Transcript: William Cohan – The Big Picture

 

The transcript from this week’s, MiB: William Cohan on GE, Lazard, Goldman & Bear, is below.

You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

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ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, Bill Cohan is a fixture on Wall Street for a long time, both as an investment banker at Lazard Freres and eventually Merrill and JPMorgan Chase, as well as an author. He is one of the co-founders of Puck. He is a writer for Vanity Fair, for the New York Times, for Bloomberg.

He’s really well known on the street and puts out a number of fascinating books, arguably a sort of parallel career to Michael Lewis. He’s at Lazard Freres for seven, eight years, and then sometime later writes his version of Liar’s Poker, which is a history of Lazard Freres. His most recent book, Power Failure, about the rise and fall of General Electric is really a fascinating history, with some fun stories and a lot of really interesting gossip throughout it. It’s deeply researched, deeply reported, and really a very enjoyable read. I think you’ll find this conversation quite fascinating; I know I did.

With no further ado, my conversation with Bill Cohan, author of Power Failure. William Cohan, welcome back to Bloomberg.

WILLIAM D. COHAN, FINANCIAL JOURNALIST, AUTHOR OF POWER FAILURE: Thank you, Barry. It’s great to be here.

RITHOLTZ: So, let’s talk a little bit about your career, which began as a reporter, went into M&A banking, and then went back to writing. You start writing for the Raleigh Times. Tell us a little bit about what you were doing there.

COHAN: I was doing something I probably should never have been allowed to do, which was write about public education in Wake County, which was fine. I had just graduated from Columbia School of Journalism, getting a master’s in journalism and I’ve done my thesis on public schools in Central Harlem, in the Central Harlem School District. I went to one of the best schools in the district and one of the worst schools in the district, and just sat there for like six weeks and tried to absorb what was going on. And no one had ever done that, I had to get special permission from the Board of Education in Brooklyn back when they still do that.

And then I went to Raleigh and covered public schools in Raleigh. But I’ve never been to a public school in my life, other than sitting in the classrooms in Central Harlem. So, it was great, but it was, you know, like anything, a total learning experience.

RITHOLTZ: So, you ended up becoming an investment banker. You worked at places like Lazard Freres and Merrill Lynch and JPMorgan. Tell us a little bit about your banking background, what did you do, what sort of deals. By the way, this wasn’t like, I’m going to try this for six months and go back to writing. You did this for 17 years.

COHAN: Yeah. And I actually started out of business school. I’ve gone back to Columbia. So, I graduated from business school in 1987 and went to GE Capital for two years, financing leveraged buyouts. And I also spent a year there, working for the chief credit officer at GE Capital, learning all the different business lines at GE Capital. And then I went to Lazard and —

RITHOLTZ: So, let’s stay with GE Capital for a minute because they’re going to loom large later.

COHAN: Plenty of relevance. Yes.

RITHOLTZ: In the ‘80s, they were really a financial arm of GE and a way to facilitate its client base. It seems like in the ‘90s, it evolved into something else. When you were there, was it a financial engineering firm, or was it a more traditional credit finance firm?

COHAN: By the time I was there, I had started in the Depression, you know, financing customers —

RITHOLTZ: Right.

COHAN: — purchase of GE’s appliances, right, because credit was hard to come by during those years.

RITHOLTZ: Everybody, General Motors had a credit on multi-big manufacturers there.

COHAN: A lot of did that. Right. GE had a benefit in over other companies in that regard because they had a AAA credit rating. So, they were able to borrow very cheap, and then lend out expensively. And they were able to arbitrage that credit rating which, of course, Jack Welch did it in spades. And by the time I got there, you know, Jack had been CEO for six years, and he was well into turning GE Capital into a financial powerhouse.

So, by the time I got there, it was well beyond just, you know, financing customer acquisitions of appliances. I mean, you know, I probably shouldn’t have been doing it because I had been a journalist covering public schools and knew nothing about leveraged buyouts. But I was financing leveraged buyouts at GE Capital, and that was one of 18 or 20 business lines that the business was in and you know, just making huge profits, arbitraging that credit rating.

RITHOLTZ: So, you go from GE Capital to Lazard next. Tell us about Lazard.

COHAN: Well, Lazard couldn’t have been more different than GE, as you can imagine.

RITHOLTZ: Talk about old school, classic partnership, managing risk, very different headspace.

COHAN: Oh, totally, totally. I mean, I’ve always been fascinated by Lazard because I read Cary Reich’s book, the Financier about Andre Meyer which was a fabulous book and Cary Reich was a great writer, but he died way too young. And you know, I’ve been a Francophile my whole life. I read that book. I wanted to work at Lazard. When I was in business school, I got an interview at Lazard with two partners who probably are still there, and they didn’t even send me a ding letter, Barry. Do you know what a ding letter is?

RITHOLTZ: Sure.

COHAN: Yeah.

RITHOLTZ: Thanks for coming in.

COHAN: Thanks for coming. We don’t need you.

RITHOLTZ: At this time —

COHAN: You know, good luck with you. I’m sure you’d be great.

RITHOLTZ: We’ve put your resume in our file.

COHAN: That’s right.

RITHOLTZ: Don’t hold your breath.

COHAN: They didn’t even send me one of those. They just ignored me. Okay. And then two years later, I tried again. You know, GE Capital, you have to understand, like, investment banking was so hot then.

RITHOLTZ: Right.

COHAN: Everybody wanted to be an investment banker.

RITHOLTZ: Of course. It was monstrous.

COHAN: It was monstrous. I mean, investment bankers were rock stars, right? So I was at GE Capital and you know, we were getting business because we had access to all this capital.

RITHOLTZ: Yeah.

COHAN: You know, I became enamored of this idea of getting business through your ideas, right. And that was at Lazard. Lazard had no capital.

RITHOLTZ: Right.

COHAN: No capital, but it got in the middle of deals. It became interstitial men because of, you know, its reputation, its brain power, and that really appealed to me. And plus, it was French, in a private partnership, and all these great men were wandering around like, you know, Felix Rohatyn, and Michel David-Weill and —

RITHOLTZ: Right.

COHAN: — Damon Mezzacappa. And so, I, you know, wanted to be part of that. I was the only associate they hired in 1989.

RITHOLTZ: They’re like the last partnership standing, aren’t they?

COHAN: No. They went public in 2006.

RITHOLTZ: Oh, they did?

COHAN: Yeah.

RITHOLTZ: That’s right.

COHAN: They’ve been, and my first book covered them being a private partnership to going public. And when Bruce Wasserstein came in, and basically stole the company from Michel David-Weill, which is a story I tell in detail in the book. They went public in May of 2006, and they’ve been public now for —

RITHOLTZ: The argument is they avoided trouble in the financial crisis because they didn’t have a decade of overleverage.

COHAN: Well, they had vague basically zero capital markets business. They had no balance sheet. So they weren’t ever going to be, you know, having securities on their balance sheet that were at risk and losing value.

RITHOLTZ: Whereas all the other public companies had access to capital and managed to get into trouble.

COHAN: Of course, having access to capital can be a big problem. And they used to say that like, you know, Goldman Sachs, which one of the reasons they stayed private until 1999 is because John Whitehead used to say that and I know this from writing my book about Goldman, John Whitehead used to say that, you know, not having capital forced them to make tougher choices. And other banks which have more access to capital, you know, were often foolish with that money.

RITHOLTZ: So, you go from Lazard to Merrill to JPMorgan, tell us about those other experiences, how do they compare to Lazard which seems much more unique, being in a public company versus a partnership. What was the workflow like there?

COHAN: I mean, in Lazard, you were drinking from the firehose —

RITHOLTZ: Yeah.

COHAN: — because, you know, there were 72 partners and 72 non-partners in the investment banking group, so very small. So, you know, that was not a pyramid structure.

RITHOLTZ: Right.

COHAN: That was a rectangular structure. So, you know, there are a lot of people at the top of the funnel, pushing down on the people at the bottom of the funnel. And so, you know, you’re just constantly busy working on the biggest and best deals of all time, you know, and that’s what I did. And you know, Merrill was, of course, much more corporate. It was public. And the ultimate corporate was Chase, JP Morgan, JPMorgan Chase, you know. So, they were all very different. But you’ll note of those three, you know, Lazard and Merrill and JPMorgan Chase, the only one I’ve written a book about is Lazard because it was so unique and you know, really, the people there were quite extraordinary and fun to write about.

RITHOLTZ: So, compared to Lazard and Goldman Sachs, I have to ask the question about GE Capital. Did they essentially in the 1990s, morphed what was an industrial giant into a financial giant?

COHAN: In fairness, you know, once Jack took over GE Capital in the ‘70s, and you know, once he decided that, as he told me, it was easier to make money from money than from making —

RITHOLTZ: Selling widgets or jet engines.

COHAN: — jet engines, making power plants. You know, it was just easier. It was easier to do that arbitrage and if you had people in place who understood the risks and managing the risk. So during Jack’s 20-year reign atop GE, GE Capital became an increasingly large and important contributor to the bottom line, and to the point of like providing 50 percent of the profits. So, I mean, —

RITHOLTZ: Wow. That’s giant.

COHAN: Of course, it was giant. It was like the third or fourth largest banking institution in the country, and it was completely unregulated, Barry, completely unregulated. It was not a bank because —

RITHOLTZ: No FDIC insurance, no regulation.

COHAN: Well, it didn’t have deposits.

RITHOLTZ: Right. Well, they had one depositor, it was General Electric, the company.

COHAN: It was the commercial paper mark.

RITHOLTZ: Yeah. That’s quite amazing.

COHAN: Yeah.

RITHOLTZ: So when I think of GE in the ‘80s and ‘90s, the three things that come up; GE Capital, obviously; the rise of shareholder value, which a lot of people point to General Electric as a key driver of that; and then Six Sigma. Let’s talk a little bit about shareholder value and that Chicago School philosophy that Jack seems to have embraced?

COHAN: Well, you know, Jack wouldn’t know Chicago philosophy from a hole in the wall. But what Jack really understood was, you know, stock price —

RITHOLTZ: Right.

COHAN: — and shareholder value. When he took over GE, we had a market value of $12 billion. And you know, by the time he left, like a year before he left, it was the most valuable company in the world.

RITHOLTZ: 650?

COHAN: $650 billion.

RITHOLTZ: Yeah. That’s amazing.

COHAN: So that’s a nice, you know, compounded rate of return over those basically 20 years. I mean, you know, we’re not unlike, you know, sort of Tesla or even Apple. Really, I mean, if you think about when Tim Cook took over Apple, it was worth $300 billion, and at one point it was worth two and a half trillion.

RITHOLTZ: Right.

COHAN: So that’s an equally Jack Welch like, or even more.

RITHOLTZ: So the difference between the two, I’m glad you brought that up as an example, the vast majority of the gain we’ve seen in Apple has been an increase in revenues and profits, with a modest, very modest uptick in PE multiple. When we look at GE from ‘82 to 2000, under the Jack Welch reign, it began priced as a stodgy industrial and I have argued that he left this giant ticking time bomb of a 47 PE on an industrial, with a cratering capital business that had a ticking time bomb of an accounting fraud that SEC finds about to happen. How much of the growth of GE was due to the legend of Jack Welch and how effectively he presented the company to the world?

COHAN: So there’s a lot there to unpack.

RITHOLTZ: Hey, I read this giant book that goes into all these details called Power Failure. Check it out.

COHAN: Wow. Don’t hurt yourself. So yeah, so I would agree with a lot of what you said, not all of it. So Jack had Wall Street research analysts eating out of the palm of his hand.

RITHOLTZ: Absolutely.

COHAN: Okay. So that’s important, number one.

RITHOLTZ: And you discussed that also.

COHAN: And he figured that out, okay, and he played that game. And also, it was a fact that, for the longest time, the research analysts that covered GE were industrial side analysts, didn’t understand what was going on at GE Capital.

RITHOLTZ: Right.

COHAN: So he could kind of wow them every quarter with the performance of the company. And he, you know, 80 straight quarters or something like that, you know, either met or exceeded the analysts’ estimates.

RITHOLTZ: He had Bernie Madoff numbers, didn’t he? Just like consistency to a degree that should have raised some red flags?

COHAN: Well, except that Bernie Madoff was a Ponzi scheme and totally fictional, and never made a trade —

RITHOLTZ: Right.

COHAN: — for his customers. So, Jack was actually, you know, running a very large —

RITHOLTZ: 90 percent of it was legit. It was just that penny or two of up or down that was —

COHAN: Well, you know, we could debate that probably endlessly, and there are people who, you know, would love to debate this. I mean, you know, having worked at GE Capital, I’m actually sympathetic. You know, if you’ve got $650 billion of assets floating around, including loans of actual buildings because you’re in the real estate business —

RITHOLTZ: Right.

COHAN: — warrants in companies, equity stakes and companies, you know, and if you have those assets and you can monetize them at some point during the quarter to achieve what you told Wall Street research analysts you’re going to achieve. If you don’t do that, then I don’t know you’re committing some sort of financial malpractice, it seems to me. And if you do it, then people accuse you of financial malpractice so —

RITHOLTZ: Well, we’ll get to the SEC fines and that stuff later.

COHAN: Right. Of course.

RITHOLTZ: I want to stick with the analyst community.

COHAN: Yes.

RITHOLTZ: Jack having them eat out —

COHAN: And he also had the media eating out the thing.

RITHOLTZ: So that’s where exactly I was going to go.

COHAN: Yeah.

RITHOLTZ: GE owns NBC Universal. NBC Universal has on its platform CNBC.

COHAN: Jack created CNBC, created MSNBC.

RITHOLTZ: So, it’s different today when the media ratings for financial television are all off. Regardless of which television channel you’re talking about, the numbers are way down from the ‘90s. You’ll get a spike during the financial crisis. You’re getting a spike during the pandemic lockdown. But that’s more like a cross between ESPN 6, Australian rules rugby and the Weather Channel, right? When some disaster happens, everybody turns to it.

But, look, we both came up in the ‘80s and ‘90s. At that time, if a CEO went on CNBC and said, here’s what I’m going to do, and then he went out and do it, the entire investment community was hanging on to that every word, which raises the question, how effective was Jack Welch as a media spokesperson? And how challenging was it for him to go on his own channel and tout his company’s stock?

COHAN: Well, he obviously had a conflict.

RITHOLTZ: A little, right?

COHAN: But I guess they got over that. I mean, did you ever meet Jack?

RITHOLTZ: Ever so briefly at CNBC for like 30 seconds —

COHAN: Okay.

RITHOLTZ: — in a green room. He was getting makeup on and I was coming in for Kudlow & Cramer, and maybe it was eight seconds.

COHAN: Well, then you have a hint of what he was like. I mean, I spent, you know, hours and hours and hours with him before he died. And he even as an 80-year-old man, he was incredibly charming and magnetic, and had a larger-than-life personality. So, you know, when he would get on television, you know, with that cranky sort of New England accent —

RITHOLTZ: Yup.

COHAN: — that I managed to get rid of, and he didn’t, even though we grew up near each other, he was magnetic and captivating. So, yes, he had the media eating out of the palm of his hands. He had the research community eating out of the palm of his hands. He had shareholders eating out of the palm of his hands. And when you have that kind of performance as a CEO over that long period of time, don’t forget, he was around for 20 years. You know, he became sort of an imperial CEO.

RITHOLTZ: I’m trying to remember which magazine it was, might have been Fortune, declared him the greatest CEO of the 20th century.

COHAN: The CEO, the manager of the century.

RITHOLTZ: Yeah.

COHAN: The manager of the 20th century.

RITHOLTZ: Quite impressive.

COHAN: Yes. You know, don’t forget, at that time, GE was the most valuable company. It was the most respected company, and Jack was the manager of the century. So it’d be like Apple, Google, Microsoft, all rolled up into one. And you know, that was GE. It was, you know, original member of the Dow Jones Industrial Average. It was a AAA credit rated company. It had been paying dividends for, you know, 50, 60, 70 years.

RITHOLTZ: It’s like they invented the light bulb.

COHAN: And they did, and it was a true bellwether. Remember that phrase? A bellwether? They don’t really use that anymore.

RITHOLTZ: No, no.

COHAN: But it was a bellwether of the market.

RITHOLTZ: Amazing. So, Power Failure: The Rise and Fall of an American Icon, you know, when I saw the title of this book, I thought it was going to be about the modern GE. You really do an amazing deep dive into the early history of the company. I mean, the foundation from before they were accompanied, when it was just a gleam in a Thomas Edison’s eyes. Tell us a little bit about the process of researching something this substantial.

COHAN: Very, very painful, Barry.

RITHOLTZ: Well, you do this in all your books, you do a giant dive.

COHAN: You know, I write the books that I would like to read, you know, so they have to be sort of part oral history, part real history, part investigative reporting, part documentary, you know, deep dive and evidence. And you know, I like to get at the DNA of these firms or these companies, right. And the DNA of GE goes back to the late 19th century, right?

RITHOLTZ: Right.

COHAN: And I didn’t know what it was, so I had to figure that out. Because, you know, the myth is that this GE was started and founded by Thomas Edison. Well, within a minute of virtue of researching, I discovered that actually, that’s not true.

RITHOLTZ: Right.

COHAN: But they play that up ad nauseam and I don’t blame them. I mean, how can you not play up Thomas Edison.

RITHOLTZ: And the light bulb.

COHAN: Well, the light bulb is real. He did, you know, develop the light bulb, create the light bulb. But you know, the business started as an electricity power generation business.

RITHOLTZ: Let’s talk about that because a light bulb is useless if you can’t it plug into the wall.

COHAN: Extremely useless.

RITHOLTZ: At that time, that wasn’t an electrical —

COHAN: If you’ve heard of candles —

RITHOLTZ: Right.

COHAN: — if you’ve heard of whale oil —

RITHOLTZ: Right.

COHAN: — if you’ve heard of fireplaces, I mean, you know, this was incredible. This was an Internet-like leap forward in technology.

RITHOLTZ: So General Electric plays an integral role into bringing —

COHAN: Essential.

RITHOLTZ: — electricity, at least starting in the Northeast of the United States.

COHAN: Right.

RITHOLTZ: Tell us a little bit about that process of electrifying New York City, electrifying other parts of the Northeast.

COHAN: Well, basically, what became General Electric, which was a merger of two companies, you know, sort of what was a pioneer in bringing electric power, the generation of electric power, and then creating the electric power grid. Remember, you can create electricity.

RITHOLTZ: And good luck.

COHAN: But if there’s no way to deliver it to businesses, and then by the way, you know, you have to convince people to, like, connect to it.

RITHOLTZ: Right.

COHAN: And it’s invisible, right? And if you mess up, it’s deadly.

RITHOLTZ: So other than that, it seems like a simple business model.

COHAN: Other than that, it seems like a simple thing. In the early days, there were like fires, you know, and people’s businesses burned down. So, you can imagine that wasn’t exactly the greatest recommendation for this product. But over time, you know, the miracle occurred. And part of the reason the miracle occurred is because, you know, there were electric subway cars and electric trams above ground.

And you know, I don’t know, you probably didn’t watch this, but, you know, The Gilded Age show. Okay. So, I mean, there’s an episode, I think the second or third episode in there, where they actually have a big social event in Downtown Manhattan, in a square mile in Downtown Manhattan, around City Hall, where they were, you know, electrifying that square mile of Downtown Manhattan. And that was GE doing that. Okay. That was General Electric doing that, and that was like a major league event in New York City’s history, you know, electrifying a square mile of Downtown Manhattan. And there was, like, a big social event. And you know, Page Six covered it, Bloomberg covered it, you know, everybody covered it.

RITHOLTZ: I don’t think Bloomberg covered that thing.

COHAN: No? Okay.

RITHOLTZ: It might have been before Mike was born.

COHAN: It might have been.

RITHOLTZ: But when you think about people seeing streetlights that are running without oil —

COHAN: Revolutionary.

RITHOLTZ: Right. This is —

COHAN: I mean, maybe not as quaint.

RITHOLTZ: Well, this is before the days of FOMO was called FOMO. But how attractive was the idea of clean, accessible light?

COHAN: I mean, it did —

RITHOLTZ: How long did it take for this to catch on?

COHAN: It happened quickly. Obviously, it was a major, you know, revolution. But, I mean, people had to get comfortable with it. And the grid had to be built out, and the power had to be able to be manufactured. So as the demand crept up and continued, then the supply grows to meet that demand.

RITHOLTZ: So, let’s talk about how that was done. Tell us about the merger in the early days that gave us General Electric, and who ran that company. It wasn’t Thomas Edison.

COHAN: No. So, Thomas Edison was completely against the merger of what became GE. So right off the bat, I’m thinking, why did they keep talking about Thomas Edison? Like, I get it from the technology point of view and the entrepreneurial point of view, but the actual merger, so right off the bat, we’re talking about M&A, which, you know, of course, intrigued me.

RITHOLTZ: Your wheelhouse.

COHAN: Right. I mean, there was probably no bigger acquirer and seller of companies over the years than GE. So, M&A was in GE’s DNA. It was like an investment banker’s dream, GE. And so, Edison had a company called Edison General Electric. But by 1892, it had about $10 million in revenue. It wasn’t doing that well. He was just basically a shareholder, and the other big shareholder was JPMorgan, the man. And then it was, you know, run by a different CEO who was also a venture capitalist friend of JPMorgan’s.

And there was another company called the Thomson-Houston Company, which was owned by a guy named Charles Coffin up in Massachusetts. And he was from Maine, but his uncle owned a shoe manufacturing business Lynn, Massachusetts. He went to work for his uncle and decided like many, you know, entrepreneurial minded people that the shoe business wasn’t all that exciting. But what was exciting was the electric power business and the generation of electric power. So, he ended up buying the Thompson-Houston Company, which was started by two high school teachers in Philadelphia, moved it eventually up to Lynn, Massachusetts, and started running it. He was a very good businessman, and he ran it much more profitably than Edison’s company.

So basically, JPMorgan and the Boston venture capitalist backing Thompson-Houston Company, backing Charles Coffin’s business, wanted to merge these two businesses. And the merger took place in 1892, over the serious objection of a guy named Thomas Edison. He wanted nothing to do with it. He became a minor shareholder, eventually sold his shares and started working on, like, limestone mining in New Jersey.

RITHOLTZ: So, did Edison profit from when GE eventually went public, or did he sell his —

COHAN: You know, he wasn’t a very good businessman.

RITHOLTZ: He’s clearly not.

COHAN: No. And I’m sure he made money because he started the company, but —

RITHOLTZ: But he ended up like a 10 percent shareholder of GE, right?

COHAN: Well, you know, when it went public. But we’re talking about relatively small numbers, but at the time, I’m sure that was, you know, more money than most everybody else. He was fine. Don’t you worry. But you know —

RITHOLTZ: Don’t worry about Thomas Edison. He did okay himself.

COHAN: — JPMorgan and Charles Coffin and others made a lot more money.

RITHOLTZ: That’s really interesting. So, let’s roll into the 20th century, the teens, the ‘20s, the ‘30s, GE has electrified a lot of America. They’re adding businesses. There’s a lot of M&A. And it turns out that, you know, this competition thing, it’s hard, and it’s much easier if we all kind of agree, don’t tell anybody, we’ll meet in the hotel room, not in the conference facility. But let’s all kind of fix our prices in a way that works out best for everybody. This is good for everybody, isn’t it? What happened with that?

COHAN: Yeah, you’re referring to a major league, you know, electrical conspiracy as it was called. I mean, you know, where Westinghouse and other manufacturers of electrical equipment basically conspired together to set the prices.

RITHOLTZ: And by the way, these people didn’t innovate that. This is fairly common. It’s why we have any trust rules. At that time, this seemed to have happened pretty regularly.

COHAN: And you know, they would sort of get caught, or they would decide that it wasn’t such a great idea. They would try to stop it, and then —

RITHOLTZ: Or they would cheat amongst themselves.

COHAN: And then cheat amongst themselves.

RITHOLTZ: No honor among thieves.

COHAN: And then they would realize, you know, this probably isn’t great, what we’re doing here. Let’s wind it down, and they would be told to wind it back up again. It was incredibly unethical, immoral, illegal. People went to jail. You know, no doubt after about 10 years, it was flushed.

RITHOLTZ: What was so fascinating in the book, the way you describe it, is when these sort of quiet coalitions and trusts would start to break down, the price competition became fierce, and the penetration into the market and the ability to get new products, like capitalism turns out to work.

COHAN: It’s a test case that shows you the importance of competition.

RITHOLTZ: Right.

COHAN: And collusion does not really work out for consumers. So, you know, there’s a reason we have antitrust. There’s a reason, you know, that’s still being litigated even today. We see, you know, antitrust litigation now ramping up again. So, competition is important, and collusion really is not great and is illegal.

RITHOLTZ: You know, the differences between the 21st century collusion and the 20th century, you hear about Google and Apple and Microsoft trying to cap prices on certain software engineers’ salaries. This was just massive. It affected cities. It affected businesses. Like, there was a real hard number that you couldn’t buy a turbine from, which was enormously important. Now, I’m not saying what Apple and Google did was right, it was wrong. It just seems like it’s so much smaller than the collusion from the good old days.

COHAN: Or maybe if there is collusion today, let’s just make it hypothetical, it’s sort of more insidious because you’re not exactly sure how, you know, it might affect the pricing of software products, or it might affect whether there’s cookies that are taken from our data, and how our data is used.

RITHOLTZ: Right.

COHAN: You know, back then, it was, okay, we need to build a power plant in Florida. And you know, you guys make your bids. Westinghouse, you make your bid. GE, you make your bid. And oh, these bids seem awfully similar. And you know, oh —

RITHOLTZ: Identical.

COHAN: Identical, in fact.

RITHOLTZ: What a coincidence.

COHAN: Are you guys colluding? And you know, I want to go around and cut a deal. So, it was sort of amateur hour, if you will. It really was kind of amateur hour, which doesn’t make it any less illegal or immoral or unethical. But you know, what you can probably get away with — unbeknownst to people nowadays with — and again, I’m not saying that it’s happening, but If it were to happen, you know, it’s probably much more insidious and hard to track down.

RITHOLTZ: So, let’s fast forward a little bit. GE plays a huge effort during both World Wars. Tell us a little bit about what GE did. How did they affect the ability to fight a global conflict like that, from here in the United States?

COHAN: Well, GE was a, you know, for a long time, a very big defense contractor, made jet engines for fighter jets, and you know, made nuclear power plants and probably had a role in making nuclear bombs and triggers and things like that.

RITHOLTZ: Undisclosed? None of that we really you know about.

COHAN: Yeah, we don’t know. We know, you know, there were nuclear waste dumps, et cetera, probably at one point that GE was involved with. What I found to be the most interesting thing was sort of in World War I, GE created the radio technology, you know, that we may be even using today —

RITHOLTZ: Right now.

COHAN: — right now, that allowed people to communicate with one another. And it was a real technological breakthrough and helped the Allies win the war. And so, GE created this technology, and after the war, wanted to sell it to Marconi, which was the big British company. They had an American subsidiary called American Marconi, which was a public company. And basically, the government, Woodrow Wilson’s administration blocked the sale of that.

RITHOLTZ: Sure. Too valuable.

COHAN: Too valuable. And essentially forced GE to create what became RCA, the Radio Corporation of America, inside GE, and forced GE to buy American Marconi and create what became RCA inside GE, so that the British wouldn’t get access to this technology and dominate the radio waves.

RITHOLTZ: Which is funny because they’re an ally of ours.

COHAN: Yes.

RITHOLTZ: And then am I recalling this correctly? Wasn’t the subsequent event of that, and now that we’ve done all this, you have to divest RCA.

COHAN: Yeah. So that was like, you know, in 1917, 1918, 1919, 1920. And then in 1932, for reasons that actually kind of I still don’t quite understand, the Justice Department decided that GE owning RCA was an antitrust violation, forced GE to divest RCA. That’s when RCA became a public company run by David Sarnoff. And then, you know, in 1986, our hero, Jack Welch, buys back RCA for $6.4 billion, at that point, the largest M&A deal in history. And everybody like heralds, Jack Welch is like this hero for doing this incredible deal, which by then, RCA also owns NBC. That’s how GE got NBC. And in fact, Jack was just buying back something that GE had started.

RITHOLTZ: He’s getting the band back together.

COHAN: He’s getting the band back together. But of course, nobody has that kind of a memory. In front page of The New York Times was Jack Welch buying back RCA, the biggest M&A deal of all time. And now, he’s got NBC. But Jack was just buying back what GE had already owned.

RITHOLTZ: So let’s —

COHAN: And I didn’t know that, by the way, and I had worked there. And that was a big revelation to me. I was fascinated by that.

RITHOLTZ: So, let’s stay with the chronology, World War II ends, they come out of the war with a burgeoning defense business. Jet engine is invented during World War II but not deployed until after the war. I don’t know if we had any jet fighters during the war. The Germans had a couple. It certainly didn’t affect the tide of the war, one way or another.

COHAN: I mean, I think you know that GE perfected, you know, the jet engine by going up to Pikes Peak, you know. I’m sure you remember that commercial.

RITHOLTZ: Yes. It’s an amazing story.

COHAN: Yeah.

RITHOLTZ: They have to drive up there —

COHAN: They have to drive up there.

RITHOLTZ: — because it’s the highest point you can get to by truck.

COHAN: It’s the highest point that you can get to by truck —

RITHOLTZ: Yes.

COHAN: — because it’s a road up to the top of Pikes Peak. And then they test the engine because they needed to test it out —

RITHOLTZ: Was that a propeller engine, not a jet engine, right?

COHAN: I think that was a jet engine, but, like, you know —

RITHOLTZ: But the whole idea was some of the fighter planes move faster.

COHAN: Were losing altitude.

RITHOLTZ: Right.

COHAN: They would get up to certain altitude —

RITHOLTZ: They would lose power.

COHAN: They would lose power. And so they needed to test a new jet engine to see whether it would maintain its, you know, velocity —

RITHOLTZ: Full thrust that had the higher —

COHAN: — of full thrust that had a high altitude. And obviously, GE perfected that on top of Pikes Peak and that made a huge difference for the speed and the, you know, viability of these fighter jets.

RITHOLTZ: So, they come out of the war with this huge book of patents, all these new products, essentially an entire new line of aerospace and defense sectors. It seems like the post-war era really began the modern period of General Electric becoming a dominant conglomerate. Fair statement?

COHAN: I mean, yes. I mean, you know, GE kind of ended up, for whatever reason, doing some of the largest M&A deals, you know, up to that point. Like, you know, Jack’s predecessor, Reg Jones, bought something called Utah International, which was like a mining company of all things, because he decided that, you know, owning commodities would be a good hedge against the 1970’s inflation. So that was like a two and a half billion-dollar deal. That was, again, Utah International. That was the largest M&A deal, you know, up to that point, prior to RCA.

RITHOLTZ: The RCA?

COHAN: Right. Which Jack had done a decade later. And of course, when Jack became the CEO in 1980, he hated the Utah International deal. He was against it, but nobody listened to him. And the first thing he did was divest it. So, Jack divests, you know, so that’s not unsurprising that the new CEO, you know, wants to undo. Jack wanted to, you know, make changes to the way Reg Jones ran GE. And so, I think, you know, it was under Jack, really, that GE was just buying and selling so many companies all the time. They were really an M&A machine. You know, they hired this guy, Mike Carpenter, you know, from McKinsey to be the M&A guy and you know, just create a strategic planning department just to do deals.

RITHOLTZ: And they did a ton of them, didn’t they?

COHAN: Did a ton of deals.

RITHOLTZ: So, I have to start by asking, you begin the book telling a story of driving with Jack to the golf course. Tell us a little bit about how you met him and what that set of conversations were like.

COHAN: So, once I decided to see if I could do this book in August of 2018 —

RITHOLTZ: Geez, that’s a five-year process.

COHAN: Well, I mean, it took me probably two and a half years to write it and research it, and then another, you know, 15 months to get it published. You know, getting a book published in the middle of a pandemic is not that easy.

RITHOLTZ: You see, I would think it’s easy because you’re at home. They’re at home.

COHAN: You know, it was easy for me. But you know, we’re talking about paper supply and printing time on the printer and things like that really got bogged down, and not just for my book, but a lot of books.

RITHOLTZ: That’s interesting. I didn’t realize that.

COHAN: And getting time on the press was very hard to do, and finding the paper was very hard.

RITHOLTZ: So, we had supply chain issues with —

COHAN: Supply chain issues.

RITHOLTZ: — paper for books.

COHAN: Exactly. And time on the press

RITHOLTZ: I had no idea.

COHAN: I think I actually started it in October of 2018. But one thing I did was, you know, I figured if Jack weren’t going to talk to me, then I would have to think about whether I wanted to do it. You know, I had a home in Nantucket, I was there. He had a home around the corner from me in Nantucket. I would see him occasionally.

RITHOLTZ: Did you know him when you worked at GE Capital?

COHAN: I mean, of course, we all, quote, “knew” Jack.

RITHOLTZ: Did you meet him? Did he chat? Was he familiar with you prior to you reaching out to him?

COHAN: Oh, I seriously doubt it. But I think —

RITHOLTZ: You were a kid banker and a finance banker.

COHAN: I was, you know, a pipsqueak, way down the food chain. And I think over time, over the years, he became aware of who I was, running the book. And when I reached out to him, he surprised me by saying, yeah, let’s have a meeting and let’s meet at the Nantucket Golf Club which, you know, was where he was a member. And we met and —

RITHOLTZ: I love the story of him like kind of rolling up in the car to the valet, and the kid, the keys. Tell us a little bit about what that was like.

COHAN: You know, I walked into the Nantucket Golf Club and told them I was being a Jack Welch. Of course, you know, it was like I was meeting royalty. I love this story. We go out onto the veranda which was the porch, you know, for lunch, and he was already seated there. And at the next table, there was Phil Mickelson.

RITHOLTZ: Right.

COHAN: It was a Wednesday. Okay. And the Thursday was, like, I think the Deutsche Bank Golf Tournament, the Annual Deutsche Bank Golf Tournament happens in Massachusetts, right. So the professional golfers were in and around Massachusetts, and Phil Mickelson, Lefty, was doing a practice round at the Nantucket Golf Club the day before the tournament started. So he was there having lunch and he was seated at a table with Bob Diamond who had been the CEO of Barclays and I think had been defenestrated by then. And he was with Paul Salem, who I knew from growing up in Central Massachusetts. And Paul was one of the founders of a private equity firm, Providence Equity Partners.

And so they were having lunch and you know, one after another, they came over and paid their respects to Jack. Everybody was always paying their respects to Jack and this was no different. And I knew Bob and I knew Paul, so they’re probably wondering, what the hell is Bill Cohan sitting and having lunch with Jack Welch?

The first thing out of Jack Welch’s mouth, as I tell the story, was that, you know, he had messed up. He didn’t use messed up, but he used something —

RITHOLTZ: He was not afraid to use salty language.

COHAN: He was not afraid. And he had messed up with the succession process. He had messed up the selection of Jeff Immelt, which basically, who was his handpicked successor. And he felt, you know, by 2018, Jeff, of course, had been —

RITHOLTZ: Gone.

COHAN: — fired. You know, he had been fired a year earlier, and John Flannery was the new CEO. Now, I had worked with John Flannery. John Flannery and I had started at GE Capital together and shared an office together. So, I knew John for 30 years and you know, it was great that John was the new CEO. So the first thing out of Jack’s mouth is how he had messed up the process and I’m thinking to myself, whoa, Jack Welch is telling me that the person he had hand-selected as a successor, he was completely disavowing and, like, saying, I messed this up completely. But I said, Jack, you chose him.

RITHOLTZ: Right.

COHAN: Yes, I know, but I screwed it up and this is on me, and this is going to affect my legacy. At that moment, I kind of knew I was onto something —

RITHOLTZ: You’re in.

COHAN: — quite special. Yeah.

RITHOLTZ: And he had already published his —

COHAN: Oh, yeah, his memoir.

RITHOLTZ: — autobiography.

COHAN: His memoir came out literally on September 11th, 2001. In fact, he had been on the Today show that morning and had finished his segment about his book. It went memory down.

RITHOLTZ: Now, if memory serves, his ghostwriter or co-author eventually becomes his third wife, second wife, I don’t remember.

COHAN: No.

RITHOLTZ: Or was that —

COHAN: No. The co-author on that book was a former Fortune and Business Week reporter, John Byrne.

RITHOLTZ: Okay. So it’s not his next wife.

COHAN: Right. And Jack Welch did not get married, not that there’s wrong with that.

RITHOLTZ: Didn’t he write a book with a woman that he ended up —

COHAN: Okay. So then this book comes out. And there’s a woman he’s married. And this book comes out on September 11, 2001. But because of the events of that day —

RITHOLTZ: It gets lost. Right.

COHAN: It was still a bestseller. But the publicity disappeared, and it didn’t pick up the publicity again until October.

RITHOLTZ: Right. So as part of the publicity that got picked up in October of 2001, by the way, the book was a big bestseller.

RITHOLTZ: Straight from the Gut.

COHAN: Straight from the Gut. And as part of the publicity that got picked up again in October 2001, the woman who was the editor of Harvard Business Review, a woman by the name of Susy Wetlaufer was the editor of the Harvard Business Review, had been a former journalist, Harvard Business School graduate, interviewed Jack, came to New York to interview Jack.

They had lunch at the 21 Club, which I think no longer exists. And then, you know, pretty much soon after that, they became, shall we say, an item. And next thing you know, Jack was divorcing his second wife and marrying Suzy who was leaving her husband and her three kids to be with Jack. And then the two of them, you know, had a column in Businessweek together, wrote books together.

RITHOLTZ: Okay. So I got the chronology wrong, but more or less. This, by the way, is an issue we’ll circle back to because this has come up previously in his tenure. But let’s roll back to Nantucket. You’re on the veranda. Everybody is coming to kiss the ring.

COHAN: Okay. And we have our lunch, and we have our first interview. And my wife had dropped me off there because we had one car and she wanted to take the car to, you know, go around and do things. And so Jack was going to drive me home because he lived near me. So, we have the lunch and usually I would see Jack around Nantucket driving his Mercedes, you know, coupe.

RITHOLTZ: Convertible, right?

COHAN: It’s convertible. Right.

RITHOLTZ: It’s the best sell (ph) with the top-down.

COHAN: That’s right. Right. And so you can always see this sort of like, you know —

RITHOLTZ: You can see the head.

COHAN: — Mr. Magoo-type character because he’s a little fellow, just sort of his white baseball cap sort of sticking above the steering wheel, you know, around town. And you know, it was not a late model convertible. It was sort of an olderish, but not really old version. So anyway, I was thinking that’s what we’re going to drive home in, but it turned out it was his Grand Cherokee.

One thing that they sort of do with the club, which was quaint is, you know, they bring the car around and they open both doors facing out —

RITHOLTZ: Right.

COHAN: — and they turn it on. So, all you have to do is like hop in and drive off, you know, like, you’re some person out of a James Bond movie or something.

RITHOLTZ: Like, you’re some CEO of a giant company.

COHAN: The job, the most valuable company in the world. And so, you know, I get in and I put my seatbelt on. You know, Jack had either a walker or a cane at that point and I was wondering —

RITHOLTZ: He’s how old at this point?

COHAN: He’s 80 or something at this point.

RITHOLTZ: Okay.

COHAN: And he wasn’t in the greatest health. His mind was all there, but physically, he had started to deteriorate. And I was wondering how is he going to hop up and you know, be in the driver’s seat, let alone drive us home. You know, he scrambles right up there, but sits on his seatbelt.

RITHOLTZ: He won’t put it on?

COHAN: He won’t put his seatbelt on and it’s dinging and dinging. I said, Jack, you know, why not put your seatbelt on, Jack, you know, at least to stop the dinging. Nah, I don’t like those things. So he decides he’s not going to put a seatbelt on. So he sits on the seatbelt. The dinging is going the whole way home. And he drives, you know, there’s a long driveway out of the golf club and we finally get to what is Milestone Road, the long road between the town of Nantucket and Sconset, where we both live. And he took a left to go back down to the village of Sconset and instead of driving on the right side of the road like we do in America, he decided to drive literally in the middle of the road.

RITHOLTZ: Right down the slot, double yellow.

COHAN: Right down. You know, the sets of tires on either side of the center of the car were, you know, straddling the double yellow line. And of course, cars coming the other direction were freaking out —

RITHOLTZ: Who’s that?

COHAN: — pulling off into the grass. And I’m thinking, well, okay, if I perish right now, at least, my obit will say that I was, you know, driving in a car driven by Jack Welch —

RITHOLTZ: Right.

COHAN: — the former CEO of GE.

RITHOLTZ: Neutron Jack, you wouldn’t be the first person —

COHAN: Eliminated by Jack.

RITHOLTZ: Right.

COHAN: That’s right.

RITHOLTZ: In the book, I just kind of picture him careening off of cars on either side of the road, just, you know, pinballing down the road.

COHAN: You know, it’s close. But really what’s happening is cars coming the other direction were all pulling off into the grass, and there wasn’t a lot of grass because it’s sort of a lot of trees and stuff, you know.

RITHOLTZ: Unbelievable.

COHAN: Yeah.

RITHOLTZ: So let’s discuss his career at General Electric from the beginning rather than his latter days as a demolition derby driver. This is pretty much his entire career at General Electric. Tell us a little bit about where he began and how he rose through the ranks through plastics and everything else.

COHAN: Yeah. I mean, he was an only child, and his mother was a stay-home mom. He grew up in Salem, Massachusetts. And his father was like a conductor or, you know —

RITHOLTZ: On a train.

COHAN: — on a train, right, that went from Boston to the North Shore, which was a train that I grew up taking all the time too. So, I’m familiar with that.

RITHOLTZ: So, might Jack Welch’s dad have punched your ticket?

COHAN: It’s not inconceivable, but I doubt it, because I probably would have been, you know, too young to have taken the train by myself —

RITHOLTZ: Okay.

COHAN: — but, you know, that idea. And then, you know, Jack was actually a bit of an athlete, even though he was small. And he also stuttered. His mother was his greatest champion, you know, got him through the stuttering, you know, made him seem like he 10 feet tall and a huge athlete, even though he really wasn’t any of those things. But he was athletic, and he was on high school teams. And then he went to UMass in Amherst, Massachusetts. And then from there, got a PhD in Chemical Engineering at the University of Illinois, and got offered a number of jobs back then, including Exxon and other places.

He was offered a job at GE, which paid him a little bit more, so that’s why he decided to take it. And he moved to Pittsfield to basically try to figure out how to commercialize GE’s plastic pellets business. GE had created these plastic pellets and, you know, how do we make these useful to American industry and industry all around the world.

RITHOLTZ: The plastic was used as an insulator on electrical wires, and it had all sorts of other applications that potentially —

COHAN: You know, melt it down and put it in cars like car bumpers. I mean, all of a sudden, you know —

RITHOLTZ: Potentially, a huge business.

COHAN: Potentially, a huge business. It was Jack’s job to figure out how to commercialize that. And then, of course, he did it fabulously.

RITHOLTZ: You tell the story of them hitting a roadblock. And then ultimately, one of the engineers who was working on this, had left GE in a huff, but left all of his books behind, his notebooks, and someone said, it might have been Jack said, let’s go through the notebooks. Literally, the solution to the engineering problem written down waiting for them.

COHAN: Very true. And they ended up, you know, having to compensate that guy who they had —

RITHOLTZ: Had the pen.

COHAN: Yeah. But that made a huge difference in Jack’s career. And you know, he once was responsible for a chemical plant that blew up at GE. And you know, literally, the roof blew off. He thought he was going to be fired, but he wasn’t. You know, he did things like complain about his compensation because he was concerned that, you know, he thought he was doing this great job and he was getting paid the same as, you know, the other people he had started with, and he didn’t like that. So you know, even a year after he started, he threatened to quit and was literally given a going away party.

RITHOLTZ: Right.

COHAN: And then, you know, the person who became his rabbi, you know, had detected by then his talent and convinced him to stay, paid him more. And you know, this guy who became his rabbi, he sort of circumvented the guy who paid him the same as other people. And you know, Jack, really, began to differentiate himself,

RITHOLTZ: I’m looking for the quote, the rabbi tells him when the building blows up, hey, you know, that’s what happens in chemistry. Stuff blows up.

COHAN: Stuff happens. Stuff happens. Yeah.

RITHOLTZ: Although that’s not the exact quote.

COHAN: No, it’s not.

RITHOLTZ: So, the other thing that really stuck out to me from the pre-CEO period with him was the Hudson Valley PCB issue. That was one of the plants that General Electric had up to Hudson, legally with the approval of the federal government and the state is discharging —

COHAN: PCBs into the Hudson River.

RITHOLTZ: Right, into the Hudson. And decades later, we find out, hey, this stuff is really dangerous and kills people. And it was a giant overhang on General Electric. He seemed to negotiate a deal that everybody was happy with, very rare when you’re dealing with regulators, politicians, and big companies. Tell us a little bit about that deal.

COHAN: First of all, Jack is a chemical engineer, PhD.

RITHOLTZ: Right.

COHAN: He did not agree, did not think PCBs were dangerous to —

RITHOLTZ: Isn’t the science like, hey, you know, given a choice, you probably don’t want to be drinking PCBs?

COHAN: Look, as you said, again, and I’m just being reportorial here, okay? So I’m not a scientist, I don’t know what the science is. I know it’s very controversial. The PCBs were discharged into the Hudson, pretty far up the Hudson.

RITHOLTZ: With knowledge and approval.

COHAN: With knowledge and approval. You know, then all of a sudden, the EPA began to think that, you know, there were reports of PCBs in, like, the milk in Japan, making people sick. And you know, so there was starting to be some data and evidence that this chemical, you know, could be dangerous to people, but not necessarily completely definitive. And Jack for one, you know, did not believe they were dangerous.

So then, you know, it became his problem to clean up. Like, Red Jones (ph) gave it to him to clean up, maybe because, you know, Pittsfield was near the Hudson, and he was up there anyway, and he was a go-getter. And if anybody could —

RITHOLTZ: And a local guy.

COHAN: And a local guy. So, Jack negotiates a deal and GE pays $3 million to —

RITHOLTZ: $3 million?

COHAN: $3 million, that was the original deal.

RITHOLTZ: I thought it was $3 billion.

COHAN: No, no, no.

RITHOLTZ: Yeah.

COHAN: The original deal was $3 million. It was absurdly low.

RITHOLTZ: Pencils for the month.

COHAN: Exactly. $3 million with the state and it was, you know, in the New York Times, the picture of Jack, you know, reaching a deal with the state. And the long story short, again, the EPA got involved and other, you know, state conservation people got involved, and that whole agreement, even though it was signed and GE, I think, being paid the money, all that got completely overturned. Jack, you know, thought it was ridiculous. Then over time, and it went on through Jack’s tenure —

RITHOLTZ: Like decades.

COHAN: Decades. And eventually GE had to pay like $500 million to have the Hudson dredged.

RITHOLTZ: Right. They literally sucked all the PCBs out of the floor of the river.

COHAN: Of the river, I mean, where they had come to rest. And some people think that that —

RITHOLTZ: Made it worst.

COHAN: — made it worst.

RITHOLTZ: Right. It’s like asbestos. If it’s there, leave it alone or cover it up, but don’t tea it down.

COHAN: Well, of course, you know, asbestos is much worse —

RITHOLTZ: Right.

COHAN: — than PCBs. You know, the whole thing became, you know, cause celebre that went on for decades.

RITHOLTZ: Net-net, it was a billion dollars by the time they’re done.

COHAN: Whatever, yeah, they have to pay to dredge the Hudson River.

RITHOLTZ: And we’re not talking about like a little segment.

COHAN: No. Huge segments.

RITHOLTZ: Miles, miles, miles.

COHAN: That’s right. I mean, I can’t even imagine that —

RITHOLTZ: But ultimately, this is a feather in his cap because they give him this assignment and he crushes it.

COHAN: Well, he solves it, $3 million.

RITHOLTZ: Yeah. Right.

COHAN: You know, he solves it. But, of course, then it got relitigated during his tenure and he was against it the whole time. And then, you know, it was ultimately Jeff Immelt’s GE that had to pay the money to dredge the river.

RITHOLTZ: Which is kind of ironic. But he ends up cleaning up a number of things after Jack, which is kind of ironic that Jack is not thrilled with him. But I want to roll back to Suzy and the history, the building blowing up. It seems like there’s a lot of red flags in the early part of his career. All right, so he blows up a factory. Everybody is trying to get people to return to working from home. They had a hard time getting him to come into the Lexington Avenue headquarters, which is right down the street from us, which is actually gorgeous art deco building.

COHAN: Which GE got as part of the divestiture —

RITHOLTZ: From RCA.

COHAN: — out of RCA.

RITHOLTZ: Right. That was originally the RCA building and it’s the spectacular —

COHAN: Spectacular art deco building.

RITHOLTZ: Like, just the crown of that building is gorgeous —

COHAN: Yeah.

RITHOLTZ: — which I think was in the movie, Mr. and Mrs. Smith. And the base of it is fabulous.

COHAN: The lobby, the elevators, everything is just gorgeous.

RITHOLTZ: Right down the street from the Chrysler Building, so it’s a little overlooked because of that —

COHAN: Yeah.

RITHOLTZ: — but a fantastic building. So, listen, I’m on the road anyway 200 days a year. What does it matter if I have a desk here or a desk in Pittsfield? So, there’s that, there’s the drinking. If there was an HR department, he would have been in a lot of trouble.

COHAN: There was, and he still wasn’t —

RITHOLTZ: And then there was —

COHAN: He would have been counseled today.

RITHOLTZ: Today. A lot of womanizing going on back in the days.

COHAN: A lot of insulting fat jokes.

RITHOLTZ: Oh, really?

COHAN: Oh, yeah, a lot of that. Like, he would go into manufacturing plants, and he’d take the scale out and he would force people to weigh themselves.

RITHOLTZ: Men and women, not just the females in the —

COHAN: Yeah, men too. Yeah.

RITHOLTZ: Right. So, the —

COHAN: And in fact, once, when Jeff Immelt was working his way up and was head of major appliances, I guess he had gained a lot of weight and was weighed like 280 pounds or something.

RITHOLTZ: Oh, that big.

COHAN: Well, he had played football at Dartmouth. But he sort of ballooned up because it was a very stressful time and Jack —

RITHOLTZ: Plus, you’re testing all the cooking and he blamed it on —

COHAN: Well, the business he was running was the GE’s toughest business. And boy, they sold it. And Jack basically told him like, if you don’t lose weight, you’re not going to be ever be the CEO of this place.

RITHOLTZ: So let’s talk a little bit about succession planning, and there were a couple of things that really stood out. First, it seems like for all the criticism about Jack’s succession planning, he really groomed and created a lot of people who became successful elsewhere. Now whether or not that was because Jack wasn’t going anywhere and people figured out pretty quickly, hey, if I want to be CEO, I got to find a different home because it ain’t going to be at GE. But still, there have been a lot of leaders groomed under Jack Welch. Tell us a little bit about that.

COHAN: I mean, I think there’s an analogy to be made with, you know, Jamie Dimon and —

RITHOLTZ: For sure.

COHAN: — JPMorgan Chaser, right? Jamie has been there since, whatever, 2005. And so that’s, you know, 18 years. Jack was there for 20 years.

RITHOLTZ: Right. And he just got the stents so he’s good for another 10 years.

COHAN: Jamie ain’t going anywhere as far as anybody can tell. But you can see even with Jamie, a lot of top executives have left, and they’ve become CEOs of other financial institutions. And you know, the Jamie Dimon coaching tree is large and influential. You know, the Coach K coaching tree is large and influential.

RITHOLTZ: Right.

COHAN: Jack Welch’s coaching tree was large and influential. And you know, Jack, and I’m sure Jamie is the same way, had no hesitation in telling potential CEO candidates, that they weren’t going to make it and firing them. I tell the great story of Dave Cote, who also ran the major appliance business for a period of time. Jack called him in and, of course, Dave Cote went on to be the CEO of Honeywell, and Honeywell was incredibly successful. You know, of course, Jack could have bought Honeywell. That’s another story.

But Dave Cote went on to become CEO of Honeywell, and Honeywell’s market value exceeded GE’s for a long period of time. And Jack admitted to me that he made a mistake by getting rid of Dave Cote. And Dave Cote is a great guy, by the way. You know, he was running major appliance business, which was their most difficult business. It was like 13 out of 13 in the GE portfolio. And Jack called him up one day and basically had dinner with him and said, that’s it, Dave, you’re out.

You know, he’d been at GE his whole career too and he, you know, tried to discuss it with Jack and tried to, you know, buy himself more time and tried to have Jack explained to him why. Like, oh, Jack, you know, basically just wanted nothing to do with that conversation, just kept repeating over and over and over again. You know, it’s over, Dave. Just take your stuff and go. I want you out by, you know, the end of the year, whatever it was, and just go. And so, Jack, you know, he was like a light switch. Once you’ve made a decision and —

RITHOLTZ: That’s it.

COHAN: That was it. You’re out. So either he had that discussion over and over again with people, or they realize they weren’t going to make it on their own. And so, you know, they were constantly being headhunted because of GE, of course, had Crotonville, which was the management development training center which was, you know, world famous. You know, executives were schooled in Six Sigma, whether it was worthwhile or not. I mean, you know, they were rotated around in all sorts of positions. So they, you know, had a very eclectic and diverse both manufacturing and finance background, most of them. And so, they were very desirable as CEOs of other companies. So, headhunters would, of course, go there and pick them off, left and right.

RITHOLTZ: So now that leads us to Jeff Immelt and let me just preface this by saying I had Immelt on the show during the pandemic, while he was out in Stanford where he’s a professor now. And I gave him a dozen opportunities to toss Jack under the bus. And remember, Jack isn’t by this time gone, so there’s not going to be any tit for tat. And he absolutely refused to rise to debate, continuously said, hey, he left you a ticking time paying for the Hudson cleanup, cleaning up the SEC accounting scandals, cleaning up the GE Capital subsequent fraud, all this other stuff, and an industrial with a PE ratio of 47, he refused to do that.

COHAN: You know, so I spent a lot of time with Jeff Immelt too, many, many hours, just like I did with Jack. Of course, I’ve read Jeff’s book, Hot Seat, many times. You’re right. I know Jeff, privately, was quite miffed at Jack. Don’t forget, in whatever was, April of 2008, after Jeff announced that the first quarter of 2008 was going to be a major miss. You know, he had promised he was going to make X amount of money and then it was a major miss. Because don’t forget, Bear Stearns went down the tubes and —

RITHOLTZ: Right.

COHAN: — you know, the levers that he might have usually pulled —

RITHOLTZ: Gone.

COHAN: — weren’t available. Like, selling GE Capital assets was not an option.

RITHOLTZ: Right. The financial crisis kind of revealed the black box of GE Capital, and suddenly the scales fell from the analysts’ sights (ph).

COHAN: Totally. The financial crisis of 2008, where everybody was focused on Wall Street banks and even the car companies. The dirty little secret of the 2008 financial crisis was GE and GE Capital.

RITHOLTZ: Yes. For sure.

COHAN: So, Jack goes on CNBC in April of 2008, to criticize Jeff and GE for missing the first quarter of 2008 earnings. And he says on national television, you know, if Jeff Immelt misses earnings again, I’m going to take a gun out and shoot him, on national television, which you know —

RITHOLTZ: Can you imagine the hoots about this guy who himself has been engaging in the sort of behavior, manipulating GE Capital.

COHAN: Manipulating is a big word, but okay.

RITHOLTZ: All right. But the SEC use the phrase accounting fraud earnings manipulation and find GE, was it $230 million or $330 million for their earnings falsity under the one and only Jack Welch.

COHAN: Well, I don’t know if there’s a question there.

RITHOLTZ: No. I’m curious of your thoughts.

COHAN: Well, I mean, again, I go back to what I said before, and maybe it’s because Jack repeatedly made this argument to me, maybe it’s because I worked at GE Capital, maybe it’s because I understood and understand how the two pieces of GE fit together.

RITHOLTZ: Oh, it’s a fabulous combination when it’s working. There’s no doubt about that.

COHAN: So, if you have those assets —

RITHOLTZ: Yeah.

COHAN: — and you’ve promised research analysts, you’ve promised the street you’re going to do X dollars per share, and then you don’t do it, then obviously, people are going to fall out of love with you. And if you do do it, they’re going to love you. And if you do it because you’re, you know, selling a building that you own, or selling warrants that you own, or monetizing the equity in a business that you own in the market to make up any shortfall going on in the industrial side of the business, that’s not manipulation. That’s not fraud. That’s just telling people doing what you told people you were going to do. Why is that a problem?

RITHOLTZ: So, my pushback is —

COHAN: The problem became —

RITHOLTZ: — if it was just that, if it was just selling the building, that’s one thing. But there was a lot of paper transactions. Look, when I’m an investor in GE, I expect them to sell a certain amount of widgets, whether that’s industrial or financial widgets, and generate a profit.

COHAN: Okay.

RITHOLTZ: And if they’re playing with the levers and the dials —

COHAN: What did happen was what I would call obfuscation —

RITHOLTZ: Okay.

COHAN: — constant obfuscation. They would make big acquisitions. And then, of course, everyone would say, oh, well, now everything has to be integrated, the special charges, you know —

RITHOLTZ: Right.

COHAN: — the discontinued operations. You know, we’re going to have to wait for this to get all smoothed out. And that would go on year after year after year —

RITHOLTZ: Right.

COHAN: — constant inability to compare apples and apples, and apples and oranges. And then after Sarbanes-Oxley passed, you know, the GE Annual Report became like a textbook.

RITHOLTZ: Right.

COHAN: So, you couldn’t parse it, even if you knew what you were parsing.

RITHOLTZ: Right.

COHAN: And the accounting mumbo jumbo that was contained in it, yeah, there was an awful lot of that. You still cannot, if I may, figure out GE’s earnings. It’s always, well, you know, we can’t compare this quarter to that quarter because in this quarter, there was this GE operation or that special charge. And oh, by the way, the pandemic and blah, blah, blah, blah, blah. I mean —

RITHOLTZ: So, to me, when I walk into a room full of manure, I don’t say where’s the pony? I say, hey, there’s a lot of BS in here. You’re looking for the pony. You’re more generous than I am to Jack Welch. Fair?

COHAN: Well, I mean, I am more generous perhaps to Jack and what he was doing than you are. Yes. You know, maybe because —

RITHOLTZ: I have yet to meet a person who spent any time with him, that doesn’t seem, well, you know —

COHAN: People who he fired, if Dave Cote was sitting here today, they would say how much he loved him, right?

RITHOLTZ: Right. It’s amazing. He could fire people and they still they praise him.

COHAN: David Zaslav, the head of, you know, Warner Brothers Discovery, loves the guy. I mean, you know, people who left GE and worked for him loved the guy. And so, manipulation and fraud, those are —

RITHOLTZ: Big words.

COHAN: — big words.

RITHOLTZ: Yeah.

COHAN: Okay. Another more charitable way to look at it is, you know, and don’t forget —

RITHOLTZ: He managed the earning well.

COHAN: He managed the earnings beautifully. Okay. Remember our friend Harvey Markopolos, or Harry Markopolos —

RITHOLTZ: From Bernie Madoff. Yeah.

COHAN: — from the Bernie Madoff scheme. Remember, a few years ago, he also took his vast accounting skills and forensic skills and applied them to GE, working for a short seller. And he produced a document that was supposedly, you know, definitive, and that became pretty much totally debunked.

RITHOLTZ: Could one person ever in a given lifetime figure out the full earnings report? But to me —

COHAN: No.

RITHOLTZ: — that lack of transparency is kind of telling.

COHAN: Of course, it was telling. In fairness, can you figure out Amazon?

RITHOLTZ: Yes.

COHAN: Can you figure out Google? I mean, this is your business.

RITHOLTZ: Yes., I can figure that. Sure.

COHAN: You know —

RITHOLTZ: What’s your advertising dollar? What’s your stand?

COHAN: Can you figure out Meta? Can you figure out Apple? I mean —

RITHOLTZ: Now, well, yeah, Meta. Yes, I can figure out Apple. I can figure out Meta because they have certain revenues —

COHAN: Yeah.

RITHOLTZ: — and they have certain costs, and they line up fairly, certainly. I’ll tell you of all the companies, you can figure out —

COHAN: Can you figure out JPMorgan Chase?

RITHOLTZ: You took the words out of my mouth.

COHAN: Yeah.

RITHOLTZ: Although of all the banks, that’s the easiest one to figure out.

COHAN: Can you imagine a business that was like half JPMorgan Chase —

RITHOLTZ: And half Honeywell. It’s impossible.

COHAN: — and half Honeywell —

RITHOLTZ: Yeah.

COHAN: — and try to figure it out? I mean —

RITHOLTZ: So, you could have made that more transparent if you wanted do. It’s a choice to say we’re going to move the meter, which, by the way, leads me to a funny little story with Jack. Back during the financial crisis, post financial crisis when Obama was president, after Bush had left and McCain had lost, I want to say it was like 2012 or 2013, where the economy is coming off the lows. And you’re finally, after three years, seeing the employment data improve, which is what you would expect with zero percent interest rates and a 57 percent market reset.

Welch had a line, I’m paraphrasing, but the BLS report comes out one Friday and Welch tweets, leave it to those Chicago boys to cook the books, meaning Obama and BLS. And I responded immediately, if anybody knows about cooking the books, it’s Jack Welsh. And one of my greatest memories is Jack Welch, you know, cursing me out on Twitter.

COHAN: Nice.

RITHOLTZ: And I was thrilled to death about that.

COHAN: Not sure there’s a question there. But I can tell you that Jack did not like Obama.

RITHOLTZ: Clearly.

COHAN: He was virulently anti-Obama. I remember going to a talk that Jack gave with Bob Wright in Nantucket, at the Nantucket High School, and I was in the audience, and they were up on stage talking. And I think David Gregory, if I’m not mistaken —

RITHOLTZ: Bob Wright ran NBC for a long time.

COHAN: Bob Wright also lived in Nantucket, and ran NBC and then NBC Universal for a long time. He was the vice chairman. Jack brought him. Jack —

RITHOLTZ: And a rock star.

COHAN: Well, he was a lawyer that worked for Jack at plastics. I mean, Jack had the vision to make Bob Wright, you know, into a media mogul.

RITHOLTZ: And he did a fabulous job.

COHAN: Even though most people doubted that he could ever do it. And up on stage, and this was, I think, during the Obama years, it was, and Jack just lit in. It was offensive almost how —

RITHOLTZ: Really?

COHAN: — virulently anti-Obama he was.

RITHOLTZ: Wow.

COHAN: So, you know, Jack was —

RITHOLTZ: He’s old school.

COHAN: — to the right of Attila the Hun, I think, you know, kind of thing. But he did not like Donald Trump.

RITHOLTZ: I got to talk about some of your other columns and books. You’re writing for Puck. You’re writing for Vanity Fair. You’ve previously —

COHAN: I’m not writing for Vanity Fair anymore.

RITHOLTZ: So now it’s all Puck.

COHAN: It’s all Puck and other things, New York Times.

RITHOLTZ: Previously, you wrote for The Times. You wrote for Bloomberg. You’ve written for all over the place. I want to do one Vanity Fair story —

COHAN: Sure.

RITHOLTZ: — and one Puck story.

COHAN: I mean, I wrote for Vanity Fair for 13 years. I’m under Graydon.

RITHOLTZ: For a good long time. Yeah.

COHAN: And then —

RITHOLTZ: By the way, Graydon was the publisher, you’ll remember this, in the ‘80s, of Spy magazine —

COHAN: Yes, he was.

RITHOLTZ: — which was the greatest publication of all times. He famously called Donald Trump, a short-fingered vulgarian.

COHAN: Yes.

RITHOLTZ: And we’ll come back to some of your quotes on Trump, which I found to be quite fascinating, some of the stories. But let’s stick with the pandemic. You’re writing about the meme stocks, and This Is Effing Unbelievable: Bankrupt Hertz is a Pandemic Zombie Meme Stock. Tell us a little bit about what was going on when you were writing that piece.

COHAN: Well, you know, when I was at Lazard, I did a lot of restructuring advisory work, both out of bankruptcy and in bankruptcy. So, I mean —

RITHOLTZ: You know the law.

COHAN: Well, I know the —

RITHOLTZ: The rules, anyway.

COHAN: I know the rules and I know the financial side of bankruptcy.

RITHOLTZ: Right. So, do you recommend people buy companies that are publicly traded and have declared bankruptcy?

COHAN: Absolutely not. Because in 999 times out of 1000, the equity gets wiped out. For instance, when Revlon filed for bankruptcy last year, and next thing you know, it became a meme stock.

RITHOLTZ: Right.

COHAN: And the equity, like, went up six times. I wrote and said, this basically is insane.

RITHOLTZ: Right.

COHAN: This is insane. The equity is going to get wiped out here. You are you are making a major mistake. And of course, the equity got wiped out —

RITHOLTZ: Right.

COHAN: — and they’re restructuring. Now, once every thousand times something weird happens, and that’s what happened with Hertz.

RITHOLTZ: It’s a stub. You don’t ever see 100 cents on the dollar. You’ll see some fraction of it, unless someone comes in to make the creditors whole.

COHAN: Well, look, you know, usually in a bankruptcy, a company files for bankruptcy because they can’t pay their creditors.

RITHOLTZ: Right.

COHAN: They can’t pay their bills as they become due, right? That’s what happened with FTX. That’s what happens. Companies go into bankruptcy because they literally cannot pay their obligations as they become due.

RITHOLTZ: So, to clarify, it’s not a buying opportunity on the equity side, is it?

COHAN: No, it might be a buying opportunity on the debt side.

RITHOLTZ: Sure. You pick them up for pennies on the dollar.

COHAN: And then you convert that debt to equity and ba-bada-bing, there are people who loaned to own.

RITHOLTZ: On the other side of the bankruptcy proceeding, right? You come out —

COHAN: As creditors.

RITHOLTZ: Right.

COHAN: And then you convert that debt to equity in the reorganized company, and then, you know, maybe that will become worthwhile, maybe it will, maybe it won’t. With Hertz, what happened is that there was like a bidding war for Hertz in bankruptcy. And you know, once you make the creditors whole, then you can control the equity. You can control the action. And so, you know, this is apparently something that these hedge funds did, and made a killing.

RITHOLTZ: From the equity side or the debt side?

COHAN: From buying the equity. I mean, it was pandemic related because, you know, everybody was not going anywhere —

RITHOLTZ: Stuck at home. Right.

COHAN: — and the demand for rental cars evaporated, and I guess they figured correctly that it would rebound, and they were right.

RITHOLTZ: So, let’s talk a little bit about a more recent piece you wrote in Puck about Bob Iger’s Nelson Peltz saga. Let’s talk about what’s happening over there.

COHAN: Well, of course, you know, having done all this restructuring work at Lazard and working with private equity firms at Merrill and JPMorgan Chase, that, you know, I was extremely familiar with Nelson Peltz and Trian. And of course, they had taken a two and a half billion-dollar position in GE, and Jeff Immelt had been friends with Ed Garden’s brother, Ed Garden is Nelson Peltz’s son-in-law.

So, after Jeff Immelt decided to sell GE Capital in 2015, Project Hubble, he also decided it would be a great idea to invite Trian Partners into the GE Capital shareholder base. It’s sort of a way to ratify Jeff’s strategic initiatives, you know, to refocus the company on its industrial origins, to get out of GE Capital. He’d, by that time, gotten out of NBC Universal. He had doubled down by buying Alstom, the big, you know, power generation business in France, and was remaking the company. Well, he had been told that activist investors were going to come into the company, one way or another. So Jeff decided he would invite someone in, who we thought would be friendly to him, because he knew Ed Garden’s brother from Dartmouth, and he had known the Gardens. He used to go to their house on holidays and going back to Cincinnati. They lived in Melrose, Mass. And Jeff would go down there for Easter and other holidays, Thanksgiving and things like that.

And he would talk to Nelson and get advice and invite him up to Crotonville and things like that. And he thought that he was going to get a sympathetic partner by having Trian Partners in by two and a half billion dollars with the GE stock —

RITHOLTZ: Not how Nelson rolls, huh?

COHAN: That’s not how it works out. It’s fine if you, you know, make your numbers and the stock price goes up and you do everything he wants you to do. But, you know, Jeff got overtaken by events. It didn’t work out and, you know, the smiling crocodile Nelson Peltz bared his teeth. And basically, he was responsible for Jeff Immelt being fired, and basically being responsible for firing John Flannery after 15 months and bringing in Larry Culp who was still there, and Larry Culp sort of executing the Trian playbook.

And so then, when I see Trian, you know, make a $930 million investment in Iger, and Iger kind of been asking for a board seat, and Iger kind of showing him his hand, well, I couldn’t resist writing that that is a big mistake.

RITHOLTZ: Right.

COHAN: We’ve seen this movie before.

COHAN: We’ve seen this movie repeatedly, not just at GE but in other places too. You know, P&G and then DuPont, I mean, you know, come on here, Bob. You know, a leopard doesn’t change his spots.

RITHOLTZ: Right.

COHAN: And you know, why does scorpion sting Bob? Because that’s what they do.

RITHOLTZ: It’s their nature.

COHAN: Right. But Bob Iger is going to learn the hard way, I think.

RITHOLTZ: Right. The scorpion and the frog is a perfect metaphor.

COHAN: Yeah.

RITHOLTZ: Let’s talk about some of your other books. This is an embarrassment of riches, I don’t know where to go first, Goldman, Bear, Lazard. We only have you for a limited amount of time. Which was the most fun to write? Which one do you like talking about the most? Lazard seems to be the most fascinating and least well known of the three.

COHAN: I had a great time writing about Lazard because, first of all, it’s my first book. And of course, it was challenged. Who was I to think I could even write a book? I mean, I hadn’t written anything in 20 years. But I decided, well, you know, this is what I was going to do. And I knew it was a great story. I knew the characters were great, and I knew that because I had worked there, even though it was, you know, 10 years before. And I didn’t take a single note or anything, I had no plans ever to write a book.

So, you know, to me, every page was kind of a revelation, you know, going back and trying to figure out the history and then unearthing various scandals which I’ve heard about, but no one ever talked about. And so it was just a lot of fun.

RITHOLTZ: Money and Power: How Goldman Sachs Came to Rule the World. Do we still think today Goldman Sachs rule the world? Have they been bypassed a little bit by other companies, or are they still, you know, the company that fills all the seats in the federal government, Department of State, Department of Treasury? I mean, there used to be former government execs wherever you looked in D.C.

COHAN: You know, it’s two different questions. I think there are still Goldman execs who managed to make the leap into government all around the world, you know, better than any other bank. And their influence continues to be, you know, unparalleled in the halls of government. You know, obviously, it depends on the administration. Like, in the Trump administration, they were kind of everywhere. You know, in the Biden administration, less so, but there’s still examples.

Then there’s the question about Goldman as a bank and as a financial institution, you know, still highly respected, still probably the number one place that college graduates want to work and MBAs want to work, probably number one still in prestige, certainly number one in many investment banking categories, including M&A and has been forever, basically. But it’s trading below book value. It went public in, like, 4 times book value. It’s trading below book value or at book value.

Morgan Stanley, its longtime rival, trades at 1.7 times book value. You know, James Gorman, the CEO of Morgan Stanley diversified Morgan Stanley into wealth management and asset management, bought Smith Barney. You know, Goldman has sort of been stuck. The truth is it’s not very good at doing M&A deals for its own account. The ones that it’s done have not worked out particularly well, except for perhaps J. Aron, which got them a lot of management talent, but basically haven’t worked out.

Whereas, you know, Morgan Stanley has been much more successful at doing deals and diversifying its business away from the volatile investment banking and trading businesses to more steady fee income. And it’s gotten rewarded now, trades at 1.7 times book. Its market cap is like 40 to $50 billion higher than the Goldman’s now. And so Goldman’s valuation is around, you know, 110, $120 billion; and Morgan Stanley’s is around 170.

Now, meanwhile, JPMorgan was, what, 450, I don’t know what it is today. So JPMorgan Chase, you know, Jamie Dimon, of course, is the biggest bank, the most powerful financial institution, and that used to be Goldman’s role. But, you know, Goldman has not diversified well or easily. And you know, obviously now everybody is wondering about David Solomon in his tenure and how long he can last. You know, his effort at diversification into consumer banking was very expensive and so far unrewarding, trying to get into commercial banking and banking generally.

Basically, Goldman needs to do what the Fed won’t let it do, which was, you know, buy a balance sheet, merge with a big bank, you know, like, Bank of New York Mellon or something which doesn’t have investment banking so that, you know, there won’t be any overlap there. But it has a very big asset management business and a very big sort of back office —

RITHOLTZ: Custodian.

COHAN: — custodian. I mean, it’d be a great merger with Goldman, which ironically, is the thing that Jon Corzine was trying to do in the late ‘90s, do that merger and was trying to do it without the approval, as I write in the book, of his partners on the management committee like Hank Paulson, and that got Corzine zotzed.

RITHOLTZ: And they probably missed their window. Let me ask you one last question before I get to my favorite questions, which is, you’ve had some really interesting columns about Donald Trump who spoke with you on frequent occasion and liked a lot of the stuff you were writing, even though a lot of it was fairly critical. Tell us a little bit about what it’s like to get that phone call from Trump, inviting you on Air Force One.

COHAN: No, no, no, I never got invited.

RITHOLTZ: Weren’t you supposed to take a flight? Maybe it was before he was elected, you were supposed to take a flight with him? And then —

COHAN: Yes. So, I had written a piece in The Atlantic about why nobody on Wall Street, this is —

RITHOLTZ: Except for Deutsche Bank.

COHAN: Right. But this is why like mainstream Wall Street doesn’t do business with Donald Trump, and this was in, like, 2013, beginning of 2014. And I talked to Donald for that. You know, he was a pretend candidate at that period.

RITHOLTZ: Right.

COHAN: So, you know, I spoke to him several occasions. And then he didn’t like that article, it was critical of him. And then I wrote an article in Vanity Fair about Trump University and Eric Schneiderman, then the New York State Attorney General, going after Trump University. And I spoke to him again, as well as Schneiderman, and they basically went out each other in this Vanity Fair article. And that was fun, that was great.

So then, you know, he comes down the escalator in June of 2015 and he announces he’s going to be a candidate. And he’s like campaigning. Because, of course, as you pointed out, Graydon had referred to Donald Trump as a short-fingered vulgarian in Spy magazine, so let’s just say Graydon and Donald Trump didn’t get along very well —

RITHOLTZ: Right.

COHAN: — among other things over the years that Graydon had done to Donald, and presently, I might add. And so Graydon said, you’re the only one that gets along with him. Can you, you know, see if he’ll let you follow him around on the campaign trail? So, at that time, as you’ll remember what Donald liked to do is he would take Trump Air out for the day and he’d fly to, you know, Iowa, or he’d fly to Minnesota, or he’d fly to Chicago, and then they’d fly home to, you know, sleep at Trump Tower.

So, I asked him if I could go on a day, you know, go with him. And Hope Hicks who was his communications person at that time, you know, I was in touch with Hope. And Hope basically said, yeah, you know —

RITHOLTZ: We can get you on.

COHAN: — we can get you on. I think this is going to work out. You know, let me work on it for you. But I think he’s basically favorably disposed towards this. And I’m getting ready to go, and then I get an email saying, you know, no, Bill, he’s changed his mind. He’s not going to let you go with him. But he did want me to ask you this question, what happened to you, Bill? What happened to you? The implication being, you know, I thought you were a fan of Donald Trump. Now, you seem to be so against him. We can’t have somebody who’s this against Donald Trump, you know, going with him and reporting on it.

RITHOLTZ: You really weren’t editorializing against him. And you had said, okay, the guy cheats at golf, hold that aside.

COHAN: Right.

RITHOLTZ: But you also said, hey, he used to be a terrible businessman who would put his own money at risk. Now, he uses other people’s capital, he slaps his name on stuff. It’s a cash cow.

COHAN: In fact, Barry, I said that on Bloomberg TV air.

RITHOLTZ: Okay. There you go.

COHAN: Okay. So, can I tell you this story?

RITHOLTZ: Sure.

COHAN: So, I had written this article in The Atlantic about why nobody on Wall Street does business with Donald Trump anymore, except for Deutsche Bank. And I talked about in that article, how he had evolved as a businessman, where sort of putting his own money at risk and losing it oftentimes, you know, Trump Air and Trump Steaks —

RITHOLTZ: Vodka.

COHAN: — whatever it was. He had decided to license his name and just take fees and you know, that’s a much better business model.

RITHOLTZ: Yeah.

COHAN: Much better business model. He was capitalizing on his name recognition and his, you know, so-called the business expertise. So —

RITHOLTZ: This is after The Apprentice, after the 2012 election.

COHAN: Right.

RITHOLTZ: He had a brand.

COHAN: He had a brand. I mean, of course, as we all know, he capitalized it on 2016. So I come on TV here, and the anchors who I don’t remember who they were, they were saying, but, you know, Donald is not a very good businessman, is he? You know, you write in your article. I said, well, actually, he was. You know, he evolved. He wasn’t a great businessman, and he’s probably not worth as much as he claims to be. But he has evolved, and I have to give him credit for evolving his business model and becoming smarter about that.

He had invested $40 million in the Chicago Tower, which he lost. But, you know, basically, that was chump change as far as Donald was concerned. He was using other people’s money. He was taking fees for licensing his name. And I thought that was pretty smart. Even though Wall Street won’t do business with him, and I understood why, because he, you know, was famous for not paying his bills and stiffing creditors, but he had evolved.

So that was the Atlantic article. Then I called him up and I said, I want to do this article about Trump University. I knew he didn’t like The Atlantic article because he had written me, he didn’t like it. But I didn’t know whether he was going to talk to me. But I figured, okay, he calls me up and he says, William, he called me William, I mean, in bass, I won’t do his voice. I could, but I won’t.

RITHOLTZ: Come one, do it. It’s radio, do his voice.

COHAN: He said, you know, Bill, I thought that that Atlantic article you wrote was a bunch of crap. But then I saw you on Bloomberg talking about it and the anchors wanting you to say bad things about me, and you wouldn’t do it, and I really appreciated that. And so as results, he told me he would talk to me for the Trump University article. And then he told me my favorite line of all, which is, he said to me, like me, Bill, like me, William, you’re a good-looking guy and you have a great head of hair. And I thought the like me part —

RITHOLTZ: Right.

COHAN: — was my favorite thing ever.

RITHOLTZ: Right.

COHAN: Because we all know that hair, whatever that is on top of his head is not hair.

RITHOLTZ: I don’t know what it is.

COHAN: I don’t know what it is.

RITHOLTZ: But you and I both —

COHAN: We are blessed —

RITHOLTZ: — have a nice head of hair.

COHAN: — as middle-aged guys —

RITHOLTZ: Good genetics.

COHAN: Something.

RITHOLTZ: Whatever is that on top —

COHAN: Whatever that orangutan is on top of his head, that is not. And the pictures of him, you know —

RITHOLTZ: And the wind.

COHAN: And the wind —

RITHOLTZ: It’s the best.

COHAN: — and then making it up in the morning are like my favorite thing ever.

RITHOLTZ: So, in the last few minutes we have, let’s jump to our favorite questions, and we’ll make this a speed round. What are you streaming these days? Tell us your favorite Netflix, Amazon Prime —

COHAN: Yeah. I mean, I’ve been doing Bad Sisters, I have to say I really like.

RITHOLTZ: Okay.

COHAN: They really are bad sisters, but they’re great. Now watching Derry Girls which is, you know, crazy fun. But, you know, it’s been like Call My Agent and —

RITHOLTZ: I love that.

COHAN: — The Americans and The Crown.

RITHOLTZ: Oh, you’re Francophile. I forget —

COHAN: Yeah, a big Francophile.

RITHOLTZ: So, my wife and I went to Paris for like two weeks for our 25th anniversary.

COHAN: Of course.

RITHOLTZ: So, we love Call My Agent.

COHAN: Yeah.

RITHOLTZ: And we watch Emily in Paris just because the scenery is just the —

COHAN: Benefic.

RITHOLTZ: It’s spectacular. And you know, it’s a goofy set.

COHAN: I have not watched that, but —

RITHOLTZ: But if you just mute it and just let it roll, it’s fantastic.

COHAN: Okay.

RITHOLTZ: Tell us about your early mentors who helped shape your career.

COHAN: Well, I mean, I think, and I’ve talked about this in my books, somewhat, I mean, you know, I had two careers. I had investment banking career, such as it was, and a journalistic career, you know, which probably had been better. So, I think, you know, one of my important mentors was a guy named Mel Mencher, who was a professor at Columbia Journalism School, who basically told me something I’ve never forgotten. And you know, he was a very tough professor, and most people could only take his course for one semester just because they couldn’t stand it. He was very rough and gruff and abusive. But I, of course, loved that and took him for the whole year. It was a one-year program.

And he always used to say you can’t write writing, you can only write reporting. And I never quite understood what that meant for a while, but I’ve figured it out now. And basically, if you don’t do the reporting, you can’t write anything. So, you have to do the reporting. You’ve got to do the reporting. And so that’s why these books are so full, chock-full of reporting because if you don’t do the reporting, you can’t do the writing.

RITHOLTZ: Every page is rich with research and details. And you know, it doesn’t make for a fast read, but it makes for a very satisfying read. I don’t know if anybody has ever told you that. But I found myself going back and saying, let me just make sure I understand this chronology because it’s so detailed and so rich. So you put that advice to work.

COHAN: Right. Thank you. And Mel Mencher was the proponent of that. And then, you know, in banking, the guy is still my friend, David Supino at Lazard. He was a Lazard partner. He was also a renaissance man. He loved art and collected art. You know, I love art. And he’s a real collector and he’s also a writer. David, you know, he was a lawyer at Shearman & Sterling then he went to Lazard as a partner. He was head of the restructuring bankruptcy effort. I mean, he was a true renaissance man. And he’s written, you know, bibliographies of great writers. And he’s been incredibly important to me in my banking and writing a career.

You know, I didn’t have many mentors at JPMorgan Chase. I had sort of colleagues who were very competitive. I mean, Lazard seemed like a viper pit and, of course, it was if you were a partner, but I wasn’t. I left before I became a partner. But at JPMorgan Chase, it was a true viper pit, at least, before Jamie Dimon got there. And you know, people were at each other all the time.

RITHOLTZ: So speaking of art, doesn’t Lazard have quite a storied art collection?

COHAN: Not inside the firm, the partners had an incredible art collection. And one of my favorite parts of the Lazard book was when I went and spent time with Michel David-Weill, of course, the descendant of the David-Weill family who owned the firm before Bruce Wasserstein came along, as I said, stolen and took it public. Michel and I would meet at his apartment on Fifth Avenue and that was just filled with art. And then I met with him once at his incredible full block townhouse in Paris, which is filled with this incredible art collection. And he walked me through his collection.

He basically did an explication de texte of his collection and how it had been stolen by the Nazis during World War II. And you know, he had to fight to get it back, and he basically got back his father’s and grandfather’s, a large part of that collection. And you know, it was just surrounding him, and it was an incredible collection. But I mean, Andre Meyer collected art and Felix Rohatyn collected art, but it was Michel who was annually named one of the best 200 collectors in the world.

RITHOLTZ: Wow. That’s amazing. I actually just watched Woman in Gold when we were traveling, about that whole story and the recovery of Nazi art. It was really quite fascinating with Gustav Klimt and all that. Speaking of books, tell us about some of your favorite books. What are you reading right now?

COHAN: I’m finishing up The Divider by Peter Baker and Susan Glasser, who are my friends. I mean, it’s a great book. I hate to read it because it’s reliving, of course, Donald Trump era, which, you know, I hope we all don’t have to relive again. You know, there’s probably 50/50 chance that we might. And you know, I’ve been blurbing books. So there’s some new books coming out, which you’ll probably want to have people on your show about —

RITHOLTZ: An introduction.

COHAN: A book about Mark Spitznagel and Nassim Taleb that’s coming out by a Wall Street Journal reporter.

RITHOLTZ: Who’s writing it?

COHAN: Scott Patterson.

RITHOLTZ: Oh, sure. I met Scott before. He’s great.

COHAN: Yeah. That’s a very interesting book that I just blurbed, which is coming out soon. You should have Scott on. He wrote The Quants and others —

RITHOLTZ: I had him on for that. It was fabulous.

COHAN: So, you know, it’s hard when you write as much as I do, to actually, you know, be constantly reading other stuff. But I’m always reading, you know, articles and so —

RITHOLTZ: So, let’s get to our last two questions before they toss us out of here. What sort of advice would you give to a recent college grad who is interested in a career in either investment banking or journalism?

COHAN: You know, my father, who’s still alive, never wanted me to go into journalism because he knew, intuitively and correctly, that it is an extremely low-paying profession compared to others.

RITHOLTZ: He didn’t want you to be an ink-stained wretch. He would rather have you in investment banking?

COHAN: Well, I think he wanted me to be able to, you know, have a good life and make a good enough living to afford a lifestyle that I probably had become accustomed to, so to speak. And know that being an ink-stained wretch, you know, I was making $13,000 a year working for the Raleigh Times, which was fine. I was a single guy, but that was clearly not going to be sustainable long term.

RITHOLTZ: Right.

COHAN: So, you know, I don’t know, it’s a very tough profession. It has gotten no easier. I mean, don’t forget, when I was making $13,000 a year, the EBITDA margins in the newspaper business was 60, 70 percent. And the paper I worked for, The News & Observer Publishing Company, got sold by the Daniel’s family for $300 million to McClatchy. You know, the Louisville Courier-Journal got sold, you know, to Gannett for whatever, you know —

RITHOLTZ: That’s before eBay, Craigslist, Google. That is gone.

COHAN: Before everything. Okay. And so, now, we’re sort of having a media meltdown. And of course, you know, I’m a founding partner of Puck and we’re trying to make, you know, a go of it. And I think we’re doing, knock wood, you know, quite well.

And my oldest son is a lawyer here in town. My younger son works in L.A. and sort of has aspirations towards writing and journalism, and he’s doing documentary films now. So, you know, that’s tough. It’s great in the abstract. You know, it’s great for people to get into this line of work because, you know, it’s obviously endlessly fascinating and riveting. And you know, every day is a new day, and you learned so much. It’s great if it’s not your child. When it’s your child then, you know, it can be challenging.

RITHOLTZ: You can understand your own father’s concern.

COHAN: Absolutely. Now, I can, And you know, he encouraged me to go back to get my MBA.

RITHOLTZ: Good advice.

COHAN: Well, I didn’t want to do it, just like my younger son didn’t want to do it and he hasn’t done it. I did do it and it worked out great for me. You know, one of the things I wanted to do was to get a job working for Businessweek before Mike Bloomberg did.

RITHOLTZ: I know, Joel Weber. I’ll make an introduction.

COHAN: Yeah, I know, Joel. But I mean, before, when it was owned by McGraw-Hill, I wanted to work there, and I couldn’t pull it off. I wanted to work at the Wall Street Journal, and I couldn’t pull it off. In fact, I told the editor at The Wall Street Journal, who I had managed to get myself an interview at. And I was in his office when he, like, came in and he couldn’t figure out what I was doing there. And I said, I’m here for a job interview. And he said, well, forget that, my friend.

RITHOLTZ: Really?

COHAN: Yes. Forget that, we have a hiring freeze on. This was 1987. If we didn’t have a hiring freeze on, we’re going to hire this person from Fortune and that person from Forbes. So, you know, you can take your MBA and shove it.

RITHOLTZ: (Inaudible)

COHAN: And I said, well, I’m either going to go to the Wall Street Journal or Wall Street. And he said, goodbye.

RITHOLTZ: Wow. That’s fascinating. My final question, what do you know about the world of finance, investing, and journalism today, you wish you knew 40 or so years ago when you were first getting started? Really, 30 or so years ago, when you were first getting started.

COHAN: So, I’ll tell you another one of my favorite stories, since we seem to have endless amount of time here.

RITHOLTZ: I told you I’ll get you out by dinner, right?

COHAN: Yeah, you did. You mentioned that. So when I was at Lazard as an associate, it was about 1990, I used to have Quotron machine. Do you know what a Quotron machine is, Barry?

RITHOLTZ: Sure, of course.

COHAN: Of course, you do. Now, we have Bloomberg streaming real-time information. The Quotron machine, you would put in the ticker and that would come the price or something resembling a price. So —

RITHOLTZ: Right. More or less semi-current.

COHAN: More or less.

RITHOLTZ: Not quite.

COHAN: Who knows what? Certainly, no desktop streaming of real-time financial information, which enables us to be sitting here today. And so, I decided I wanted to buy some Berkshire Hathaway. I had become enamored of Warren Buffett. He had gone to Columbia Business School. I’ve gone to Columbia Business School. I just thought, okay, there’s something about him that’s captivating to me. So this was, what, 30-plus years ago and —

RITHOLTZ: You backed up the truck on Berkshire, huh?

COHAN: So I went to the Quotron machine, there was one on the floor, one. I went to the Quotron machine on the floor, I put BRK into the Quotron, and up popped 1,200.

RITHOLTZ: Per share?

COHAN: Well, 1,200.

RITHOLTZ: Right.

COHAN: I’m thinking, okay, 1,200 per share. I didn’t have much money. And you had to put the trade through the Lazard trading desk even though there was like one person or a quarter of a person who was the Lazard trading desk. And so I said, I want to buy 10 shares. So, I thought, okay, I have $12,000 barely. I’ll buy 10 shares of Berkshire Hathaway. There was only Berkshire Hathaway, A; there wasn’t —

RITHOLTZ: Right.

COHAN: — Berkshire Hathaway, B. So, they said, okay, do you want to do it at market? I said, sure, I’ll do it at market. I’ll call you back. Call me back half hour, said, okay, you’re done, 10 shares of Berkshire. How do you want to pay for it? I said, I’ll write you a check. So, I’m thinking I’m going to have to write a check for $12,000.

RITHOLTZ: No.

COHAN: He says, it’s $120,000.

RITHOLTZ: Right.

COHAN: How do you want to pay for it? I said, what are you talking about? I’m literally having a heart attack. $120,000? I went to the Quotron, it said 1,200 times 10, that’s $12,000. What am I missing here? No, no, no, no. The Quotron only went to four spaces. It’s 12,000. You owe me $120,000. You know, what do you want to do? I don’t have $120,000. I thought okay, well, I —

RITHOLTZ: There goes my career at Lazard.

COHAN: I will buy two shares. I will write you a check for $24,000. So, I did that. And it’s okay, we’ll sell the rest. I said sell the rest. They sold the rest. No one was hurt. No harm, no foul.

RITHOLTZ: Right.

COHAN: I gave them $24,000. I kept my two shares. I still have them.

RITHOLTZ: And what are the A shares trading at today?

COHAN: Well, I don’t know, $450,000; $500,000.

RITHOLTZ: So are you happy you made a million dollars in the trade, or are you thinking about —

COHAN: Well, of course, I’m happy I made —

RITHOLTZ: — the other 10 shares you left?

COHAN: The other eight shares. So, you want to know what my advice would have been? Write the check for the whole $220,000 would have been my advice.

RITHOLTZ: Thank you, Bill, for being so generous with your time. We have been speaking with Bill Cohan, author of many fabulous books, the most recent is Power Failure. I wish we had a little time to talk about your history at Duke and Lacrosse theme, and the book you did there. But we’re completely out of time. It’s been four hours and there’s only so long they can leave us with this.

If you enjoy this conversation, be sure and check out our other 489 previous discussions. You can find those at iTunes, Spotify, YouTube, or wherever you get your favorite podcasts from. You can sign up to see my daily reads at ritholtz.com Follow me on Twitter @ritholtz. Be sure and check out the entire family of Bloomberg podcasts @podcasts on Twitter.

I would be remiss if I did not thank the crack team that helps put these conversations together each week. Paris Wald is my producer. Sean Russo is my head of Research. Atika Valbrun is our project manager. Justin Milner is my audio engineer.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

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