Freakonomics Radio - 452. Jeff Immelt Knows He Let You Down

Episode Date: February 18, 2021

Not so long ago, G.E. was the most valuable company in the world, a conglomerate that included everything from light bulbs and jet engines to financial services and The Apprentice. Now it’s selling off body parts to survive. What does the C.E.O. who presided over the decline have to say for himself?

So there is a silly question that a lot of authors get asked, which is, why did you write this book? Silly because it's usually obvious. But in your case, I don't think it's such a silly question because, A, you don't need the money, let's be honest. And B, you don't have a tale of triumph to tell. So why did you write the book? I'd say really two reasons. I felt like the story had been out there, but lacking context and quite honestly, not always being truthfully told. And the second thing is today, all leadership is

crisis leadership. And I have a lot to offer to that debate. That is Jeff Immelt. I worked at GE for more than 35 years. I was the CEO for 16. And yes, GE, that's General Electric, gave Immelt a lot of experience with crisis leadership. I lived and led at a time of immense volatility and change. Always did my best. Some things worked and some things didn't. Okay, let's start with what didn't work out. When Immelt inherited the CEO position in 2001 from the legendary Jack Welch, the stock price was around $38, representing a market capitalization of just over $400 billion. When Immelt left in 2017, the stock price had fallen to around $25, with a market cap of around $220 billion, a drop of roughly 45%. And now, just four years and two

CEOs later, John Flannery lasted just 14 months and Larry Culp now has the job, GE stock has fallen even further, and the company is only worth around $100 billion, or one quarter of what it was when Jeff Immelt took over in 2001. As recently as 2005, GE was still the most valuable company in the world. Today, it's not even in the top 100 of companies when ranked by market cap. The financial collapse is only part of the story. For decades, General Electric was the quintessential American corporation, a combination of scientific ingenuity and muscular execution. It was founded in the 1890s to capitalize on the inventions of Thomas Edison, including his light bulb.

For years, its headquarters were in Schenectady, New York, built up around Edison's own machine works. I happened to have been born in Schenectady. GE was the biggest fixture on the horizon. Literally, its famous cursive logo visible for miles in the night sky. And economically, too. It was by far the biggest private employer in the region. And many would say the best employer, too. GE had grown into an industrial conglomerate, making airplane engines and locomotives, gas turbines and medical equipment. During the Jack Welch era, it became a much broader conglomerate,

expanding into financial services, insurance, commercial real estate, even the NBC television network. Some of its growth was spectacular. Just as the economy in California is larger than that of most countries, GE's finance arm, GE Capital, was bigger than most banks. But in the past decade plus, GE has been selling off body parts to stay alive, including last year its iconic lighting division. In 2018, GE was removed from the Dow Jones Industrial Average. It had been the last of the original 12 members. And then there are the allegations of accounting and other financial fraud brought by the Securities and Exchange Commission and the Department 12 members. And then there are the allegations of accounting and other financial fraud brought by the Securities and Exchange Commission and the Department of Justice. In 2019, GE agreed to pay a $1.5 billion penalty for its misrepresentation of the subprime

residential mortgages it sold. There was a $200 million penalty last year for violating a number of accounting and anti-fraud provisions and a similar $50 million penalty last year for violating a number of accounting and anti-fraud provisions, and a similar $50 million penalty in 2009. Most of these alleged violations happened on Jeff Immelt's watch, although in a recent book called Lights Out About GE's Decline, The Wall Street Journal reporters Thomas Greida and Ted Mann write that fudging the numbers was a standard GE practice that went back at least to the Jack Welch era. The exposure of this practice can help explain the decline of General Electric, but there were other reasons too. According to his critics, Jeff Immelt's strategy

to modernize the old industrial company was erratic and wayward. Buying high and selling low as he shuffled GE's portfolio and placing bad bets, bulking up in the oil and gas sector, for instance, just in time for oil prices to tank. So, yeah, those are the things that didn't work out for Jeff Immelt when he was CEO of General Electric. The things that did? That list is shorter. Today on Freakonomics Radio, how Immelt won the CEO job in the first place. You know, Stephen, near-death experiences are really good for you.

One big reason things went sideways at GE, which Immelt says no one could have prevented. We were kind of collateral damage, if you will. We hear about his bitter end. What were the last months like? They were excruciatingly sad. And why Jeff Immelt will forever be marked, quite literally, by the company that got rid of him. I googled Tattoo Danbury because I wanted to be far enough away that maybe nobody would recognize me. That's all coming up right after this.

This is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner. I have to say, you are my favorite kind of CEO to interview, a former CEO, because when you're in the job, it seems like there's very little incentive and time, honestly, to really say anything interesting. Now you can speak your mind. Do you find that liberating? You've got a little bit more time to think about things. When you're in the job, it's such an intense 7x24 job. I still have a desire not to trash people, things like that. But I am able to be a little bit more frank, for sure. Jeff Immelt's new book is called Hot Seat, What I Learned Leading a Great American Company. He doesn't trash a lot of people in the book.

It is primarily a defense of his performance, which, not surprisingly, he rates substantially higher than his critics do. This interview with Immelt is part of an occasional series we call The Secret Life of a CEO. We've had John Mackey from Whole Foods, Indra Nooyi, who was then CEO of PepsiCo. And in 2018, we had Jack Welch, Immelt's predecessor at GE. Here is a relevant exchange from that Welch interview. In 1999, not long before you retired from GE, you said that your ultimate success would be determined by how well your successor grows the company over the next 20 years.

When you said that, GE's market cap was up north of $450 billion. Now, it's almost 20 years later, it's just north of $200 billion. So talk to me about that. I know that you... I don't talk about that. You don't? Why not? I mean, it's public record. Well, you can comment on it any way you want, but I haven't commented on my successor once in the 20 years. And I don't intend to comment now. You can judge me any way you want on whether I picked the right guy or not.

You gave numbers, and one from those numbers would question how well I did. But I'm not commenting, and if you want to give me a black mark, give me a black mark. I did the best I could. I picked the guy. So why did Jack Welch pick Jeff Immelt? How did Immelt put himself in that position? And then what went wrong? Immelt grew up in Cincinnati, where his father worked 38 years for, you guessed it, General Electric in the

aircraft division. Most of his career was in sourcing, purchasing fan blades and castings and things like that. You know, we used to go to Lunkin Airport and watch Planesland. We never missed an open house where we would go see Building 800 and see how engines were made. Just loved, you know, loved the business, loved the company. Jeff Immelt studied math at Dartmouth and got an MBA at Harvard. In between, he worked briefly at Procter & Gamble, where he was buddies with future Microsoft CEO Steve Ballmer. After business school, Immelt took a sales job in the plastics division at GE. He would go on to run or help run plastics, appliances, and healthcare. So I'm going to tell you, Jeff, my favorite GE invention, and then I want to hear yours, okay? So my favorite story is about a physicist named

Bernard Vonnegut, who worked at GE Research in Schenectady, who discovered that if you fly up in an airplane and add droplets of silver iodide to the clouds, you can make it rain. OK, but even better, his little brother, Kurt, worked as a PR guy for GE. Ah, there you go. Yeah, for sure. And then Kurt, of course, went on to write these amazing novels with all sorts of fantastical elements. And I'd like to think that his big brother's GE weather experiments played a role in Kurt Vonnegut's novel writing. So that's my favorite GE invention. What's yours? I always go to healthcare just because it's so identifiable.

So I would say it's somewhere between the ultra-fast CT, which can freeze the beating heart, so you can really diagnose vascular problems and circulation problems. And then I would go from there to the ultrasound, a handheld ultrasound, which is sold in India and Africa. I've always found that there's just a great intersection between technology and solving problems. Okay, yours beats mine. I mean, at least in terms of, you know, good for the world. So let me ask you this. When you look back at the technology that was either invented or perfected or acquired during GE's history, it's breathtaking to me that one company did all that. But in the last, let's say, 30 years, the innovations were much slower coming,

and it became more about selling off some things and acquiring others that were often established. So how did a firm that was so innovative stop being so innovative? I would push back just a little bit. You know, Stephen, we spent a lot of time on investing in technology. And in the industries that we were in, like aviation and healthcare, energy, we would be viewed both by patents filed and by our customers and the markets as kind of the industry innovator. So that was certainly part of

my strategy. I would say the difference is so much of the innovation today is driven by information technology, data, and analytics. And this was something we were trying to change. But I think if you could rewind lots of stuff over time, the company would have made even bigger and more profound bets in those areas earlier. I know that you believed and invested in a software vision for GE to harness the customer and other data that's generated by your various machines. And that really didn't work. It did make me wonder, is the era of that kind of conglomerate just over? Oh, gosh. I think the era of somebody that does jet engines, TV shows, and insurance, that's over.

Okay. It's just, you know, investors don't want it. It's too hard to manage. I think being able to do a more tightly connected, you know, with aviation and power, maybe healthcare, I think that's possible. And there's reasons to think that's going to endure. If you think about the conglomerates of today, I'm talking about Amazon and Alphabet. They have a technical foundation.

I would say GE had, at least in the beginning of my career, our foundation was management practices. It's not that that's unimportant, but that wasn't enduring, really. And I think when you look at Amazon, they are a dominant software company. And in some way, shape, or form, everything they do feeds off that. Google is a dominant AI company. Everything they do feeds off that, right? So I think if you want to be a conglomerate today, a technical foundation is a must. Yeah, but their core is built around technology that is also very scalable and very flexible, whereas what you were doing still involved a lot of physical things with sunk costs spread all over the world. And that just seems like a hard thing to do.

If you step back, I think what we saw as our core competency was the global framework, you know, infrastructure equipment, rotating equipment, and then the digital context for how to optimize, get productivity, drive safety. And so we were a relevant player in 150 countries around the world because of the mix of businesses that we had. Now, it doesn't mean they don't cycle. Aviation on 9-11 was the world's worst industry. And then for 15 years, it was awesome. And then with COVID, it's the world's worst industry, right? And then for 15 years, it was awesome. And then with COVID, it's the world's worst industry again, right? So I think you need to separate natural volatility from a company that was basically winning in the businesses we were in from a market share standpoint, but it wasn't because they were cycle-free. So you write about this incident back when you were running plastics, most of plastics, and you missed your annual earnings estimate by a lot, $50 million, which was really something at the time.

And as you write, Jack Welch, CEO, grabbed you at a manager's conference and said, Jeff, you had the worst year in the entire company. You were the worst person in the entire company. But he didn't fire you. And interestingly, Welch, when he was starting out at GE, he blew the roof off a factory. He was expecting to be fired and he hadn't been. So I'm curious what that event did for you, how that set you up to keep succeeding there? You know, Stephen, near-death experiences are really good for you in growing a career. You don't want too many of them, but being able to survive your own failure is part of life and part of a business career. And nobody has a perfect career, and I didn't.

It also taught me that, like, I could live, that basically he wasn't going to define how I felt about myself. So I told him, look, Jack, I'm going to fix this. And if I don't, you won't have to fire me. I'm going to quit. So you became famous for hitting your numbers from there on out. And really, the story of GE during that period was a company that hit its numbers, and Wall Street loved it. And the stock boomed because of it. But the more postmortems that are done on GE, especially in this book Lights Out by two Wall Street Journal reporters, the more we find that a lot of those

earnings were just pumped, you know, inflated, that there were a lot of different ways to reach your earnings targets, including some really creative and aggressive accounting that was going on across a lot of divisions at GE for many years. So I'm not expecting you to cop to any specifics or point any fingers, but looking back, wasn't that a counterproductive institutional practice? Well, what I learned growing up in GE was how to be a good operator, how to invest in growth, how to drive productivity, how to manage cost, those kinds of things. Interwoven in this story is always going to be the growth of financial services.

And financial services is, let's say, historically just been more fluid because of the way reserves are done and things like that. But even in like power, where the way orders were booked and accounted for ahead of time and the way that they're predicted against an unreasonable and not realistic timeline, it just sounds as though there was a culture that was pronounced under Welch and continued under you that led to a situation where you got backed into a lot of corners. Is that not the case? So all accounting at GE was bottoms up, all of it. We paid external auditors hundreds of millions of dollars a year to review our books.

We had a 20-person disclosure committee that was made up of mid-level managers that approved everything we said, everything we ever did. We were regulated by the Fed for six years. I had two audit committee chairs. One was a retired CEO of J.P. Morgan. The other one was the retired commissioner of the SEC. I know what's been written, Stephen, but all I can tell you is what we tried to do. So, okay, Jeff, you were a GE lifer. At one point, you were in a bake-off to replace Jack Welch. You're the youngest guy by quite a bit. Why did you win?

You know, I never really know because these are things you don't know. I would say, to a certain extent, in a big company, your peers promote you. And not that the other guys didn't, but I had really good peer relationships at that time. And I think that certainly helped. So your reward is getting to replace Jack Welch, who Fortune magazine had named manager of the century. So tough warm up act. And there's a story you tell in the book, this encounter just before you'd been appointed to take over. This was at a dinner in London where a legendary British executive, as you call him, says to Welch, Jack, how do you do it? How do you get a 50 PE? That's price to earnings ratio for the GE stock price. How do you get a 50 PE with that bag of you've got meaning GE? And you write how you were shocked that someone would say to his face what surely other people were thinking. This was right before you get the big job.

Obviously, the big job is extremely desirable. Did that comment, however, make you want to run just a tiny bit in the other direction? You know, everybody roared with laughter when the guy said it. And I realized at that moment that the joke was on me, really. Strikes me as I read about the complicated history of GE during Jack Welch's tenure and yours, that you needed to make a lot of decisions, often under time pressure. And like any human that makes any decision, you often have incomplete information and the stakes are routinely very high. So I hate to say it, but the primary lesson I took away from reading your book was don't be a CEO. It is freaking impossible. Well, I'd say, I would say, you know, the last 20 years have just been filled, you know,

so I basically went to work, let's say about 1980. And from 1980 to 2000, I had never seen a tail risk event. I didn't even know what they were, really. And then 9-11 happens and Fukushima happens and the financial crisis and COVID. And so leaders today almost haven't seen anything but tail risk events. So among other things, you had some pretty bad timing. I mean, look, you become CEO just in time for 9-11. Yeah, I would say not only 9-11, but Enron. You were maybe the biggest trustmate company. And then you trip over into a world where there is no trust. That's a big change.

Give me your thumbnail of getting settled that first year or two, trying to figure out what the company actually was and where it needed to go. Yeah. So the original thing was just get through 9-11, right? We not only were big in the aviation business, but we were big in the aviation leasing business. We had an insurance product and it was just a panic. You know, we used to have these nightly calls and we had to lend airlines money to keep them going. Let's say it's nine o'clock at night and it's a week or two after 9-11 and the G Capital guys say, we need to buy $2 billion of American Airlines WTCs by tomorrow morning. And, you know, my question was what the F is

a WTC? I don't even know what the language, what we're talking about. So making decisions like that was hard. I mean, at least it's good for the GE capital numbers, right? Yeah, we made some good loans. But then we started whittling away on how do we start reinvesting again in technology that could help the industrial business? And we started plotting a path of saying, look, all of our industrial businesses need to be retooled, even in VC, right? Even though the long-term goal was to make GE Capital smaller. But keep it. But keep it. We had to let GE Capital go for a while because we needed the cash. The decision we made was to try to do that in the

context of continue to grow earnings per share because it was the only line which investors understood. And was that the kind of path dependence that Welch had set you on, that you had to hit that dividend number? Look, I mean, I just think it was— It's the kind of company you were. It was the kind of company we were. Look, I probably had a window to reset the company after 9-11 and not doing it probably was a mistake. So I kept us on that path and it was starting to work.

And then the financial crisis hit. There's people that say you should have seen the financial crisis coming. And I recognize that maybe there are things we could have done differently, but none of us really saw that as a tail risk, right? So when COVID happened, my first reaction was, ah, you know, we lived through SARS. It wasn't that bad, right? It turns out it was like a thousand times worse. You can make yourself prepared, but you better be good at volatility. In his new book, Immelt writes about the immediate aftermath of 9-11 and the double whammy the GE

faced, a huge hit to many of its core businesses, as well as a huge drop in its stock price. I tried to stay calm, he writes, but GE was getting crushed. I heard from several shareholders, including our biggest one, we didn't realize GE was so big in insurance. I wanted to say, we've never hidden it. Didn't you examine our holdings when you bought our stock?

Instead, I kept quiet. It is hard not to picture how Jack Welch might have played things differently. When Welch was CEO, the markets loved GE stock in part because he made them love it by force of will. Stock markets are full of numbers, but those numbers are driven by stories. And Welch sold the GE story enthusiastically and aggressively. Jeff Immelt didn't. Here again is what he wrote about that shareholder call after 9-11. Instead, I kept quiet. The markets seemed to punish him for that. That and the simple fact that Jeff Immelt wasn't Jack Welch.

So by the time of the global financial crisis, GE looked a lot like a financial services company. In hot seat, you're right. After Lehman Brothers went bankrupt, I knew it presaged not just the beginning of a down cycle for GE, but the destruction of our business model. I'm guessing a lot of people did not see that that was a destruction of your business model, not appreciating how reliant Big GE, as you called it, was on GE Capital. Can you explain how reliant you were, how intertwined, and why you saw how bad this was going to be for you? We were what was called a wholesale-funded finance company.

So basically, we would borrow unsecured debt because we had industrial cash flow and we were a AAA. And then we could lend that money out at a higher rate. And the difference between what we could borrow money for and what we could lend money for created a very profitable financial services company. You know, banks had deposits. We had some deposits, but we were basically prohibited pre-financial crisis from having deposits because we weren't a bank holding company.

So when Lehman Brothers went down, it was really a missile into the unsecured debt market more than anything else. We were kind of collateral damage, if you will. And we were big. We were huge. So the combination of our size, plus the fact that we weren't funded by deposits, was a real one-two punch. This is a crisis that came at you in waves. And then where regulators went, ultimately, which is probably exactly what they should have done, just really disadvantaged us. It was really bad for GE specifically, it sounds like.

Extremely. It was extremely bad. It was hard to grow. It was costly. It was a huge challenge. And, you know, it wasn't going to be like a month or two. There was no vaccine, let's say. It was going to be permanent. So you write that after reading, I think it was the first draft of the Dodd-Frank legislation, which set forward some regulations for the finance and banking industries, you said you felt that the federal government had pointed a cannon at GE specifically, that they didn't want big financial institutions to also have an industrial arm. There may have been a handful of others, but it really was at us. And basically, the first draft said we were going to have to split off GE Capital from GE, which at that moment in 2009, we just had no way to even think about doing it. It was just hard to consider what we would have to do.

So, like I said, the crisis came at us in waves, and this was another wave. So, I'm sure Tim Geithner had good reason to suggest this. I'm sure it wasn't folly. Why do you think that you had been singled out? I don't know exactly because Tim and I never had the conversation, but my sense was they probably always had in mind of making us a Fed-regulated entity. I think they basically felt like for a financial institution to be as big as GE Capital, it needed to be under Fed regulation. So I think to a certain extent, they may have looked at it in two steps and not one

step, but I don't know. In September of 2007, this was a $42 stock and had the broad support of investors and analysts. And, you know, we were executing a strategy that seemed to be working and was appreciated by our customers and our team and our investors. So I never play victim, but I think that's just a fact. But others saw the facts differently. After the break... I know that there are people that feel like I let them down. And, you know, I think about it every day of my life. And there's this, too. Now, we should say that you single-handedly got Donald Trump elected.

Please, please don't go there. That's coming up in a minute. Also, please keep your ears open for the newest podcast to join the Freakonomics Radio Network. It's called Sudhir Breaks the Internet, featuring the Columbia University sociologist Sudhir Venkatesh. He is also the author of Gang Leader for a Day. You can subscribe now to Sudhir Breaks the Internet. Sudhir is S-U-D-H-I-R. You can hear a preview now on any podcast app, and the first episode

will be out soon. Just how devoted was Jeff Immelt to General Electric, the company he led for 16 years and worked at for more than 35?

Consider the story of the meatball on his hip. The meatball is what GE employees call their famous circular logo. Yeah, so I have a daughter. She's 34 now. But when she was a teenager, I used to always say that I was going to get a tattoo. And she would just say, yeah, dad, big talk, no action, blah, blah, blah. So one day I finally said, I'm going to do it today. So I was in my office in Fairfield on a Saturday. That's Fairfield, Connecticut, where GE had moved its headquarters in the 1970s. I googled Tattoo Danbury because I wanted to be far enough away that maybe nobody would recognize me. Danbury is a little over 20 miles from Fairfield. And so I drove to Danbury, Connecticut, went to a tattoo parlor. There's a

woman tattoo artist, and I showed her the G meatball. I put my wife's initials on top and my daughter's initials on the bottom. She said, why are you doing this? I said, well, I work at GE, and I play in a bowling league, and I lost a bet, so this is what I have to do. My daughter comes home like three hours later, and I show it to her, and she hits the floor. She screams. So, you know, sometimes when you're a dad, you have to go that extra mile. Immelt plainly loved GE, and for a long time, it loved him back. The epilogue of the book I mentioned earlier, Lights Out, is titled Jeff is a Friend. When the authors Thomas Greida and Ted Mann interviewed Immelt's former co-workers,

those colleagues would routinely start off by saying, Jeff is a friend, but, and then they'd lay into him for all the bad things that happened on his watch. He did invest about $175 billion in acquisitions to grow the company's life sciences and alternative energy portfolios, among others. But there was another $400 billion of divestments as Immelt sold off the storied plastics division, major parts of GE Capital, and NBC Universal. The thing is, for a long time, Immelt felt his plan to streamline and reshape the company was working, but the markets weren't buying. At one point, the activist investing firm Tryon Partners took a big position in GE, which earned them a sit-down with Immel in Fairfield. They presented an 80-page white paper whose title beautifully summed up GE's dilemma. Transformation underway, but nobody cares.

We were pivoting from 50-50 financial industrial to more industrial. That's not something you do in a day or two or a week or two. That takes time. I'd like you to talk for just a second about when you were CEO, your role as a de facto ambassador for American capitalism, really. At one point or another, you interacted with many, many heads of state around the world. What did they typically want from you and what did you want from them? The first thing is I always try to maintain good relationships with all the administrations and the secretary of state and things like that. So I never was just freelancing. I always tried to understand here's what the U.S. interests are so I could meet with ambassadors and things like that.

So that's number one. I think if you want to be a good global company, you have to know how to make money in a country and you have to know how to make money for a country. So you have to be able to say things like, hey, I want to sell you a jet engine, your highness, but I'm also creating 200 jobs. So let's talk a little bit about politics, or at least the interface of a company like yours and an administration, keeping in mind, you know, the financial crisis happening, the end of the Bush II era, and then the beginning of Obama's first term. In an interview you did with 60 Minutes around this time, you write that Leslie Stahl had said that most Americans see big corporations as greedy and selfish. And you pushed back. You said, everybody in Germany roots for Siemens. Everybody in Japan roots for Toshiba.

I want you to root for me. So does America, in your view, or at least a significant portion of America, just not like capitalism? Oh, gosh. So I'd say, first of all, we had built our company to win around the world, and we were either the first or second largest exporter after Boeing, right? So exporting creates incredible jobs that, you know, for every GE job, there would be eight in the supply chain. So it created lots of competitiveness for the country. And the point I was trying to make with Leslie was, you know, exporting is a way to make a strong country.

And it's hard. It's harder than almost anything else. And you shouldn't criticize us for that. Look, I lived in a generation, let's say from roughly 1980 to 2020, where the wave of productivity hit hard, information technology, and certainly in the early parts of that time, shutting down factories in the US and moving them to Mexico or doing backrooms in India or things like that. I think everybody viewed that as a common business practice and that, you know, anything we could do to be competitive. And guess what? That didn't work. That wasn't sustainable over the long term. And it's hard to portray yourself as a great citizen while

that's happening. Earlier in the Obama administration, as part of the recovery from the Great Recession, the president asked you to chair the Council on Jobs and Competitiveness. And you write that you were really impressed with Obama's intellect, but as you write, Obama didn't, quote, empathize with the business community. I'm curious, what do you think were the biggest ramifications of that, maybe up to and including the election of President Trump a few years later? I would say President Obama saw the job of the president of creating jobs. And whoever could help him create jobs in the U.S. was a friend. And whoever didn't was not a friend. And things like tax repatriation, he viewed that as whining from companies.

In terms of tax repatriation or the lack of repatriation, keeping money out of the hands of U.S. tax collectors, where did GE rank among the offenders? We were on that list for sure. By the time I retired, 70% of our revenue was outside the United States. And so people that made money around the world were like on the target list for sure. So suffice it to say that for a company that many people still think of as a big, powerful, rich American company, you weren't contributing to tax coffers as much as that person might realize. Exactly, because we were big outside the US.

The one thing I would say is an exercise that everybody should do is to go to any town and interview 25 small and medium business people because we always say we love them, but I think both parties go out of their way to make their lives miserable. In different directions, yes? In different directions.

Tell me the ways in which each party does that. Oh, I would say on the Democratic side, regulations for sure. And certainly the more recent Republican Party, just volatility. Volatility around globalization and different things like that. So when people ask me, I said, go create your own index of small and medium business people and figure out what their lives are like. And if their health care costs are going up 50% a year, it doesn't matter what the president is saying about how good a policy is working. They don't like it.

Now, we should say that you single-handedly got Donald Trump elected the first time. Please, please don't go there. Well, maybe not single-handedly, but for those who don't recall the connection, you know, GE owned NBCUniversal at the time, which aired the reality show The Apprentice, without which Donald Trump probably wouldn't have become even close to president. I mean, clearly The Apprentice was a platform for him. But nobody, when we were doing The Apprentice, ever said, you know, there goes the president of the United States. I don't think anybody ever said that.

Now, you, I understand, are on record as a Republican. Did you vote for him once or maybe twice? No, I never voted for him. No. You know, I'm a Romney Republican, so there's 12 of us left. Can you assess, however, some of the things he did from a business community perspective as president that were beneficial? Oh, so, Stephen, I want to be very clear that I don't want to in any way make a comment about supporting what's happened the last six months or a year. Really, I don't. I will say I believe

in less regulation. I believe that everybody should help small and medium-sized business. And that's tended to be the way I've thought about politics. But I just think nobody, myself included, can support what's taken place over the last six months. All right. So let me just get back to the large picture. There are two main stories that GE observers tell about the downfall of GE as we knew it. One is that Jack Welch propped up the share price by bluster and BS and by, you know, browbeating his direct reports into generating profits, even if those profits were only on paper, and that he therefore left a company behind that was in decline or disarray,

which you, Jeff Immelt, as incoming CEO, tried to modernize and globalize. That's one story. The other story is that you inherited a great, if, you know, slightly graying company and tried to remake it in your image and wound up destroying it with a series of bad acquisitions and bad decisions. Now, whichever story people tell, the ending is always the same, which is bad. So what's your version? Look, I guess I would just say two things. You know, the results of the company over the time I was there, we were number one in the industries we were in. We set up a global foundation way ahead of others. Other people that have adopted the initiatives that we started have one big, right? So that's one piece. The other piece, it clearly didn't end

the way I wanted it to. I think markets were tougher. The tale of GE Capital was longer and more volatile than we recognized. The people that I'd put in place at G Power didn't do as good a job as they should have. And at the end, we had too much going on for the board and I own that. So I'm going to let others kind of plot how they want to put that, but those are the two pieces I'd give you. So Jeff, you wound up stepping down as CEO a few months earlier than expected. Why'd you do that, and what were those last months like? Oh, gosh. The answer to your first question is that we all felt it was probably in the best interest of the company. I guess one thing I'd like people to know, and I know not everybody would give me the benefit of the doubt, is I really love the company, and I love the people,

and I always try to do the best for them. What were the last months like? They were excruciatingly sad. This was my life and it wasn't going to turn out the way I wanted it to. And I felt like I had let people down and that made me really sad. So after you left, things got much worse for the company. The share prices dropped much, much more. There's been a pretty unbelievable, really, dismantling of the conglomerate and DOJ and SEC investigations into improper accounting, including during your tenure. Are you concerned about civil or criminal charges against you personally? Again, I'll let that stand on its own.

I would just go back to what I described to you earlier, which is to say we bent over backwards to do it right. We had detailed transparency with our board. We had the best auditors that money could buy. We had a multitude of relief valves and reviews and things like that. So, you know, we tried our best to get all those things right. I am curious, what do you say to the longtime shareholder, you know, if it's a retiree, if it's a former GE employee themselves who

watched the stock price just get pummeled, if I were to corner you at the grocery store and say, you know, you kind of screwed up my retirement, what do you do with that even? Look, I would say I don't blame you for the way you feel. Here's what we tried to do. Here are the actual results of cashflow generated and dividends paid and earnings generated and market position. And I try to point out the context of what actually happened. And I end by saying I had every penny, not that this is great consolation, but I never sold a share of G stock. I had every penny of my 401k in GE stock. I was always in it with everybody else.

Okay, but you had a lot more pennies. No, no, no. I'm saying it doesn't give people. But I always start by saying, look, I understand the way you feel. I really do. But here's what we tried to do. Do you still own some or all of that GE stock? I still own a lot of GE stock, and I just bought some recently.

I don't mean to put you on a couch here, but I'm curious. You sound conscientious enough and self-aware enough that I'm guessing you feel a lot of guilt. You know, your career ended poorly, but it was a very good career for which you were obviously paid very, very well. And then the company is in bad shape now. Is that a feeling of guilt when you talk about looking back? I just, I don't want to put a word on it. I'll let other people say I don't hide. And, you know, I'm going to try to continue to make contributions as best I can. These days, Jeff Immelt splits time between coastal South Carolina and coastal Northern California. He teaches a leadership class at Stanford, and he's a partner

in a venture capital firm called New Enterprise Associates, where he focuses on technology and healthcare. So at the beginning of your new book, Hot Seat, you write about the inspiration for the book. You were doing a Q&A with the leadership class that you teach at Stanford. And this was right after Fortune magazine had published a piece called What the Hell Happened to GE? And it mostly argued, you know, I hate to say it to your face, but it mostly argued that Jeff Immel is what happened to GE. It was a very critical piece. And one of your students asked you about the article

and you said, I know some feel that I've let them down and that will weigh on me for the rest of my life. So I'm curious, what does that feel like? How much does it weigh on you now a couple of years out? Oh gosh, there's not a day that I don't think about it. And that's despite the fact that, you know, I love what I do now. I'm very happy.

I have friends. I have a professional career that I enjoy, I have a family that I love. But there's not one day that goes by that I don't sit back and say, I wish the stock price weren't where it was. I wish people weren't writing those things. I wish I had done certain things differently. And I think that every day I live, I'll have those moments. You know, every job looks easy till you're the one doing it. Your podcast listeners should keep that in mind. Jeff Immelt's book, co-written by the journalist Amy Wallace, is called Hot Seat. That is our show for today. We'll be back next week.

Until then, take care of yourself, and if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. We can be reached at radio at Freakonomics.com. This episode was produced by Mary Duduk. Our staff also includes Allison Craiglow, Mark McCluskey, Greg Rippin, Zach Lipinski, Matt Hickey, and Emma Terrell. We had help this week from Jasmine Klinger.

Our theme song is Mr. Fortune by the Hitchhikers. All the other music was composed by Luis Guerra. The complete archive of Freakonomics Radio, more than 400 episodes, is now available on all podcast apps. And you can also hear on many NPR stations across the country. As always, thanks for listening. Well, there's going to be plenty of things on this podcast that could get me massacred, so maybe add this to the list.