Michael Loeb at Advertising Week//On Careers and Innovation

[Applause] was I really called a legend

oh my god aren't most of them dead I think so so um first of all I think I think I saw a Batman vs Superman here

okay it really was a dreadful movie I'm hoping for a better outcome but I just time will tell

I did by the way going in you all have a thanks card right that is good for a latte we call that a thanks a latte and

a brownie because if you're gonna hear me for 25 minutes a little bit of

caffeine and sugar is really required so enjoy that with our compliments I'm gonna talk a little bit about

entrepreneurship and startups and I was asked to talk a little bit about my journey which I plan on doing by the way

I will open it up for some questions no hard ones please and then we will talk about the thin line if we have time

between audacity which I think embodies the entrepreneur and arrogance which is often associated rightly with the status

quo so let's talk briefly about [Music] entrepreneurs who here wants to be an

entrepreneur okay okay who here had a lemonade stand okay who here had a paper

route right okay so basically I do if it's not an entrepreneurs gene it's something that you had when you were

young and and and it stays with you and you always want you're always thinking about businesses you're always thinking about ways of making money the money itself and this has been talked about a

lot but it's true is not the prize what is the prize is that sense of accomplishment and that sense of competition that you made more money on your paper route than anybody else

and you delivered more papers and it really does start young apropos that a story that is just gonna stay in this room I was invited several years ago to

see the MIT lab startup Lab which is actually quite the facility and there was about a dozen people sitting in the

conference room and they hand me a book write a book and the book is the 24 steps of being an entrepreneur right 24 steps so all I could think about is oh

my god I didn't read chapter 13 I missed the step I can't be an entrepreneur anymore so I then got the book and I try to be

as graceful and gracious as I could and I said you know you are missing something you're missing step number 25 and they go we're missing step number 20 you're missing step number 25 they said

what's that and I said burn this book okay there is no book on entrepreneurship the old saw about you know having electricity in your head

when you're taking a shower is absolutely true I wish you can take lightning in the bottle and put some of these ideas together and you can do it

in a programmatic way but frankly it just doesn't work that way I get ideas from reading reading is a good thing by the way I get ideas from talking to

people I get ideas by actually talking out loud to other people by the way if I'm having a conversation with you and I have an idea while I'm having that conversation I own the intellectual

property just want to let you know so I do think it's something that you were born with and by the way if that doesn't

sound like you that's okay because the entrepreneurs need a lot of help because their unbridled right they have no governor right they have no editor and

they need one so you can be part that and part of that ecosystem and not be the entrepreneur themselves I have a

quote here from Steve Jobs and I think that expresses entrepreneurship very well I think was part of an ad right was

that part of his 1984 M and Jobs was by the way the greatest entrepreneur of all times we will never have another one I

mourn his passing he transformed not one not two but I don't know six industries and he did it in just miraculous and

creative style and job said here's to the crazy ones The Misfits the rebels the troublemakers the round pegs in square holes the ones who see things

differently they are not fond of rules oh my god we hate rules hate rules I'd say of entrepreneurs that they think rabbity does not apply to them that if

there's a four-way stop that means gun the engine because the other schmuck is stopping see things differently you can quote them disagree with them glorify or

vilify them please don't but the only thing you cannot do is ignore them because they

change things they push the human race forward and while some may see them as crazy we see genius because the ones who

are crazy enough to think that they can change the world are the ones who do so it's an amazing and powerful thing but

if you think of all the things that we have it really is due to somebody who dared to be crazy somebody who dared to think different we had Sir Isaac Newton

said if I see further it's because I stand on the shoulders of giants right so invention is highly iterative and

highly compounding it stands on top of yesterday's inventions we can talk about a million people I'm gonna talk a little bit about Henry Ford

right so Henry Ford in a day and age where automobiles were a cottage industry right and the average car cost

$3,000 Ford made a car that cost $300 can you imagine that 90% discount and Ford did something else extraordinary of

course he built the assembly line but he paid his workers five dollars a day when two dollars was a going rate why well in 60 days they could buy a Ford

and what better way can you have can you advertise your own product than to have all the people that are building your car driving your car right and in case

you are confused about which came first chicken or egg in the case of the automobile it was the chicken right there were 14 million Model T's that

were manufactured by the way the only automobile in the history of automobiles that eclipse that was the Volkswagen right so it took all those years and

think about the share of market at that time it was profound and Ford was able

to build roads because he was the chicken right or he was the egg that created the chicken on the chicken was all the roads in the United States Ford

did by the way and this is also an interesting lesson became so big and so popular that he succumbed to the status

quo right and he flipped from being audacious to being arrogant and Ford famously said a couple of things one he

said that if I asked the American public what they wanted they would say a faster horse right now by the way Steve Jobs said the same thing if I would ask you what you want you would never come up

with an iPad or an iPod but Ford also said you can have a Model T in any color you want just so long as it's black

right and he lost Ford did he almost lost his company it almost went bankrupt because alpha Sloane took a half-dozen failing

American automobile companies and put them together okay into something called General Motors right and it was Sloane's

philosophy that I am gonna start you off with a Chevy and as you get a family and as you get promoted in your job you're gonna go to a Buick and then an Oldsmobile and finally when you're 60

years old you gotta be six years old you're gonna get a Cadillac right and he said Alfred Sloan a chicken in every pot

and a car in every garage right some garages were bigger garages that could afford a bigger car and some were smaller and for just about went bankrupt

and he was forced right into capitulating and all of a sudden competing which he did successfully

finally with Alfred Sloan I think what I will do now is tell you a little bit about my journey and Richard was very

gracious when he said that I left Time Inc I was actually fired from timing right and sometimes people say you know what type of an entrepreneur are you and

I say I'm a breech birth entrepreneur right and my wife says that is disgusting so I'm an accidental entrepreneur and the accident was that I

got fired I got fired in my late 30s now by the way I'm not alone Michael Bloomberg also something to aspire to he was 37 I was 36 but I would have not

been an entrepreneur if I wasn't pushed I had the gene I was something of an instrument or entrepreneur I joined Time Inc because that was the company that my dad worked for almost 40 years it was a

journalist he managed Fortune magazine as a journalist the managing editor before that Money Magazine he put personal finance on the map before that he was an editor at Time magazine and

time at the time was that type of company where a lot of sons and daughters would join the company and I did I went on the business side instead of writing pretty words I made pretty

sneaker phones and football phones and blue verse videos for Sports Illustrated which I had the pleasure of managing I launched si for kids and was

asked to launch Entertainment Weekly which I said could be done with a hundred million dollars my vision of the magazine and that of the editor was

quite a bit different that is the formula for a bad outcome we were both shown the door and what I did was start the company outside of

Time Inc that I was trying to start inside of Time Inc can we have a slide please right okay so

the magazine industry that I joined used to sell and maintain magazines through a series of renewals followed by bills

that was the standard thing and there was one exception which was the titles owned by American Express food and wine and travel leisure and it was a joint

venture with timing and I tried like the dickens to get American Express to sell other timing titles now what is the advantage of that well there were

several if I was a card member of American Express of which there's somewhere in the neighborhood of thirty million in the United States I could get a letter from the American Express which

would look all like a bill now this was back in the days that when you got a bill it was in the mail it had to open it you had to take a look at your you had to take a look at your bill you

would take part of the form you'd put in a reply envelope that was embedded in the bill that was the protocol so this was a first-class piece of mail that had a ninety-nine percent open rate and what

you would have is offers for food and wine and travel leisure that looked all like a bill on course would get a hundred percent or close to an open rate and then right instead of picking a

method of payment or saying I will be billed later you simply check the box and you were billed on your American Express card not once not twice but for

the entirety of the life of the subscription which could last for years and years and years by the way would they ask permission to do it again though they didn't form you that you were gonna get billed again you had the option to

cancel anytime by the way if you're a little bit late they had very forgiving customer service and they would say I'm terribly sorry I will refund you 100% of

the money even if you're 90% of the way through the subscription so American Express and Time Inc had a joint venture

with those two magazines food and wine and travel leisure time Inc actually did the writing in the publishing and you had American Express doing the billing

and promoting and I said instead of just one credit card and one publisher why not have all these other publishers on

that system now on the face of that it was about saving the cost of renewals and bills and you had a male but that wasn't the secret the secret is that

lifetime value when you took an Ursa and you turned it from your mortal enemy to your best friend right because in the old system do nothing right you get a renewal notice you ignore it guess what

after a year your subscription died on the other hand with the American Express system just like your American Express card do nothing and you maintain your

subscription now lifetime value with that system triples triples so why couldn't we take all the magazine's of all the publishers and do it the same

way my ambition by the way when I was still at Time Inc was just getting other timing titles to have the same courtesy as the American Express and you would think with the joint venture you should

be able to do it but then again with large companies that's quite a trial so the ambition of the company that I

started when I got my walking papers from Time Inc was this so what we wanted

to do was have all magazines be billable on all credit cards right so you took that one card one publisher and you turned it into all cards all publishers

and you can transform an entire industry because we had three times the lifetime value now at the time

there was two giant muscular competitors American family publishers and Publishers Clearing House how many people have heard of those companies a

few of you you're old right and that's because they're artifacts of history and we won the war the same way grant won

the Civil War which is we add 3x to lifetime value it didn't mean that we had to be as smart it just meant that we couldn't be three times more dumb right

because we had that much more rocket fuel in order to invest in customer acquisition so we did something else which is we owned the customer

relationship cradle to grave we had we're so sophisticated or or or so advanced in our thinking that we made our publishers dial down the renewal notices and bills when you thought about

that it's totally redundant why confuse the customer and they got to save a whole lot of money in doing so and we were became so big and so powerful as

part of the magazine industry that we represented about 14% of all circulation of the magazine industry in the United

States we went to the EU we never got quite that big in Europe but we did have a nice position in Europe and it was very interesting what happened with that

perch what happened with that perch because we're not just 14% we're a very valuable reliable recurring part of that 14% of your subscriptions and by

definition we are a little more upscale than the average bear right now you would say well everybody has a credit card but you know what if you have five credit cards we're hitting you five

times okay and they're therefore what we found is that if a publisher was going to launch a magazine we became the

launch friendly vendor that was not true in the industry but we were a launch Henry friendly vendor they came to see us first and they were really showing

the business plan and they were asking for our help so I'd have conde nast and Hearst and all these companies coming and saying Michael can we have your help can we have your support when we are

launching this brand new title now you might ask is this such a relevation revelation that the entirety of the magazine industry did not figure this

out right and they intuitively knew about the power of a credit card right and if you could put the magazine on a credit card the problem is it was tried

many times and always failed right and part of the reason why it failed is that the magazine industry had trained its customers that you are you know that you would get a free trial and if you like

the magazine you would pay for the magazine but if you didn't want to do that you didn't pay for the magazine the bills would just come you would ignore them and what are they gonna do put you in magazine Jail actually that sounds

pretty fun right a whole bunch of magazines anyway so you weren't allowed to go into magazine Jail and but the reason why it didn't work is that the

point of view was always incorrect okay except for American Express with American Express it started with the credit card it was a credit card asking for the magazine for the rest of the industry

it was the magazine asking for the credit card they were going from the outside in and not the inside out so when we launched synapse okay we changed

the point of view we were always the credit card asking for the magazine in the very beginning it was quite literal we went to all the credit card issuers

American Express Capital One Citibank and we told them you need a magazine program and they said I do I said yes you definitely to me in a magazine

program and they go wow that sounds very convincing okay we need a magazine program so we started out with all the credit card companies and then we went to fish where the fish are now back in

the day catalog sales you look at the catalog industry in the magazine industry and there were parallel industries there were car magazines and car catalogues call for magazines and golf catalogs

and if you were golf Smith you would populate your phone room because that's how you ordered you sent that a catalogue and people would call in with the order and when you called in of

course I had to have a bespoke labor force picking up the phone okay and answering all my golf questions right

but the problem with above bespoke Center is that you're only gonna get a utilization rate of about 40 or 50 percent why well you have to hire people

back in the day before there was you know before you can do everything Mobley you had to put people in a room and you had to get them to drive and you couldn't hire them for less practically

than a four hour day part right and four o'clock in the afternoon and 6:30 in the evening have a totally different call profile the other thing is you couldn't really predict the volumes that were

coming in from the catalogs that you were mailing and exactly when they would come in so by definition you were inefficient and industry standard 40 or 50 percent of the utilization which

meant that your operators were we're not doing anything up to sixty percent of the time so what we did was we added a little technology a little switch we would determine whether or not it was

all hands on deck which it really was and if it wasn't we would cross sell so that customer calling in the golf Smith after they bought the bags the clubs and

the little tiny booties that go on top of the clubs I never really understood what those are for right they're wood and metal and they need little booties on top for what keep warm I don't get it

anyway so little booties that go on top of the clubs can I get you anything else when the customer said no I'm fine they would say well we want to say thank you right we want to give you three months

free of Golf Digest and by the way if you want to continue you can only $12 a year oh and by the way I don't need your name and address and credit card I

already have it okay so for the cataloger found money right because I already paid for the operator and the electricity in the phone room and

everything else and they're not doing my operators are not doing anything and we would pay six dollars for every yes six marks now only about 30% of the

people converted but that was fine right that was fine again we had to be very gentle with those customers we had to remind them that they could cancel if they wanted and if they wanted to continue but bear in mind we were

fishing in the same pond that Golf Smith was so this was the same type of customer and so we had very high levels of satisfaction and very good lifetime

value from the people that we convert so you add all that up and all told synapse was selling 70 million subscriptions a year and the way I just described and we

can again we became a powerhouse nine years after the the start of the company I was bringing the company public this

was following the public offering a price line by about a year and as I'm fueling up the Jets there actually wasn't me doing it as the Jets are being

fueled I do get a phone call from Time Inc and timing says you know this public thing are you sure you want to sign up for that which by the way it's a good technique right I mean just to show

potential buyers that you're really serious say that you're having an IPO and so are you sure you want to have this you know go public you got to manage and Michael let's face it you're

not very user-friendly really you want to take all sorts of investor questions and I said okay guys you just merged with AOL okay not your stinky stock

right they're gone uh now cash Dale I said okay that's good and I said what's your number and they told me nice number and then I said they said there's one

rub which is you got to hang in for five years right you got to hang in for five years so I had a five year old my dad had an expression about the gangster who

died in bed right to describe a rare event gangsters don't die in bed but he applied that to an ER now and we ran out that ends well and it's rare right most

bankers would say oh my god stay away from the ER now that if you have to have an ER now have the skinniest amount of money possible but time didn't want to do it that way and we had the advantage of a no in the company

pretty well and be really understanding lifetime value right so we it was all even a base so we had a pretty good idea of the Machine that we had and what it was going to push out every year in

terms of evita so we did sign up for that and it was either depending on how you think about it either very flattering or very

insulting very insulting is well mighty michael really sold us a piece of cow dung right and we want to put the money

on the back so just in case this really is a pig in the poke we don't have to be so exposed on the other hand maybe it was flattering like hey we really wanted

you to be around and we really we really want you to be around we want you to be around for five years to help grow the business and help our other titles we of

course that synapse always sold everybody but it's a little like back in the day with blockbuster blockbuster sold movies who rented the movies of

every single studio even though they were owned by the same company that owned 21st Century Fox can I tell

another story it has a curse word in it can you can you handle that is that okay you sure you can handle that okay hoo-hoo-hoo here is like deeply Catholic and we be offended by

that nobody okay you sure because you're gonna leave now alright so for 15 minutes I had fame at Time Inc and they would trot me out around the world for all these

conferences of all these executives again this was a oh well Time Warner right and I was proof positive right that all of a sudden the company can

adopt can adapt change right and timing frankly wasn't very good at adapting to change and I'll tell you another story but I'll get back on point which is back

in the eighties a little company approached Sports Illustrated again and again and again and begged to be bought by Sports Illustrated and Sports Illustrated thought about it thought

about it and they said you know what we were started by Hank loose in 1923 and Hank would be rolling over in his

grave if we bought a TV company so no and that little company was the SPN okay and the price was sixty million dollars right that was the price it was on the

table and they were saying please buy me please buy me right because timing also by the way had cable assets so please buy me and in the end they say now that we're a magazine company you know we're

not a sports company we're not about journalism in sports or magazine company and so they said no okay but so my story

is they would trot me out for my 15 minutes and it was really to illustrate that you know this a o L Time Warner had learned right and they are in racing

entrepreneurs for the first time ever and they would bring me out on stage and they'd have a journalism a journalist interview me and they would say so

Michael you know you used to work your dad worked at timing for almost 40 years you worked there for about eight years then we fired you ha ha ha right and

then we bought you back for a whole lot of money you know what do you think about that how do you feel about that and I said it feels great actually no I

said you know I said all the right things and in the audience in one of these meetings one of these worldwide meetings was the guy who pulled the chick trigger right you always need a

trigger man right you always get into in my case it was the map room at Time Inc now the mat room is where the board met right so a guy like me would not be

invited up to the map room once unless it was really bad or really good and the likelihood is it was really going to be bad so they invited me up to the map

room and it was just me and this other guy okay this other guy that means I should hurry up or or Katie needs a new

watch I haven't figured ok so this guy the trigger man happened to be in the audience right happen to be in the audience and after I was done with my talk

he came to the dias and he said Michael I'm really happy you exercise restraint and I said well Mike his name have them you like what do you mean by that he

said well when the question came up about how you were fired and you were the most expensive rehire and Time Warner history I'm really happy that you

didn't say and it was that I didn't say that but he was happy and he said it just like that I was thinking of giving him one share of stock but I didn't do

that either okay so I'm this so I got to hurry up do I have time for a question or no okay but we didn't use it does anybody have something they want to ask

Michael before he breaks and we go to this anyone anyone that means I was either really good or really bad I don't

know okay so how did I do very well Mike I do okay so are you are you clapping because you got a latte and a brownie or you like the content well we have a

question I'm sorry oh we do have a question okay mr. Bonin from bond invent I always like I enjoy dances knowledge

right okay so the biggest thing I learned Bonin was that I wasn't wrong

right I wasn't wrong so it when you're in a big institution yes I did you just worked you fell asleep I was

watching you didn't I say that I said I had the upright I had the idea okay so what I what I learned is that you know you're not wrong you're not wrong so the

interesting thing is a lot of times you have an idea and it's amazing you're in a big company in a big institution and it does billions of dollars of sales and billions of dollars of revenue and it's been around a hundred years yeah make

that assumption that with all that success if they give you a feedback right there right you're wrong you had an idea it's not such a good idea okay I can live with that I'm gonna go on but you know what a lot of times you're

right right a lot of times you're right another question you ask me is my one regret and a regret is that I didn't start

earlier so I got I see these kids in my office because we're actually starting about 18 companies and they're all like

23 and they had you know like a 13 year head start on me I'm like really 13 years I can't get back so I would advise

people to just do it I think I'll coin that oh yeah - just do it the - just do it and I will also share with you that we live in a remarkable

time for an entrepreneur and it's remarkably because I have never seen a time of such remarkable dislocation right I mean and and there's so many

signs all over the Walmart buying jet for 3.3 billion that's amazing to me right that's a capitulation that is saying you know what our formula right

that was then this is now and I need a piece of that and I didn't build it myself I'm so late that I got to pay this 3.3 billion dollar penalty right and what was the company worth at the

time thirty million maybe I don't know but 3.3 billion they had to do it to catch up so there's never been this incredible time of dislocation there's

never been this table incredible time of capital formation there has never been a time where giant giant companies are saying in themselves I got to change or die right most of

time it was the opposite I got to stay the same or I will die but now their conviction is and their mindset is I got to change or die and that's new thank you

Michael oh thank you three