William Cohan: The Rise and Fall of America’s Most Iconic Company, General Electric | E243
William Cohan: The Rise and Fall of America’s Most Iconic Company, General Electric | E243
William Cohan is the author of multiple New York Times bestselling books. A former longtime special correspondent at Vanity Fair, he is also a founding partner of Puck, a daily digital news and opinion publication. His most recent book is Power Failure: The Rise and Fall of an American Icon, which is about the astounding rise and precipitous fall of General Electric.
In this episode, Hala and William will discuss:
– His journey from journalist to investment banker and back
– Working on Wall Street in the 1980s
– How not to get hoodwinked by the Street
– Why it’s never too late to change careers
– Creating a new business model for journalism at Puck
– The rise and fall of General Electric
– Channeling the energy of GE’s legendary CEO Jack Welch
– Why you don’t need to be a founder or inventor to make it big
– And other topics…
William Cohan was a senior Wall Street M&A investment banker for 17 years at Lazard Frères & Co., Merrill Lynch and JPMorgan Chase. He is the New York Times bestselling author of three non-fiction narratives about Wall Street: Money and Power: How Goldman Sachs Came to Rule the World; House of Cards: A Tale of Hubris and Wretched Excess on Wall Street; and The Last Tycoons: The Secret History of Lazard Frères & Co. A former longtime special correspondent at Vanity Fair, he is also a founding partner of Puck, a daily digital news and opinion publication. His most recent book is Power Failure: The Rise and Fall of an American Icon, which is about the astounding rise and precipitous fall of General Electric, once the world’s most valuable and respected companies.
William’s Website: https://williamcohan.com/
William’s LinkedIn: https://www.linkedin.com/in/williamdcohan/
William’s Twitter: https://twitter.com/WilliamCohan
William’s Newsletter (Dry Powder): https://puck.news/newsletters/dry-powder/
William Cohan’s most recent book is Power Failure: The Rise and Fall of an American Icon: https://www.amazon.com/Power-Failure-Rise-General-Electric/dp/0593084160/
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[00:00:00] Hala Taha: Yap. Fam, as you know, we are big believers on this podcast about learning from the trials and tribulations of entrepreneurs, executives, and companies that have come before us. Sometimes those leaders are up and coming influencers. Sometimes they're giants in their field, and sometimes they're larger than life figures from history like Thomas Edison and Jack Welch, whose lives and careers offer us a host of lessons that are still relevant to us today.
My guest today is gonna take us through some of those stories and much more. 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 and Profiting Podcast.
[00:01:09] William Cohan: Thank you for having me holla.
It's great to be here.
[00:01:12] Hala Taha: 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 from the Columbia School of Journalism. You got your big first break as an investigative reporter for a newspaper in Raleigh, North Carolina in the early eighties. 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?
[00:01:49] William Cohan: Sure. So after graduating from uh, journalism school, I had done my thesis at Columbia on the public schools in Harlem. In the early eighties, and uh, I think it was the first time ever that a journalist had been allowed into those public schools. And so I spent time at the, what 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 won for getting the Wake County School superintendent, a guy named Walter Marks, 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 was paying for kids. To ride to school in 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, in Wake County. Anyway, both of those things occurred in two years that I was there.
One investigative reporting awards for both of them. And you know, my father always, uh, thought it was, uh, important for me to go to business school. I didn't really want to go but. You know, as a history major, I was enjoying being a reporter, but I wasn't making very much money In fact, very, very little.
And you know, it was enough for a single guy to live on, but it wasn't gonna 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, 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 M B A from Columbia, the journal will have to hire me. So that's why I went back to business school. And of course, uh, the journal did not hire me, so that plan got scuttled.
[00:04:30] Hala Taha: 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 M B A?
[00:04:48] William Cohan: Well, it was fortuitous series of events because when I graduated from Columbia with an M B A in May of 1987, literally all you had to do.
Was be able to breathe to get a job on Wall Street. You may, well, 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, you know, things were booming on Wall Street, so they needed bodies. I was a freshly minted M B A 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 a abandon. And again, you know, as I mentioned, really wanted to get a job at the Wall Street Journal and I managed to finagle interview with the National News editor, uh, 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, nine 11 occurred and I got into the guy's office. 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 at 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 uh, even if we didn't have a hiring freeze on, I've got my eye on this guy from Fortune and that guy from Forbes. So forget you. I said, well, I, I'm gonna either go to Wall Street or the Wall Street Journal.
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. And that'll give you just sort of some idea of how wacky things were.
Back then because you know, I had no experience as you pointed out O other than my M B A I had so zero experience. 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 come from a long line of accountants in uh, Massachusetts, I had no idea what accounting was all about or finance.
I did get my degree, but when I went to GE Capital to, you know, quote unquote finance leverage buyouts, 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.
[00:07:37] Hala Taha: Yeah, that is really crazy. And then you ended up basically making your rounds around Wall Street.
You went to Lazar, Merrill Lynch and JP Morgan. What were some of the aspects of the different companies that you liked and disliked when you went to those different companies? What were they all like?
[00:07:52] William Cohan: Well, I mean, i, I wrote my first book about Lazar, so I was totally infatuated by Lazar. you know, they didn't recruit, unlike everybody else, Goldman, Solomon, first, Boston, whatever that recruited on campus, MBAs Lazar didn't.
So you had to know someone to get an interview there. And when I was at. Columbia, I managed to finagle an interview and you know, I interviewed with two partners, Ollie Womble and Jonathan Kagan, and they never even sent me a dinging letter, which is what you get when they're rejecting you. They just ignored me, they just ghosted me.
So that made me wanna 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 and I was the only associate hired that year. They didn't have an HR department, so I wasn't welcomed with open arms. They weren't, you know, like, here's what you're gonna do.
I'm so glad you're here. It was like, okay, here's an office. Sit in the office, and I think it was like four months before I did anything of any substance. So it was a crazy place. I mean, at that point it was 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. 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 ARD many years later. But it was also a very frustrating place to work. And politics were quite byzantine, Soviet like.
And, you know, I probably wasn't the greatest navigating all of that. And so after about six years there, I got recruited away to go to Merrill Lynch. That was the total polar opposite. It was corporate, it was a public company, very big lard was very small. I couldn't figure out the politics there either.
And then got recruited away to what is now JP Morgan Chase. But I went from being an associate, uh, at Lazar to, uh, a managing director at JP Morning Chase running, uh, the media and telecom m and 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.
So there you go.
[00:10:17] William Cohan: 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.
[00:10:25] Hala Taha: 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 to make a fruitful career out of that
[00:10:39] William Cohan: desperation, hala, 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, uh, two young sons. My wife was working and basically not only did j b Morgan Chase fire me, they also blackballed me from the industry so that I couldn't get another job, uh, 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? You know, who I don't have to worry and wait, you know, who's gonna 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, uh, ironically it was my journalism that I could fall back on and, you know, I, 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 lard.
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 lard. 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 Doubleday, which is part of Penguin Random House.
And so spent the next two years, uh, reporting and researching and writing the book. Uh, it got published in 2007. And incredibly, not only was it a New York Times bestseller, 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, buying Assem Taleb, 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 op-eds. Uh, Grayden Carter called me up, did I wanna write for Vanity Fair? And the rest is history at that point.
[00:13:16] Hala Taha: 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 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.
[00:13:35] William Cohan: There are other great writers who spent time on Wall Street, like Michael Lewis and Bethany McClain, and, but no one, you know, they, they were like in and out after a couple of years. I mean, I spent 17 years and I, I never even could thought for a second that I'd go back to writing.
It was only through the kindness of the, uh, my bosses at JP Morgan Chase. Who derated 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 JPMorgan 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, I wrote a book called Why Wall Street Matters because I thought that politicians and others were just, victimizing 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, and why it's such an important part of. It's a global economy. I mean, because it just frankly is so, yes. I mean, I've written five books, I guess.
You know, a book about Lazar, a book about Goldman, a book about Bear Stearns, the Why 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, I. A real insight, a real authority, which is important. Sort of like somebody who's been a politician writing about politics, it's really hard to spin me or hoodwink me or lead me on.
I mean, I, I know the questions to ask and I know when you're bullshitting me and I, I won't be bullshit up on so, and I'm gonna tell it like it is. I'm absolutely gonna get to the bottom of whatever it is I'm writing about. I will not ever compromise or give up until I get to the bottom of it. So I think that is a, an advantage.
There are very few things about Wall Street that I don't understand at this point. So I can, uh, really, because I think cut through a lot of the crap and get to what I think is important. And also write a story that I think people wanna read. So I also try to write books that I like reading.
[00:16:12] Hala Taha: 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 and 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 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?
[00:16:48] William Cohan: Yeah, this kind of rejection is, uh, very lonely, so therefore that's a good prelude to writing. 'cause writing is also very lonely. And look it, there's no way around it. It absolutely sucks and it's completely unanticipated. Completely unfair, ruthless, heartless.
Then again, as I said, you know, starting again, being forced into figuring out what to do next when I was 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 gonna get fired or not, because you're not in the room where those decisions are getting made.
No, that was never gonna happen to me again. And so even if I were to get canceled now, even if I could never write another book, I don't care. I'm fine, I'll be fine. I could do what I want and I've saved enough. I've invested well enough. I'm worked hard on my reputation and and my skills, and that's what's important to me now.
And. The reason I left Vanity Fair to 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, 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 Puck. And this is something that I helped create and feel very strongly about, have been fighting for since I was a Cub reporter at the Raleigh Times in 1983.
[00:19:21] Hala Taha: 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. My podcast is called Young and Profiting, but I actually have a lot of 40 year olds and even 50 and 60 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.
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.
[00:20:03] William Cohan: 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.
I mean, it's true. I, I was good. I mean, I was good enough investment banker. I mean, I don't think you have to have a great amount of talent to be an investment banker. You have to have incredible political skills. 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 Lazar, 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 a writer today. There's no doubt about it because as I said about Invis 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 that like you can get paid on Wall Street even, 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. That is just repulsive to me in every way. And you know, 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 wanna go on vacation, I can go on vacation. If I don't, if I wanna work while I'm on vacation, I can, if I wanna stop work at noon every day, I can. That's a life. It's a great, you know, it's a great life.
[00:22:11] Hala Taha: Okay. Let's talk about your latest book about ge.
What was the genesis of this book?
[00:22:17] William Cohan: As I mentioned, I had worked there in my first two years after business school. So I had a sense of the place, obviously, uh, it was one of the great American companies led by many great leaders, but including Jack Welch. And so he was the legendary, uh, figure. I knew him a little bit and he had a house around the corner from me here on Nantucket, and I was able to interview him many times before his death.
And so a combination of that and the c e o of. GE that followed Jeff Molt, 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 longtime friend of mine. So it just seemed like, uh, you know how this company went from being the most valuable, most 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 want, I, you know, 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 Emmelt and others too.
And, uh, I just, I love nothing better than sort of taking a blank sheet of paper and starting at the beginning of a tale. Just telling it from beginning to end without any preconceived notions. Just letting the reporting take me away and into this story. And I think that's what I, what I did here in this book.
[00:23:53] Hala Taha: 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 ge. A lot of people think that it started with Thomas edison,
[00:24:06] William Cohan: and I thought it started with Thomas Edison too, because that's of course what GE wants you to believe and, and why not Who, who wouldn't want to have their company started by Thomas Edison, especially in 1892, and have it still be going.
But you know, the, fortunately, that's not the whole truth. It was formed by a merger, uh, 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, Edison was not even the c e o. There was basically an an investment banker who was the C E O and JP Morgan.
The man was the principal owner of the company. 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 Lynn, Massachusetts. 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, and Thompson Houston was about the same size in terms of revenue as Edison General Electric, but it was much more profitable.
So it's no surprise that they wanted Charles Coffin to run the combined company. And that happened in 1892. And then, um, 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, uh, GE had a fortress balance sheet, AAA credit rating. And that only began to fall apart as GE capital got bigger and bigger and bigger and more profitable and riskier.
[00:26:27] Hala Taha: 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 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 slow ramp up? maybe can you compare that to a technology of today?
[00:26:56] William Cohan: GE was a technological pioneer without question. I mean, whether it was jet engines, 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 3 trillion, suddenly was worth 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'd rather shocking development when it came along. Uh, and Edison was of course, one of the pioneers in the creation of the generation of electricity and it, 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. And now again, we take it for granted and it has improved our lives immeasurably. And I think it's sort of like that in that way. I mean, obviously electricity has improved our lives immeasurably, 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, you know, early adopters things blew up. There were fires. Uh, and you know, if somebody who's an early adopter of electricity, you know, their house burns down or their business burns down, and that sends quite a message to everybody else.
And so, you know, you begin to think twice about whether or not you want to do that. But, you know, I dunno if you watched, um, I think it was a H B O silly h b os show called The Gilded Age. But you know, in one of the early episodes of the Gilded Age, they all, assembled in downtown Manhattan because, uh, they were going to sort of electrify Edison was gonna electrify city block and it became a huge event and he flipped the switch and the whole block was electrified down by City Hall in, in New York Now, And you know, 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 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.
[00:30:04] Hala Taha: 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
[00:30:14] William Cohan:
[00:30:14] Hala Taha: airplanes and stuff like this.
[00:30:17] William Cohan:
[00:30:17] Hala Taha: do you think other companies. Are like that today in terms of being such a large company that does so many different things. I think the only company I can think of is like Microsoft right now that really does a lot of different things.
[00:30:29] William Cohan: Well, GE was what was obviously known as a 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. Danaher is a publicly traded conglomerate that the current GE, C e o, Larry Culp actually worked at as the c e O 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. 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. But you know, it makes probably more money from cloud computing than anything else. So I think there was a time on Wall Street I.
Conglomerates were very much in fashion and investment managers felt they needed to own them. GE was a bellwether on Wall Street, AAA rated company in the Dow Jones Industrial Average. I mean, Jack Welch was a master at romancing the Wall Street research analysts as well as the media. I think, you know, 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.
[00:32:25] Hala Taha: 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 Nantucket, like you were mentioning, and I think you met him several times. Can you tell us about your first interaction with him?
[00:32:51] William Cohan: Sure. I mean, I knew who he was, obviously, because I had worked there and of course everybody knew who Jack Welch was.
He was a legendary c e o. But you know, he lived around the corner from me here. And once I decided that I was going to see if I would could write this book, you know, which. As you alluded to, I mean, going back to 1892, even though Lard was founded in 1848, making it 50 years older than ge, you know, 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 sort of uncover and. Mine and synthesize and distill. So I thought, well, I, I mean, if I'm gonna do this, I've gotta 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. Uh, I don't know, or obvious I'd worked it. G Capital or maybe because of my, my reputation as a, as a writer and a, a bank former banker. But he agreed to, and then we just started right in on conversations first, starting at the Nantucket Golf Club.
You know, he is a big golfer. You know, we had lunch and uh, on the veranda. I'll never forget, and even, even, you know, before I could sit down, he couldn't get out of his mouth fast enough. How. In much more colorful language than I'll use here. How disappointed he was with his selection of his successor, Jeff Immalt, and how he thought Jeff Immalt had ruined ge.
So interesting and I, as soon as he said that, I knew that I was off to the races and something special was underway.
[00:34:46] Hala Taha: You had a juicy 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 c e o eventually.
And so his successes and his failures were celebrated. His bad behaviors were overlooked. Why do you think he could pull that off
[00:35:10] William Cohan: skill? He had, uh, fabulous people skills. He had great iq, great eq, great political skills. I. Again, I mean, to get to the top of ge, I mean, requires unbelievable political skills and he had them, but he also had had accomplished unbelievable things along the way.
I mean, he, you know, basically commercialized GEs discoveries in plastic pellets, and he was head of the plastics division up in Pittsfield, mass and created his own little fiefdom up there, and he just, Gave great presentations. He,
had great communication skills. He was able to set budgets and exceed the budget that he had set for himself and his division, you know, year after year. And then when he was given more and more responsibility, he excelled during that phase two. So, I mean, what more can you ask for? And then we know, you know, when it.
Came time for him to compete for the top job. He was younger, probably, uh, more ambitious and was gonna shake things up, which I think his predecessor, reg Jones, you know, wanted him to do, wanted his successor to do. And then Jack sort of had all of that and his ability to do that.
[00:36:34] Hala Taha: I know that he ended up getting the nickname at GE of Teflon Jack.
Where did that nickname come about from?
[00:36:41] William Cohan: Well, I mean, uh, 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.
I think we all know people like that.
[00:37:03] Hala Taha: Then neutron Jack was because he was kind of infamous for laying people off and trimming the fat at companies. Do you have any insight in terms of his decision making process about layoffs or how he felt about them?
[00:37:14] William Cohan: I mean, I think he thought, gee, he had just gotten way too 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. And there's no better way to do that kind of thing than to fire a bunch of people. 'cause that gets people's attention. And you know, it's like, uh, Voltaire wrote about in CandE, uh, uh, after a British general lost a battle in France when he got back to England, uh, he was killed an.
To make an example for the others, and I think, uh, Jack, uh, did the same thing.
[00:38:06] Hala Taha: Yeah. And I know with these organizations, especially big organizations, people can get really lazy and there, 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 outta the palm of Jack's hand. They ate up his every word. What made him such a special spokesperson as the c e O of ge?
[00:38:39] William Cohan: He was totally a man of the people. He sounded like what he was, which was an only child from North, north of Boston.
I mean, he's really sounded like I. His father was a trained conductor. His mother was a stay-at-home mom, and they were totally middle class people. He's a 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 around 650 billion at its 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. 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 suey generous. The people I talked to. About him. Just loved the guy. I mean, and loved working for him, and that's pretty unusual. Um, most people don't like their boss.
[00:40:26] Hala Taha: Well, maybe Apple is your next buck if you get a job there. And then, I'm just kidding.
[00:40:31] William Cohan: I use Apple, uh, products. So yeah, there, there you go. You go, there's the intersection, there's your personal connection,
[00:40:37] Hala Taha: there's the nexus. 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 like 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,
[00:40:57] William Cohan: right?
He, he did. You know, and again, it's a skill, uh, it's an art form. 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 was, he had real political skills, and I think that inured to his benefit.
But he also, he did what he called wallowing, uh, which was he would dig deep into a topic and just bring everyone together to talk about it.
Uh, but he also encouraged dissent. He dis encouraged people to disagree with him. Now again, he was very forceful. He would generally get his way, of course, as a C e O 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 he was wrong and had made a mistake.
And I think that is a great skill.
[00:41:51] Hala Taha: 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 of him as this tall grand person. What did he dress like? Like talk to us about that.
[00:42:03] William Cohan: 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, uh, even he was, uh, when he was in his prime. But he right to the end always had an incredible, uh, amount of energy and just, uh, ambition that knew no bounds and a real. Love of life and lust for life.
I mean, it 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, uh, Jack, uh, invited him and his friend to come over to the club and sit with us and have a beer.
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.
[00:43:12] Hala Taha: 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 did it end up where it is now? My last question is really about the fact that Jack worked his way up to become a C E O.
Just like Tim Cook didn't found Apple. The c e O of Microsoft didn't found Microsoft and is a really great c e O. 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, but talk to us about the fact that not everybody needs to be an inventor or entrepreneur
[00:43:51] William Cohan: I've sort of thought a lot about this. I mean, uh, You know, at some point 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 Hutt, you know, 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 at it than they were or would be.
You know? That must have been an incredible leave 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, uh, were quite diverse.
And there were many shareholders. I mean, GE had billions of shares in the company and hundreds, uh, millions, many millions of shareholders. 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, I'm sort of fascinated by that moment in time when they, which of course we take for granted now, but somebody had to come up with that scheme.
[00:45:44] Hala Taha: 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.
[00:45:56] William Cohan: Look at Jamie Diamond at JP Morgan Chase. I mean, he was not a banker, he was not a trader. He was, he worked for Sandy Weil and uh, 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, uh, we've ever had, and made himself a billionaire in the process through his ownership of JP Morgan stock that he got for compensation, not because he was the founder of JP Morgan.
So if you can get yourself somehow into those positions and do a good job at it, you're gonna get rewarded. Okay. Let's get
[00:46:35] Hala Taha: back to ge. So the story's not over. After Jack Welch, he hands off. CE role to Jeffrey Emmelt and everything sort of went haywire after 2001. So talk to us about that. The evolution of where GE is now after Jeffrey took over,
[00:46:54] William Cohan: Jeff Emmelt, in fairness to him, took over from Jack his first day in the office, uh, his c e o was September 10th, 2001, and the next day was September 11th.
So, GE had made the engines on the Jets. 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 N B C, which of course, uh, I think went for a week or so without any advertising. And then along came the Sarbanes Oxley law.
And, you know, things changed dramatically. On Wall Street and corporate America. In America generally after nine 11. And so Jeff Immelt had to deal with all that, but I think as they say, mistakes were made. Dave Calhoun, who's now the c e O of Boeing, uh, and who worked at GE for a long time, told me that, um, you know, you know, this is a little harsh, but I think it's hard to argue with, and that is that.
When Jack had, uh, big decisions to make as c e o of ge, he generally made the right decision. And when Jeff had big decisions to make as the c e O 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.
Uh, he thought they were the right ones and It's easy to second guess in hindsight, but the truth is that poor decisions cost ge. It's earning stream, it's profitability, it's market value, it's respect, it's AAA credit rating, it's stability. It, it almost went down the tubes during the 2008 financial crisis.
So, Had to be bailed out. I mean, so you name it. In retrospect, you'd have to say he made the wrong decisions more often than he made the right ones. And do
[00:49:06] Hala Taha: you feel like Jack thought that Jeff tarnished his legacy or reputation?
[00:49:13] William Cohan: Absolutely, yes. I think Jack felt that he had left Jeff a royal flush, uh, when Jeff took over from him and.
It was hard to argue with, uh, Jack about that. I mean, it was AAA rated company. It was the most valuable company in in the world. It was the most respected company in the world. Jack was the c e o, you know, the manager of the century, whatever that means. Uh, 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 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 as good a 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.
He didn't play it particularly well. Circumstances have changed. Obviously. Nine 11 changed things. The things that we talked about before changed things. But Jeff made a lot of proactive decisions that I think Jack wouldn't have made or Jack would've played differently. And I, I don't think I, uh, you know, if Jeff had played the hand differently, I probably wouldn't have written this book.
So that's something to think about too.
[00:50:47] Hala Taha: So interesting. What do you think is there for the future of ge? Do you think it's ever gonna be the huge company that we used to know it for, or do you think, I know it's separating into other companies or has
[00:50:59] William Cohan: Yes. Uh, in the process of breaking itself up into three companies, it's, uh, the healthcare division is a already publicly, uh, trading ge ISS a big shareholder.
I'm sure they'll spin that off to shareholders. I think next year they're splitting off the, Power business is GE Renova. Uh, 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 c e O 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 business is a really good business. The power business, of course, is you know, the original business and it's hugely important. Even to this day. There's still probably billions of people, 2 billion, 1 billion, one and a half billion people who don't have electric power today who would need it, and GE can provide that.
And of course, the jet engine business is Juul. Those engines are the most respected. Technologically advanced engines in the world. Uh, so, you know, I just don't think any of it's gonna amount to, uh, what GE was once upon a time.
[00:52:26] Hala Taha: Yeah. Well this is such a great interview. Yap. Vm. There you have it. A forensic autopsy of one of America's greatest companies by one of its elite financial journalists, William Cohan.
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, just from your own personal experience.
So what is one actionable thing our young Anders can do today to become more profitable tomorrow?
[00:53:01] William Cohan: Invest wisely. Invest in good companies with. Good earnings, good management, good dividends. Don't fall for get rich quick scams. No crypto, no, no meme stocks, none of that crap. I
[00:53:21] Hala Taha: love that advice. And what is your secret to profiting in life?
And this can be beyond financial,
[00:53:26] William Cohan: you know, having a loving family and working hard each day and you know, having integrity and I. You know, having equity in what you, doing, what you do, and trying to minimize, uh, you know, the hold other people have on you.
[00:53:46] Hala Taha: And where can our listeners learn more about you and everything that you do?
[00:53:49] William Cohan: Well, I have a website, william cohan.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, uh, of course, uh, you know, I can be, uh, red, uh, you know, I write twice a week for puck, uh, puck News.
That's the subscription business that we started a digital media company, and I write for a variety of publications still.
[00:54:25] Hala Taha: Awesome. Well, thank you so much for joining us on Young and Profiting podcast.
[00:54:30] William Cohan: Thank you all for having me. I really enjoyed it.
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