AN UN­PAR­AL­LELED EX­PE­RI­ENCE

Forbes - - FACT & COMMENT - GULF­STREAM.COM

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ish $35 a year ( Forbes sub­scrip­tions went for $4 or less), with pro­duc­tion costs a frac­tion of the mag­a­zine’s. The news­let­ter was an in­stant suc­cess and pro­vided the cap­i­tal to re­or­ga­nize the com­pany.

In 1947 Forbes marked its 30th an­niver­sary and nascent re­vival with a ma­jor din­ner at New York’s Wal­dorf As­to­ria. New York gover­nor Thomas Dewey gave the evening’s ma­jor ad­dress, and he didn’t dis­ap­point, mak­ing head­lines by declar­ing his in­ten­tion to run for Pres­i­dent in 1948. (Al­though he was heav­ily fa­vored to win— Life mag­a­zine ran a pho­to­graph of Dewey with the cap­tion “The next Pres­i­dent trav­els by ferry boat over the broad wa­ters of San Fran­cisco Bay” be­fore the elec­tion—dewey lost to in­cum­bent Harry Tru­man in Amer­ica’s great­est elec­toral up­set prior to Don­ald Trump’s stun­ning 2016 vic­tory.)

Ed­i­to­rial con­tent im­proved, as did cir­cu­la­tion and ad­ver­tis­ing with a num­ber of in­no­va­tions. In Jan­uary 1949 Forbes in­tro­duced what would be­come its an­nual re­port card on in­dus­tries and com­pa­nies, thereby start­ing the buildup of its sta­tis­ti­cal mus­cle. Jan­uary tra­di­tion­ally was the dead­est month of the year for ad­ver­tis­ing, but with this is­sue’s ad­vent it be­came one of the best. In the 1950s the mag­a­zine be­gan in-depth cov­er­age of the bur­geon­ing mu­tual fund in­dus­try. Every year we would give each fund a let­ter grade for long-term per­for­mance in up mar­kets and an­other in down mar­kets. De­spite bit­ter mem­o­ries of the De­pres­sion, mil­lions of peo­ple were start­ing to in­vest again as their eco­nomic con­di­tions got bet­ter.

The long­time (1961–99), bril­liant, crusty, cowed-by-no-one ed­i­tor James Michaels did more than any­one else to bring about Forbes’ ed­i­to­rial promi­nence. We de­vel­oped a rep­u­ta­tion for hard-hit­ting sto­ries that eval­u­ate com­pa­nies the way crit­ics cri­tique a stage play. What made th­ese pieces ring true was our grow­ing so­phis­ti­ca­tion in dig­ging into cor­po­rate bal­ance sheets in a way that no other pub­li­ca­tion did. One ex­am­ple: a cover story in 1998 ex­pos­ing the ob­scure and ou­tra­geous fees charged by most an­nu­ities, which made this pop­u­lar ve­hi­cle a de­cid­edly poor in­vest­ment for cus­tomers.

The mag­a­zine’s grow­ing fame was ac- cel­er­ated in 1982 with the in­tro­duc­tion of a spe­cial an­nual is­sue that ranked the 400 rich­est Amer­i­cans. The idea was Mal­colm’s (the “400” num­ber was in­spired by the so-called 400 Ball hosted in 1892 by New York’s so­cial queen, Caro­line As­tor. So­cial ar­biter Ward Mcal­lis­ter coined the phrase “The Four Hun­dred”). MSF met fierce in­ter­nal re­sis­tance: How can we find out who th­ese peo­ple are, since much of the nec­es­sary in­for­ma­tion isn’t pub­lic? If we think some­one might qual­ify, how can we dig up their fi­nances? Any­way, won’t our list­ing them make them tar­gets for kid­nap­pers, rob­bers and fundrais­ers? The ed­i­to­rial de­part­ment con­ducted a “study” and told Mal­colm his idea was ab­so­lutely un­fea­si­ble.

“Okay,” the boss replied. “I’ll take it out of your hands and do it my­self; I’ll hire some out­side staff and raid a few of yours.” Edit ca­pit­u­lated. In fact, the hand­ful of edi­tors and re­porters in­volved on what was dubbed “The Rich List” deftly de­vel­oped ways of get­ting seem­ingly un­avail­able in­for­ma­tion, and Forbes has been widen­ing the search and re­fin­ing the meth­ods of min­ing data ever since. The first edi­tion was a huge suc­cess, ed­i­to­ri­ally and fi­nan­cially, and lists be­came a Forbes main­stay. The key was and is cred­i­bil­ity and in­no­va­tion. For ex­am­ple, Forbes’ 30 Un­der 30, an an­nual list of 30 im­pres­sive young achiev­ers in 20 dif­fer­ent cat­e­gories, has been phe­nom­e­nally suc­cess­ful, thanks to Ran­dall Lane, its orig­i­na­tor and the ed­i­tor of Forbes, and his ed­i­to­rial col­leagues.

Key to Forbes’ con­tin­ued suc­cess was what we now call “brand­ing.” Hav­ing an ever bet­ter prod­uct isn’t enough, as Steve Jobs vividly demon­strated with his al­most manic em­pha­sis on sleek and beau­ti­ful de­signs. In 1964, when MSF suc­ceeded his brother Bruce, who had died of can­cer at age 48, the com­pany ac­cel­er­ated moves that would make Forbes syn­ony­mous world­wide with en­trepreneurial achieve­ment, suc­cess and the good life. MSF did things no tra­di­tional CEO would do: He col­lected Fabergé eggs; Amer­i­can pres­i­den­tial and his­tor­i­cal let­ters, manuscripts and mem­o­ra­bilia; toy boats; and toy sol­diers and ex­hib­ited them in a mu­seum open to the pub­lic, which he built in the Forbes Build­ing on lower Fifth Av­enue. He ac­quired ex­otic prop­er­ties in the U.S. and around the world ( see p. 80). Elab­o­rate lun­cheons for CEOS were a rou­tine in the brown­stone house con­nected to the Forbes com­pany head­quar­ters. Each guest was given an ad­ver­tis­ing pitch be­fore leav­ing. A Tiffany-made sil­ver cup, in­scribed with the per­son’s name and the date of the lun­cheon and em­bossed on the bot­tom with a Forbes stag’s head, would sub­se­quently be sent to each guest, along with the in­for­ma­tion that an­other such cup with the same in­scrip­tion would hang in the brown­stone’s wine cel­lar, en­ti­tling the guest to come by any­time to try the wine. None ever did.

The good feel­ings gar­nered from this kind of en­ter­tain­ment, how­ever, didn’t al­ways en­dure. Mal­colm once in­vited a rail­road CEO to lunch with whom he’d been ex­chang­ing barbs. It was time to bury the hatchet! The af­fair went well, but a few months later the mag­a­zine hit him again. The fu­ri­ous ex­ec­u­tive sent the cup back.

In 1967 Forbes fi­nally sur­passed the num­ber of ad­ver­tis­ing pages it had run in 1929. To mark its 50th birth­day, MSF threw a spec­tac­u­lar party at his New Jersey home. More than 500 lead­ers of Amer­ica’s might­i­est cor­po­ra­tions and their spouses at­tended. The key­note ad­dress was de­liv­ered by Vice Pres­i­dent Hu­bert Humphrey, a very lib­eral Demo­crat. But Humphrey won over the crowd with hu­mor and the theme that govern­ment and busi­ness need not be en­e­mies. (Mal­colm had come to know Humphrey sev­eral years be­fore and had writ­ten a glow­ing Fact & Com­ment

ed­i­to­rial about him in early 1964. Humphrey sub­se­quently told Mal­colm that the piece had helped per­suade Pres­i­dent Lyn­don John­son to choose Humphrey as his run­ning mate.

Forbes also cel­e­brated its 70th an­niver­sary at MSF’S New Jersey home. Guests still re­mem­ber the 70 bag­pipers march­ing down a hill, seem­ingly com­ing out of the mists of the nearby woods. Scores of he­li­copters had fer­ried in the cor­po­rate moguls. No sur­prise, the largest chop­per be­longed to Don­ald Trump.

Such events didn’t meet with uni­ver­sal ap­pro­ba­tion. In Au­gust 1989 MSF gave a party in Tang­ier, Morocco, to mark his 70th birth­day at Palais Men­doub, which Forbes had pur­chased years be­fore (now, fit­tingly, owned by the king of Morocco). Even though MSF per­son­ally footed the bills for this af­fair, he was ex­co­ri­ated in cer­tain parts of the me­dia at home—a lot of peo­ple are never short on ideas of how to spend other peo­ple’s money. To some out­siders, all of this looked like waste­ful ex­trav­a­gance. It was the op­po­site: It cre­ated a global im­age for Forbes that is as pow­er­ful to­day as it was decades ago. Many busi­ness­peo­ple and en­ter­tain­ers re­gard land­ing on the cover of Forbes as the ul­ti­mate proof of their achieve­ments. Talk about brand­ing!

Al­though Forbes Inc. was a frac­tion of the size of such me­dia pow­er­houses as Time, Dow Jones and Mcgraw-hill, its rep­u­ta­tion was big­ger, more pres­ti­gious and more glam­orous. The mag­a­zine sur­passed ri­vals, For­tune and Busi­ness­week, in the clout it ex­erted in the busi­ness world.

In 1992 Forbes ob­served its 75th an­niver­sary with a ma­jor event at Ra­dio City Mu­sic Hall. The high­light was ad­dresses by for­mer Pres­i­dent Ron­ald Rea­gan, whose poli­cies and adroit diplo­macy had been cru­cial to the U.S. win­ning the Cold War, and Mikhail Gor­bachev, the last leader of the re­cently de­funct Soviet Union, which had been cre­ated in 1917, the same year as Forbes mag­a­zine’s found­ing. What a pair­ing! B.C. would have been proud that his cre­ation had out­lasted Lenin’s.

Forbes’ post-wwii come­back and surge was in an in­dus­try whose fun­da­men­tals hadn’t seen much change since the in­ven­tion of the steam-pow­ered ro­tary print­ing press in 1843, which had made the mass-mar­ket­ing of news­pa­pers and mag­a­zines pos­si­ble. But with the as­cen­sion of the in­ter­net, the print world was be­ing dec­i­mated.

It’s a cliché to say, “You must rein­vent your­self ” or “Re­make your com­pany as if it were a startup.” This is very dif­fi­cult for legacy com­pa­nies to do, which is why most even­tu­ally fall by the way­side. The mind is so ac­cus­tomed to—and en­cum­bered by— see­ing the world and car­ry­ing out tasks in a set way. Even when man­age­ments do rec­og­nize in­dus­try-al­ter­ing in­no­va­tions com­ing at them and try to ad­just, their re­sponses are of­ten too slow and unimagi- na­tive, or they go into panic mode. Think Ko­dak with the rise of dig­i­tal pho­tog­ra­phy.

In the mid-1990s most pub­lish­ers thought that elec­tronic pub­lish­ing meant merely re­pro­duc­ing the printed page on­line. And just about every pub­lisher was hes­i­tant to make a com­mit­ment to fully de­vel­op­ing their web­sites. Why give away their copy for free? More­over, on­line ad­ver­tis­ing was then mi­nus­cule.

At the start of Forbes.com in 1996, we for­tu­nately sep­a­rated the on­line prod­uct from the mag­a­zine—dif­fer­ent build­ings, dif­fer­ent staffs, dif­fer­ent re­port­ing lines. The new ven­ture didn’t just post what had ap­peared in the mag­a­zine; it also cre­ated a lot of orig­i­nal con­tent, a true rar­ity for sites from legacy pub­lish­ers. Forbes.com suf­fered con­sid­er­able losses for sev­eral years be­fore turn­ing profitable. But the time even­tu­ally came when op­er­a­tions had to be com­bined. It was a cul­tural blood­bath, most par­tic­u­larly for the ed­i­to­rial de­part­ments. Print writ­ers re­garded their dot-com coun­ter­parts as peas­ants and poseurs, con­tent to turn out plen­ti­ful but su­per­fi­cial and fourth-rate copy; the dot­com writ­ers and edi­tors saw print re­porters and edi­tors as lazy, over­rated snobs.

Big changes came in 2010 at Forbes with the ar­rival of Lewis D’vorkin as chief prod­uct of­fi­cer. Lewis had had a var­ied ca­reer in print, TV and high tech. He had been at Forbes dur­ing the 1990s and most re­cently had run his own startup, True/slant, in which Forbes Inc. was a mi­nor­ity in­vestor.

When Forbes bought out Lewis’ com­pany, he agreed to come on board. He had a dar­ing and orig­i­nal vi­sion of what the new on­line world of pub­lish­ing should be. He cre­ated a new con­trib­u­tor model that to­day num­bers some 1,700 ex­perts in per­ti­nent fields. Al­though hav­ing spent much of his pro­fes­sional life in the print world, Lewis didn’t share the con­ceit that tra­di­tional jour­nal­ism had a mo­nop­oly on dis­cov­er­ing and pur­vey­ing in­for­ma­tion for its au­di­ences. If the con­tent was good, who cared where it came from, in­clud­ing from ad­ver­tis­ers? He boldly in­sti­tuted what’s called na­tive ad­ver­tis­ing. Un­der Lewis’ cease­less prod­ding, his tal­ented team is con­stantly de­vel­op­ing new tech­nolo­gies and prod­ucts that help read­ers and en­hance their on­line ex­pe­ri­ence. The chal­lenges—and op­por­tu­ni­ties—are un­end­ing, in­clud­ing the new world of mo­bile de­vices, not to men­tion the ad­ver­tis­ing jug­ger­nauts of Google and Face­book. But, thanks to D’vorkin and his crew, Forbes has been in the fore­front. Also help­ing make the com­pany’s evo­lu­tion to Forbes Me­dia pos­si­ble dur­ing this ex­cit­ing time was the ar­rival in 2010 of Mike Perlis as CEO. Mike, who came from out­side of Forbes, has a life­time of pub­lish­ing and startup ex­pe­ri­ence.

Three years ago, In­te­grated Whale Me­dia In­vest­ments, headed by T.C. Yam, bought a ma­jor­ity stake in Forbes, en­abling the com­pany to fur­ther ex­pand on the dig­i­tal side and to move into other ar­eas. To­day, Forbes ed­i­to­rial is stronger than ever.

What’s ahead? Here’s bet­ting that in 2117 peo­ple will be in­fin­itely richer with an unimag­in­ably higher stan­dard of liv­ing than that we are ex­pe­ri­enc­ing to­day. And Forbes, if guided by the spirit of its founder, will be there to cel­e­brate it.

Key fig­ures in the his­tory of Forbes: founder b.c. and son mal­colm, as young men.

ron­ald rea­gan, sf and mikhail Gor­bachev at Forbes’ 75th an­niver­sary cel­e­bra­tion. theme: b.c. forbes’ cre­ation out­lasted lenin’s.

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