Young and Profiting with Hala Taha - William Cohan: The Rise and Fall of America’s Most Iconic Company, General Electric | E243

Starting point is 00:00:00 This episode of Young & Profiting Podcast is sponsored by JustWorks. Whether you're a small business or a growing team, JustWorks has the tools to support your HR needs. Learn more about JustWorks and how they can help you get more done by visiting JustWorks.com-podcast. This episode is brought to you by Kraken Pro. Meet the all-new Kraken Pro, the powerful, customizable, beautiful way to trade crypto. It's Kraken's most powerful trading platform ever, packed with trading features like advanced order management and analytics tools, all in a redesigned, modular trading interface, head

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Starting point is 00:01:25 William Cohan has worked as an investment banker on Wall Street. He's been a financial writer for the Vanity Fair, The New York Times, and Bloomberg. He's the author of multiple New York Times bestselling books and is one of the co-founders of the new media company, Puck. Along the way, William has become one of the world's premier financial journalists. His most recent book, Power Failure, is a fascinating look at the rise and fall of one of the most influential companies in history, General Electric. William, welcome to Young & Profiting Podcast.

Starting point is 00:01:54 Thank you for having me, Hala. It's great to be here. I'm excited for this interview and before we get into G, and Jack Welch, and so much more, I really think there's a lot that our listeners can learn from when it comes to your own backstory and career. And so let's start here. You've changed course several times in your career. I'm always interested to hear about those pivots. And early on, you got your degree

Starting point is 00:02:17 from the Columbia School of Journalism. And you got your big first break as an investigative reporter for a newspaper in Raleigh, North Carolina in the early 80s. Can you talk to us about what you were doing there and what made you decide to ultimately pursue a career on Wall Street instead later on? Sure. So after graduating from journalism school, I had done my thesis at Columbia on the public schools in Harlem in the early 80s and And I think it was the

Starting point is 00:02:47 first time ever that a journalist had been allowed into those public schools. And so I spent time at the, it seemed to be one of the best schools in the Central Harlem School district and in one of the worst schools in the Central Harlem School District and tried to figure out why one was working and one wasn't. And then I had gone to Duke, so I returned to North Carolina and somehow by some miracle I got hired at the Raleigh Times in Raleigh, North Carolina to cover public schools in Wake County. I did that for two years. One investigative reporting awards statewide in North Carolina, one for getting the Wake County school superintendent, the guy named Walter Marx, who was misusing federal chapter one funds and then lying about it essentially trying to cover it up. So wrote stories about that. He ultimately got fired and then wrote a story about how the school system

Starting point is 00:03:54 was paying for kids to ride to school and taxi cabs, believe it or not, students who didn't even exist. taxi cabs, believe it or not, students who didn't even exist. So that was sort of a scam. With the taxi cab companies in Wake County, anyway, both those things occurred in two years that I was there. One investigative reporting awards for both of them. And my father always thought it was important for me to go to business school. I didn't really want to go, but you know, it has a history major. I was enjoying being a reporter, but I wasn't making very much money, in fact, very, very little. And there was enough for a single guy to live on, but it wasn't going to be enough to support a real career. I never understood in fact why journalists get paid so poorly, but that's another topic. So I really wanted to get a job at the Wall Street Journal,

Starting point is 00:04:51 which is something I hoped to do, leaving journalism school and that didn't happen. And so I thought, well, if I have a journalism degree, investigative reporting awards, and I've got an MBA from Columbia. The journal will have to hire me. So that's why I went back to business school, and of course, the journal did not hire me. So that plan got scuttled. And so you ended up going and becoming an investment banker, which at the time was like a super hot career, sort of like everybody trying to get into AI now. So how did you actually get into Wall Street and become an investment banker? What was that transition like considering you didn't really have experience other than your MBA? Well, there's four two to serious of events because when I graduated from Columbia with an MBA in

Starting point is 00:05:41 May of 1987, literally all you had to do was be able to breathe to get a job on Wall Street. You may, oh, you're probably too young, but in October of 1987, the market crashed. 22.6% in one day. And after that, things slowed down considerably. But when I got hired in May, things were booming on Wall Street, so they needed bodies. I was a freshly minted MBA, and so I didn't have a clue what I was doing, of course, but that just goes to show you that they were hiring MBAs sort of with abandon. And again, as I mentioned, we really wanted to get a job

Starting point is 00:06:26 with the Wall Street Journal. And I managed to finagle interview with the National News Editor at the journal and they were down. That was when they were down still at the World Financial Center in Manhattan, near where, you know, 9-11 occurred. And I got into the guy's office and he looked at me like I had 27 heads and he basically said, what are you doing here in my office? And I said, well, I really want to get a job with the Wall Street Journal. I really want a job here. I'm here to get a job. And he said, well, you can forget that. We have a hiring freeze on. And even if we didn't have a hiring freeze on, I got my eye on this guy from Fortune and that guy from Forbes. So forget you, I said, well, I'm gonna either go

Starting point is 00:07:09 to Wall Street or the Wall Street Journal. You know, it's your choice. And he said, goodbye. So, so at that point, I sort of reconnected with the Wall Street hiring practice at Columbia and ended up deciding to go to GE Capital where I was hired to finance leverage buyouts of all things. That'll give you just sort of some idea of how wacky things were back then because I had no experience as you pointed out, other than my MBA, I had so zero experience.

Starting point is 00:07:47 And let's be frank, I wasn't the greatest student at Columbia. I was selected to be the class speaker, no doubt, because of my charming personality, but I was not a great student. Even though I'd come from a long line of accountants in Massachusetts, I had no idea what accounting was all about or finance. I did get my degree, but when I went to G.E. Capital to quote, unquote,

Starting point is 00:08:12 finance leverage bias, that'll just show you how crazy things were that I was hired to do that without any background or knowledge of what I was doing whatsoever. Yeah, that is really crazy. And then you ended up basically making your rounds around Wall Street, you went to Lazard, Merrill Lynch, and JP Morgan. What were some of the aspects of the different companies

Starting point is 00:08:33 that you liked and disliked when you went to those different companies? What were they all like? Well, I mean, I wrote my first book about Lazard. So I was totally infatuated by Lazard. They didn't recruit, unlike everybody else, Goldman, Solomon, Fersposter, whatever,

Starting point is 00:08:49 that recruited on campus, NBAs, Lazard didn't. So you have to know someone to get an interview there. And when I was at Columbia, I managed to finagle an interview. And I interviewed with two partners, Olly Womball and Jonathan Kagan, and they never even sent me a ding letter,

Starting point is 00:09:07 which is what you get when they're rejecting you. They just ignored me. They just ghosted me. So that made me want to work there all the more, and then two years later, after I'd spent two years at GE Capital, I got another chance to go there, and this time they did hire me,

Starting point is 00:09:23 and I was the only associate hired that year. They didn't have any chart apartments. So I wasn't welcomed with open arms. They were like, here's what you're gonna do. I'm so glad you're here. It was like, okay, here's an office, sitting in the office. And I think it was like four months before I did anything of any substance.

Starting point is 00:09:41 So it was a crazy place. I mean, at that point, it was a private partnership. It at that point is a private partnership it was literally a firm that was punching above its weight on a regular basis it worked on all the best deals and without really trying too hard and there were you know amazing people who worked there and you know which is of course why i decided to write my first book about lissard many years later but it was also a very frustrating place to work and politics were quite Byzantine, Soviet like, and I probably wasn't the greatest navigating all of that. And so after about six years there, I got recruited away to go to

Starting point is 00:10:21 Merrill Lynch. That was the total polar opposite. It was a corporate, it was a public company. It was very big. Lazar was very small. I couldn't figure out the politics there either. And then got recruited away to what is now Chabin Morgan Chase. But I went from being an associate at Lazar to a managing director at Chabin Morning Chase running the median telecom M&A group before January 2004 when I got summarily fired again for breathing. So I guess I got hired for being able to breathe and then I got fired for being able to breathe.

Starting point is 00:11:01 So there you go. And so you ended up transitioning back into writing. And that was after 17 years, it's not like you just spent a few years on Wall Street, it was a long time, a whole career that you spent. So what was your thinking like back then, why did you decide to pivot back into writing, especially when you know that it's really hard

Starting point is 00:11:21 to make a fruitful career out of that. Desperation, Paula. Desperation, I was fired again through literally no fault of my own. Never got a good explanation. Treated horrifically, absolutely horrifically. I wouldn't wish it on anybody. And I had two young sons. My wife was working, and basically not only did

Starting point is 00:11:47 J.V. Morgan Chase fire me, they also blackballed me from the industry so that I couldn't get another job working on Wall Street. And they did that repeatedly and without the slightest bit of remorse or concern. And I thought, well, what can I do that is within my own control, who I don't have to worry and wait, and who's going to finally decide to hire me or not? I need to get control of my own life. I can't put my career in the hands of other people anymore. I just cannot do it. I did that. And I'd had quite enough of that taste. And so, ironically, it was my journalism

Starting point is 00:12:36 that I could fall back on. And, you know, I didn't have a job on a paper or a magazine or anything, but I could write a book. I mean, I had this crazy idea that I'll just start by writing a book and I'll write a book about Lizard. I'll write a proposal and I'll see if anybody will buy it. I got an agent. The agent shopped the proposal. I wrote a hundred page proposal about Lizard. They didn't know. I hadn't taken a single note. It's not like I had planned to do that or anything. And I did some research. I wrote this proposal and lo and behold, it got bought by Double Day, which is part of Penguin Random House. And so I spent the next two years reporting and researching and writing the book. I got published in 2007 and incredibly not only was it a near-time

Starting point is 00:13:29 space seller, which was incredible enough, but then it got named the 2007 Financial Times Goldman Sachs Business Book of the Year, you know, beating out Alan Greenspan's book, beating out the Black Swan by Nessim Te lib. And basically that was obviously a very lucky break. And put me on the map and next thing you know I'm getting called by the you know the New York Times to write up Ed's a great and Carter called me up. Did I want to write for Vanity Fair and the rest is history at that point. I love this part of your story because I actually don't think it was luck. I think it was a lot of experience because what you had different from all the other writers

Starting point is 00:14:11 in your niche is that you actually had 17 years of industry experience and a lot of the books that you write, correct me if I'm wrong, really intersect with your professional and personal experiences. There are other great writers who spent time on Wall Street, like Michael Lewis and Bethany McLean, but no one, you know, they were like in and out after a couple of years. I mean, I spent 17 years and I never even could thought for a second that I'd go back to writing. It was only through the kindness of the, at J. B. Morgan Chase, who

Starting point is 00:14:46 defenestrated me that I got to think about what I wanted to do. So sometimes I've thought about dedicating one of my books to my former bosses at J. B. Morgan Chase, who got me fired. But yes, I mean, the good news is I do really understand how Wall Street works. There's no question I understand pretty much all aspects of it at this point. I understand what the risks are. I don't understand. I mean, a book called Why Wall Street Matters because I thought that politicians and others were just victimizing Wall Street after the 2008 financial crisis.

Starting point is 00:15:23 And I thought, you know, we need to like hold on a minute here and just remember what's good about Wall Street after the 2008 financial crisis and I thought, you know, we needed to like hold on a minute here and just remember What's good about Wall Street? So I mean I I was willing to see the other side of How things work and why it's such an important part of the global economy I mean because it just frankly is so yes I mean I've written five books. I guess you know know, book about Lizarra, a book about gold, men a book about bears turned, the Y Wall Street matters, and a book about GE, all sort of about business or corporate, you know, or Wall Street type situations. And I think it gives me a real insight, a real authority, which is important, sort of like somebody who's been a politician writing about politics.

Starting point is 00:16:09 It's really hard to spin me or hoodwink me or lead me on. I mean, I know the question to ask and I know when you're bullshitting me and I won't be bullshad on. So, and I'm going to tell it like it is. I'm absolutely going to get to the bottom of whatever it is I'm writing about and I will not ever compromise or give up until I get to the bottom of it. So I think that is an advantage. There are very few things about Wall Street that I don't understand at this point. So I can really, I think, cut through a lot of the crap and get to what I think is important. And also write a story that I

Starting point is 00:16:53 think people want to read. So I also try to write books that I like reading. Yeah. And we talk about skill stacking a lot on the podcast. And you're somebody who seems to have really leaned into your skill stack, starting with journalism, then working on Wall Street, then putting it all together, and becoming an author of those types of books, and even having the skills of actually working at the companies that you write about. So it's really interesting what you do. Let's talk about your rejection and termination at this company for other people who may have been laid off, terminated unfairly, and they're looking

Starting point is 00:17:25 to make a career transition or pivot, what would be your advice to them in terms of how to deal with rejection and how to sort of move on to something else more positive. Yeah, this kind of rejection is very lonely. So therefore, that's good prelude to writing because writing is also very lonely. And look, it does no way around it. It absolutely sucks. And it's completely unanticipated, completely unfair, ruthless, hardless. Then again, as I said, you know, starting again, being forced into figuring out what to do next when I was 44 years old

Starting point is 00:18:04 44 years old is extremely challenging and distressing especially when you have two young kids who you know are wondering what the hell you're doing at home suddenly But it you know when you sort of hit rock bottom and you begin to think well What can I do or I can get total control of my life so that this never can happen to me again? I never ever want to ever again be at the whim of some asshole boss who can just unilaterally decide whether or not you're going to get fired or not because you're not in the room with those decisions you're getting made. Now that was never going to happen to me again. And so even if I were to get canceled now, even if I could never write another book,

Starting point is 00:18:47 I don't care. I'm fine. I'll be fine. I can do what I want. And I've saved enough. I've invested well enough. I worked hard on my reputation and my skills. And that's what's important to me now. And the reason I left Fanny Farritt at start Puck is because the writers were given equity in Puck, and I'm a founding partner with equity. And just like I said at the beginning, I never understood why reporters get paid so little, why they never had equity. Well, this is a totally new model where we have equity. We are the content creators.

Starting point is 00:19:27 We are the people who are building this company. And if it works out, we will be the ones who benefit from it. And that's the way it should be. And I've been fighting for equity for writers. You know, I have equity in my books. But I don't have equity in my non-book journalism until with Pock. And this is something that I helped create and feel very strongly about.

Starting point is 00:19:52 I've been fighting for since I was a cub reporter at the Rolly Times in 1983. Let's hold that thought and take a quick break with our sponsors. My fellow business owners and entrepreneurs, I know you're juggling a million things right now and it can feel hard to keep up. JustWorks has just lifted a huge weight off my shoulders. JustWorks makes it easier for you to start run and grow a business. With justWorks, you can relax knowing that your payroll runs smoothly. Your team gets benefits customized to their needs without breaking your budget, and your business gets all the support it deserves. But there's so much more they offer wellness and

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Starting point is 00:21:33 more done by visiting justworks.com-podcast. Again, that's justworks.com-podcast. If you know Fintech, you know the category is moving fast. And as your company continues to grow, Visa has innovative solutions that can help you scale and succeed. Need to integrate payments? The Visa Developer Platform gives you access to Visa's APIs designed to power any solution.

Starting point is 00:21:55 Want to get to market faster? Visa Fintech FastTrack offers dedicated support and accelerated timelines. With the right tools, the goals you have tomorrow can happen today. Visa is ready to build a next generation of Fintech together. Learn more at visa.ca. It's really cool, and I think another big lesson from your story is that you're never too old to make a career change.

Starting point is 00:22:19 My podcast is called Young and Profiting, but I actually have a lot of 40-year-olds and even 15- and six-year-olds that listen to my show. And I want them to know, like, you're never too old to make a career pivot because look at you, you changed your career basically at 44. Everybody knows your name, you're like a very famous author. So it's like, thank God you got rejected and had your back against the wall and basically created this unique path that is only yours.

Starting point is 00:22:46 Nobody could replicate this. I think that's what's special is that nobody can really replicate you now, because you're putting all these different skills together and offering something unique. I just completely agree with that. I mean, some people who I've written about who don't like me have called me a Thrice failed investment banker to try to grind me a little bit.

Starting point is 00:23:08 I mean, it's true. I was good enough investment banker. I mean, I don't think you have to have a great amount of talent to be investment banker. You have to have incredible political skills. You have to be able to navigate your way year in and year out through that crazy puzzle that is Wall Street, the ultimate zero sum game. This used to be said at Lazarid, it's not enough for you to succeed. Others have to fail. I mean, if I hadn't gotten fired, then I wouldn't be right or today. There's no doubt about it because as I said about

Starting point is 00:23:41 I'm just banking, it's good one day a year, but that one day a year is enough to sustain you for the other 364 days because you know, you can't get paid pretty much doing anything else without risking your own money. They'd like you can get paid on Wall Street, even if compensation has come down in the last few years. But I don't care about that. What I care about is telling stories that I want to tell. I want to have total control over what I do. I do not want to have a boss. I do not want somebody else telling me what I can and can't do. I don't want somebody else deciding whether I will have a job or won't have a job. If I'm not, my political skills are off compared to what that person wanted or wants.

Starting point is 00:24:32 That is just repulsive to me in every way. And I've managed to carve out in the last 20 years, nearly 20 years at career, starting at 44, where I have pretty much total control every day over what I do all day, every day. I mean, and I can be where I want. I can do what I want. If I want to go on vacation, I can go on vacation. If I don't, if I want to work while I'm on vacation, I can.

Starting point is 00:24:58 If I want to stop work at noon every day, I can. That's the life. That's a great life. It's a great life. Okay, let's talk about your latest book about GE. What was the genesis of this book? As I mentioned, I had worked there in my first two years after business school. So I had a sense of the place. Obviously, I was one of the great American companies led by many great leaders, but including Jack Welch.

Starting point is 00:25:26 So he was legendary, a figure. I knew him a little bit. And he had us around the corner from me here on the attack it. And I was able to interview him many times before his death. So a combination of that and the CEO of GE that followed Jeff Nimalt, who followed Jack, a guy named John Flannery, was somebody I had started with at GE Capital and we shared an office together and is a long time friend of mine. So it just seemed like, you know, how this company went from being the most valuable, most

Starting point is 00:26:00 respected company on the planet to being a more of an afterthought, you know, not particularly relevant anymore. I mean, it's still more than a hundred billion dollar company, so it's not nothing, but it's not what it once was. And I thought I wanted to tell that story because I had worked there and I knew Jack and I knew John and I spent a lot of time with Jeff Emmelton. Others too and I just, I love nothing better than sort of taking a blank sheet of paper and starting at the beginning of a tale and just telling it from beginning to end. Without any preconceived notions, just letting the reporting take me away and into this story.

Starting point is 00:26:43 And I think that's what I, what I did here in this book. Yeah. And something that was interesting is that you focused a lot about the early history in the book. And I'd love to uncover that a bit. Tell us about the origins of G.E. A lot of people think that it started with Thomas Edison. And I thought it started with Thomas Edison too, because that's of course, what G.E. wants you to believe. And I thought it started with Thomas Edison too, because that's of course what you want you to believe. And why not? Who wouldn't want to have their company started by Thomas Edison, especially in 1892 and have it still be going?

Starting point is 00:27:13 But, you know, that's fortunately that's not the whole truth. It was formed by a merger between two companies, one of which was Thomas Edison's company called Edison General Electric. But in 1892 by the time that that merger took place, companies, one of which was Thomas Edison's company called Edison General Electric. But in 1892, by the time that that merger took place, Edison was not even the CEO. There was basically an investment banker who was the CEO and JP Morgan, the man, was the principal owner of the company.

Starting point is 00:27:41 Thomas Edison had pretty much checked out and moved on to another project, something to do with like a limestone quarry in New Jersey or something. And then they merged it with another company, the Thompson Houston company that was owned by a guy named Charles Coffin in and around Boston. Edison General Electric was based in New York City. Thompson Houston was based in Lin-Mastjusits. And so the merger took place because JP Morgan, the man and Charles Coffin's venture capital backers in Boston wanted the company to be merged.

Starting point is 00:28:17 And Thompson Houston was about the same size in terms of revenue as Edison General Electric, but it was much more profitable. So it was no surprise that they wanted Charles Kaufman to run the combined company, and that happened in 1892. And then ironically in 1893, it was a financial crisis, a big time financial crisis, like what we had in 2008. And this general electric almost went into bankruptcy because it had like 10 million of debt that it couldn't make payments on and Ultimately the reason it did not go into bankruptcy was because JP Morgan the man agreed to Allow the debt to be bought back at a discount and retire it and for the next 70 80 years G.E GE had a fortress balance sheet,

Starting point is 00:29:08 AAA credit rating, and that only began to fall apart as GE capital got bigger and bigger and bigger and more profitable and riskier. So, a lot of my listeners might not have known GE as the powerful company it once was. It was basically a pioneer for bringing electricity to the masses. So a couple of questions around this. First of all, talk to us about how big of a superpower GE once was. And then also talk to us about electricity and what that was like in terms of was it adopted fast, was it a slower amp up, maybe can you compare that to a technology of today?

Starting point is 00:29:49 GE was a technological pioneer without question. I mean, whether it was Jet Engine's X-rays, electricity, electrical generation, light bulbs, we take so many of the things that GE pioneered for granted today. I mean, it was sort of like Google, Apple, Microsoft all rolled up into one. And as I said, it was the most respected company. It was the most powerful company in the world. It was the most valuable company in the world. You know, what if Apple, which is worth more than three trillion, suddenly was worth

Starting point is 00:30:25 a hundred billion again, I mean, it would not be nothing, but you'd wonder what the hell happened. And so it was a very, very important technological company and a leader in many, many industries. Obviously, we completely take electricity for granted, but it was no pun intended. I rather shocking development when it came along. And Edison was, of course, one of the pioneers in the creation of the generation of electricity. And the adoption was slow because people were very wary of it. I mean, everything happened so quickly today, but like the internet was, the adoption of the internet was relatively slow.

Starting point is 00:31:11 And now again, we take it for granted, and it has improved our lives, and measurably. And I think it's sort of like that in that way. I mean, obviously, electricity has improved our lives, and measurably. And it was an incredible discovery. I mean, we went from essentially, you know, whale oil or candles to being able to flip a switch and having a light go on, you know, at all hours of the day. But it was dangerous. I mean, the early adopters, things blew up.

Starting point is 00:31:39 There were fires, and you know, if somebody who's an early adopter of electricity, their house burns down or their business burns down, and that sends quite a message to everybody else. And so you begin to think twice about whether or not you want to do that. But I don't know if you watched, I think it was a HBO, a silly HBO show called The Guilded Age. But in one of the early episodes of The Guilded Age, they all assembled in downtown Manhattan

Starting point is 00:32:08 because they were going to sort of electrify. Edison was going to electrify City Block and it became a huge event. He flipped the switch and the whole block was electrified down by City Hall in New York now. And that was a huge event. I mean, that was a huge event. I mean, that was, you know, front page news. And slowly but shortly, it got adopted from there. You know, the earliest subway systems in Manhattan were electrified thanks to Edison and Edison General Electric. And obviously,

Starting point is 00:32:41 electricity became and still remains more than a hundred years later incredibly important to our society and societies around the world. So one of the most incredible technological discoveries of all time. And I'm curious, GE, like you said, was this huge company. They had lots of different areas of business, electricity, they were doing like stuff for war, airplanes and stuff like this. Do you think other companies are like that today in terms of being such a large company that does so many different things?

Starting point is 00:33:16 I think the only company I can think of is like Microsoft right now that really does a lot of different things. Well, GE was what was obviously known as conglomerate. There was an era of conglomerates. The conglomerate era is pretty much over now that GE is splitting itself up into three companies and basically sold off the rest of it. There are a few lingering conglomerates. lingering conglomerates. Danahir is a publicly traded conglomerate that the current GECO, Larry Kulp, actually worked at as the CEO once upon a time. There are other, you know, Berkshire Hathaway. I mean, you could, it's more of a holding company, but it's clearly a conglomerate. There are a few left. Nobody talks about conglomerates anymore, but there are a few left, nobody talks about conglomerates anymore,

Starting point is 00:34:05 but there are a few left, you know, Alphabet slash Google, Apple, Microsoft, I mean, these are huge, powerful companies and they do a lot of different things. I mean, Amazon does a lot of different things, right? It's the number one cloud computing company and people don't even realize that. They think that's where they go to get their books and their detergent.

Starting point is 00:34:27 But it makes probably more money from cloud computing than anything else. So I think there was a time on Wall Street when conglomerates were very much in fashion, and investment managers felt they needed to own them. GE was a bellwe weather on Wall Street, triple a rated company in the Dow Jones industrial average. I mean, Jack Welch was a master at romance saying the Wall Street research analysts, as well as the media, I think, you know,

Starting point is 00:34:58 those days are over, but when those days were primo, there was nobody better than Jack Welch at making GE really sexy and something that investors had to own. We'll be right back after a quick break from our sponsors. Young and profitors. Most of you know that I started my LinkedIn secrets master class late last year, and it's going well, we're crushing it over $300,000 in revenue so far.

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Starting point is 00:37:20 Again, that's Shopify.com slash profiting. Well, this is a perfect transition to start talking about Jack Welch. So I started this podcast in 2018 and for two years, I was trying to get Jack on the show before he passed away. I didn't get the chance, but now I've got you on the show. You've spent a lot of time with Jack. So this is sort of like the next best thing for our listeners at Young and Profiting to get to know Jack. So you met him in Nan Tucket, like you were mentioning. I think you met him several times. Can you tell us about your first interaction with him?

Starting point is 00:37:53 Sure. I mean, I knew he was obviously because I had worked there. And of course, everybody knew who Jack Welch was. He was a legendary CEO. But, you know, he lived around the corner from me here. And once I decided that I was gonna see if I could write this book, you know, which, as you alluded to, I mean,

Starting point is 00:38:18 going back to 1892, even though Lazar was founded in 1848, making it 50 years older than GE, it was like a big nothing for many years. So, I mean, GE started off as a very important company. The founder of electricity, it basically was public from the outset. So, there was a lot of history to uncover and is a lot of history to sort of uncover and mine and synthesize and distill. So I thought, well, I mean, if I'm going to do this, I've got to talk to Jack. He pretty much readily agreed to talk to me. And I don't know whether it was because we lived around the corner from each other or whatever. I don't know. Or I'd be, as I'd worked at G capital or maybe because of my reputation as a writer

Starting point is 00:39:06 and a bank, former banker, but he agreed to and then we just started writing on conversations first starting at the Nantucket golf club. He's a big golfer. We had lunch and on the verand down there forget, and even before I could sit down, he couldn't get out of his mouth fast enough how, and in much more colorful language than I'll use here, how disappointed he was with his selection of his successor, Jeff Immelt, and how he thought Jeff Immelt had ruined G. So interesting. And as soon as he said that, I knew that I was off to the races and something special

Starting point is 00:39:46 was underway. You had a GC story to uncover. So let's talk about Jack's leadership style. So based on what I read, he really played by his own rules when he first started his career at GE, because essentially he started from the bottom and worked his way up to become the CEO eventually. And so his successes and his failures were celebrated, his bad behaviors were overlooked. Why do you think he could pull that off? Skill. He had fabulous people skills. He had great IQ, great EQ, great political skills. Again, I mean, to get to the top of GE, I mean, requires unbelievable political skills, and he had them. But he also had accomplished unbelievable things along the way. I mean, he basically commercialized GE's discoveries in plastic pellets, and he was head of the plastics division. The up in Pittsfield Mass and created his own little fiefdom up there and he just gave great presentations. He had great

Starting point is 00:40:55 communication skills. He was able to set budgets and exceed the budget that he had set for himself and his division a year after year. And then when he was given more and more responsibility, he excelled during that phase too. So, I mean, what more can you ask for? And then we don't get to want to come time for him to compete for the top job. He was younger, probably more ambitious, and was going to shake things up, which I think his predecessor, Reg Jones, wanted him to do, wanted his successor to do, and then Jack sort of had all of that and his ability to do that. I know that he ended up getting the nickname of Teflon Jack.

Starting point is 00:41:41 Where did that nickname come about from? Well, I mean, he had a bunch of nicknames. He was called Neutron Jack. He was called Teflon Jack, where did that nickname come about from? Well, I mean, he had a bunch of nicknames. He was called Neutron Jack. He was called Teflon Jack. I think he got away with a lot of things that nowadays he might get quote unquote canceled for. So I think people thought that things happened on his watch that he never got blamed for.

Starting point is 00:42:03 I think we all know people like that. And then jack was because he was kind of infamous for laying people off and trimming the fat at companies Giveny insight in terms of his decision-making process about layoffs or how he felt about them I mean, I think he thought jee just gotten way to bureaucratic and bloated and You know, he sort of needed to break it, to build it back up again. And I think he wanted to get rid of people who are non-productive, who had gotten lazy, who weren't as motivated as he was. He wanted real go getters.

Starting point is 00:42:37 And it's no better way to do that kind of thing than to fire a bunch of people because that gets people's attention. And you know, it's like Voltaire wrote about in Candide after a British general lost a battle in France when he got back to England. He was killed for fair, an example of Paul des Autres to make an example for the others. And I think Jack did the same thing. Yeah. And I know with these organizations, especially big organizations, people can get

Starting point is 00:43:13 really lazy. And there can be a lot of fat at the organizations. Things can get really slow. So it is understandable when a company gets that size that you may want to sort of trim it down and let people work a little bit harder. So I heard you say in a past interview that researchers, media reporters and shareholders were basically eating out of the palm of Jack's hand. They ate up his every word. What made him such a special spokesperson as the CEO of G?

Starting point is 00:43:42 He was totally a man of the people. He sounded like what he was, which was an only child from North Notha Boston. I mean, he's really sounded like, you know, his father was a train conductor. His mother was a stay-at-home mom and they're totally a middle class of people. He's self-made man, and he sounded that way, but he also had a knack for getting along with people and motivating people to do more than they ever thought they could, to accomplish more than they ever thought they could at every step of the way. And when he was took over GE, it was a company worth $12 billion, you know, not nothing in 1980. But when he left, it was worth

Starting point is 00:44:33 around $650 billion, had his peak, and was the most valuable company in the world, and the most respected company in the world. And, you know, that's a major accomplishment. Now Tim Cook at Apple took over Apple after Steve Jobs died. It was worth 300 billion. And now it's worth 10 times, $3 trillion. I mean, that's phenomenal. I think Tim Cook has probably created more shareholder value than any other person in the history of the world. But Jack in his day was like Tim Cook today. You know, it'd be interesting to explore how Tim Cook really did do that. Just like I explored how Jack did it. Jack was totally sweet generous. The people I talked to about him just loved the guy. I mean, and loved working for him. And that's pretty unusual.

Starting point is 00:45:26 Most people don't like their boss. Well, maybe Apple is your next buck if you get a job there, and then I'm just kidding. I use Apple products. So there we go. There's the intersection. There's the interpersonal connection. There's the nexus.

Starting point is 00:45:41 Let me dig a little bit deeper on the way Jack treated his employees. Like you mentioned, he was a man of the people. Talk to us about how he was sort of known for remembering his employees' names, even their family members' names, and how he was able to use that sort of connection to get people to work harder for him, essentially. Right. He did, you know, again, it's a skill. It's an art form.

Starting point is 00:46:05 I mean, being able to remember people's names after you meet them once, their family members' names to be able to ask about them, he had real political skills. And I think that in your to his benefit. But he also, he did what he called wallowing, which was, he would dig deep into a topic and just bring everyone together to talk about it. But he also encouraged descent. He just encouraged people to disagree with him. Now again, he was very forceful. He would generally get his way, of course, as a CEO would, but he was capable of having his mind changed. If he'd made a decision, he could reverse that decision if somebody convinced him why

Starting point is 00:46:48 he was wrong and had made a mistake. And I think that is a great skill. What did he look like? Right? Because when I think about Jack, and especially for all of us who sort of just know his name, I think from as this tall, grand person, what would he dress like? Like, talk to us about that. Jack was not tall, grand person. What would he dress like? Like, talk to us about that. Jack was not big, not tall. He was short and a dynamo. When I knew him, obviously it was much later in his life. So he was even sort of diminished, smaller than even he was when he was in his prime

Starting point is 00:47:25 but he right to the end always had an incredible amount of energy and just ambition that new no bounds and a real love of life and lust for life. I mean it was was, it was very infectious. I think one of the things that sort of made me the happiest was that during our last visit together, which also was at the Nantucket Golf Club. My older son called up and coincidentally, and Jack invited him and his friend to come over to the club and sit with us and have a beer.

Starting point is 00:48:07 So I was really glad that my son got to, you know, have a beer with Jack Welch and meet Jack Welch. That was great. That's really cool. Good for him. Okay. So my last question here about Jack Welch and then we'll move on to GE and sort of what it is now and how it ended up where it is now. My last question is really about the fact that Jack worked his way up to become a CEO, just like Tim Cook didn't found Apple, the CEO of Microsoft didn't found Microsoft and is a really great CEO. So talk to us about the fact that being an entrepreneur doesn't necessarily mean you need to be a founder or inventor. You took that path, sort of you invented your own career and took that path,

Starting point is 00:48:48 but talk to us about the fact that not everybody needs to be an inventor or entrepreneur. I've sort of thought a lot about this. I mean, you know, at some point around the turn of the around the turn of the 20th century founders of companies sort of made the decision that they didn't have to continue to run these companies to benefit from what they had started and created. They could bring in professional management, give them incentives to run the companies that they had started, and it could actually all work out just fine. They could go pursue other things, philanthropy, golf, living in a hut in the middle of an island or something, and just own the equity that they had got because they were the founder and the creator, and let somebody else run these things who might even be better

Starting point is 00:49:45 at it than they were or would be. You know, that must have been an incredible leap of faith to realize that that could work that you could bring in professional management then that you could go off and do something else and then create a whole series of companies where shareholders were quite diverse and there were many shareholders. So I mean, G had billions of shares in the company and hundreds, millions, many millions of shareholders. So the ownership was quite diversified and diluted. And it could all just work out just fine, by and large, not always, but mostly. I mean, so that is an incredible leaf of faith to create something like that and to make it work. So I'm sort of fascinated by that moment in

Starting point is 00:50:41 time when they, which are give us, we take for granted now, but somebody had to come up with that scheme. And it's really interesting because I think a lot of people, they're not great at inventing or creating or taking something from zero to one, but they might be great at the ops and operations and actually leading and managing. Look at Jamie Diamond that JPMorgan Chase, I mean, he was not a banker, he was not a trader, he worked for Sandy Wilde, and he sort of learned to be a bank executive, whatever that means. And he's turned out to be one of the best bank executives we've ever had, and made himself a billionaire in the process through his ownership of J. B. Morgan stock that he got for compensation, not because he was the founder of J.B. Morgan. So if you can get yourself somehow into those positions and do a good job at it, you're gonna get rewarded.

Starting point is 00:51:37 Okay, let's get back to GE. So the story's not over after Jack Welch. He hands off the CE role to Jeffrey Emelt. And everything sort of went haywire after 2001. So talk just about that. The evolution of where GE is now after Jeffrey took over. Jeff Emelt in fairness to him took over from Jack his first day in the office CEO with September 10th, 2001. The next day was September 11th. So, GE had made the engines on the jets.

Starting point is 00:52:15 One of the buildings down at the World Trade Center was reinsured by GE Capital. They had some employees who died that day, you know, they owned NBC, which of course, I think went for a week or so without any advertising. And then along came the Sarvaine's Oxley law and things changed dramatically on Wall Street and corporate America in America, generally, after 9-11. And so Jeff Himmels had to deal with all that. But I think, as they say, mistakes were made. Dave Calhoun, who's now the CEO of Boeing and who worked at GE for a long time, told me

Starting point is 00:53:02 that, you know, this is a little harsh, but I think it's hard to argue with. And that is that when Jack had big decisions to make as CEO of GE, he generally made the right decision. And when Jeff had big decisions to make as the CEO of GE, he unfortunately often made the wrong decisions. And so, you know, what I document in the book is just sort of a series of unfortunate decisions that Jeff made. He thought they were the right ones, and it's easy to second guess in hindsight, but the

Starting point is 00:53:38 truth is that poor decisions cost GE its earning stream its profitability its market value its respect its triple-lay credit rating its Stability it did almost went down the tubes doing the 2008 financial crisis so Had to be bailed out. I mean so you name it retrospect, you'd have to say he made the wrong decisions. More often than he made the right ones. And do you feel like Jack thought that Jeff Tarnished his legsier reputation? Absolutely. Yes. I think Jack felt that he had left Jeff a flush, when Jeff took over from him, and it was hard to argue with Jack about

Starting point is 00:54:29 that. I mean, it was a AAA rated company. It was the most valuable company in the world. It was the most respected company. The world, Jack, was the CEO, the manager of the century, whatever that means, thanks to Fortune Magazine. And Jack absolutely felt that Jeff squandered that incredible hand that he had given. Jeff now, of course, Jeff felt that the hand

Starting point is 00:54:58 that Jack dealt him wasn't that great. And he needed to fix it. And a lot of CEOs believe that their predecessor didn't do his good job as their predecessor would have everybody believed. So I mean, that's nothing new. I think objectively speaking, you'd have to say that Jack did leave Jeff with a pretty good hand. And he didn't play it particularly well circumstances have changed obviously. 9 11 change things the things that we talked about. Before change things but Jeff made a lot of proactive decisions that.

Starting point is 00:55:36 I think Jack wouldn't have made or Jack would have played differently and I don't think I. You know Jeff had played the hand differently, I probably wouldn't have written this book. So that's something to think about too. So interesting. What do you think is there for the future of GE? Do you think it's ever going to be the huge company that we used to know for? Do you think I know it's separating into other companies or has? Yes. So in the process of breaking itself up into three companies, it's the healthcare division is already publicly trading. GE's big shareholder. I'm sure they'll spin that off to shareholders. I think next year they're splitting off

Starting point is 00:56:16 the power business is GE, Vernova. You know, there's a name right out of a computer brain. And the old GE will be the jet engine business. And Larry Culp will continue to run that. Although, I don't know what he knows about the jet engine business, but he obviously wants to be remaining as the CEO of GE. Look, each one of those businesses is important in its own way. Again, we take many of them for granted, but the healthcare businesses have really good business.

Starting point is 00:56:51 The power business, of course, is the original business and it's hugely important even to this day. There's still probably billions of people, two billion, one billion, one and a half billion people who don't have electric power today who would need it and G can provide that. And of course the jet engine business is dual. Those engines are the most respected, technologically advanced. Engines in the world, so, you know, I just don't think any of it's going to amount to what GE was once upon a time. Yeah. Well, this is such a great interview. Yeah, Pam, there you have it. A forensic autopsy of one of America's greatest companies by one of its elite financial journalists, William Cohan.

Starting point is 00:57:40 And I hope you learned as much as I did. and I hope you take some of that Jack Welch energy into everything that you seek to accomplish as well. So William, how we wrap up this interview is I ask a couple questions. And this doesn't have to be related to Jack, your book, it just from your own personal experience. So what is one actionable thing our young and profitors can do today to become more profitable tomorrow. Invest wisely. Invest in good companies with good earnings, good management, good dividends. Don't fall for get rich quick scams, no crypto, no meme stocks, none of that crap. I love that advice. And what is your secret to profiting in life?

Starting point is 00:58:25 And this can be beyond financial. You know, having a loving family and working hard each day and, you know, having integrity and, you know, having equity in what you, we, what you do and trying to minimize, you know, the whole other people have on you. And where can our listeners learn more about you and everything that you do? Well, I have a website, Williamcohan.com. I'm still on what used to be known as Twitter and now is called X. That's my only social media outlet. I don't believe in any others. I really don't even believe in X either. But, you know, I'm still there. Of

Starting point is 00:59:11 course, you know, I can be a red, you know, I write twice a week for Pock, Pock.News. That's the subscription business that we started, a digital media company, and I write for a variety of publications still. Awesome. Well, thank you so much for joining us on Young & Profiting Podcast. Thank you all for having me. I really enjoyed it. you

Young and Profiting with Hala Taha - William Cohan: The Rise and Fall of America’s Most Iconic Company, General Electric | E243

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