to own the Internet. They own the PC because they invented it. Well, Apple really invented it, but Microsoft created its own version. It may have been called the IBM PC, but it was owned by Microsoft and Intel. In one of the most gracious acts in the history of business, IBM decided to be the marketer of the first Microsoft Intel PC. What a gift to those two companies. Microsoft’s and Intel’s market values suggest it was a gift of a trillion dollars in market valuation. Those two companies should certainly send IBM cards during the holidays. It was the biggest mistake in the history of commerce.
Playboy: Will Microsoft and Intel retain their lock on PCs?
Ellison: Yes, though PCs will become less important, at least in terms of connecting to the Internet. There will be many devices attached to the Net. Your car will be a two-way transmission device to the Internet. You’ll send and receive messages on your telephone. According to some, the next big thing will be cameras built into telephones. Japan may start sending pictures over the phone, but most other people won’t. I do believe we’ll be sending messages, automatically receiving changes in our calendars and the like.
Playboy: For a while it looked as if the Justice Department might break up or otherwise punish Microsoft. Now it seems less likely. What’s your view?
Ellison: The fallout remains to be seen. The court found that Microsoft routinely broke antitrust laws. The company was found guilty, even after it appealed the original ruling. The only thing that remains for the government to do is decide how to penalize Microsoft. The latest idea is that rather than penalize them, they should be rewarded.
Playboy: How does the proposal reward Microsoft?
Ellison: One of the few markets that Microsoft doesn’t yet have is the education market. The government is now saying, “Microsoft broke the law but didn’t get all of the money. They dropped a bag or two on the way out of the bank. If we give them all the money, they will have no reason to rob banks anymore and the problem will be solved.”
Playboy: You’re referring to the remedy that would have Microsoft give free software to schools.
Ellison: Yes, and thereby make Microsoft a standard in America’s schools, too—the one place Apple has beaten them. Why not just wipe Apple off the face of the earth? But it’s not the end of the story. Now that Microsoft has been found guilty by the court, the company is subject to a bunch of civil lawsuits. Microsoft erased Netscape—as good as destroyed the most innovative company in the Silicon Valley of the Nineties. As a result, Netscape is suing Microsoft in civil court. I believe Netscape, now owned by AOL, will win tens of billions of dollars in damages—and Netscape won’t be the only one.
Playboy: Can you pinpoint when your battle with Microsoft become personal between you and Bill Gates?
Ellison: Actually, Bill and I used to be friends.
Playboy: So what changed?
Ellison: I began to intensely dislike him when I learned about his behavior toward Netscape. Here was this incredibly innovative small company, and the largest, most powerful technology company in the world—arguably. Gates wasn’t satisfied until he wiped them out. And he did so by breaking the law. He tried to force Compaq not to ship Netscape. He threatened people not to do business with Netscape. He destroyed Netscape, and consumers are paying the price.
Playboy: How are we paying?
Ellison: We pay the price in the lack of alternative products. Remember there used to be a PC software industry? There were companies like Lotus, Harvard Graphics, Ashton Tate. No longer. If you want PC software, you wait until Microsoft builds it and you pay whatever they demand. Microsoft products are mediocre and don’t need to be anything more—we have no choice. What other word processor can you use? What other spreadsheet? What other presentation graphics application? What other operating system? It’s like the good old days of the Soviet Union. Without competition, there were high prices and terrible products. Our public schools are disasters for the same reason: There’s no competition. If there’s no competition for your word processor, there’s really no reason to make a better or cheaper word processor.
Playboy: Your own tactics in going after Microsoft have been called into question, particularly when you hired private detectives who went through the company’s garbage.
Ellison: I began hearing about certain groups that support Microsoft. One was called the Independent Institute. Its line was, “Anything that hurts Microsoft hurts America. Microsoft is a national asset. You wouldn’t want to damage Microsoft, because they’re a big exporter and a national treasure. Please, God, don’t hurt Microsoft and America.” Well I’m an American. I don’t want to do anything against America. My God, I may have to rethink my position! But who are these people at the Independent Institute? I’m curious. How about Americans for Competitive Technology, another pro-Microsoft group? I’m an American. I think that we should have competitive technology. I wanted to know who these people were.
Playboy: How did you find out?
Ellison: We found out, but the question was, how could we prove it? That’s why we hired private investigators. I didn’t know they were going to go through Bill’s garbage, but that doesn’t bother me at all. I wouldn’t want to go through garbage personally, because I’m wearing a very expensive suit. But we wanted to disclose the truth. Going through Microsoft’s garbage, the investigators found evidence linking Microsoft to the Independent Institute. We then turned those documents over to the media. We thought the American people should know. It’s totally legal to go through people’s garbage, by the way. If Microsoft wanted to deceive the American people and not get caught, they should have bought a few more shredders.
Playboy: Is there a moral lesson about Bill Gates’ success? Does crime, if not ruthlessness, pay?
Ellison: The story’s not over. Microsoft could have beaten Netscape without breaking the law, and Microsoft would be a more powerful company today if they had engaged in competition with Netscape that was legal. They almost were broken up. If Thomas Penfield Jackson, the original judge in the case, had not made a few statements to the press, Microsoft would be two or three or even four companies right now.
Playboy: Is a lot of your view sour grapes?
Ellison: No. Is AOL’s suit against Microsoft sour grapes? We will aggressively compete with any company. We have aggressive competition with IBM. But IBM, to the best of our knowledge, operates entirely within the law. So do we. When we compete with Microsoft, however, it’s gloves off because of the way that they have operated.
Playboy: How do you think Gates would respond to you?
Ellison: Gates believes he’s done nothing wrong. He thinks the rules don’t apply to him. Like Milo Minderbinder in Catch-22, he really believes what’s good for Microsoft is good for America.
Playboy: Is it true that you love a fight?
Ellison: I love to compete, whether racing a sailboat or selling a piece of software. The selling part isn’t so interesting, but building a faster sailboat, a better database, better applications, is. If you build better products, most of the time you win, but not always. Apple found that out from Microsoft. Though I feel a special glee when it comes to beating Microsoft, I really don’t think about our competitors. When we have trouble, it’s usually self-inflicted. We have had some product problems—products late for the market, bugs. We are an engineering company. We live or die by the quality of our products. There’s no way we could compete with a company like Microsoft or IBM if their database was better than our database. So we have to engineer better products.
Playboy: Can size wind up hurting you, though? Technology companies have to be nimble, fast-moving.
Ellison: Really? How has it turned out? The smaller companies—Commerce One, Ariba—are not going to survive. Look at our database competitors. Ingress? Gone. Informix is gone. Sybase doesn’t matter. Technology is going the same way as the car industry. People don’t believe it, but there is going to be a handful of large technology competitors. The idea that the software and computer industries are going to be forever young is fanciful. One of the reasons our database is so good is that we’ve had long-term competitions with Sybase, Informix, Ingress and now IBM and Microsoft. We’ve always been an extremely competitive market. If that doesn’t keep you alert, nothing will. We’re also in a very competitive market in the enterprise software business. We just entered the e-mail business, a brand-new business for us, and it’s dominated by Microsoft. The problem with Microsoft’s e-mail is its fragility. Our e-mail does not break. Microsoft’s does. Microsoft’s e-mail server is really a virus exchange. Microsoft’s idea of how you handle viruses is: “You know that e-mail you got yesterday? Don’t open it. It has a virus in it.” When we discover a virus we simply delete it from the server so you can’t get to it. Post-September 11, people are much more sensitive about security and terrorism, whether physical or cyber. We have the answers built in.
Playboy: Since September 11 you have also been the chief proponent of a national ID card to help combat terrorism. What led to that idea?
Ellison: There’s a global database to keep track of how much you earn, where you work, how much your car payment is, what magazines you subscribe to, what your bank balance is, what your last raise was, whether you’re married, not married, divorced, how much you pay in alimony. But there’s nothing that reveals whether you might be a suspected terrorist. It’s a no-brainer.
Playboy: But the price is even less privacy than we have now.
Ellison: Which isn’t much. You’ve given it all up already. In exchange for what? A credit card. You have given up your personal privacy to make it easier when you go to the mall. Should we give up a little more privacy to save the lives of our families? Should the government create one of these databases to keep all of this information about us? Can we trust our government? You trust Bank of America, but do you trust your government?
Playboy: But you participate in the decision to trust Bank of America.
Ellison: I’m not for mandatory IDs. I want a national standard for IDs, but they should not be required for most people. If you decide to drive, you need an ID. All I’ve come out for is a standard for existing driver’s licenses, pilot’s licenses, voter registration cards, social security cards and the like. I want to make them much more difficult to forge and duplicate so people can’t go around stealing our identities. My pilot’s license is much easier to duplicate than an American Express card. Anyone with a color laser printer can copy it. If you want a pilot’s license, before you leave here today, I’ll make you one. No problem. The point is that we take credit much more seriously than national security. I want to use credit card technology and a single merged database. The FBI would probably be the best place to keep that information. If the states and FBI had had a linked database, we probably would have caught half of the terrorists boarding those airliners. They were wanted. They were in the country illegally, overstayed their visas, had an outstanding arrest warrant or something else. The airlines had no way of knowing they had sold tickets to terrorists.
Playboy: The counterargument is that by giving away our freedom or privacy, the terrorists have in some ways won.
Ellison: [Exaggerated] “Surely they will have won!” You have to be kidding. Are you more interested in stopping a little credit card fraud or saving lives? Now who’s won? Civil libertarians are off-base here. It’s mind-boggling how much we don’t trust our government. Everyone is quoting Ben Franklin: “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” Remember that Franklin lived in this country 200 years ago, when the world was dominated by aristocrats and kings. The big risk to folks like you and me were that these aristocrats and kings were going to take away our rights. I don’t know the last time I saw an aristocratic king running around the U.S., threatening to take away our house or dog. The risks today are from terrorists who get their hands on nuclear weapons and vaporize a million or 2 million people. Should we sacrifice some of our privacy to make that more difficult? A handful of people are so concerned about protecting themselves from the government they’ve made it impossible for the government to protect the rest of us. I’m quite a bit more worried about Al Qaeda than I am the Republicans. And I’m a Democrat. The fact is, we live in a dangerous world, and we can’t pay enough for good information. Think about the calamities around the turn of the millennium that were prevented by intelligence agencies. Can such intelligence be abused? Absolutely. Everything can be. The cave person who invented fire went around saying it would keep caves warm and cook food, but someone was out there worrying about arson. Technology is agnostic. Information is agnostic. It can be used inappropriately, but by and large, our government has a damn good record of using information and behaving well in its 200 years. I would rather trust our government to protect us than rely on blind luck. Otherwise we can hope that the Michigan Militia protects us against Al Qaeda. I think we’d be better off relying on the Marines.
Playboy: Which politicians understand technology? Who doesn’t?
Ellison: I was a big fan of Bill Clinton’s and I’m happy with the current administration. I’m a lifelong Democrat, but I was not a supporter of Al Gore.
Playboy: Do you know President Bush?
Ellison: I met him when I was deciding who I would support. I had about an hour with him. I’d heard all of these people say, “George Bush isn’t very smart,” but he is bright, determined and focused, certainly every bit as much as Al Gore. I didn’t find huge differences in their intellects. Bill Clinton, on the other hand, is an extraordinary human being. People talk a lot about his flaws, but he is truly gifted. Very few people have Bill Clinton’s intellect.
Playboy: Did you get to know Clinton personally?
Ellison: Absolutely. I went nightclubbing with him recently in New Orleans. There is no better person. If you were able to pick a president in the past 50 years to hang out with, he’s the one.
Playboy: How successful was his presidency in your view?
Ellison: It’s appalling to me that the Democrats, supposedly the champions of Latinos, were against Nafta. Clinton pushed it through, and it’s behind the economic miracle that’s occurring south of the Rio Grande. He can be proud of that. He contributed enormously to solving the 500-year-old problem in Northern Ireland. It may lead to a successful resolution. The 2,000-year-old problem in the Middle East seems to have exceeded even his enormous talent.
Playboy: What’s your take on Senator Clinton?
Ellison: I know Hillary, but not well. She’s incredibly bright but an extremely different personality from Bill.
Playboy: Would you support her for president?
Ellison: It depends who she were running against. If she were running against Colin Powell, I would support him.
Playboy: We know what you think of Bill Gates. On the other side, who are the business leaders you most respect?
Ellison: What Jack Welch did with General Electric was astonishing. Andy Grove at Intel. Steve Jobs. Steve reached out with one strong arm and kept Apple from falling into the abyss. People ask how much difference one person can make. Steve Jobs answers that question. Apple under Gil Amelio, with many of the same people underneath him, was a disaster. Winston Churchill once referred to the British army as “lions led by donkeys.” You can have lions throughout your organization, but it’s a disaster if donkeys are on the top. No leader by himself can completely make a company, but a leader can destroy it.
Playboy: You’ve been accused of being cavalier in firing people, bullying them.
Ellison: The opposite is true. When Oracle ran into trouble in 1991, we’d had people in place for too long. We should have changed management long before we did. Until 1991, I was reluctant to fire anybody. It was painful. I don’t know anybody who likes to fire people.
Playboy: But you have and do.
Ellison: One of the most horrible things I’ve ever done was lay off 500 people at Oracle in 1991. I couldn’t come to work. It was traumatic. Because of mistakes I had made or was complicit in, 500 people were losing their jobs. I don’t know anyone who likes to lay off or fire people, and I can’t imagine being cavalier about it. However, if by removing one person you can keep from laying off a thousand the following year, you have to do it. When we’re paying people tens of millions of dollars in a combination of stock, salary and bonus—sometimes hundreds of millions of dollars—and they’re doing their jobs badly, they are putting the company at risk. It could lead to a situation where we have to lay off thousands of people. I’d much rather get rid of one executive vice president.
Playboy: Where does your tyrannical image come from?
Ellison: From a handful of people we fired. Sometimes they sue, sometimes they say bad things.
Playboy: Do you admit you sometimes rule by bullying?
Ellison: No. You can’t rule a successful company by bullying. For the 25 years I have been at Oracle, the only group I have consistently run is engineering. You can’t bully those guys. If I try to bully those guys, they’ll giggle, get up and leave and get a job that pays 20 percent more in half an hour.
Playboy: What would you say—one CEO to a former CEO—to Ken Lay of Enron?
Ellison: Enron is an interesting problem. Enron didn’t get into trouble because of its energy-trading business, but because it tried to go into all these different businesses—power plants in India, broadband and many other things. Since they were successful in energy trading, they naturally assumed they’d be successful at everything. I know that disease—had it once myself. “My God, I’m one of those gifted people who’s good at everything.” No, the only thing you’ve proved is that you’re good at one thing. The problem was initially that they thought they had the Midas touch. Then when problems began appearing, they thought if they could conceal them, everything would get better. There was probably never any criminal intent. I don’t know for sure, but Enron smells much more like managerial delusion than criminal behavior. The real sad casualty is Arthur Andersen, which is a great firm. The greatest loss of wealth was among the executives at Enron.
Playboy: Tell that to the employees who lost their retirement and savings invested in company stock.
Ellison: There are many lessons. The biggest is that you shouldn’t be able to have all your retirement money in your company stock, even if you do it voluntarily. Yeah, Ken Lay lost a lot more money than everybody else, but Ken Lay had a lot of money to lose. A lot of people lost a little bit of money, but that was the money they were depending on for their retirement. That should not be allowed. We have an employee stock purchase plan, but retirement money should be separate and it should be in much less risky vehicles than company stock.
Playboy: In 2000, you were, for a while, the richest man in the world.
Ellison: Yeah, for a few weeks.
Playboy: What did that mean to you?
Ellison: It’s kind of irrelevant. I have joked that I wished I’d passed Bill Gates on the way up rather than having him pass me on his way down. But what really means a lot to me is Oracle passing Microsoft. If we can accomplish that, it will be huge. It’s not about who wins the batting title; it’s about who wins the World Series. I want Oracle to become the largest and most valuable software company. It’s hard to go from number two to number one. It’s like heavyweight championship boxing. People get better and better as you move up the ranks.
Playboy: Steve Jobs once said you were the poster child for the outrageous CEO. Is that something you take pride in?
Ellison: It might be safer and easier saying what’s safe and expected. I’d rather speak my mind and do what I want to do. I know some people are offended by the fact that I’m spending a lot of money trying to win the America’s Cup. I could have given all that money to charity. Well, I do give hundreds of millions of dollars—lots and lots—away. Once I was thinking of buying a second car and I was in a moral dilemma. Should anyone have a second car when there are people who are hungry? If I didn’t buy the second car, I could have taken the $5,000 or $10,000, whatever it was, and given it to people to save their lives. If you have a second car, it’s OK for me to have a boat. All of us who live in this country consume much more than we need, but it’s OK. We’ve earned it.
Playboy: What does it say about someone, whether it’s you, Ted Turner or Richard Branson, when he becomes obsessed with winning the America’s Cup or being first to sail a balloon around the world?
Ellison: We just enjoy the competition. We’re endlessly curious about each other and ourselves. We’re curious about our limits. Can I win the Pulitzer prize? Can I finish that novel? I’m satisfying my curiosity to find out if we can engineer a boat and sail that boat well enough, better than anyone else in the world. I think I can, but I don’t know.
Playboy: How important is the risk?
Ellison: I have done things that are high risk. I sailed Sayonara in the Sydney-Hobart race in 1998 in a hurricane. Many boats were sunk and many sailors died. No one enjoyed being in that race. Everyone wished there were a magic button we could push to get out of that hurricane.
Playboy: Did the experience make you more cautious?
Ellison: Absolutely. I was asked if I was going to race in that event again. I said, “I’m not going to do this race again if I live to be 1,000.” Then I thought about it and said, “No, if I live to be 1,000, I’ll do the race again.” I’ve surfed in storms in Hawaii. I’ve broken my neck surfing in storms, which was really stupid. I was out with a couple of Hawaiian kids surfing on a huge wave, which was just dumb. While bike racing I broke my arm in 28 places.
Playboy: Is there a corollary between the ability to succeed in business and being drawn toward risk?
Ellison: No. I would say it’s curiosity. George Mallory was wrong. When he was asked why he climbed the mountain, he said, “Because it’s there.” It was because he wondered if he could be the first.
Playboy: What upsets you?
Ellison: I was upset when a young lady accused me of doing things I didn’t do. People assumed she was telling the truth.
Playboy: You are referring to the case of the former Oracle employee who alleged you tried to force her to have sex.
Ellison: Yes, who later went to jail for a year for perjury and for falsifying evidence.
Playboy: What happened?
Ellison: We were dating and she said in a claim that I forced her to have sex with me. Then she immediately changed her statement to say that she actually refused to have sex with me and that’s why I caused her to be fired. I was absolutely horrified by the first statement. I never forced her to have sex, and I never caused her to be fired. It was a scam. She was caught sending a false e-mail note. It was premeditated.
Playboy: Is this an example of the downside of your fame and wealth?
Ellison: Yeah. No one thinks of me as a victim. But I was. I’ll never forget riding up the elevator at Oracle alone with a woman—the way she looked at me. That was the worst thing that’s happened other than nearly dying in that stupid hurricane. No, the accusation was worse.
Playboy: As a result, are you cautious about who you’ll spend time with?
Ellison: No. Again, it’s “Surely the terrorists will have won.” Maybe I should be more cautious than I am, but I’m pretty good at detecting people’s motives. How can you believe me after I went out with that woman? I knew I was getting myself into trouble with her. I knew she was different. She was evil.
Playboy: Was it that you didn’t trust your instincts?
Ellison: I’d never met anyone like that before. I’ve run into people who are selfish, self-serving, calculating—all of those things—but rarely do you run into a person who is genuinely evil. I found her intriguing. I knew something was off, but, boy, I didn’t detect it. I can detect when there’s a quid pro quo expected. But this was something I had no experience with.
Playboy: Have you run into evil people in business?
Ellison: Absolutely not. Tough business people but not evil.
Playboy: Is winning in business like winning in a game?
Ellison: Two analogies are always used to describe business. One is military—that it’s a war—and the other is sports. Neither works. It’s much more important than a game. It’s much less important than a war. Of the three things I’m working on now, cancer research is vital; business is important but not vital, and the America’s Cup is just fun.
Playboy: You were once asked how much of your wealth you would pay for your biotech company to successfully beat cancer.
Ellison: All of it. It’s a simple calculation. Which would you rather have as an outcome of your life: Be the richest person on earth or be the guy who cured cancer?
Playboy: You’ve also said that part of the motivation has been to prove your adoptive father, who criticized and doubted you, wrong. Is that accurate?
Ellison: When you don’t have a close relationship with your parents, it forever colors your personality. In theory, parents grant their children unconditional love. Other love has to be earned. If you don’t get unconditional love early on, you have a great void in your life. Depending on how you adapt, you can get very good at trying to earn the love of others. Bill Clinton is like me in that regard. He had a difficult relationship with his father. Another is Winston Churchill, who had virtually no relationship with his parents. Without love from your parents, the love of others becomes a large part of your life. You either learn how to get it or you try to get it through your achievements.
Playboy: Does it work? Do the achievements fill the void?
Ellison: Yes and no. My sister is a psychologist. Once she asked me an interesting question. “What’s more important to you: to be loved or to be respected?” I was in my midteens. I said it was easy to answer. To be respected. She said I was wrong. I got really annoyed with her. But then I paused for a second. I thought, Ahh. I just think it’s more important to be respected. I’m concealing the fact that it’s really more important to be loved. Of course she’s right. We’ve got to find that someplace in our lives. It’s why my extended family is very important. And my relationship with my children is especially important to me.
Playboy: Are there successful people who had happy childhoods?
Ellison: There’s a great line in Tim Rice’s Chess about Evita: She had all of the disadvantages she needed to succeed. If it doesn’t kill you, it makes you stronger. Unfortunately, it kills an awful lot of people.
Playboy: How important was it to learn about your birth parents?
Ellison: For a long time I would rather not have known. Then I got curious enough and strong enough. I was willing to take the emotional risk of finding out about my biological origins. The interesting thing about discovering my biological family was the realization that I didn’t belong to them. I belonged to the family that raised me. It eliminated all ambiguity.
Playboy: Was it in some ways disappointing to complete the search?
Ellison: No. And it was not nearly as emotional as I expected.
Playboy: Did the parents who raised you live to see your success?
Ellison: My father saw some of it and he was pretty surprised.
Playboy: When you look back on it, do you feel it was just a matter of lucky choices that led you to found Oracle?
Ellison: I’m sure there’s a huge portion of luck. Without being in California, without being in the United States—this would not have happened in Russia.
Playboy: Did you go to California specifically to work in technology?
Ellison: No, because it was the Sixties.
Playboy: Did you wear flowers in your hair?
Ellison: I didn’t wear flowers in my hair and I never wore beads.
Playboy: Beads or not, were you affected by the Sixties counterculture?
Ellison: I loved the music, but I thought the make-love-not-war thing was an unusual theory; that the best way to stop the Vietnam War was to have sex. I thought the clothes were kind of odd. I had sideburns, but I’m not very good at being a conformist. In the Silicon Valley, where everyone wore jeans and T-shirts, I wore suits. People thought I was crazy, but I think suits look better. If the majority is listening to Creedence, I probably won’t. If you’re really different, like Galileo, and you say, “No, I don’t think the Earth is the center of the universe,” you get yourself into a lot of trouble. We hate people who are different. We hate innovation. We hate new ideas. It worked badly for me in school and it worked badly in my peer groups. The teachers said that things were true that I didn’t think were true, and I would argue with them. Everyone was wearing their hair long and I was wearing mine short. Not conforming caused terrible problems for me at school, but it was magic in business.
Playboy: How so?
Ellison: The only way you can succeed in business big-time is to find places where conventional wisdom is wrong—to find errors in the fashion. You cannot innovate by copying. You can’t innovate by wearing your hair the same as everybody else.
Playboy: What’s an example in your business life?
Ellison: We were the first company to decide to base all of our software on the Internet, not this Microsoft client server or anything like that. Everyone said we were crazy. There even was a revolution inside the company; half of the senior executives wanted me to lose my job because I was putting the company at risk at a time when the customers were demanding client server systems. Someone always has to be first. The first is always saying, “I’m right, and everyone else in the world is wrong,” and we call that arrogance of the highest order. But unless you’re willing to diverge from conventional wisdom, you won’t do anything new. Thinking outside the box is tough because the box has very strong walls, floor and ceiling. But it’s the only way to win big.
Playboy: At a start-up, new thinking is much less risky. But at a company the size of Oracle, there are lots of jobs, never mind investors’ cash, at stake.
Ellison: Yeah, the stakes are much higher, but once every five years you have to find some error in conventional wisdom and do it differently. We were founded on that type of risk. We were the first company that thought a relational database could be commercialized. I read the IBM white paper about this and saw no reason why the idea wouldn’t work. I thought, We can beat IBM to the market with their own idea.
Playboy: How did you explain to a lay audience how a relational database was different from the databases that had preceded it?
Ellison: With a relational database, you can ask any kind of question of the data you have compiled. Which department has the highest average salary? Which department had the highest average salary six months ago? Any question you can think of. Before that, you often couldn’t ask those questions. You’d have to write a complex computer program to do it, but often you couldn’t answer the question even if you took the time to write the program. The existing databases could never run a bank, insurance company or an intelligence agency; they were too slow. We figured out ways to make it work and run faster than the then-popular commercial databases. The relational database is now the standard. Now no one would dream of building a database that wasn’t a relational database.
Playboy: What’s your next move that people will say is crazy?
Ellison: We’re in the middle of it. We have what we call an applications suite. In the past, you would rely on different companies for different applications: Siebel for sales force automation, Epiphany for marketing, SAP for accounting, 12 for supply chain. The idea was that you should buy all these different applications and stitch them together. The stitching together is what interested us. We think it’s a nonsensical idea. It’s as nonsensical as trying to build a car out of a transmission from a Cadillac, an engine block from a Porsche, pistons from a BMW. It makes no sense. We think all these parts—your marketing system, your sales system, your support system, your accounting system, your supply chain system, your HR system—should be engineered to fit together. It’s a radical idea. We call it the E-Business Suite, and we’re the first to talk about it. Everybody—IBM, SAP, Siebel—says we’re crazy. They say customers don’t want to depend on one company. They can give a million reasons why we’re crazy. They told us we were crazy for moving everything to the Internet, too. They told us we were crazy when we built the first commercial relational database. There are two possibilities when people say you’re crazy: You’re first with a really wonderful idea that’s going to make your company is possibility one. Possibility two? You’re crazy. [laughs] Unless you hear you’re crazy every once in a while, you’re doing something wrong.
Playboy: At what point do you know an innovation is going to work?
Ellison: When everyone else comes onboard. Microsoft goes through four stages of stealing someone else’s idea. First they say that what you’re doing is the stupidest thing they ever heard of. Stage two: “Well, there are some interesting pieces in it, but the idea as a whole isn’t very good.” Stage three is: “We have exactly the same thing, but ours is better.” Stage four: “It was our idea in the first place.” We saw it with relational databases and Internet computing, and we’re watching it again now in E-Business Suite.
Playboy: Have you been wrong?
Ellison: Not at a time when we bet the entire company on a new idea. However, I’ll never forget one of the worst mistakes I ever made. We had an Oracle server that ran on top of MS-DOS. We decided not to release it because OS2 was coming out. As it turned out, OS2 came out and was kind of irrelevant. We lost a lot of the server business to Novell at the time. We had followed the conventional wisdom. Everyone waited for OS2 since Microsoft and IBM told us to wait for it. We got creamed by following conventional wisdom.
Playboy: Another mistake was in 1991 when the company crashed. According to reports, you were out sailing instead of minding the store.
Ellison: I just wasn’t very good at minding the store. I wasn’t a very good CEO. This naive, inexperienced management team led by yours truly did a terrible job. I didn’t even own a boat 10 years ago. As a result I got much more involved in the business. I learned.
Playboy: How do you explain all your success?
Ellison: It’s based on our products, but that’s not enough. Still, most of the people who buy our database are people who already have our database. What can the salesmen say to somebody to get them to buy a product that they use every day if they don’t like it? We live and die on our products. Maybe 99 percent of Fortune 500 companies use our database. IBM. Microsoft. Virtually everybody.
Playboy: Bill Gates?
Ellison: We do MSN’s billing system.
Playboy: You said once you would stay at Oracle four more years. That was five years ago.
Ellison: There are days when I feel like I’ll leave now, thank you. But no. It’s very hard for me to walk away from Oracle without knowing how the story is going to end. We’re in the middle of the greatest consolidation of the technology industry ever. People are arranging themselves at the table; it’s not obvious who is going to sit at the head. I want to know what’s going to happen. I feel as if we’re only halfway through a novel.
Playboy: Is there an ending to the novel?
Ellison: Absolutely. Life is short and there are lots of interesting things to do. Unlike Gates, I have lots of other interests. I own a cancer research company [Quark] in Israel. I have a pretty good time. The best thing about being a minor celebrity is that I get to meet all sorts of interesting people.
Playboy: Have you thought of running for office?
Ellison: If I thought I could improve education in California, it would be immoral for me not to. But God knows I don’t want to be in Sacramento, and I am pretty sure I wouldn’t be elected, so it works out well.
Playboy: Instead, you’re getting married—again.
Ellison: I’m engaged, and I have two children, a 19-year-old son and a 16-year-old daughter. More? That’s up to my fiancée. So will you please set the record straight: I am engaged to Melanie Craft. The New York Post said that she doesn’t exist. They wouldn’t have had to do a lot of research to find out she exists. She’s been seen by a lot of people. She is a writer and they said that I wrote the book that she published. They said that it was designed to keep women away—like I have this huge problem.
Playboy: As a veteran of three marriages, do you feel you can do it better this time?
Ellison: There’s no question I can do it better. Can I do it worse? I don’t think so. Impossible.
Playboy: What have you learned?
Ellison: Some people may think their partner is really an extension of themselves. I had an irrational standard of behavior for myself. If she didn’t conform to the same standard, I would become annoyed. I’ve got to keep in mind that she is she and I am me. I shouldn’t seek to control her anymore than I would want her to control me.
Playboy: How about as a parent—are you better than your parents?
Ellison: My kids will tell you I torment them with attention.
Playboy: According to your story, they won’t be great business leaders.
Ellison: But they will be happy people. And that’s much, much nicer.

Sergey Brin and Larry Page, September 2004#

Just five years ago a googol was an obscure, unimaginable concept: the number one followed by 100 zeros. Now respelled and capitalized, Google is an essential part of online life. From American cities to remote Chinese villages, more than 65 million people use the Internet search engine each day. It helps them find everything from the arcane to the essential, and Google has become a verb, as in, “I Googled your name on the Internet and, uh, no thanks, I’m not interested in going out Friday night.”
In addition to being the gold standard of Internet search engines, Google is setting a new example for business. It’s difficult to imagine Enron or WorldCom with a creed similar to Google’s: “Don’t be evil,” a motto the company claims to take seriously.
This maxim was perhaps most apparent in May when the company announced it was going public. Google founders Sergey Brin and Larry Page explained their lofty ambitions. “Searching and organizing all the world’s information is an unusually important task that should be carried out by a company that is trustworthy and interested in the public good,” they wrote in an unprecedented letter to Wall Street. With the release of the letter, Newsweek reported, “The century’s most anticipated IPO was on, and the document, revealing the search giant’s financial details, business strategy and risk factors, instantly eclipsed Bob Woodward’s Iraq book as the most talked about tome in the nation.”
Page, 31, is the son of Carl Page, a pioneer in computer science and artificial intelligence at the University of Michigan. Larry was surrounded by computers when he was growing up and once built a programmable ink-jet printer out of Legos. Reticent but wide-eyed and reflective, he is Google’s clean-cut geek in chief, the brilliant engineer and mathematician who oversees the writing of the complex algorithms and computer programs behind the search engine. His partner, Brin, 30, is a native of Moscow, where his father was a math professor. As Jews, the Brins were discriminated against and taunted when they walked down the street. “I was worried that my children would face the same discrimination if we stayed there,” his father told Reuters. “Sometimes the love for one’s country is not mutual.” The family emigrated to the U.S. when Brin was six. A part-time trapeze artist, Brin is the company’s earnest and impassioned visionary—a quieter, nerdier Steve Jobs. Early on, when Google CEO Eric Schmidt was asked how the company determines what exactly is and is not evil, he answered, “Evil is whatever Sergey says is evil.”
Page and Brin met as graduate students at Stanford University. After years of analyzing the mathematics, the computer science and the psychological intricacies involved in searching for useful information on the ever-growing World Wide Web, they came up with the Google search engine in 1998. It was far superior to existing engines, and many companies, including Yahoo and MSN, licensed it. (Yahoo recently severed its ties with Google, introducing its own search engine. Bill Gates, who once admitted that “Google kicked our butts” on search-engine technology, has announced that Microsoft will launch its own search engine next year.) With its simple design and unobtrusive ads, Google has quickly become one of the most frequented websites on the Internet, and the company is one of the fastest growing in history. The financial press has estimated that after the initial public offering, Google will be valued at $30 billion, and Brin and Page, each of whom owns about 15 percent, will be worth more than $4 billion apiece.
The two are unlikely billionaires. They seem uninterested in the accoutrements of wealth. Both drive Priuses, Toyota’s hybrid gas-and-electric car. It is impossible to imagine them in Brioni suits. Brin often wears a T-shirt and shorts. Page usually dresses in nondescript short-sleeve collared shirts. Both rent modest apartments. Their only indulgences so far fall into the realm of technology, such as Brin’s Segway Human Transporter, which he occasionally rides around the Googleplex, the company’s Silicon Valley headquarters. (Page often scoots around on Rollerblades or rides a bike.) Page bought a digital communicator that employs voice-recognition technology to place phone calls. Both men are notorious workaholics, though The Wall Street Journal, which uncharacteristically did some sleuthing into their personal lives, reported that they have girlfriends. “Mr. Page has been dating an employee at Google, according to people close to the company,” the Journal reported. “Mr. Brin has started going out with the sister of a Google employee.”
Contributing Editor David Sheff met with the Google founders at the Googleplex. It is unlike most other offices, with free Odwalla juice, random toys, a pool table, a courtyard lined with scooters and bikes, and an on-site masseuse. In the company’s airy cafeteria, the former chef to the Grateful Dead prepares lunch. Sheff arrived at Google just before the company entered the quiet period prior to its IPO, but he found Brin and Page less interested in the billions of dollars on the horizon than in the day-to-day challenge of running a hugely successful company that provides a valuable service, does good in the world and is fun to work for.
“When I arrived, Brin was indeed having fun, playing a sweaty game of volleyball in an open-air plaza,” reports Sheff. “Dragged in shoeless from the court, he contemplated questions with great seriousness while occasionally stabbing at a salad. Throughout our conversation, he and Page, who wore shoes, rarely sat down. Instead they stood up, leaned on their chair backs, climbed on their chairs and wandered about the windowed conference room. It’s apparently impossible to sit still when you’re engaged in changing the world.”
 
Playboy: Google has emerged as one of the most watched companies in the world. Since deciding to go public, have you worried that Google could become less fun because of quarterly reports and the scrutiny of thousands of investors?
Page: I worry, but I’ve worried all along. I worried as we got bigger and there were new pressures on the company. It wasn’t so long ago that we were all on one floor. Then we moved to a new, larger office building and were on two floors. We added salespeople. Each change was huge and happened over a very short period of time. I learned you have to pay a lot of attention to any company that’s changing rapidly. When we had about 50 people, we initiated weekly TGIF meetings on Friday afternoons so everyone would know what had happened during the week. But those meetings have broken down because we now have too many people, about 1,000, including many who work in different time zones. We try to have a summation of the week’s work via e-mail, but it’s not the same. When you grow, you continually have to invent new processes. We’ve done a pretty good job keeping up, but it’s an ongoing challenge.
Playboy: It’s one thing to have volleyball games, refrigerators full of free juice and massages when you’re a start-up, but can you maintain such a laid-back culture as a public company?
Page: We think a lot about how to maintain our culture and the fun elements. I don’t know if other companies care as much about those things as we do. We spent a lot of time getting our offices right. We think it’s important to have a high density of people. People are packed together everywhere. We all share offices. We like this set of buildings because it’s more like a densely packed university campus than a typical suburban office park.
Playboy: We read that you originally wanted a building without telephones.
Brin: That was Larry. He was making the argument that you call most people on their cell phones because you’re not sure if they’re at their desk. Why bother having land lines? We decided to have them, though, because the quality is better. It’s nice to have them.
Playboy: Do you subscribe to any particular management theories, or do you make them up as you go?
Page: We try to use elements from different companies, but a lot is seat-of-your-pants stuff.
Playboy: How will you avoid the mistakes of many other dot-coms? After their IPOs, employees became more focused on the stock price than on their jobs. Many of those companies are gone.
Page: Those companies are not good analogues for Google.
Playboy: But like you, they were Internet-focused technology companies. What’s the difference?
Page: A lot of those companies were around for less than a year or two before they went public. We’ve been around for five. We’re at a pretty significant scale, too. We have more than 150,000 advertisers and a lot of salespeople. Millions of people use Google. It’s a completely different thing.
Playboy: And you’re profitable.
Page: That’s a difference, yes. The dotcom period was difficult for us. We were dismayed in that climate.
Playboy: What dismayed you?
Page: We knew a lot of things people were doing weren’t sustainable, and that made it hard for us to operate. We couldn’t get good people for reasonable prices. We couldn’t get office space. It was a hypercompetitive time. We had the opportunity to invest in 100 or more companies and didn’t invest in any of them. I guess we lost a lot of money in the short term—but not in the long term.
Playboy: Companies tried to buy you, too. Did you ever consider selling Google?
Page: No. We think we’re an important company, and we’re dedicated to doing this over the long term. We like being independent.
Playboy: Is your company motto really “Don’t be evil”?
Brin: Yes, it’s real.
Playboy: Is it a written code?
Brin: Yes. We have other rules, too.
Page: We allow dogs, for example.
Brin: As for “Don’t be evil,” we have tried to define precisely what it means to be a force for good—always to do the right, ethical thing. Ultimately, “Don’t be evil” seems the easiest way to summarize it.
Page: Apparently people like it better than “Be good.”
Brin: It’s not enough not to be evil. We also actively try to be good.
Playboy: Who ultimately decides what is evil? Eric Schmidt, your CEO, once said, “Evil is whatever Sergey decides is evil.”
Page: That was not one of his best quotes, though it’s memorable.
Playboy: How does it work?
Brin: We deal with all varieties of information. Somebody’s always upset no matter what we do. We have to make a decision; otherwise there’s a never-ending debate. Some issues are crystal clear. When they’re less clear and opinions differ, sometimes we have to break a tie. For example, we don’t accept ads for hard liquor, but we accept ads for wine. It’s just a personal preference. We don’t allow gun ads, and the gun lobby got upset about that. We don’t try to put our sense of ethics into the search results, but we do when it comes to advertising.
Playboy: Who decides that wine is all right but hard liquor isn’t?
Brin: We collect input. I think we do a good job of deciding. As I said, we believe that “Don’t be evil” is only half of it. There’s a “Be good” rule also.
Playboy: How are you good?
Brin: We have Google grants that give advertising to nonprofit organizations. A couple hundred nonprofits—ranging from the environment to health to education to preventing various kinds of abuse by governments—receive free advertising on Google.
Page: We’re also working to set up a Google foundation that will have even broader initiatives. The “Be good” concept also comes up when we design our products. We want them to have positive social effects. For example, we just released Gmail, a free e-mail service. We said, “We will not hold your e-mail hostage.” We will make it possible for you to get your e-mail out of Gmail if you ever want to.
Brin: You won’t have to stay with us just to keep your address.
Page: Which is something we view as a social good.
Brin: Another social good is simply providing a free and powerful communication service to everyone in the world. A schoolchild in Cambodia can have a Gmail account.
Playboy: But Yahoo and MSN’s Hotmail already offer free e-mail accounts.
Brin: This one has one gigabyte of storage—200 times more.
Playboy: But there’s a catch. You have stated that you will scan e-mail in order to target advertisements based on its content. As a San Jose Mercury News columnist wrote, “If Google ogles your e-mail, could Ashcroft be far behind?”
Brin: When people first read about this feature, it sounded alarming, but it isn’t. The ads correlate to the message you’re reading at the time. We’re not keeping your mail and mining it or anything like that. And no information whatsoever goes out.
Playboy: Regardless, it’s analogous to someone looking over our shoulder as we write private messages.
Page: You should trust whoever is handling your e-mail.
Brin: We need to be protective of the mail and of people’s privacy. If you have people’s e-mail, you have to treat that very seriously. We do. Everyone who handles e-mail has that responsibility.
Playboy: The Electronic Privacy Information Center equates such monitoring with a telephone operator listening to your conversations and pitching ads while you talk.
Brin: That’s what Hotmail and Yahoo do, don’t forget. They have big ads that interfere with your ability to use your mail. Our ads are more discreet and off to the side. Yes, the ads are related to what you are looking at, but that can make them more useful.
Page: During Gmail tests, people bought lots of things using the ads.
Brin: Today I got a message from a friend saying I should prepare a toast for another friend’s birthday party. Off to the side were two websites I could go to that help prepare speeches. I like to make up my own speeches, but it’s a useful link if I want to take advantage of it.
Playboy: Even that sounds ominous. We may not want anyone—or any machine—knowing we’re giving a speech at a friend’s birthday party.
Brin: Any web mail service will scan your e-mail. It scans it in order to show it to you; it scans it for spam. All I can say is that we are very up-front about it. That’s an important principle of ours.
Playboy: But do you agree that it raises a privacy issue? If you scan for keywords that will trigger ads, you could easily scan for political content.
Brin: All we’re doing is showing ads. It’s automated. No one is looking, so I don’t think it’s a privacy issue. To me, if it’s a choice between big, intrusive ads and our smaller ones, it’s a pretty obvious choice. I’ve used Gmail for a while, and I like having the ads.
Playboy: Do the ads pay for the extra storage space?
Brin: Yes. Targeted advertising is an important component. We could have had glaring videos appear before you look at every message. That could generate revenue too. Our ads aren’t distracting; they’re helpful.
Page: I find it works well. And it’s an example of the way we try to do good. It’s a high-quality product. I like using it. Even if it seems a little spooky at first, it’s useful, and it’s a good way to support a valuable service.
Playboy: Did the outcry about the privacy issue surprise you?
Brin: Yes. The Gmail thing has been a bit of a lesson.
Page: We learned a few things. There was a lot of debate about whether we were going to delete people’s mail if they wanted it to be deleted. Obviously, you want us to have backups of your mail to protect it, but that raises privacy issues. We created a policy statement about privacy, and the attorneys probably got a little ahead of themselves. The lawyers wrote something that was not very specific. It said something like, “If you request that we delete your e-mail, it may remain on a backup system for a while.” It led people to say, “Google wants to keep my deleted mail.” That’s not our intent at all. Since then we have added some language explaining it. We intend to try to delete it.
Playboy: That’s not reassuring.
Page: But you wouldn’t want us to lose your mail, either. There’s a trade-off. So yes, we learned some things. We could have done a better job on the messaging. In its earliest testing stages Gmail was available only to a small number of people. People started talking about it before they could try it. I didn’t expect them to be so interested. We released the privacy policy, and they were very interested in that. It was all they had access to, so it sparked a lot of controversy. The more people tried Gmail, however, the more they understood it.
Brin: Journalists who tried it wrote positive reviews.
Playboy: With the addition of e-mail, Froogle—your new shopping site—and Google news, plus your search engine, will Google become a portal similar to Yahoo, AOL or MSN? Many Internet companies were founded as portals. It was assumed that the more services you provided, the longer people would stay on your website and the more revenue you could generate from advertising and pay services.
Page: We built a business on the opposite message. We want you to come to Google and quickly find what you want. Then we’re happy to send you to other sites. In fact, that’s the point. The portal strategy tries to own all the information.
Playboy: Portals attempt to create what they call sticky content to keep a user as long as possible.
Page: That’s the problem. Most portals show their own content above content elsewhere on the web. We feel that’s a conflict of interest, analogous to taking money for search results. Their search engine doesn’t necessarily provide the best results; it provides the portal’s results. Google conscientiously tries to stay away from that. We want to get you out of Google and to the right place as fast as possible. It’s a very different model.
Playboy: Until you launched news, Gmail, Froogle and similar services.
Page: These are just other technologies to help you use the web. They’re an alternative, hopefully a good one. But we continue to point users to the best websites and try to do whatever is in their best interest. With news, we’re not buying information and then pointing users to information we own. We collect many news sources, list them and point the user to other websites. Gmail is just a good mail program with lots of storage.
Brin: Ironically, toward the end of the 1990s most of the portals started as search engines. Yahoo was the exception, but Excite, Infoseek, HotBot and Lycos began as search engines. They diversified and didn’t take searching as seriously as they should have. Searching was viewed as just another service, one of 100 different services. With 100 services, they assumed they would be 100 times as successful. But they learned that not all services are created equal. Finding information is much more important to most people than horoscopes, stock quotes or a whole range of other things—which all have merit, but searching is substantially more important. They lost sight of that. It’s why we started Google in the first place. We decided that searching is an important problem that requires serious concentration. That continues to be our focus.
Playboy: What does Google do that early search engines didn’t?
Brin: Before Google, I don’t think people put much effort into the ordering of results. You might get a couple thousand results for a query. We saw that a thousand results weren’t necessarily as useful as 10 good ones. We developed a system that determines the best and most useful websites. We also understood that the problem of finding useful information was expanding as the web expanded. In 1993 and 1994, when Mosaic, the predecessor of Netscape, was launched, a “What’s New” page listed new websites for the month and then, when more began appearing, for the week. At the time, search engineers had to deal with a relative handful of sites, first thousands and then tens of thousands. By the time we deployed our initial commercial version of Google in late 1998, we had 25 million or 30 million pages in our index. Today we have billions—more than 4 billion, in fact. That volume requires a different approach to search technology.
Playboy: How do you refine the results when there are so many websites?
Brin: We had to solve several problems. One was relevance: How do we determine if a web page relates to what you ask? Next, although many results may be relevant, which are the most relevant and the most useful? That’s something we continue to work hard on. Another important consideration is that the kinds of questions people ask have changed. They have become far more challenging and complex. People’s expectations have grown. They ask for unusual things that have a variety of associated linguistic challenges. We have to deal with all of those situations.
Playboy: Specifically, how do you deal with them?
Brin: It’s so complex—there’s not one way but many ways. We worked hard to understand the link structure of the web. It’s analogous to the way people provide references to one another. If I’m looking for a doctor in the area, I might go around and ask my friends to recommend good doctors. They in turn may point me to other people who know more than they do—“This guy knows the whole field of Bay Area doctors.” I would then go to that person and ask him. The same thinking applies to websites. They refer to one another with links, a system that simulates referrals. The web is far more expansive and broad, however, so there must be refinements to the system. We have to look at who is doing the referring. It presents a new challenge: How do you decide the importance of the links on a site? We do it with mathematical formulas that go deeper and weigh many factors.
Page: That’s a small part of how we actually link pages. It’s very complex.
Brin: We have to consider many other challenges. How do you deal with different words that refer to the same concept? How do you help people find websites in languages they understand? Can we translate pages for them? Google is all about getting the right information to people quickly, easily, cheaply—and for free. We serve the world—all countries, at least 100 different languages. It’s a powerful service that most people probably couldn’t have dreamed of 20 years ago. It’s available to the rich, the poor, street children in Cambodia, stock traders on Wall Street—basically everybody. It’s very democratic.
Playboy: Tim Berners-Lee, who designed the World Wide Web, worried that commercial content would prevail on the Internet, pushing aside open and free conversation and information from individuals. Does Google have a bias toward commercial websites?
Brin: One thing that’s important to us is the distinction between advertising and pure search results. We make it clear when something is paid for. Our advertising is off to the side and in a couple of slots across the top. Ads are clearly marked. There’s a clear, large wall between the objective search results and the ads, which have commercial influence. Other search engines don’t necessarily distinguish. Beyond ads, with other search engines, payment affects the results. We think that’s a slippery slope. At Google, the search results cannot be bought or paid for.
Playboy: Will that distinction be protected after the IPO? What if your shareholders push you to accept payment for better placement in search results?
Brin: It doesn’t make sense. Why don’t you, as a magazine, accept payment for your articles? Why are advertisements clearly separate?
Playboy: Our editorial content retains its credibility only if it isn’t influenced by advertisers. If that line were unclear, our readers would rebel.
Page: There you go. It’s no different for Google. People use Google because they trust us.
Playboy: With search engines, however, the line between editorial content and advertisements may become less obvious than in magazines. As you note, some search engines do not clearly identify results that are paid for. How can users know the difference?
Page: It’s a problem for us because some people assume we blur the distinction as well. But people are smart. They can distinguish pure results. We will continue to make it clear.
Brin: It’s an important issue, something people should be concerned about. We’re dedicated to separating advertising and search results, and we want people to understand the distinction. The more awareness among the entire world’s people about these questions—their ability to understand results that are tainted versus those that are not—the better. It’s not enough for us to improve the search engine so it provides better results from more web pages; we must also protect it from people who attempt to manipulate the results. People try to find ways around our system, and we continue to work on the problem.
Playboy: And yet an entire industry of optimizers seeks to influence Google search results. They claim they can help companies place higher in your rankings, but sometimes they resort to treachery. How do you counteract them?
Brin: You have to distinguish among optimizers. Some do perfectly legitimate things—they’re just trying to create informative sites.
Page: They help people find what they’re looking for.
Brin: But some people do surreptitious things. They try to influence the system.
Playboy: What are some examples of new techniques people use to influence your search results?
Brin: People send us web pages to review that are different from the ones they’ll send to users. It’s known as cloaking. They’ll put stuff on their web pages that the user can’t see—black-on-black text, for example. We consider that manipulative and work to combat it.
Playboy: Playing cat and mouse like this, how can you be sure to stop them?
Page: We have a lot of people devoted to stopping them. We do a good job.
Brin: People try new things all the time. By now, the people who succeed have to be very sophisticated. All the obvious or trivial things one might think of have been done many times, and we’ve dealt with them.
Page: It’s going to get harder and harder to do these things. However, the benefits are obviously large, so some people will try to manipulate the results. Ultimately, it’s not worth it. If you’re spending time, trouble and money promoting your results, why not just buy advertising? We sell it, and it’s effective. Use that instead. Advertising is more predictable and probably more effective.
Playboy: Yet it may not carry the weight of a search that appears to be unaffected by money.
Page: Yes. So people will try, and we will continue to stop them. Eventually people may realize that it’s more efficient just to pay to promote their things, if that’s what they want to do.
Brin: That’s absolutely true, because ads on Google work. We know that when people are looking for commercial things, they use the ads. They know they’re ads and they know they’re just commercial, yet they use them.
Playboy: How do you fight Google bombing, a tactic some people use to manipulate search results by linking words? For instance, if they have their way, the query “world’s dumbest man” might lead you to the White House web page.
Brin: That’s in a different category. We call it spam but not in the sense of e-mail. People try to make political statements using search results. They want to affect the results when you search for something obscure and specific, say “French military victories.” They get tons of people to link the phrase to a website that pushes their political point of view. These queries are rare. The number of people interested in French military victories is tiny. There may be no other websites dedicated to that topic, so people create a page with the idea of controlling a message.
Page: People do it because it’s like discovering fire: “We can affect the web!” Well, you are the web, so of course you can affect it.
Brin: Typically Google bombs don’t affect people looking for information.
Page: They’re more like entertainment.
Playboy: How can you balance the more modest sites of nonprofits or consumer groups with those of enormous companies and industries? If we research a controversial topic, how can Google be certain to point us to sites that reflect both sides of an issue?
Brin: I agree that diversity of sources is a desirable goal, and in fact the results naturally tend to be diverse. We do some simple things to increase the diversity. If you check almost any topic, you will get diverging viewpoints. Everyone on any side of an issue will typically complain, though. Environmentalists will say, “Why aren’t you showing our results first?” An industrial group will say, “Why aren’t you showing our results first?” They all want to be number one. We think it’s good for us to encourage diverse viewpoints, and the search engine presents them. It happens naturally as a response to queries.
Playboy: But don’t companies with enormous budgets have the ability to pay for deep sites with lots of links and overwhelm the opposition?
Page: Actually, given the factors the search engines take into consideration, opposition groups do well in search results. For example, environmental groups tend to be very active on the Internet. That’s how they organize. They have good websites with a lot of activity. All of that is factored into the search results. Thus their sites will be prominent in the listings.
Brin: Yes. On such a search, you would likely get the best environmental sites as well as the best sites representing the industry, for two sides of the issue. I’m sure there are counterexamples, and I’m sure we could do a better job.
Page: In general we’re trying to use the web’s self-organizing properties to decide which things to present. We don’t want to be in the position of having to decide these things. We take the responsibility seriously. People depend on us.
Playboy: Yet you’ve been criticized for caving to pressure from organizations that objected to some of your search results. In one famous case, the Church of Scientology pressured you to stop pointing out a website critical of it.
Page: That was more of a legal issue.
Brin: The Scientologists made a copyright claim against an anti-Scientology site. It had excerpts from some of their texts. The counter-Scientology site, Xenu.net, didn’t file an appeal. It sort of folded. Consequently, we were forced to omit their results, but we explain what happened on the search. If things are missing from a search, we often link to websites that explain the controversies. So now, if you do a generic search on Scientology, you get a link to a site that discusses the legal aspects of why the anti-Scientology site isn’t listed. In addition, this independent site links to the anti-Scientology site. As a result, if you search for Scientology, you will be armed with anti-Scientology material as well as pro-Scientology material.
Page: A Stanford University organization has volunteer lawyers posting complaints about cases like this related to web searches. We’re able to link to this site. It’s a nice compromise. In general, though, few things get removed in this way. It’s not a practical problem.
Playboy: How did you respond when the Chinese government blocked Google because your search engine pointed to sites it forbade, including Falun Gong and pro-democracy websites?
Brin: China actually shut us down a couple of times.
Playboy: Did you negotiate with the Chinese government to unblock your site?
Brin: No. There was enough popular demand in China for our services—information, commerce and so forth—that the government re-enabled us.
Playboy: Have you ever agreed to conditions set by the Chinese government?
Brin: No, and China never demanded such things. However, other search engines have established local presences there and, as a price of doing so, offer severely restricted information. We have no sales team in China. Regardless, many Chinese Internet users rely on Google. To be fair to China, it never made any explicit demands regarding censoring material. That’s not to say I’m happy about the policies of other portals that have established a presence there.
Playboy: Which sites cooperate with Chinese government censors?
Brin: I’ve heard various things, but I don’t want to spread secondhand rumors. There is a Harvard site that lists what you can and can’t get from different places around the world.
Page: Search for “censorship” and “Berkman” and you can get the website. [Editor’s note: The website is at cyber.law.harvard.edu/home.] It has some cool programs that automatically track what is and isn’t available on the web.
Playboy: What would you do if you had to choose between compromising search results and being unavailable to millions of Chinese?
Brin: There are difficult questions, difficult challenges. Sometimes the “Don’t be evil” policy leads to many discussions about what exactly is evil. One thing we know is that people can make better decisions with better information. Google is a useful tool in people’s lives. There are extreme cases, we’re told, when Google has saved people’s lives.
Playboy: How has Google saved lives?
Brin: When people look up information in a life-threatening situation. Someone wrote that he was having chest pains and wasn’t sure of the cause. He did a Google search, decided he was having a heart attack and called the hospital. He survived and wrote to us. To help in situations like that, Google has to be quick and correct. Other people have written us with similar stories. We get postcards and pictures of them with their family. Those are extremes, but there are countless other examples. People are helped with their careers. Students are helped when they study. It’s a powerful tool.
Playboy: When someone is having chest pains and searches the web for information about them, for example, it’s essential that the information be correct. How does Google know about the veracity of a website’s information?
Brin: Similar to other media—books, magazines, whatever—you have to use judgment.
Playboy: But isn’t the Net, where anyone can put up a web page, more likely to have erroneous information?
Brin: Yes. Joe Blow can write something in a few hours, post it and it’s on the Net. It could be about neuroscience, and he may know nothing about neuroscience. More typical inaccuracies in other media are from out-of-date material. In both cases, you have to apply judgment. The Internet helps because you can quickly check a number of different sources. If I were seriously interested in something important to me, I wouldn’t just click on the first search result, read it and take it as God’s word.
Page: Which is a great thing about the Internet, because you can read information from many sources and decide. Libraries might have some of the information but probably not all—and not necessarily the most up-to-date.
Playboy: Librarians must hate Google. Will you put them out of business?
Brin: Actually, more and more librarians love Google. They use it. They do an excellent job helping people find answers on the Internet in addition to using their book collections. Finding information still requires skill. It’s just that you can go much further now. Google is a tool for librarians just as it’s a tool for anyone who wants to use it.
Playboy: Much has been made of the fact that Google has now become a verb. When did you begin to fathom the scale of Google’s success?
Page: I don’t remember exactly. Pretty early on I saw a newspaper story about Googling dates. People were checking out who they were dating by Googling them. I think it’s a tremendous responsibility. If you think everybody is relying on us for information, you understand the responsibility. That’s mostly what I feel. You have to take that very seriously.
Playboy: Are you still surprised by the ways people use Google?
Page: We hear surprising stories all the time. The amazing thing is that we’re part of people’s daily lives, like brushing their teeth. It’s just something they do throughout the day while working, buying things, deciding what to do after work and much more. Google has been accepted as part of people’s lives. It’s quite remarkable. Most people spend most of their time getting information, so maybe it’s not a complete surprise that Google is successful.
Playboy: Though you have cataloged 4 billion websites, there are more than 10 billion, and the number grows each day. Is it possible for Google to catch up and keep up?
Page: We have to. The increasing volume of information is just more opportunity to build better answers to questions. The more information you have, the better.
Playboy: Yet more isn’t necessarily better.
Brin: Exactly. This is why it’s a complex problem we’re solving. You want access to as much as possible so you can discern what is most relevant and correct. The solution isn’t to limit the information you receive. Ultimately you want to have the entire world’s knowledge connected directly to your mind.
Playboy: Is that what we have to look forward to?
Brin: Well, maybe. I hope so. At least a version of that. We probably won’t be looking up everything on a computer.
Playboy: How will we use Google in the future?
Brin: Probably in many new ways. We’re already experimenting with some. You can call a phone number and say what you want to search for, and it will be pulled up. At this stage it’s obviously just a toy, but it helps us understand how to develop future products.
Playboy: Is your goal to have the entire world’s knowledge connected directly to our minds?
Brin: To get closer to that—as close as possible.
Playboy: At some point doesn’t the volume become overwhelming?
Brin: Your mind is tremendously efficient at weighing an enormous amount of information. We want to make smarter search engines that do a lot of the work for us. The smarter we can make the search engine, the better. Where will it lead? Who knows? But it’s credible to imagine a leap as great as that from hunting through library stacks to a Google session, when we leap from today’s search engines to having the entirety of the world’s information as jus,

T. Boone Pickens, January 2007#

T. Boone Pickens, dressed in an army-green hunting jacket with fluorescent orange patches, raises a shotgun to his shoulder. A pair of bright-red clay pigeons shoot skyward and Pickens blasts one, exploding it into a million pieces. The preeminent corporate raider and oilman is warming up with guests before they head out on the morning’s quail hunt.
After shooting, Pickens, hiking along a stone path at his Texas panhandle ranch, is literally walking on his next fortune—that is, if he turns out to be right, as he has so often been in his life. “The hydrocarbon era is ending,” the 78-year-old tycoon says. The hottest commodity of the next century? Water. Pickens not only owns the abundant ground-water under him, but he controls the rights to 320,000 acre-feet of it in the area.
Water may be his latest venture, but Pickens’s enormous (and growing) fortune comes mostly from energy. In 2005 BP Capital—his private investment firm, which invests billions of dollars in alternative energy, energy-related companies and oil, natural-gas and petroleum product futures—did so well, claims Pickens, that his staff of 25, including 10 traders and analysts, split $50 million in bonuses. According to Forbes magazine, Pickens’s personal worth has reached $2.7 billion.
Pickens has been a business legend since the 1980s, when he became notorious as a corporate raider. Fortune called him “the most hated man in corporate America” during the period when his former company Mesa Petroleum made hostile takeover bids for Gulf Oil, Phillips Petroleum, Unocal and other companies. His efforts often turned his quarry around and in the process made Pickens rich.
A Republican, Pickens twice explored running for governor of Texas. In the most recent presidential election he gave more than $5 million to conservative groups, including the one behind the infamous Swift-boat ads against John Kerry. Pickens has recently emerged as a leading philanthropist, ranking fifth in the nation in 2005 in individual generosity, according to The Chronicle of Philanthropy. He made one of the largest individual donations to Hurricane Katrina relief.
Pickens is from Holdenville, Oklahoma, and his father gambled on oil leases. The family moved to Amarillo, Texas, where Boone was a high school basketball star. In 1951 he graduated from college with a degree in geology and went to work for Phillips Petroleum. In 1956, with $2,500, he started Mesa.
Thrice divorced, Pickens has five children. In 2005 he married Madeleine Paulson. In November it was reported that Pickens’s son Michael, 52, had pleaded guilty to stock fraud and was facing jail time. Though in our interview Pickens agreed to generally discuss his relationships with his children, he declined to comment about the incident.
With gasoline prices hovering around $3 a gallon and oil passing $50 a barrel—which Pickens predicted when most analysts said it was improbable—we sent Contributing Editor David Sheff to meet with the tycoon. Sheff reports, “The interview took place in Pickens’s Dallas office, on his jet and at Mesa Vista Ranch. He gave a tour of the place, which includes seven miles of lakes and streams he has dug, a pair of mansions (one incorporates a hunting lodge), two gyms and roaming deer, quail, elk, turkeys and antelope. During construction, Pickens didn’t like seeing a road from a porch so he diverted it with a $1 million bridge, yet as we left each room he was preoccupied with turning out the lights.
“A fitness nut—he often travels with a personal trainer—Pickens, though silver haired, looks a decade or two younger than his years and maintains a schedule that would exhaust most teenagers. Throughout the interview he frequently checked a nearby computer monitor flashing with his company’s equity and commodities portfolio.”
 
Playboy: Overall, how are you doing this year?
Pickens: [Checking the computer screen] The equity fund is up 24.23 percent. We have made $243 million. The commodity fund is up 124.97 percent. That’s up $492 million. Of funds of more than $500 million we’re probably number one in the United States in the hedge-fund business. We’ve been in business for more than five years, and we’re up 687 percent.
Playboy: Do you invest only in energy?
Pickens: We’re 100 percent energy. Our commodities are all oil, gasoline, natural gas and heating oil. The equities are all listed high- and mid-cap energy companies. Energy is what we know. We’re about five feet wide and 50 feet deep.
Playboy: Are you currently bullish on oil?
Pickens: Uh-huh. We have capped out on the oil supply. Meanwhile the market continues to grow. If the market grows, the price goes up. I’m not an economist, but I can understand that much.
Playboy: But are we capped out? What about untapped reserves?
Pickens: What untapped reserves? We’re currently getting 85 million barrels of oil a day worldwide and using it all. We won’t be getting more.
Playboy: Are you saying there are no new sources of oil?
Pickens: You’ll find more oil, but you’ll also have declines in older fields. Eighty-five million barrels is about it. Playboy: Where is the price of oil going?
Pickens: I don’t think we’ll ever see $50-a-barrel oil again.
Playboy: How high will it go?
Pickens: I have said we’d see $80-a-barrel oil before the end of this year. If you take Iranian oil off the market—or Nigerian or Venezuelan or Saudi—anything of that magnitude could send the price to $100 a barrel.
Playboy: But are you predicting $100?
Pickens: At some point. Even without a dramatic event, even with normal growth, at some point our demand will be greater than the supply. We have a lot of oil in storage right now, so we’ll pull that out. But 85 million barrels a day is all the world can produce.
Playboy: What happens when we run out of stored oil and the world needs more than is produced?
Pickens: The price will just get higher and higher until it chokes the demand, which is a good thing. I’m amused when I hear politicians say they want to get the price of gasoline down. No, you want to get it up.
Playboy: Most people, not only politicians, want cheaper, not more expensive, oil.
Pickens: High prices will get us to stop using so much. Then we will transition to alternative fuels.
Playboy: If oil were to reach $100 a barrel, how much would a gallon of gas cost at the pump?
Pickens: At $60 it was $2.50. At $100 gas would be about $4.50 a gallon.
Playboy: At what point will people use less?
Pickens: Some people are already using less. I was amused last year when the price first got up to $3. In USA Today a woman said, “I’m going to start cutting my trips to the grocery store down from five a week to three.” I thought, Bully. That’s good. You don’t want to be wasting. The way you cut out waste is to get the price up so people start to conserve.
Playboy: Won’t many Americans be hurt if they have to pay $4.50 a gallon for gasoline?
Pickens: When you look around, we still have the cheapest gas in the industrialized world. Cheap gasoline encourages use. If the price gets up, people will carpool. When they do they cut out pollution and they’re not so dependent on foreign oil.
Playboy: In his most recent State of the Union address, President Bush said, “America is addicted to oil.” Is it realistic to think price will slow our consumption? A large part of the economy runs on oil.
Pickens: There’s no question we’re addicted to oil. We’re using more than 20 percent of the oil produced every day in the world, and we have less than five percent of the population. We’re importing 60 percent of our oil right now.
Playboy: As an oilman, however, don’t you want people to use as much oil as possible at the highest price?
Pickens: I want us to find alternative fuels. I want us to be oil independent. I like the corporate average fuel economy standards. I support all that. I support hybrids.
Playboy: Do oil companies want people driving Priuses?
Pickens: Maybe not, but there’s no question there will be more and more of them. In 2005, 200,000 hybrids were sold in the United States. Who would have predicted that? Hybrids are just one of the things on the way.
Playboy: What do you think of hybrid cars?
Pickens: They’re fine, but I don’t want one.
Playboy: Why not?
Pickens: I’m just not interested.
Playboy: At our current rate of use, when will we run out of oil?
Pickens: We’re halfway through all the oil in the world. We have produced about a trillion barrels, and there are probably about a trillion barrels to go. We will have lived in the hydrocarbon era, starting in 1900 with the automobile, and oil will be pretty much gone by 2100. Look at what we have done to the atmosphere—the greenhouse gases. Look at the emissions we put out in the first hundred years of the hydrocarbon era. It may be that the ultimate cleanup is just to run out of it.
Playboy: You sound like an environmentalist, yet most environmentalists would consider you one of the bad guys.
Pickens: Why am I a bad guy?
Playboy: Even as you’re pushing alternatives, carpooling and hybrids, you’re invested in oil, and you have been in the oil business most of your life.
Pickens: I consider myself an environmentalist, but I can still be an oil producer. As dependent as we are on oil, we can’t just shut it all down. That doesn’t mean I don’t practice protecting the environment. At the same time, I don’t complain about environmentalists, though they’re a bit strong sometimes.
Playboy: How do you respond to the charge that oil companies have been gouging consumers?
Pickens: I don’t stump for major oil companies, but they don’t sit down and try to figure out how to gouge consumers. That isn’t their business.
Playboy: Yet pump prices soar and they make record profits—some would say obscene profits.
Pickens: They make a lot of money, no question about it, but go back and look at all the money they’ve lost at different times, when oil prices were $10 a barrel instead of $60 a barrel.
Playboy: The oil companies pushed to open the Arctic National Wildlife Refuge to drilling. Do you support that?
Pickens: I’d be real surprised if ANWR produced a million barrels a day, so it doesn’t do that much for us.
Playboy: But would you open it?
Pickens: My problem with that is the people in Alaska should have the right to say what happens to their state. I would let the Alaskan people decide what they want to do.
Playboy: What are the most feasible alternatives to oil? Are you optimistic about liquid hydrogen?
Pickens: It won’t be hydrogen. People have about quit talking about that. We’re in the natural-gas fueling business. We’re the biggest in the business. Within the next two years the company will probably have a market cap of something like $1 billion. It’s growing about 25, 30 percent a year.
Playboy: What makes natural gas better than gasoline?
Pickens: On average it’s 30 percent cheaper. It’s domestic. On key pollutants it burns up to 86 percent cleaner than gasoline. It’s cleaner at a time of global warming. There are no oil spills with natural gas. You have no underground tanks that could leak.
Playboy: Do you predict a time when we’ll drive our cars on liquefied natural gas?
Pickens: You can now. If I lived in California, I’d be on natural gas in my personal car because you can drive in the carpool lane with just one person in a car when that runs on natural gas. Same with hybrids. I’d do it just for that reason.
Playboy: Are you trying to convince people to convert?
Pickens: We’re starting with things like trash trucks.
Playboy: Why trash trucks?
Pickens: One regular trash truck has the same emissions as 325 cars, so this is a fabulous use of the fuel. Of the nearly 2,500 buses in the L.A. transit authority, more than 2,100 of them are on natural gas.
Playboy: If it’s cheaper, cleaner and domestic, what’s preventing it from replacing gasoline for cars?
Pickens: The infrastructure isn’t in place yet, though we have more than 750 refueling stations for public use. Playboy: Can we currently drive across the country on LNG?
Pickens: You could. You’d have to know where to fuel. We don’t recommend it at this point.
Playboy: For driving mostly in urban centers, does LNG make more sense than an electric car?
Pickens: Electric is a lot more expensive than gasoline, diesel or natural gas, and the battery life has not been very long. You turn on the windshield wipers and the air conditioner at the same time and lose 20 miles an hour. Playboy: Is it expensive to convert a car to natural gas?
Pickens: It’s expensive, but you can also buy new vehicles. In the United States, Honda makes a Civic that runs on natural gas. You can also get a wide range of new GM and Ford vehicles converted to natural gas through the dealers. Around the world, almost every major vehicle manufacturer offers natural-gas models.
Playboy: If we come to rely on natural gas, aren’t we simply setting ourselves up for another disaster because natural gas is limited too?
Pickens: Overnight you could have LNG vehicles in people’s hands. Oil imports would go down. But yes, though the initial supply is domestic, 20 years from now we would be importing LNG and be dependent again. So what do we do? In the coming years we’ll continue to develop alternatives and learn to conserve. We have to. In the meantime, if we develop a second infrastructure, we will be using cheaper and cleaner domestic fuel.
Playboy: From which you would profit handsomely.
Pickens: The reason I’m into it is I think it’s the way to go. I have thought so for a long time. Currently, of all the oil produced daily, about 75 percent goes for transportation. Natural gas can have a big impact on that. About 50 percent of today’s power generation in the United States is from coal. That’s going to get higher—and it should. Coal can be burned more cheaply, and we have a lot of coal in the United States. About 20 percent of power generation is nuclear, and that should grow too. Twenty percent is natural gas, and that’s the most expensive power generation you have. It’s getting squeezed out of the market, as it should. It will go into transportation fuel.
Playboy: With increased reliance on nuclear power, would you worry about accidents like those at Chernobyl and Three Mile Island?
Pickens: No one that I know of has been lost in a nuclear accident in the United States. I’m not concerned about it. I think the Chinese have 15 to 20 nuclear plants in development or under construction right now. They’re working hard to compensate for what they believe to be a scarcity of energy. I’m not so sure we’re working nearly as hard on the problem as the Chinese are.
Playboy: Are you investing in other alternative energies?
Pickens: We were in wind for about three or four years, but I was never really enthusiastic about it.
Playboy: Are you invested in ethanol?
Pickens: No. It never seemed realistic to me because it has to be so heavily subsidized. I don’t know whether you can raise corn crops and turn them into ethanol without subsidies. Anyway, I’m an oilman. I’ve been in it for 50 years, and it’s hard for me to make a switch.
Playboy: What about biodiesel or solar technologies? Are you investing in any of those businesses?
Pickens: No, but people will move more and more into those.
Playboy: Would you simply let the market raise prices or would you do something else to encourage people to convert to alternative fuels?
Pickens: I’m not sure it isn’t a good idea to put a tax on gasoline to push the price up and kill the demand.
Playboy: That’s the last thing a Republican administration would do.
Pickens: No, I don’t think it’s in the cards. But you asked what I would do.
Playboy: But a gasoline tax is regressive, hurting the poorer people.
Pickens: I just think the price for gasoline should be higher. Demand should be killed and conservation enforced.
Playboy: Is this an issue on which you diverge from the majority of Republicans?
Pickens: It’s not something politicians like to talk about—Republicans or Democrats. You yell “tax” and everybody runs under the table.
Playboy: If we don’t cut down on use, do you predict more gas shortages, along with the high prices? Will there once again be lines at gas stations?
Pickens: I’m not predicting that’s going to happen, but the ingredients are all in the mix. The lines before were caused by an unusual shock. We’re talking about a gradual transformation now. If there were a worldwide recession in 2007, it would kill the demand for a period of time, but recovery would come, and demand would come with it. I’d rather get everybody prepared before we have a crisis.
Playboy: How do you respond to the charge that oil companies have stopped the innovation that would lead to the creation of alternative fuels?
Pickens: I think it’s true. I don’t think the major oil companies want to see a second infrastructure developed for transportation fuel, meaning natural gas competing with gasoline and diesel.
Playboy: But like you, aren’t they heavily invested in natural gas?
Pickens: The major oil companies probably own 60 percent of the gas reserves in the United States.
Playboy: Then why would they resist?
Pickens: I’ve had a hard time understanding that. The current system works, and the oil companies don’t want it to change. You’re talking about careers built on oil. They don’t want a new infrastructure. They’re doing fine with the one we have. They have a lot of control now.
Playboy: How powerful are the oil companies when it comes to U.S. foreign policy? How do you respond to people who are convinced we attacked Iraq for its oil?
Pickens: We didn’t go to Iraq for oil. We don’t get that much oil out of Iraq. I don’t even think it was a factor.
Playboy: But as you point out, we need all the oil we can get.
Pickens: People can come up with all kinds of theories. I’ve found that many people know very little about what they’re talking about. They’re conspiracy types.
Playboy: How is the world market for energy changing?
Pickens: There’s going to be a greater demand. China is very aggressive in the market right now. The Chinese are buying oil reserves around the world. I first thought they were nothing more than tire kickers, but they’re much bigger than that.
Playboy: What are the implications of a joint China-Russia energy collaboration that would include pipelines for natural gas and one for oil?
Pickens: We don’t have a state-owned oil company. Seventy-five percent of the oil reserves are now held by state-owned oil companies, and we don’t have the reserves for something like that. We’re left out because we have produced most of our oil reserves. The Chinese will deal with anybody and everybody to nail down oil. If it’s good business for them, they should do it. How will it impact us? We’ll see. It probably just means a more competitive market for energy—higher prices and all that. It all means we should do what I’m advocating: conservation and alternative sources of energy.
Playboy: Were you concerned when a company largely owned by the Chinese government tried to buy Unocal?
Pickens: It was meaningless.
Playboy: Obviously many Americans, including legislators, disagree that it was meaningless.
Pickens: It was a question for stockholders, not politicians. The stockholders made the investment. If the Chinese were willing to pay more for Unocal than Chevron was, the shareholders should have decided, not some guys in Washington.
Playboy: Many people felt that a Chinese company shouldn’t own an American oil company or that a Dubai company shouldn’t run America’s ports. Do you disagree?
Pickens: I think it’s meaningless. In the case of Unocal, 60 percent of its production is in Asia. It doesn’t make any difference, and people are demagoguing in speeches that all this and that is going to happen to us. Nothing is going to happen to us. When China backed out of the Unocal deal, I think the shareholders may not have gotten the best price.
Playboy: Which is more important: the shareholders’ interest or the national interest?
Pickens: This had nothing to do with the national interest. It’s business. These companies are owned by shareholders.
Playboy: Your other major new business is water. Is water the next oil?
Pickens: I don’t see it that way. It’s a resource.
Playboy: Then how is it unlike oil?
Pickens: Oil isn’t renewable. Water is. Our project has a life of 200 or 300 years. It will be a $2 billion to $2.5 billion project.
Playboy: The plan is to pipe panhandle groundwater—which is under your and your neighbors’ ranches—to water-hungry cities such as Dallas. What are the major obstacles?
Pickens: We just have to find our first customers. It’s a project that will happen, but I’m not in any big rush. As with natural gas, the longer you wait without selling it, the more valuable it becomes.
Playboy: At some point, however, are there pressures to cut your losses?
Pickens: I always say, “Don’t rush the monkey and you’ll see a better show.”
Playboy: Can you understand how some people would resent that you or another individual owns a resource such as water?
Pickens: If you own the surface, you own the groundwater. That’s just the way it is.
Playboy: Within the greater scheme of your businesses, how significant is water?
Pickens: To date I’ve got $80 million in the project. I consider it to be a long-term investment. It’s only one of our businesses but an important one. I think it’ll do pretty well for us.
Playboy: How would you describe your management style?
Pickens: I would have been a good coach. Here you get it thrown at you fast. You’re in on so many deals, it’s like putting an 18-year-old on a battlefield. If he can survive 90 days, he’s a veteran. All it takes is somebody shooting at you. Here you eat what you kill. Everybody has to produce.
Playboy: Why would you have made a good coach?
Pickens: I think I’m inspirational.
Playboy: Would you have made a good politician?
Pickens: I looked at running for governor in 1990 and 1994. I wasn’t cut out for it. I’m not one for consensus in decision making. I operate by committee now, but it’s a select committee. I can sit down with people who I know are working in the same direction, but it becomes so political. Then come the demagogues. I don’t believe I could handle that.
Playboy: Do you regret not running?
Pickens: I don’t look back and think, Oh gosh, I wish I’d have done that. I look back and think, Thank God I didn’t.
Playboy: It didn’t stop you from being involved in politics.
Pickens: No, I do my bit. I’m always interested.
Playboy: Who do you consider the greatest president of your lifetime?
Pickens: Ronald Reagan. After Jimmy Carter we didn’t have a good opinion of ourselves. Reagan came in and restored that pretty quickly. He made speeches that gave me goose bumps. He played to the entrepreneur in every American. What is it we have going on around the world today? Just exactly what Reagan promoted: democracy, entrepreneurship, free markets. Those are things he stood for, simple values that mean so much to people.
Playboy: Critics cite the enormous debt he left.
Pickens: The debt he ran up was from winning a war with the Russians. We rebuilt our military. The Russians couldn’t stand the pace. We put a heck of a lot of money into the game, but we won and we didn’t lose any people. Playboy: Are you concerned about the administration’s domestic spying?
Pickens: It doesn’t bother me. If it helps stop terrorism, I say have at it.
Playboy: How close are you to the Bushes?
Pickens: I have known them for quite a while. I met the first President Bush, 41, back in the 1950s when he lived in Midland. I’m not a close friend. I’m not in the inner circle, but I’m a friend and supporter.
Playboy: Are you closer to the father or the son?
Pickens: George W.—I was a big supporter.
Playboy: In this past election, along with supporting Bush’s campaign, you gave millions of dollars to the group that made the controversial Swift-boat ads questioning John Kerry’s record as a hero in Vietnam. Why?
Pickens: John O’Neill, a member of Swift Vets and POWs for Truth, came to see me. He knew Kerry. He served with him in Vietnam. He said, “I know too much. I can’t let this man be president.”
Playboy: Looking back, do you acknowledge that the Swift-boat ads were misleading and unfair?
Pickens: All we did was put on his 1971 testimony before the Senate Committee on Foreign Relations. We didn’t edit anything. “Here he is. How do you like him?”
Playboy: Many people who served with Kerry said the attacks were unmerited. Even John McCain stuck up for Kerry against those ads.
Pickens: McCain surprised me. I think they were pals. Kerry let his fellow soldiers down. The POW wives I know are convinced Kerry cost their husbands one more year in the Hanoi Hilton because of his testimony. Playboy: Whether they support your view or the opposite side’s, do you agree with the tactics of political action committees that operate on soft money?
Pickens: I don’t think they ought to have it. But you play the hand you’re dealt. George Soros was pouring money in on the other side.
Playboy: Would you support campaign-finance reform?
Pickens: Yeah, go ahead and shut it down. I don’t like it. But for now, just tell me what the game is, throw the ball up in the air, and I can play that game.
Playboy: How do you describe the difference between George W. and his father?
Pickens: Forty-three makes up his mind and he pulls the trigger. Forty-one had to have everything under study.
Playboy: It sounds as if you prefer the current Bush.
Pickens: Yes.
Playboy: Is your relationship with him such that if there’s something going on in the country you feel strongly about, you would get him on the phone?
Pickens: Can I just pick up the phone and call the White House and get him on? “You know, he is taking a nap.” “Wake him up and put him on the phone.” No. But I could talk to him if he knew I was calling.
Playboy: You have hunted with Vice President Dick Cheney; what was your reaction to his hunting accident? Pickens: It could have happened anywhere.
Playboy: Have you ever been in a situation in which an accident like that happened?
Pickens: I haven’t, but I’ve seen people get some shot in them. It can happen. It’s not that far-fetched.
Playboy: A long list of companies have ended up on the wrong side of the law, including Enron, Tyco and WorldCom. In the 1980s you railed against corruption and mismanagement in corporate America. Is it any better now?
Pickens: There will always be crooks, but most chief executives in corporate America aren’t trying to take advantage of anybody.
Playboy: How would you solve the problems in corporate America?
Pickens: You just need boards of directors that answer to shareholders instead of management. How do directors get on the board? Management picks them, so they’re beholden to management. I think that’s bad. Still, boards of directors today are a lot more responsive to shareholders than they have been in the past. There are plenty of laws; just carry out the laws we have. If you have the right directors, they’ll keep the deal running straight.
Playboy: Were you surprised by the Enron trial verdicts?
Pickens: I wasn’t. But it’s important to remember Enron was an exception. Things in general are better at most companies. Most companies are run to maximize the return for shareholders, which is how it should be.
Playboy: You haven’t always been popular for pushing shareholders’ interests. 
Pickens: I was praised by the shareholders. It was the managers who didn’t like me. They called me a raider. Playboy: You were a raider.
Pickens: A raider? I changed the value of these companies, which management couldn’t do. Take Gulf Oil: When we started buying stock in Gulf Oil, it was $33. It had been $33 for 10 years. When we sold our shares back, it was $80 share. At $40 the market cap was $6 billion. At $80 it was $13 billion.
Playboy: With Gulf and other so-called raids, did you actually want to take over and run the companies, or did you make, as some charged, a hit-and-run, a tactic designed to escalate the value of the stock so you could then sell out at a profit?
Pickens: I just thought Gulf should be managed better, and there was no question in my mind that I could do a better job running the company than the guys who were doing it. I’m capable and qualified. I’ve been a builder all my life. I really thought I could take over Phillips and Unocal. I was wrong.
Playboy: At Phillips, for example, what would you have done? One big fear is that corporate raiders will break companies up.
Pickens: Why is it bad if we break them up? Our motive with Phillips was only to take out the assets that were not core, like real estate in Florida. The management had no business being in that. They had a golf course down there, and they were constantly using the company plane on Friday afternoon to entertain themselves on the company’s dime. You get rid of those kinds of things. I never had those kinds of perks at Mesa. When I used the company aircraft for something personal, I paid for it at $1,500 an hour.
Playboy: Initially, when you went after companies in the 1980s, you were viewed as a David fighting against Goliaths, but soon you were considered a pirate, and you became, as Fortune magazine said, “the most hated man in corporate America.” Did a group of companies band together and launch a campaign to discredit you?
Pickens: There is no question about that. There was a roundtable with 200 of the largest corporations in America represented. You had to be the chief executive or the chief operating officer of a company to get in. They each paid $50,000 to see the plan. One of the people who attended told me, “They’re coming after your ass.” After that, you saw stories in the media about my being a raider and greenmailer.
Playboy: Well?
Pickens: I never greenmailed anybody.
Playboy: You were accused of wanting to destroy these companies, though.
Pickens: Why would I be stupid enough to put my money in and then destroy the company?
Playboy: Why did you finally stop trying to take over companies?
Playboy: Why did you finally stop trying to take over companies?
Pickens: I couldn’t ever win.
Playboy: Do you invest at all in the Internet? Did you participate in the bubble?
Pickens: It didn’t make any sense. Something would come out at $40 and go to $100. That’s not real and not going to last. I didn’t lose anything on it. It’s hard for me to see how long anything that doesn’t make money is going to stay up in the air.
Playboy: How about now? Overall, are you bullish or bearish on the stock market?
Pickens: I don’t know. Tell me what’s going to happen in the Middle East.
Playboy: Do you have any stock picks for us?
Pickens: Suncor Energy and Canadian Oil Sands Trust, oil sands companies. We’re big shareholders in both of them. I like them because I don’t have to deal with declining production.
Playboy: Are you concerned about the lavish perks chief executives have at some companies? In your takeover bid for Unocal you went after CEO Fred Hartley for having an exorbitantly priced piano on a corporate jet. Pickens: Somehow I wouldn’t think playing a piano on an airplane would be a productive way to spend your time when you’re supposed to be running a company. It was a waste. It wasn’t something easy for him to explain, either.
Playboy: Were you ever tempted by perks like that?
Pickens: I always felt temptations were dangerous. I just didn’t go where I would be tempted to do anything I shouldn’t—and I’m talking about going out, partying, girls, all that.
Playboy: What has tempted you since you have been able to buy anything you want—if not women, jewelry? Cars?
Pickens: In the past three months I’ve bought 16,000 more acres out here. The ranch is now 50,000 acres. I realized I would get a lot more pleasure out of that than I would from 100,000 shares of Exxon. The land really needs help. We’ll restore it. We won’t have any cattle on it. What else? More houses? I have the money if I want them, but what can I do with another house? Neither my wife nor I like to be anyplace for very long, so we go to the Four Seasons. It’s three or four nights, you pay the bill and leave. If you buy a place, you have responsibility for it. I don’t want that. My life is pretty streamlined. I have all the bird dogs. We’re buying some more Labs. Do I spend a lot? Yes, but I don’t shop.
Playboy: We won’t see you at a mall?
Pickens: No. I do my clothes a couple of limes a year and wrap it up pretty quick. We own a G4.
Playboy: What do you drive?
Pickens: My wife ragged me on that something terrible. For years I drove an old BMW. I wouldn’t spend 15 minutes to go look at some jewelry or a car. My wife was absolutely frantic to get me a new car. She finally got me a new Mercedes.
Playboy: Besides the new car and improving and expanding the ranch, what else do you spend money on?
Pickens: It’s not like I have lots of hobbies. I try to keep in good shape.
Playboy: What’s your exercise regimen?
Pickens: I’ve got a trainer, and I do weights and the aerobic deal on a treadmill.
Playboy: You have said, “I don’t want to grow old and feel bad.”
Pickens: We practice what we preach. Mesa won first place in the nation—the most physically fit company—from the President’s Council on Physical Fitness and Sports.
Playboy: You have said you’ve suffered from depression. Do you still?
Pickens: No, but in the 1990s I couldn’t gel anything to work.
Playboy: Was it difficult to admit?
Pickens: I didn’t think my being depressed was something my grandmother and mother would go for. We’re not complainers. If you were sick—“I can’t go to school today”—the first thing my mother would do was stick a thermometer up your ass. “Do you have a fever? If you do, you can stay home.” “No, I’ll go.” So I wasn’t admitting anything was wrong. My lawyer said, “You need to go see somebody.” I read in The Wall Street Journal that four things can cause depression. One is the death of a family member. Well, I lost my best friend; he was killed in a car accident. Second is your business not doing well. I admit that. The third one is moving from your home. And I did that. The list may have had divorce, too. I had every one of them.
Playboy: Before your lawyer told you, did you sense something was wrong?
Pickens: I knew something was peculiar. I didn’t know what it was. I thought it would clear up.
Playboy: What happened when you went to the doctor?
Pickens: He asked a lot of questions, and I was fitting the pattern. “Do you sleep well?” “No.” “And are you tired all the time?” “Yeah.” “Do you enjoy being with people?” “No, not really. In fact, I don’t want to be with people,” which is not my personality. I just think I hit a bad spot and couldn’t get out of it‚ sort of like running into a mud hole, sticking, and you can’t get moving.
Playboy: What helped?
Pickens: I did antidepressants for about 30 days, and everything started clearing up in my life. The things I felt I couldn’t change were starting to change. I think one thing that kept it less severe was the fact that I exercised.
Playboy: Did you consider retiring?
Pickens: A friend was asked if I would retire. He said, “Boone’s doing what he wants to.” He said, “The way I’d retire would not suit Boone at all. He would be bored to death.” I thought, Well, that guy has watched me pretty closely.
Playboy: Why are you still working? You could be off playing golf. You could be shooting quail.
Pickens: What I’m doing is saving my life. I love to work. I never have a boring day. I don’t get so wrapped up in any one project that it just shuts out everything else. I must have ADD. I really think I do. I switch from one thing to another with ease.
Playboy: Do you have any health problems?
Pickens: I took this physical, and my doctor called and said, “I’ve got some good news and bad news.” He said, “You’re going to live to be 114, but you won’t be able to hear or see.”
Playboy: Would you want to keep going if you couldn’t hear or see?
Pickens: No, probably not.
Playboy: How do you shoot quail with poor vision?
Pickens: I see double, but I’ve adjusted. I don’t think about it.
Playboy: You married again at the age of 77. Were you reluctant to?
Pickens: I didn’t think I’d ever get married again. If I hadn’t met Madeleine, I’m not so sure I would have.
Playboy: Is it true you wrote to your children and admitted that you were not always the best father and you would like to have a better relationship with them?
Pickens: At Christmas 1999. I saw time escaping and relationships not building. So I thought, Let’s see if we can get the ball moving.
Playboy: Do you regret not being a better father?
Pickens: I think I was a good father. I coached the kids’ teams and took them to the slopes and skied with them. But I wasn’t perfect. I required a high level of performance and all the other things that were tough on them.
Playboy: How did your children respond to your letter? Are you closer now?
Pickens: Some responded and hopefully some maybe still will. It’s not what you wanted, but you feel as if you did everything you could to make it right and maybe it would have been one big, happy family, and it didn’t work out that way.
Playboy: Will you pass along your wealth to your children?
Pickens: My estate will basically go to charity.
Playboy: Why won’t you give your money to your children?
Pickens: It doesn’t do them any favors. If my kids are going to be rich, they’re going to make the money. It won’t be because of an inheritance.
Playboy: How do you choose the charities to which you give?
Pickens: I’ve got people who work on that. They screen requests. Then I’ll say, “Okay, have a meeting.” If they jump that hurdle, I’ll meet with them. We want to know how much of the money goes to what they say it does. We screen them and follow up.
Playboy: When Ted Turner pledged $1 billion to the United Nations, he called on the wealthiest Americans to follow his lead and give more money to charity. Did he inspire you to give more?
Pickens: I know Ted, and I couldn’t agree with him more, but I didn’t need to be inspired. If I’ve got it, I’ll give it.
Playboy: You gave nearly $7 million to Hurricane Katrina victims and $165 million to your alma mater. How do you reconcile those two figures? Didn’t Katrina victims need that money more than a college did?
Pickens: It’s what I wanted to do with my money. That’s my answer. I thought I made a nice gift to Katrina survivors and a nice gift to my university. I went to school at Oklahoma State. I want it to be competitive. If the athletic program is competitive, it helps the academic programs, too.
Playboy: When you gave the money, The New York Times reported that no cash actually changed hands‚ you still have the money.
Pickens: It did change hands. It was wired to Oklahoma State University, and they wired it, plus $35 million, back to us 24 hours later to put into our hedge fund. We take no fees on that money. That’s an important point—we manage the money for them and take no fees. It’s all the school’s money. There wasn’t anything strange about it. George Soros was generous to the school he founded, Central European University, and the funds he gave went right into his Quantum fund. It’s not uncommon. There is one big difference: He does take out fees, as far as I know. If I had taken fees, they would have been $8 million to $10 million this year.
Playboy: Famous billionaires such as William Randolph Hearst and Howard Hughes became isolated and increasingly eccentric at least partly because their every whim was catered to. Could that happen to you?
Pickens: I think I’m the opposite. I get around a lot. I’m with people. I’m not isolated, and it’s not like everybody’s telling me what I want to hear.
Playboy: We assume that paying the electric bill is not a problem, yet you seem obsessed with going around the house and shutting off lights.
Pickens: I was staying with my grandmother one time, and she said, “Sonny, next month I’m going to give you the electric bill.” I didn’t know what she was talking about, and I said, “What do you mean?” She said, “Well, apparently you don’t care about the cost of electricity, because you leave lights on in the room you leave.” It made all the sense in the world. Why waste power? I’m sensitive to that.
Playboy: What does it mean to you that you have made more money in your 70s than you did in the first 69 years of your life? Do you attribute it to your attitude, your physical health, luck or talent?
Pickens: Some of all that. I stay on top of things.
Playboy: What do you read?
Pickens: I don’t see as well as I used to, so my reading is not as fast. It takes me longer. But I read The Wall Street Journal and The Dallas Morning News.
Playboy: Do you use the Internet?
Pickens: Can’t do it. I enrolled in a class five years ago, and then something happened and I never even made the first meeting. Fine. I’m very well satisfied with what I do, what my production is. I’m never stressed, and I have a low heart rate. I feel I’ve been lucky enough to be given all these things, so it’d be a shame if I didn’t make use of them.

Richard Branson, January 2009#

The economic crisis of 2008 was unprecedented. Formerly stalwart companies, including AIG, Lehman Brothers and Washington Mutual, disappeared or needed government funds to stay afloat. The prices of stocks, oil and gas fluctuated wildly. The worldwide credit crunch choked businesses and individuals. This hasn’t been a time for fainthearted businessmen, yet Richard Branson, the founder and chief of one of the U.K.’s largest private groups of companies, Virgin Group, continued to run his $23 billion travel, leisure, telecom and finance conglomerate as if it were a start-up. Branson’s an unconventional chief executive who owns Virgin’s more than 200 businesses without flowcharts or meetings. Though he has a pool of secretaries, he keeps his appointments in a dog-eared paper diary and scribbles ideas and phone numbers on his hand. He spends an enormous amount of time talking to and sometimes even hanging out with his employees.
Branson’s Virgin is unlike any other company in the world because the boss is unlike any other. His companies—a bevy of Virgins that includes Virgin Atlantic, Virgin Drinks, Virgin Megastores, Virgin Mobile and the newly launched Virgin America airline—do everything from marrying people and selling them vodka and phones to putting them up on a private island and massaging them as they fly across oceans. Perhaps most unusual for a modern CEO, Branson seems to be having fun. Rarely does a day go by without a Virgin-related party or some publicity stunt, such as when he startled passengers on a 747 by appearing in a stewardess’s uniform or slogged down another jet’s aisle, wearing a wet suit, mask and snorkel. His widely read business books have titles like Business Stripped Bare and Screw It, Let’s Do It.
Branson’s personal wealth totals at least $5 billion, and Virgin is expanding seemingly daily into new businesses, including recent U.S. additions like Virgin Money, a financial-services company, and Virgin Charter, an online marketplace for private jets. In the past 20 years he has taken over the failing British railway system, presided over the opening of a hundred Virgin Megastores, opened dozens of Virgin Active health clubs, launched V2, a new music label, and expanded Virgin Atlantic’s international services. Branson has also fulfilled a dream to start a U.S. airline. Virgin America is a year old and has already been named best domestic airline by Travel and Leisure magazine.
It all began with a magazine for students that Branson founded when he was 16. To keep the literary venture afloat, Branson started a mail-order discount records business, which led to a record store, the first Virgin. Branson soon had a goal: to cover the earth in everything Virgin, his ubiquitous brand of travel, entertainment and almost every other type of goods conceivable. Now the earth is no longer a limitation. Branson plans to move into space with Virgin Galactic, which will offer tourist flights into the upper atmosphere and, eventually, a space hotel.
In addition to his businesses and stunts, Branson is known for being an adventurer who has broken world records in ballooning and sailing. He made four attempts to circumnavigate the globe in a hot-air balloon. In one of them, his balloon plummeted out of control in the Algerian desert; the previous time he almost died over the ocean. With his two children Branson recently set out to break the record for a transatlantic crossing between New York and England on the Virgin Money, a 99-foot yacht. They failed.
Contributing Editor David Sheff, who last interviewed Daniel Craig, cornered the tycoon for an unusual conversation. “I’ve interviewed many billionaires and business titans,” Sheff reports, “and have come to expect that CEOs and other extremely successful businessmen tend to be short-tempered and even tyrannical bosses. But Branson’s employees praise him as a genuinely nice guy who inspires rather than berates his staff. We discussed a wide range of issues, from the economic crisis to his burgeoning empire and his business philosophy, to the energy crisis and the ailing airline industry. He also predicted a first: space sex.”
 
Playboy: This year has arguably been the most traumatic for the world economy since the Great Depression. How has Virgin held up?
Branson: About two years ago we began to sense problems with the banks related to credit. As far as we were concerned, those problems were a warning that things could ricochet throughout the whole system. At the time, we sold all our public shares of non-Virgin companies. As a result we weren’t invested in the stock markets, and Virgin was in a better position than most companies when things began to unravel. Our companies are extremely well funded. We have strong cash positions. Virgin Atlantic alone has $1.5 billion in cash.
Playboy: On what do you ultimately blame the crisis?
Branson: Greed and a lack of regulation. It’s stunning to think that the combination could bring the world to a precipice. It’s unbelievable that the institutions gambled to such an extent. It’s not surprising they lost the gamble.
Playboy: When banks like Washington Mutual, brokerages like Lehman and insurance companies like AIG began going under, were you surprised?
Branson: No one realized the problem was as widespread and fundamental as it was. I didn’t know the degree to which regulators had no checks and balances on banks. Also, I didn’t know the greed had gotten completely and utterly out of hand.
Playboy: Did you support government intervention?
Branson: Something had to be done, though I hate the idea of bailing out the people who got us into the mess. Those people certainly didn’t bail out the individuals and small businesses that got into trouble and couldn’t pay back their loans. On the other hand, those companies put so many jobs at risk that something had to be done. They put the world at risk, so a bailout was necessary. I just hope we learn. If nothing had been done, we would have been talking about a 1929-like crash. Even with a bailout, things remain uncertain. Some banks never got caught up in speculation and risk. They were conservative and didn’t get drawn in. In England, Lloyds TSB didn’t. It had been criticized for conservative, steady profits but became the biggest bank in England by taking over HBOS, which did get carried away.
Playboy: What happens next?
Branson: Of course we don’t know. A recession is quite possible. We’ll see. I don’t envy the new president having to sort it out. Hopefully, we’ll learn so nothing like this ever happens again. Hopefully, the regulations will be in place.
Playboy: How vulnerable is Virgin to a recession?
Branson: We’re pretty strong. Compared with many companies, we’re in a good position to weather it.
Playboy: But won’t people travel less and spend less on everything you sell?
Branson: Yes, but other things will shift. If there’s less demand, the price of oil comes down, for example. It’s a natural hedge that can help us as a company to balance expenses if fewer people are traveling. We’ve been through 9/11 and other global crises before and never had a company go bankrupt. There may be less business out there, but there’s also going to be less competition. I think we’ll be all right. That’s not to say we won’t be affected. We’re all connected. Everyone will be affected to some degree.
Playboy: You just launched a bank in the U.S. Given the specific problems with the American banking and financial systems, why would you start a bank now?
Branson: Virgin Money aims to help people find alternative sources of lending, especially during this adverse credit climate. It facilitates lending among friends and family, thus keeping wealth in the family. It beats out the banks and mortgage companies that are quite expensive and difficult to get loans from, especially now. We want to help people borrow. So I think it’s a worthwhile business to make it easier for people to borrow money to start up their own business or pay for college tuition, which is a huge problem now that private loan options are shrinking.
Playboy: Banking isn’t the only troubled business you’re entering in the U.S. Given the price of fuel, isn’t this a crazy time to expand your airlines? The industry is in utter disarray.
Branson: Which is exactly why there’s great opportunity. Over the years a lot of airlines have gone into Chapter 11 or gone bankrupt. Some of the really big airlines that are left could topple. At least one may topple soon.
Playboy: Which airline?
Branson: It doesn’t take much imagination to guess. But one of the two giants is likely to go. When airlines are struggling it is quite a good time to come in and set up a good-quality product. People seek out quality. That hasn’t changed. We’ve got brand-new planes, unlike big airlines like United. Our cost basis is much better than theirs. We don’t burn as much fuel.
Playboy: How are you able to burn less fuel?
Branson: We have newer, much more fuel-efficient planes, brand-new Airbus A320s, which are 30 percent more fuel efficient than the average fleet of the other airlines. They don’t need maintenance so much. They’re much more reliable, so we don’t have cancellations and don’t have to pay out lots of compensation. Also, our overhead is less because we haven’t had years and years of working with unions sticking guns at our heads.
Playboy: Are you against unions?
Branson: Unions have to prove a point and be useful, so they often create rancor. It happens a lot with many of the big airlines. We don’t have unions. The reason I hope we won’t ever need to have them is they’re a barrier between the company and the staff.
Playboy: Many people would say unions protect workers.
Branson: It’s up to us to make sure we look after our people well enough so they don’t feel they need a union. One never knows, though. We could mess up sometime and end up getting one. We’ll just have to hope we can run the company in such a way that we don’t have that happen. If the people who work for us are happy, there’s no need.
Playboy: To lighten its jets and save fuel, Air Canada’s Jazz has just announced it is removing life vests from its planes. Will you?
Branson: [Laughs] On Virgin, if we happen to land on water, we’ll still give you a life vest. I’m always amused the Civil Aviation Authority insists that when we advertise for flight attendants, we have to include “Must be able to swim.” I might be able to understand it for long-haul flights across the Atlantic; I’m not sure if it’s quite so relevant domestically, but there we go.
Playboy: Given your well-publicized concerns about the use of fossil fuels and their impact on global warming, is it responsible to expand your airline empire?
Branson: It’s true we’re in a number of dirty industries, one of which is our airlines. Airlines do use a lot of fossil fuel and emit a lot of CO2. What can we do about it? We could sell the airline and get out of the business. If we did, though, somebody else would come in and take up the slack; someone else would be emitting all that carbon. One alternative is to aggressively work to change things so the industry becomes part of the solution to the global-warming problem. That’s what we’re doing. As I said, first of all we have planes that burn less fuel. Next, we’re taking 100 percent of all the profits from the Virgin Group’s transportation companies—including Virgin Trains, Virgin Blue in Australia, Virgin Atlantic, Virgin America, our Brussels airline and our Nigerian airline—and plowing them into efforts to come up with alternative, clean energy, whether solar, wind or something else. We’ve had breakthroughs already. The biggest is through a company called Solyndra that we invested in. It’s producing the most efficient solar panels ever made. Over the next two to three years we hope to get the cost of producing electricity on the grid down to a level where it’s actually cheaper to use solar than coal. We’re doing other things, too. We set up a $25 million Virgin Earth Challenge for anybody who can extract the existing carbon from the atmosphere. We’re also setting up a global war room to encourage people to come up with geoengineering ideas. We’re doing these things at the same time we’re doing whatever we can at Virgin Atlantic and the other airlines, including Virgin America.
Playboy: What went wrong with the American airline industry?
Branson: It hasn’t really changed its spots in years and years. It’s just remarkable how these companies have remained below average. The Goliaths haven’t been able to change when it comes to quality. I think the consumer’s worst enemy is the American government bailing out the airlines time and time again and not letting them go bankrupt. In a forest, when trees become cumbersome, the old die and young trees sprout up. JetBlue is the young tree that sprouted up to the enormous benefit of the American public. Southwest is still doing a pretty good job, at least compared with most of the airlines. But the others are generally terrible.
Playboy: Isn’t it true that 9/11 devastated the airline industry?
Branson: Yes, and I think it was right that the U.S. government helped the airlines after 9/11. Interestingly, though, the British government didn’t do the same for us, and we were competing on many of the same routes and had to face the same problems. But for them to carry on subsidizing the airlines was just ridiculous. Continuing after they go into Chapter 11 is part of the problem: It enables inefficient airlines to get another round of financing and carry on in the same inefficient way. It’s much better if, when you’re inefficient, you go bankrupt and disappear. I doubt Chapter 11 in America will ever be repealed, but it’s not good from the consumer’s point of view. It means you have these big inefficient carriers continuing to charge exorbitant rates because of the overhead that has built up over decades. At some stage one of these big guys will go, I hope sooner rather than later.
Playboy: You mentioned Southwest and JetBlue. How does Virgin differ from them?
Branson: We’re better than they are. Southwest is now more than 30 years old. It has been tough for them to keep the spirit they had in the beginning. It’s still a good airline but not an exceptional one. JetBlue has a more youthful vision. We have the advantage of being the newest kid on the block, with all the latest toys. We’re delivering.
Playboy: Airline employees often seem frustrated and overwhelmed. Can you keep Virgin employees happier?
Branson: You have to give them the tools to do a good job so they can be proud of the job they’re doing. Often on other airlines the staff is frustrated because the food has run out, the seats are broken, the lighting or entertainment system isn’t working, baggage is lost or there are delays. Something’s gone wrong, and they’re on the front lines. You must give them the right tools to do their job. Also you must appreciate them. If you take care of people properly, they’ll keep their spirits up and perform and deliver. The challenge is to make sure you never lose that as time goes on. We do that at the airline and, I hope, at our other companies, whether it’s Virgin Mobile or the other new businesses in the U.S., such as Virgin Money and Virgin Charters.
Playboy: What about the cell-phone company? Don’t we have enough of those in the U.S.?
Branson: We’ll come into any business we think we can perform in better than others, to provide something to customers. It has gone very well. We were one of the fastest companies in America to reach a billion-dollar turnover. We haven’t yet got the value of Google. We’re working on that. We’re just launching into the postpaid market. Virgin Mobile launched some good music festivals in America, which is about keeping the brand young and fresh. Virgin Mobile in the U.S. was one of the fastest-growing companies in the history of corporate America. It was the first national product we broke in the States, though we had bands like Genesis, Lenny Kravitz and Janet Jackson break in America, which helped build the brand.
Playboy: There have been some notable Virgin failures. What happened with Virgin Cola?
Branson: We launched Virgin Cola in England, and it was fantastically successful for a period of time. I met a lady who worked for Coke in Atlanta. She was English. She said she watched the success of Virgin Cola in England and went to the board of Coke in Atlanta and basically said, “We have to crush Virgin Cola. You’ve got to take it seriously as a brand that could catch fire and take over the world. It’ll be the only brand in the world that could really take Coke on.” She said she was put in charge of a SWAT team and sent to England. Basically they just lavished discounts anywhere we were in stock. They threatened to withdraw fridges from small retailers. They did to us what British Airlines had done to us as an airline some time before. Coke just had enormous clout. People had to stock Coca-Cola because it was a generic name for soft drinks. They damaged us quite badly. Having said that, we’re now set up in about 20 countries around the world. We’re a very profitable company. We’re even the number one cola in Bangladesh, of all places.
Playboy: Is there anything you wouldn’t attach the Virgin name to?
Branson: Cigarettes. I’ve got nothing against adults killing themselves in whatever way they wish—boating, cigarette smoking, whatever—but I think it would be wrong for us to encourage people to smoke.
Playboy: Some people say a company has to be known for one thing; otherwise it dilutes its expertise.
Branson: I personally think that’s a load of bollocks. However, if you look at the top 20 brands in the world—which I think maybe Virgin just scrapes in there—the other 19 all specialize in one area, as Microsoft, Coca-Cola and Nike do. But Virgin is a way-of-life brand. As such, we can move from music companies to airlines, from airlines to mobile phones, from mobile phones to train companies, from train companies to health clubs, from health clubs to banking and so on fairly seamlessly—as long as every new venture we do enhances the brand and we make a real difference.
Playboy: What about the famous stories of companies that flounder when they fail to stick to their knitting and branch out into unrelated fields?
Branson: When we went from music, with Virgin Records, into the airline business, people thought we were completely mad. How could somebody running a record company know anything about the airline business? The people fretting about that were meanwhile running the airline business into the ground. They had forgotten that entertaining people in the air is very important. We moved into the airline business and brought with us our experience in the music business. With the music company and airline company, we knew our goal was the same: to entertain people, give them a good experience. The keys are the same in any business.
Playboy: Keys such as——
Branson: Hiring great people and keeping them happy. If your staff is inspired and enjoying their work, they’ll do what it takes to make the company succeed. In a nutshell, that’s it. As a result we bring our experience and expertise into every new venture that comes along that interests us, whenever we want to shake up an industry. Life has been far more rewarding and interesting by our going into a lot of different sectors. We try to make sure those industries are never the same again because of Virgin’s attack on them. Virgin’s approach is to look after you throughout your life as much as possible. Hopefully, you’ll be able to come across a Virgin company to satisfy your needs in quite a few different areas. But I knew nothing about the airline business. Financial-services industry, soft-drink business—any of them—until I started.
Playboy: Is your business philosophy all self-taught?
Branson: I never took a course in management. I’ve been fortunate to learn by experience, by making mistakes, by trying. I’ve learned every day by doing things different and new. Having so many different businesses has kept it fascinating. Every one of them helps me with the previous one, from the record business to the airline business and banking—learning, learning, learning, learning.
Playboy: Is there an overall lesson on how to keep a company vital?
Branson: It all comes down to people. Nothing else comes close. Motivating people, bringing in the best. You assume every switchboard operator will excel, and they will. Often people make mistakes, but you allow for that, too. Praise people—like plants, they must be nurtured—and make it fun. Value them and give them the opportunity to contribute in ways that excite them. The kinds of people we employ are not afraid to take risks. If someone mucks up, they don’t get a bollocking from me. They know they’ve mucked up, and they redouble their efforts. We’re lucky because of the variety of places to go at Virgin: No one gets stagnant. When our people see an air hostess become the managing director of her own business, there is motivation. Keep it vibrant. Everything comes back to people. Nothing else. You get loyalty, enthusiasm and great service for your customers.
Playboy: You still travel with a notebook made of paper, not a notebook computer.
Branson: Old habits die hard. My notebook suits me. My whole life has been ruled by my notebook. Everything I do I write down in my notebook or scribble on my hand if I don’t have my notebook handy.
Playboy: You’ve talked a lot about business in terms of fun and social responsibility, but isn’t business really about the bottom line—making money for shareholders?
Branson: I wrote a lot about this in my new book, Business Stripped Bare. I’ve tried to get across my philosophy as much as I can. Basically, if any company actually thinks about putting shareholders first and is concerned just with profits and the bottom line, it’s likely to fail. Company after company lost its way when it came down to it. When you go into business you’re taking a blank canvas and filling it. You have to make it the most perfect painting ever. If you’re creating a new airline or anything else, you’ve got to make it the best. Otherwise, why bother? If you can get everything right—if you have the perfect painting—your staff will believe 100 percent in your company. They’ll believe your company will deliver the most fantastic experience for people. Then you get a commitment from them. You get a commitment from customers. Ultimately your company will become profitable. Then you’ll be able to reinvest that money into another challenge where you feel you can make a difference. But that shouldn’t be the reason you do it. It should be to create something you’re proud of.
Playboy: You’ve tried to make a difference in politics as well as in business. At one point you tried to intervene and stop the war in Iraq. What exactly happened?
Branson: We had Nelson Mandela standing by in South Africa with a private jet to fly him to see Saddam Hussein. We needed to find a way Saddam Hussein could have bowed out, his head held high, and avoided war. We might have been able to do that. Mandela wanted South African president Thabo Mbeki’s blessing, which he got. It was coming, but before Mbeki finally said yes, the Americans started bombing Baghdad.
Playboy: Do you think you could actually have prevented the war?
Branson: We’ll never know, will we? It did teach me that the world needs a group of elders, the most respected people in the world. So we started a group called the Elders. Mandela and Graça Machel, the women’s rights advocate, were the founding elders. Archbishop Desmond Tutu, President Carter, microcredit pioneer Muhammad Yunus, former United Nations secretary-general Kofi Annan, the activist Ela Bhatt from India, President Cardoso from Brazil and a few others are part of the Elders team. The group’s basic reason for being is to go into a conflict situation and use its moral authority to try to address whatever is happening. They’ll meet people on their own terms and help work with them to resolve issues. One of their best successes was in 2007 in Kenya. The leaders of the opposition felt they had been cheated in the election. There was horrific bloodshed on the streets. Graça Machel, Kofi Annan and Archbishop Tutu went in and took the president and the leader of the opposition aside. They went to a game reserve. They worked there and came out with a coalition government, bringing peace back to Kenya. It’s a remarkable example of how it can work. Now the Elders are looking at other conflicts. They’ve been to Darfur and Sudan to see what they can do there and have recently completed a successful mission to Cyprus. They’re looking at Palestine and Iran. They have no ax to grind. They’re not affiliated with any government. They can just try. They have enormous moral courage and an agenda that is only about humanity.
Playboy: Have you considered gathering a group of business elders—you and your peers Steve Jobs, Bill Gates and the like—to take on the world financial crisis?
Branson: We’ll see what happens. If Congress completely fucks up, it may be something we would try to push through.
Playboy: Do you sometimes make decisions that are not necessarily the best for business but rather to make a political or social point?
Branson: In general, yes. Fortunately, we can do that. As a private company, we can stick our neck out and do things we feel strongly about. If it’s more appropriate, we can do things with our foundation, which tries to find new ways to help social problems.
Playboy: In the U.K. Virgin has a strong brand and reputation. In the U.S., though, you have a long way to go.
Branson: It’s something like 80 percent in the major cities but drops off dramatically in Middle America. We have Virgin Megastores in many major cities. They may have heard of us through Virgin Atlantic. It’s growing with Virgin Mobile and Virgin America. Maybe they have heard of us through my boating and ballooning activities or jumping off buildings and stupid things like that. I always get a warm welcome when I’m in America.
Playboy: Speaking of your boating and ballooning, in 2007 your friend Steve Fossett, with whom you collaborated and competed, disappeared in a small plane. What went wrong? He was an experienced pilot.
Branson: I have no idea what happened. All I can say is he led a life he can be proud of. He lived the most full-on life of anyone I know. He was the greatest adventurer ever. What’s extraordinary is he didn’t start his adventuring until he was 55, and he achieved unbelievable things. He had 130 world records in about 20 different sectors. He had no experience in each field and still became the best in each.
Playboy: He beat you in your push for an around-the-world ballooning record.
Branson: Yes. On our try we hit bad weather, and he managed to get the right weather. If there’s anybody in the world I would want to be beaten by, he’s the one. Steve’s life was just pure adventure—just trying to achieve any aeronautical feat that hadn’t been accomplished.
Playboy: Does his accident make you think twice about some of your adventures and the risks you take?
Branson: The interesting thing is he didn’t die doing anything risky. It’s like Lawrence of Arabia dying on a motorcycle when he came back to England after spending years fighting in Arabia.
Playboy: But are your adventures worth the risk?
Branson: I enjoy life too much to do anything too foolhardy. I recently turned down a chance to go after the land speed record because I just felt it was too much like tossing a coin—heads you die, tails you live—and that’s unacceptable. I love life and love living it to the fullest. I want the richest life possible. It’s all part of it: building companies, being pulled out of the water four times by helicopters.
Playboy: Are near-fatal crashes part of the fun?
Branson: The moments when things go horribly wrong are some of the worst moments of my life. I remember a Pacific crossing about a few hours into the trip. We dropped an empty fuel tank, and with it went two thirds of our full fuel tanks. We calculated that we had little chance of crossing the Pacific unless we could get up to speeds of 180 miles an hour. Somebody was very kind to us. The balloon sped along; we were very fortunate to cross. But those can be lonely moments, ones when you ask what on earth has made you decide to be up there. Having said that, I’ll say it’s also incredible. I generally forget the awful moments and remember the good ones. I may swear never to do it again, but a week or two later I’m zesting for more. It’s a bad streak in me.
Playboy: Were you sobered when your family nearly died in a car crash in 1994?
Branson: It was much worse, since it wasn’t just me. It was terrible. We were very lucky.
Playboy: What records would you still like to beat?
Branson: My kids came on the most recent one: an attempt for a record in a transatlantic crossing in a single-hulled sailboat. We had to wait for the right weather. I hadn’t done an event for 10 years. It was lovely to be back doing something like this, especially lovely to be doing it with my children.
Playboy: Your wealth allows you to do pretty much whatever you want. Do a billionaire’s eyes ever wander over the prices on a menu?
Branson: I remember when I was on my houseboat and somebody said to me, “Have you bought The Independent yet?” and I said, “No, I haven’t. I didn’t actually know it was for sale.” He said, “No, I meant have you bought a copy of The Independent.” But I have a pretty good, balanced life. I play hard and work hard.
Playboy: You’re creating another business built on adventure: Virgin Galactic, which will offer rides into space. Is it a realistic venture?
Branson: It’s completely realistic, and it may be the most exciting new company of all. We’re doing a lot of work to prepare. We’ve developed a spaceship. It’s remarkable. We spent a lot of time thinking about what sort of experience people will want to have.
Playboy: What will people want?
Branson: They’ll want to have big windows so they can look out and enjoy the space experience. They’ll want to experience weightlessness. They won’t want to be sick. You have to think of every single little detail. We’ll do about a year of extensive test flights before we take passengers on board. The mother ship was unveiled two months ago, and it will be flying next month. The spaceship will be ready to test in about 12 to 15 months.
Playboy: Are you convinced there’s enough interest in space travel to build a business?
Branson: About 60,000 people have already inquired. A couple of hundred have already paid the full price up front.
Playboy: How much will a trip to space cost?
Branson: Two hundred thousand dollars.
Playboy: What will the experience be like?
Branson: We’re planning about a three-hour trip total. The spacecraft will have five passenger seats. Each passenger will have a really good window. You’ll go up in the spaceship, attached to the mother ship, to 60,000 feet, then the spaceship will be dropped off. At three times the speed of sound you’ll shoot your way into space. Then you experience weightlessness and have a spectacular view of Earth. The ship will drift back into Earth’s atmosphere like a shuttlecock; it won’t have to blast its way back through. That takes away all the risks associated with reentry—it’s far safer than what the Russians or NASA has done. Safety obviously is critical if one is going to have a successful business in space tourism. Also, this being a Virgin spacecraft, we’ll make you as comfortable and the trip as fun as we can. Three years from now I hope to be on the first flight. People like Stephen Hawking and James Lovelock, the environmentalist—he’s 89 years old—are coming as well. That will be just the beginning. Our ultimate dream is to have a Virgin Hotel up in space.
Playboy: Do you have plans for one?
Branson: We’ve got drawings. It has lovely see-through bubbles that you can go into. Say two of you could go into these bubbles outside the hotel; instead of sitting on a balcony, you could be floating around in these bubbles, looking at the world and watching Argentina pass between your legs.
Playboy: When do you foresee the grand opening?
Branson: I would hope it would happen in my lifetime. It may take longer, but at least we’re starting down the road. We’ll provide an incredibly life-changing experience for people. I wonder what nationality you would be if you were born in space? I wonder who will be the first couple to have sex in space? Weightless sex could be something, right? I mean, somebody must have done it weightless.
Playboy: What inspired you to get into the condom business?
Branson: No one was talking about condoms in Britain, even during the worst of the AIDS epidemic. We launched our company, Mates, in order to promote condom use and to stop the spread of not just HIV but also cervical cancer and other STDs and to control unwanted pregnancy. We set it up as a charitable foundation. We ran it for a couple of years and then handed it over to another company, which pays money to a health-care foundation. When we started we wanted to give Durex some competition. It owned 90 percent of the condom market in Britain and therefore had no incentive to advertise. We made a lot of really good advertorials. We got the BBC to run them, and it never runs ads. The funniest ad was a trip into a shop by a young man. He’s in front of this beautiful girl who is serving him. He’s buying everything—tissues, anything he can think of—but he doesn’t quite have the courage to ask for condoms. Finally she asks, “Is there anything else, sir?” and he whispers back, “A package of Mates condoms.” To the person who gets them for her, she yells out, “A package of Mates condoms!” It was very funny. So Mates gave Durex some competition. It has about 25 percent of the market now. It achieved what it set out to achieve.
Playboy: Of all the names for companies, why did you choose Virgin?
Branson: I was 15 and inexperienced in business. It has been quite an appropriate name because we’re new to all the businesses we start: It’s always virgin territory.
Playboy: Have you been able to look back and understand what it is about your personality that has led to your success as an entrepreneur?
Branson: I never aspired to be an entrepreneur. I wanted to be an editor. I started Student magazine when I was 16 and became an entrepreneur by mistake. In order to keep the magazine going, I had to worry about the printers, the paper manufacturers and the advertising. I’ve never been interested in business or making money. I’ve just been interested in doing things I can be proud of. Later I didn’t go into the airline business to make money. I was fed up with the quality of air travel on other people’s airlines and felt I could do it better. I started with one 747. I got the kind of people I enjoyed being with to work that airline and created something we’re really proud of. Twenty-one years later that airline is one of the most profitable in the world, and it’s become very valuable. But that is only because we had a zest to create something special. As I said, if people actually set out to make money per se in business, chances are they won’t be successful. Ideally, I think people need to fulfill their dreams. Everything else follows.
Playboy: Did something specific in your childhood lead to your business success?
Branson: My mother never let us watch people playing football; we had to be out there playing football. When I was about six, we were on our way to my grandparents’ house, and about three miles before we got there she pushed me out of the car and told me to find my own way there. Which is something, you know. I think people get arrested for doing that to their children today, I’m afraid. They were very determined to make us stand on our own two feet and prove what we were capable of. So I suspect that had something to do with it. I was also dyslexic. I wasn’t great at schoolwork and sort of turned my attention to other things, which ended up serving me.
Playboy: You were knighted. Did it mean a lot to you?
Branson: Twenty years before I was knighted I released the Sex Pistols’ “God Save the Queen,” so when she brought the sword down over my head I wasn’t sure whether she would be slicing it or tapping the sword gently on my shoulder. Time mends, and I was forgiven for that, I suppose. It’s a very pleasant English honor.
Playboy: When you retire, will your children take over the business?
Branson: My daughter is a doctor, so she probably won’t be joining me in the business. My son’s quite keen on business. There’s always a possibility that one day he’ll come in. We have a great team at Virgin, so if I get run over, the company’s well set up to continue without me.
Playboy: You’re 58. Whether or not you live to see the Virgin Hotel in space, at some point do you plan to step down from running Virgin?
Branson: I don’t think I would ever retire as long as I’m healthy and fit. I enjoy what I’m doing too much and still have lots to achieve. To be perfectly honest, I don’t feel any different today than I did when I was 24. Maybe I just try to make a slightly bigger effort to keep fit and healthy, which I’m doing.
Playboy: How do you keep fit and healthy?
Branson: I like keeping fit, and I’m into extreme sports, things like kite surfing, skiing, ballooning, surfing—any kind of sport. I play tennis. I relax by doing mad things like starting new businesses.