#145 William Randolph Hearst

What I learned from reading The Chief: The Life of William Randolph Hearst by David Nasaw. ---- [0:20] There has never been —nor, most likely, will there ever again be — a publisher like William Randolph Hearst. [0:26] Decades before synergy became a corporate cliche, Hearst put the concept into practice. His magazine editors were directed to buy only stories which could be rewritten into screenplays to be produced by his film studio and serialized, reviewed, and publicized in his newspapers and magazines. He broadcast the news from his papers over the radio and pictured it in his newsreels. [1:42] Winston Churchill on William Randolph Hearst: “Hearst was most interesting to meet,” Churchill wrote. “I got to like him — a grave, simple child — with no doubt a nasty temper — playing with the most costly toys. A vast income always over spent: ceaseless building and collecting . . .two magnificent establishments, two charming wives; complete indifference to public opinion, a 15 million daily circulation, and extreme personal courtesy.” [4:42] If public schools are rough-and-tumble they will do him good. So is the world rough-and-tumble. Willie might as well learn to face it. —George Hearst, William’s father. [8:45] He didn’t care what the world thought. . . He was rather indifferent to the thoughts and feelings of people outside of his immediate family. [10:20] Warren Buffett had this great idea that he came up with by observing his parents. Do you have an outer scorecard or an inner scorecard? Warren says you are going to have a hard time living a happy life if you don’t have an inner scorecard. His mom had an outer scorecard. She was very worried about what the outside world thought. Warren Buffett most admired his father. His father had an inner scorecard. If he could look himself in the mirror at the end of the day and say I’m comfortable with doing then he would accept it regardless if the people around him didn’t understand it. I think William Randolph Hearst had an inner scorecard. [13:08] Hearst believed you had to pay for talent: The paper must be built up and cheap labor has been entirely ineffectual. The paper requires a head that has ability, enterprise, and experience. Let one of these things be absent and the paper will be a failure. Naturally such a man commands a high salary and you must reconcile yourself, either to paying it or giving up the paper. [14:00] His father thought he was a quitter: Tell him to stand in like a man and stick to his studies to the end. [15:00] Joseph Pulitzer was William’s blueprint: His evenings were devoted to the studying of the newspaper industry in preparation to take over his father’s newspaper. He text was Joseph Pulitzer’s New York World. He was reading it daily, studying every element in its makeup, and comparing it daily with the Examiner. [17:45] Will was determined to escape the fate of a rich man’s son born a generation too late. His father’s generation had settled the West, cleared the land, built the railroads, discovered and mined the precious metals, and make their oversized fortunes. [19:55] No one owns ideas. You can do this too: He intended to work a revolution in the sleepy journalism of the Pacific slope by importing the journalistic techniques, strategies, and innovations that Pulitzer had pioneered in New York City. He is not saying he is innovating here. He doesn’t need to. He is saying I am taking Pulitzer’s playbook and I am going to run it. And I am going to run it better than he did. [22:15] If we hesitate a moment or fall back a step we are lost. Delay is as fatal as neglect. —Willam Randolph Heart [25:12] Smart way to expand his market: Because San Francisco — a city of no more than 350,000 — had three strong morning paper, Hearst recognized that he would have to expand the Examiner’s circulation base by delivering papers by railway north to Sacramento and south to Santa Cruz and San Jose. [27:54] Improve the quality of the product, and the profits will follow: He said that the reason that the paper did not pay was because it was not the best paper in the country. He said that if he had it he would make it the best paper and that then it would pay. Now I don’t think there is a better paper in the country. It is now worth upwards of a million dollars. [30:13] When Ross Perot finally leaves the board of NeXT he tells Steve Jobs that he didn’t help him by giving him $100 million dollars. The money I gave you made it easy for you to not have any sense of urgency to make a profit. [34:07] Hearst was able to poach Pulitzer’s staff by offering them something Pulitzer wouldn’t, job security: Hearst had to offer more than big salaries. He had to guarantee security in the form of large multiyear contracts. In the newspaper industry this was unheard of. [36:37] I feel like everybody beefs with Teddy Roosevelt. Teddy Roosevelt tried to have Pulitzer arrested, he hated Hearst, and goes to war with J. P. Morgan. Hearst felt Roosevelt was his competition. [37:23] What Hearst says after one of his reporters is shot during the war between Spain and Cuba: “I’m sorry you’re hurt but wasn’t it a splendid fight? We must beat every paper in the world.” This guy is really dedicated to being the world’s best publisher. [38:01] Something that I want to highlight for you that is very common — but very surprising to people who don’t read biographies — is that these people experience periods of intense doubt. We all do. Hearst did as well: I feel like hell. I sit all day in one place in half a trance. I guess I am a failure. [42:08] Hearst is deep in debt for half a century: He is an able newspaper man but does not look ahead in financial matters [42:30] He listened to no one, trusted no one. [42:49] Any kind of success arouses envy and hatred. The best punishment is to succeed more. —William Randolph Hearst [43:05] When he saw an item he wanted, he bought it, regardless of whether he had the money to pay for it. His spending had always been extravagant but it ballooned out of all proportion to his income. [46:14] Instead of retrenching until his newspapers began to earn money again, he had gone deeper into debt to finance his movie studio. The combination of debts made it impossible for him to seek further credit from the banks, which he required regularly to refinance his outstanding loans. [50:46] The financial situation of your various companies is in an alarmingly serious condition. The Chief went blithely on, spending money like water. [51:19] 70 years old, over leveraged, and going into the Great Depression: He was overextend with debt, bloated payrolls, real estate mortgages, construction and renovation costs, and huge bills to art dealers and auction houses on both sides of the Atlantic. [55:37] The Chief had learned early that there was no shame in being in debt. Debt was, on the contrary, the magic ingredient that had made it possible to build his castles and buy his art collections. He didn’t believe in the Protestant ethic or trust in Poor Richard’s aphorisms. A penny saved might be a penny earned, but a penny borrowed was worth even more. The result of this: It had taken almost half a century, but his debts had finally grown to the point where no banker in his right mind would consider refinancing them. [59:39] One of the great defenses against inflation is not to have a lot of silly needs in your life. You don’t need a lot of material goods. —Charlie Munger [1:03:06] A benefit of incorrigible optimism: Hearst never regarded himself as a failure, never recognized defeat, He did not, at the end of his life, run away from the world. ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  When Hearst was in college, he wrote his father that he intended to do something in publishing and politics, and he did, becoming San Francisco's, then New York's, and finally, the nation's most powerful publisher. He served two terms in Congress, and was, for half a century, a major force in American politics. There has never been, nor most likely will there ever be again, a publisher like William Randolph Hearst. Decades before synergy became a corporate cliché, Hearst put the concept into practice. His magazine editors were directed to buy only stories which could be rewritten into screenplays, to be produced by his film studio, and serialized, reviewed, and publicized in his newspapers and magazines.

• 0:44David Senra?

  He'd broadcast the news from his papers over the radio and pictured it in his newsreels. He was as dominant and pioneering a figure in the 20th century communications and entertainment industries as Andrew Carnegie had been in steel, J.P. Morgan had been in banking, John D. Rockefeller in oil, and Thomas Edison in electricity. At the peak of his power in the middle 1930s, Time Magazine estimated his newspaper audience alone at 20 million of the 120 million-plus men, women, and children in the nation. His daily and Sunday papers were so powerful as vehicles of public opinion in the United States that Adolf Hitler, Bonito Mussolini, and Winston Churchill all wrote for him.

• 1:29David Senra?

  At the end of my research, the Hearst I discovered was infinitely more fascinating than the one I had expected to find. This was also Winston Churchill's experience during his visit with Hearst. "Hearst was the most interesting to meet," Churchill wrote. "I got to like him. A grave, simple child, with no doubt a nasty temper, playing with the most costly toys, a vast income always overspent, ceaseless building and collecting, two magnificent establishments, two charming wives, complete indifference to public opinion, a 15-million daily circulation, extreme personal courtesy, and the appearance of a Quaker elder."

• 2:14David Senra?

  That was an excerpt from the book that I want to talk to you about today, which is The Chief: The Life of William Randolph Hearst, and it was written by David Nasaw. This is a gigantic book, over 600 pages. This is the second book written by David Nasaw that I've read for the podcast. The first one was on Joseph P. Kennedy. It's called The Patriarch. It's all the way back on, I think, Founder's Number Four, and it's a biography of the founder of the Kennedy family dynasty. Nassau writes huge, epic biographies. This one's over 600 pages, so there's no time to waste. I want to jump right into it. I think it's important to understand that there would be no William Randolph Hearst if it wasn't for the accomplishments of his father, George Hearst. And when I was reading this book, it really reminded me, when I read the biography of

• 2:57David Senra?

  Howard Hughes for Founder's Number 59, I think George Hearst is to William Randolph Hearst as Howard Hughes Sr. was to Howard Hughes Jr. What I mean by that is the son's accomplishments could have never happened without the financial and entrepreneurial accomplishments of the father. So George Hearst was born relatively poor. He had no education to speak of. He was just interested in mining and did all of his learning on his own. And through his mining companies, which he worked at for multiple decades, he became one of the richest people in the United States. He also became a US senator. So that is the father of William Randolph Hearst. And the reason I bring that up is because, just like Howard Hughes Sr. Tool Company, which has to be, I think I said on the podcast, at Founder's Number 59, it has to be one

• 3:40David Senra?

  of the most profitable private companies that have ever existed. And what Howard Hughes did, the junior, he used a lot of the profits from his father's company to invest in his aviation company and his movie company and everything else. William Randolph Hearst does the exact same thing. There's many times in this book that he's going to rely on the assets that his father leaves behind after he passes away to make up for all of the losses that his company was experiencing. So I just want you to keep that in mind because I think it's important to understand the career of William Randolph Hearst by knowing that. Now, I want to bring you to a conversation that his father is having with his mother. And you can kind of guess at that brief description I gave you, you know, George Hearst is kind of a hard ass.

• 4:23David Senra?

  And so his mother is having this conversation, like, why are we going to put little Willie, as they were calling him? Into public school. And so it says, Phoebe asked if the public schools were not rather tough and tumble for a delicate child like Willie. This is his father's response. I do not see anything particularly delicate about Willie, replied Willie's father. If the public schools are rough and tumble, they will do him good. So is the world rough and tumble? Willie might as well learn to face it. Okay, let me give you a description of, I'm gonna call him WR. That's, that's what everybody calls William Randolph Hearst. So let me give you a description of WR's childhood. And in this description of childhood, I'll be able to tell you more about his father. Hearst's childhood was defined by impermanence.

• 5:05David Senra?

  He had, by the time he was 10 years old, lived many different lives. The rich boy in the mansion? The new kid forced to attend public schools because his father had run out of money? The pampered child who toured Europe? The boy who boarded with his mother? There was no center, no place that he could call his own. School had provided no continuity. He was shifted and stunted, withdrawn and newly enrolled in school after school without rhyme or reason. His father he seldom saw and he never knew. The only fixed point in his life was his mother, to whom he was devoted. But she too had disappointed him, disappearing too often and too early.

• 5:48David Senra?

  So as that paragraph clearly demonstrates, there's no stability to a young WR's life, right? And the idea of, hey, I gotta send you to public school now because we don't have the money anymore. So George Hearst's career, as we've seen in a couple of other books around this time in history, you have a huge boom and bust. And his business was mining. So he worked in the mining industry since he was like 26. It took him till he was almost 40 years old to build wealth. Okay? And then he has this massive increase in wealth and then he winds up losing it all. And for the next 20 years, he has to fight and eventually becomes, by the time he's 60 years old, he becomes one of the most wealthy people in the, in the United States.

• 6:32David Senra?

  And he, with one mine, he makes more money than the family could spend in many lifetimes. I just looked up, it was the largest gold mine, I think, in United States history? He founded it sometime in the late 1800s. It just stopped producing gold in 2002. I think it ran consecutively for 120 years to give you an idea of the amount of money that George Hearst was able to accumulate. But again, he worked almost his entire life, let's say 15 years to get to that point, lost it all, and then worked for another 20 years to get back. In that section where they say that he really never knew his father, his father was away almost all of his life. He lived on the mines. It wasn't until he retired and goes into politics and buys a newspaper that he starts communicating with his son very frequently.

• 7:17David Senra?

  But he is extremely hard on the son, as you could imagine, the kind of person that had his life experiences would be. Okay, so I'm going to fast forward into the story. George, oh, excuse me, WR is at Harvard, and this is his first experience in publishing. So he takes over one of the Harvard school newspapers. He says, "The high point was his election as business manager of the Harvard Lampoon. To keep the magazine afloat, business managers were traditionally chosen for the size of their allowances," meaning what they got from their rich, rich family, right? "But Hurst, instead of subsidizing the Lampoon out of his own or his parents' pockets, engaged in a full-scale advertising and marketing campaign to make the journal self-sufficient. He solicited local merchants to buy ads, wrote to advertisers and other Ivy League

• 8:02David Senra?

  publications, and elicited his mother to sell subscriptions to members of the San Francisco Harvard Club. The Lampoon is peculiar Harvard all the way through, and it ought to be supported by Harvard men with contributions and subscriptions," WR had said. "In his first experience in publishing, he had expanded the Lampoon's circulation by 50%." The reason I'm reading this too is because he does a lot of the same things with the papers that he takes over, and we see like an insight into some of his strategies early on. "In his first experience in publishing, he expanded Lampoon's circulation by 50%, increased advertising revenues by 300%, and converted the bottom line from a deficit of $200 to a surplus of $650."

• 8:44David Senra?

  Here's a little bit about his personality that's mentioned by somebody who knows him at this time in his life. He says he didn't care what the world thought. So there, there's gotta be a dozen sentences in the book, including the one I read to you at the intro with Churchill saying the same thing. He's rather indifferent to the thoughts and feelings of people outside of his immediate family. It's mentioned a lot in the book. In this case, this is about the fact that he was dating somebody in a different class, because now his family's been restored to wealth. He's dating somebody from the working class. His mom doesn't like that. Let me finish reading this sentence, and then I'll tell you what I thought about it. Though Phoebe had tried, that's his mom, obviously, he tried her best to make her boy into a gentleman. He was his father's son as well as hers,

• 9:26David Senra?

  and preferred, like George Hearst, to do as he pleased. So that reminded me something. This is, one, there's something weird about spending so many hours studying a person by, you know, reading this gigantic biography that I'm holding in my hand. And what I mean that's weird by it is normally I have a good sense of who the person was, right? I don't have the Kindle version of this book, but if I did, I would have to guess that the word mysterious, mysterious, or mystery, when describing WR, has gotta be in the book, you know, 20, 30 times. There's an entire chapter called Mystery Man. And I think part of that is because he was really hesitant to tell other people outside of,

• 10:09David Senra?

  like, he kept nobody else's counsel but his own. But this idea, I do think he has a good idea here about not caring what the world thought. If you remember when I read the biography of Warren Buffett, it's on Founder's Number 100, the book is called Snowball. He had this great idea that he came up with by observing his parents, that's Warren Buffett, that is. And he says this idea about, and he talks about in his writing and his shareholder letters, too, about, do you have an outer scorecard and an inner scorecard? And he's saying, like, you're gonna have a hard time living a happy life if you don't have anything but an inner scorecard. So his mom had an outer scorecard, very worried about what the world thought, right? And Warren Buffett most admired his father. He said his father had an inner scorecard. He just decided if he's comfortable with the

• 10:51David Senra?

  decisions he's making, if he can look himself in the mirror at the end of the day and say, I'm comfortable with what I'm doing, then he would accept it, regardless of other people around him didn't understand it. I think WR operated from an inner scorecard. He was very similar to Warren Buffett's dad. Another personality trait of WR is that he's definitely a schemer. We see that even from an early age. Will's decision made in college and adhered to for the rest of his life to give up drinking himself, but host social gatherings at which liquor was abundant, put him at an enormous advantage. Sober, he was able to control events while those around him lost his bearings. WR is a rather indifferent student. He's about to get kicked out of Harvard. And let me just read you a little bit about that.

• 11:36David Senra?

  Either he believed that Harvard would never ask him to leave, or he decided it wasn't worth the trouble to stay. He had, it appears, made up his mind to move to San Francisco and take over the Examiner. That's the San Francisco Examiner, the newspaper his father bought. His father buys it, just like when I covered the Joseph Pulitzer podcast, and Joseph Pulitzer's a huge, we're going to talk a lot about him today. Just like Pulitzer bought papers to help his political career that wasn't an idea just solely that Pulitzer used, George Hearst did the same thing. He's like, I want to be, I think, a state senator at first, and then winds up being a United States senator. So he buys a paper, and he's using that to publicize and to build his political career. That's the first newspaper that WR ever works in, and that's the very start of his publishing empire.

• 12:21David Senra?

  So it says, "Earlier that spring, he had asked his mother to show Papa the letter that he had written about his success at the Lampoon, and tell him to just wait till I get a hold of the Examiner, and we'll boom her in the same way." She needs it. It's a relatively small paper. I think it's already lost a couple hundred thousand dollars. It's not doing very well. Though George was not, oh, this is another example of his dad. Though George was not about to let his son give up on Harvard, he abhorred quitters. So there's a bunch of letters that... That WR is writing to his father, that George never answers, by the way. And in it, it's very interesting.

• 13:02David Senra?

  WR is kind of lecturing his father on, you know, all the mistakes he's making with the newspaper and what he would do different. In this case, he's saying that you have to pay for talent. And this is, the reason I bring this up is because this is a very important idea that that Hearst used throughout his entire career. And at this point, he's telling his dad, he's like, why don't you hire this guy that's currently working for Joseph Pulitzer? And his name is Mr. Smith. He says, "The most striking objection to Mr. Smith is that he is very high-priced. But I am convinced, and I think you are, that the paper must be built up and that cheap labor has been entirely ineffectual. The paper requires a head that has ability, enterprise, and experience." And that Mr. Smith has all three.

• 13:45David Senra?

  "Let one of these factors be absent, and the thing will score another failure. Naturally, such a man commands a high salary, and you must reconcile yourself either to paying it or to giving up the paper." So as he's writing all these telegrams, these letters to his father, he's asking his mom, he's like, "Why am I not getting a response?" And this is hilarious, because his father had a lack of respect for a lot of the stuff that he was writing him in the sense that he's like, "Oh, you know, I need it." He thought he was kind of like a spoiled rich kid, essentially, from his father's perspective, always asking for money, always asking for another allowance, always asking for, to be given an opportunity, instead of actually going out and getting it himself. So his mother says, "Gave your father the telegram you sent expressing your desire to come here and work.

• 14:28David Senra?

  I asked him what he thought, and he replied," so this is what his father says, "Tell him to stand in like a man and stick to his studies to the end." And the reason he said that is because WR is like, "Hey, forget Harvard. I don't care about this. I'd just, I'd rather quit, not graduate, and then just start working right away." He winds up not quitting until he gets expelled.

• 14:52David Senra?

  So during the day, he's going to school at Harvard. This is before he leaves. And at night, he's studying Joseph Pulitzer. And this is, he's got two really good ideas. This is his first good idea. And the fact that he just says, hey, I'm just going to take Pulitzer's playbook. It obviously works. I'm going to adapt it to my business and then see if I can expand on it. So he says, "His evenings were devoted to the studying of the newspaper industry in preparation for his return to San Francisco to take over his father's newspaper. His text was Joseph Pulitzer's New York World." So, smart idea number one, I'm going to use Pulitzer's idea and strategy on my own newspaper. The second smart thing he did that was interesting was what they were referencing in the introduction

• 15:36David Senra?

  about this idea that different media properties can produce value together that they can alone. So my newspapers, my magazines, my radio, my newsreels, and my movie studios are all going to be able to take the same piece of content and then repurpose it and make money on over and over again. This becomes really important later in life because he's going to lose, I guess I'll tell you this right up front, if you had to choose, like, who's going to run your business, Joseph Pulitzer or William Randolph Hearst? No doubt about it, Pulitzer's way better. This guy is terrible with money, as we see, and he winds up losing his entire empire when he's 70 years old because he's so over-leveraged. And it takes like, almost a decade, maybe eight to 10 years, to get it back. And it's just devastating. And I have a lot of highlights in that section.

• 16:21David Senra?

  Okay, so let's go back to what he's doing, studying Pulitzer. "He was reading the world, Joseph Pulitzer's paper, daily, studying every element in its makeup and comparing it with the examiner." And so he's writing a letter to his dad about what he's learning. He says, "I have begun to have a strange fondness for our little paper, a tenderness like unto that which a mother feels for a puny or deformed offspring, and I should hate to see it die. Now, if you should make me take over the examiner with enough money to carry out my schemes, I'll tell you what I would do." It would be well to make the paper as far as possible original, to clip only some such leading journal as the New York World,

• 17:02David Senra?

  which is undoubtedly the best paper of that class to which the examiner belongs. And to accomplish this, we must have, as the world has, active, intelligent, and energetic young men. All these changes be made not by degree, but all at once, so that the improvement will be very marked and noticeable, and we will attract universal attention and comments. And just before moving on, just to compare and contrast Hearst and Pulitzer. Pulitzer was forced. He had no money. He was forced to be resourceful. There's a lot of sloppiness in what Hearst does. And, but I think you can understand, given the sense that he's the son of one of the wealthiest people in the United States. His dad doesn't really pay much attention to him, barely even writes letters back to him.

• 17:47David Senra?

  But he also, this section, he's got a lot to live up to. Where Pulitzer's like, you know, I'm going to sink or swim on my own. There's something like, like when we talked about Shackleton last week, something terrifyingly simple, right? This is the goal. If I'm going to get my, if we're going to get out, we have to get ourselves out, right? So Shackleton had to face that, and it kind of makes everything else that's not important fall away. Pulitzer had to experience that. Hearst never experiences it, but he's got a lot to live up to. So this is really interesting paragraph that Nassau writes here. "Will was determined to escape the fate of a rich man's son born a generation too late. He was the dandified Harvard-educated son of a California 49er.

• 18:30David Senra?

  His father's generation had settled the West, cleared the land, built the railroads, discovered and mined the precious metals, and made their oversized fortunes." So just imagine if your father had accomplished that much. Like you're in a gigantic shadow. And then not only did he accomplish all that, then he becomes, winds up becoming a US senator. So it says George Hearst took his oath of office as a United States Senator in March 1887. That same day, in San Francisco, the name WR Hearst proprietor appeared for the first time on the masthead of the San Francisco Examiner. Hearst is 24 years old at this time. And what's so interesting about Hurst's story is before this, he demonstrated, as you can imagine the way his dad talks to him, a lack of focus and commitment.

• 19:15David Senra?

  And once he starts saying, "Hey, I'm going to go into, I'm going to run this paper. I'm going to grow this paper. I want to be in the publishing business." He's extremely focused, and I really like you see the change in his behavior. I said, "Hurst spent most of his waking hours at the Examiner and commuted back and forth across the bay by boat. For a man who didn't like society, the newsroom was a perfect work site. There was no trace of society, no hint of gentility or deference of any sort. The Examiner had a circulation of 15,000, which was significantly less than that of its major competitors." And this is where we see this idea that you and I talk about all the time, that no one owns ideas. You can take ideas from other people, and you can apply them to whatever

• 19:59David Senra?

  it is you're working on. He's doing the same exact thing. "Will Hurst had not returned to his hometown to publish a provincial newspaper that filled its front pages, as the Examiner did, with stories of saloon fights and advertisements for winter dresses. He intended to work a revolution in the sleepy journalism," this is a direct quote from him, "of the Pacific Slope by importing that journalistic techniques, strategies, and innovations that Pulitzer had pioneered in New York City." So he's not, you know, he's not saying, "I'm innovating here." He doesn't need to. He's like, "I'm taking Pulitzer's playbook, and I'm going to run it. And I'm going to run it better than he does." That's debatable. I mean, he definitely is, at the end of his life, way more financially successful, but I don't know if he would have got there without his father's resources.

• 20:42David Senra?

  "His first step was to make the Examiner a cosmopolitan newspaper by contracting with the New York Herald to publish its cabled articles, including those written in Paris." The note I left myself on why he needed to do that, because at the time, the newspaper doesn't have a lot of talent. And I do think that's a good idea. So Hurst is essentially saying, "Okay, I don't have the talent I need yet. I will have it. I'll pay for it, but I don't have it. So that's fine. I'll just find another way." And the other way is like, "Okay, I don't want to be this little provincial paper. Let me go ahead and just..." This is very common in the media industry, the syndication. Like, if you have, I can't pay for people in Europe, reporters in Europe, but you're having them write stories, New York Herald. "Let me just syndicate your stories in my paper in San Francisco." And so he does that.

• 21:26David Senra?

  And so I'm going to spend a little bit more time, because this is really important, about all the different ideas that he's applying. The first one, if they have more space in the paper, that means more advertising. More advertising means more money. We need urgency, let's go fast. And parentheses, I put the Shackleton, his quote that from studying past expeditions, he felt that people that tried to prepare for every contingency actually wound up in worse, worse places than people that optimized for speed. Oh, and then this is, I found really distasteful. So you, he likes Pulitzer's ideas, but he hates him because he's Jewish, which, you know, that's just being a doofus. The new examiner carried so much national, international news that he's getting off the wires, right, that it expanded

• 22:10David Senra?

  from six to 10 pages. This is a quote from him. If we hesitate a moment or fall back a step, we are lost and we can never hope to make up anything out of the examiner while it remains in our hands. Delay would be as fatal as neglect. So he's telling all his employees, we got to move fast. We have got to turn this around. People have got to know that this is a very different paper than, than the one they were ignoring beforehand. At age 24, Hearst had developed a ruthless scheming, how many times does that word scheming already appeared? This is like the third time, scheming side to him, which he now presented to his father. Well, this is a direct quote from Hearst. While the world is, because of that Jew that owns it, a nasty, unscrupulous damn sheet that it despise, but which is

• 22:53David Senra?

  too powerful for us to insult. What are you doing there? You clearly studied this guy. You respected the paper he built up. And now because he's Jewish, you're going to try to denigrate him? Like, come on, this is ridiculous. There was incredibly nothing unique in Will's anti-Semitic slurs on Pulitzer and his newspaper, which we covered over and over again. People didn't call him Joseph Pulitzer. They called him Ju-serve Pulitzer. Like, ugh, okay. Hearst intended to use all the leverage he had as a son of a rich and powerful senator. Oh, and this is what I also don't like. Not only is on one page, he's insulting him, you know, using anti-Semitic slurs, but on the second page, This is really an example of crony capitalism, right?

• 23:33David Senra?

  Not everybody, like you have, you have a rich, famous relative that's in the senate that can lean on people and use the power of the federal government to help your business. This is not, I'm not a fan of this kind of stuff. Hurst intended to use all the leverage he had as the son of the rich and powerful senator to boost the examiner's circulation and profits. When he had difficulty getting the company that sold papers on the Central Pacific Railroad to carry the examiner, he asked his father to request that California senior senator Leland Stanford, which is what Stanford University, the person Stanford University is named after, the president of the railroad, intercede on the examiner's behalf. So right there in those few sections, we see, you know, he's ruthless, he's a schemer,

• 24:18David Senra?

  and you know, this is not anything unique to William Randolph Hearst by any means, but he's willing to do whatever he needs to give him any kind of advantage. He does convince his father to start paying for talent, and this is the result. This is a person that was working for him at the examiner. She was describing it, "It was a place full of geniuses. Nowhere was there ever more brilliant and more outrageous, incredible, ridiculous, glorious set of typical newspaper people than there was in that shabby old newspaper office." So that's something you have to give credit to William Randolph Hearst. He spent a lot of time recruiting the very best people, and he would essentially concede to any kind of demand just to get them over. This is happening in San Francisco.

• 25:02David Senra?

  When he moves to New York, he poaches almost the entire staff from Pulitzer's paper, and he does that by giving them all kinds of things that Pulitzer would not do. Another smart move by Hearst, because San Francisco, a city of no more than 350,000 at the time, had three strong morning papers, so a lot of competition, Hearst recognized that he would have to expand the examiner's circulation base by delivering papers by railway north to Sacramento and south to Santa Cruz and San Jose. So the other two papers are not doing this. It's like, well, I can fight over 350,000, or I can expand the market. And expanding the market proved to be a really smart move on Hearst's behalf. This is him applying more of Pulitzer's ideas. "Dozens of stories and advertisements were laid out in a nine-column, unbroken wall of text."

• 25:46David Senra?

  So he doesn't, this is something he learned from Pulitzer, he's not going to do that. "Will reduce the number of columns and the number of stories and doubled the size of headlines. The major change was the insertion of drawings, illustrations, that Pulitzer was one of the first people to use in New York, which extended across several columns of the pages." Illustration, this is now Hearst talking about this. "Illustrations do not simply embellish a page, they attract the eye and stimulate the imagination." So a lot of newspapers are being sold on the street. You could walk up to the, like, the newsies, I guess they're called, little boys that were selling newspapers at the time, and you see three newspapers. Two have just walls of text, other have drawings. So that's gonna, it seems like something like, looking back in hindsight, seems like

• 26:30David Senra?

  something similar, that's obvious, but both Pulitzer and Hearst use that to their benefit. Something Pulitzer and Hearst are, even to this day, are criticized for is this idea of yellow journalism, focusing on just making, they're not reporting the news, they're having an opinion, and they make it more sensational. You can summarize yellow journalism in that old axiom, "If it bleeds, it leads." We see William Hearst doing this. "The pre-Hearst examiner had devoted about 10% of its news space to crime stories. The Will Hearst version gave more space, 24% to crime, than to any other news topic." Some examples of this, there were reports, editorials, and cartoons about the corrupt

• 27:14David Senra?

  police and hack politicians who were depriving San Franciscans of the civic improvements they not only deserved but had paid for with their taxes. The crimes of corruption were legion. They were jury tampering, murder, cover-up, bribery, kidnapping, all waiting to be exposed by the examiner." And all of these ideas, just like they worked for Pulitzer, they're working for Hearst, he doubles the circulation in the first year. But you see some criticism, and at the time, I underline this, I didn't understand, because I'm now not even a fifth of the way through the book. And it says, "Though in the years to come, critics would complain that Hearst's only contribution to the newspaper industry had been the use of money like a heavy club." The reality was that Hearst had, for the most part, spent his father's money wisely in San Francisco. So this is his father talking about this.

• 27:57David Senra?

  And I also wrote on this page, I don't know why, I left the same note to myself again, "His father's a hard ass." "After I had lost about a quarter of a million on the paper, my boy Will came out of school and said he wanted to try his hand at the paper." He said that the reason that the paper did not pay was because it was not, this is another, you know, kind of good, not even kind of, this is a good idea. He said that the reason the paper did not pay was that, was because it had not, it was not the best paper in the country. He said that if he had it, meaning the paper, he would make it the best paper and then it would pay. "I agreed to stand by him for two years. Now I don't think there's a better paper in the country. I believe it is now worth upwards of a million dollars." So as things are improving in San Francisco, he has his eye. He knows he's gonna move to New York.

• 28:40David Senra?

  He, just like Pulitzer, moved from, I think, what, St. Louis to New York City. He's like, "This is too small. I gotta go to the center of media." But I want to read something to you, and then I'll read the note left to myself. "He was still in his dealings with his father, a little boy begging for a handout." So my note, I put, was that was my impression, and I'll tell you what I said after this. "As long as he ran one of his father's businesses, his business and personal life would be inextricably linked." And so I asked myself, like, okay, so what is he actually gonna do about this? I don't think I ever answered that question. He just waits till his father dies and then takes part of the estate and continues to fund a lot of his newspapers, so apparently nothing. But there is a lot of similarities in her story. It makes me think of, what was the book? Hold on, I'm looking at the bookshelf right now.

• 29:24David Senra?

  Okay, Steve Jobs and the Next Big Thing. When Steve Jobs was at Next, if you haven't read that book or listened to the podcast, five out of the six podcasts I've done on Steve Jobs are amazing about like his clarity of thought, he's got a lot of good ideas, but that, one of them is like bizarro Steve Jobs. It's like if you could take somebody really smart and really accomplished, and then they forget everything that made him smart and accomplished, and ran a business as if they knew nothing. That is Steve Jobs running Next. And I think a lot of the problem with the unconstrained spending at Next that Steve Jobs has, one, he was already super wealthy, so I think he funded the company himself for like $7 million. Then he winds up getting, I can't remember the exact dollar amount, it's like $100 million from Ross Perot. After Ross Perot saw him on a TV show, I think this TV show was Entrepreneurs. It's a crazy story.

• 30:09David Senra?

  It's in that book, and I think I covered it in the podcast. But Ross Perot, when he finally leaves the board and disassociates with Steve Jobs, he just realizes, like, "I didn't help you by giving you all this money. I made you, I neglected..."

• 30:23David Senra?

  The money made it easy for you not to have any sense of urgency to make your own. So I think this wealthy benefactor was actually harmful to Steve Jobs in that situation. I think the same thing is happening here. So this is his mother talking here. "Will has been spending an enormous amount of money, more than me and you together," she's writing to his father, who's in Washington. "I get an idea of the needs and expenses of the paper and a more thorough understanding of his personal affairs I need to get," she's saying, like she knows about it, but she needs to get precise numbers. "Then you and I will be able to judge of the amount required and act accordingly. Things have been going on in a rather bad way. I am anxious to save you any unhappy hours,

• 31:06David Senra?

  and I think it's best not to go into details now." And on the very next page, I left this note, the opposite of Pulitzer. Pulitzer was forced to be resourceful, says, "She," meaning his mother, "criticized George again for his failure to do anything about his only son's increasingly outrageous behavior. Do you intend to continue your indulgence?" Meaning not cut him off for the money. "The paper still draws heavily upon you, and it will never pay expenses while you supply funds." This argument never gets resolved because his father dies a few months after, while this is happening. When his father dies, WR is 27 years old. Before I get to the will and the shocking part about that, there's more similarities

• 31:48David Senra?

  in the life of Pulitzer and Hearst. Pulitzer winds up being in a holding pattern at this age, too. It's kind of really interesting, the parallels here. "It was time to look beyond San Francisco to the larger world. For Hearst, just as it had been for Joseph Pulitzer a decade earlier, New York City was the logical step. Will Hearst turned 30 in 1893, no closer to financial independence than he had been six years earlier. The paper's still not... He's spending on talent, and the circulation's growing, but it's still not profitable. It can't pay for itself. His life was in a holding pattern." Just like Pulitzer was at 30. He had again tried to buy a second newspaper, but nothing had come of it. Now, it's interesting, it gives you an impression of what his father thought about him. His father left everything to his wife. He gave her total

• 32:31David Senra?

  control of his entire estate. Like I said before, one of the largest estates in the United States at the time. So not only does, if he needs money, he has to go to his mother, but then his mother also exerts control on his personal life. She makes him break up with his girlfriend. He's asking for allowances and loans for the newspaper, and one of the contingencies to agree to that is you have to break up with your girlfriend. And then the author writes what I think the reader is thinking at the time. "There was something almost pathetic in 30-year-old Will Hearst asking his mother for a regular salary." So eventually, he convinces his mother to loan him some money. He breaks into New York,

• 33:14David Senra?

  interesting enough, by buying the paper founded by Joseph Pulitzer's brother. But I want to talk to you about the strategy that he uses in New York. Again, WR strategy is Pulitzer's strategy. "Hearst was not only convinced that he would succeed, but expected to do so extravagantly as he had in San Francisco. His strategy was simple, and given the competitive situation in New York, probably the only one possible. He decided to keep the price of The Morning Journal at a penny, but give readers as much news, entertainment, sports, and spectacle as Joseph Pulitzer's world, which provided that for twice the price." Pulitzer had pursued the same course on entering New York in 1882. That time, the city's only two-cent paper was this guy named Dana, it was the New York Sun, but offered

• 33:59David Senra?

  its readers only four pages for that price. Pulitzer gave them eight, and then often 12 pages for the same price. And we reach the point in the story where he poaches Pulitzer's staff by offering them something that Pulitzer wouldn't, and in this case, job security. Pulitzer was really, he had no problem with turnover. He would get rid of people rapidly.

• 34:19David Senra?

  Hearst thinks that's a bad idea. So he says, "To persuade experienced newspaperman to join a venture everyone was convinced would fail, Hearst had to offer more than just big salaries. He had to guarantee security in the form of large, multi-year contracts. This was, for the newspaper industry, almost unheard of. Until Hearst appeared on the scene, there had been no job protection for editors or reporters, no matter what their reputations were." One thing I did appreciate about Hearst is that he was the opposite of Pulitzer in temperament, very calm, very beloved. Pulitzer had a fiery temper, he's very hard to deal with. You know, a lot of people over the course of working for him would dislike him.

• 34:58David Senra?

  In fact, the name of this book, The Chief, comes from, that's what all of Hearst's employees referred to him as. And he had multiple relationships with employees that would last, you know, three, four, five decades. William remained calm, polite, and well-mannered in the extreme. "Not once," this is one of his employees who worked with him for 16 years, "did he ever show signs of irritation or lose his temper. To those whom he knew and whose work he liked, he was in those days an ideal boss. A good piece of work always brought a word of congratulations over the phone, and not infrequently more substantial recognition." Another good idea from Hearst, again, focused on inner scorecard, not interested in what

• 35:42David Senra?

  others expected him to do. "He didn't care what people thought of him, and he despised society." So what they mean about society is like the upper-class society. He did not attend society functions, he did not rent a box at the opera, he did not join civic or reform associations, he did not attend society receptions or weddings, and this was expected of the upper-class in New York City at the time. He did not court or escort eligible women to the theater. He lived downtown while fashionable New York moved northward. And he made no attempt whatsoever to marry well. In fact, he had a thing for, they called him chorus girls, and he would hang out in nightclubs. His mother was so embarrassed by his behaviors, but he just felt more comfortable, this at this point in his life. Later on, he builds a world within a world, and it's very hard to actually access him.

• 36:27David Senra?

  But at this time, you know, he's hanging out in clubs every night after work, and he's fine dating waitresses and everything else. And his mom, you know, she's kind of snooty, where she didn't appreciate that. Something also remarkable in this story is I feel like everybody beefs with Teddy Roosevelt. Teddy Roosevelt tried to have Pulitzer arrested. He hated Hearst. Goes to war with JP Morgan. In this case, Hearst felt that Teddy was his competition. They were both raised in rich families. They went to the same school. Teddy's like four or five years ahead of him and he felt that Teddy was accomplishing a lot more than he did. So when Teddy takes the Rough Riders down to Cuba, first of all, Hearst's papers greatly influenced the start of the, not the Spanish-American war,

• 37:09David Senra?

  not getting America into war, because Hearst was always like an isolationist, but getting Cuba and Spain into the war. And he actually goes down and anoints himself like a war correspondent and goes and covers the war between Cuba and Spain. And this was really, really unbelievable. One of his reporters is shot and almost dies. And Hearst is right there. It says, "James Creelman drew fire from Spanish soldiers and was wounded. Waiting for medical assistance, half-conscious and in great pain, he felt a hand on his head and looked up to see William Randolph Hearst leaning over him. 'I'm sorry you're hurt,' he says, 'but his face was radiant with enthusiasm. But wasn't it a splendid fight? We must beat every paper in the world.'" This guy is really

• 37:54David Senra?

  dedicated to being the world's best publisher. That's insane. Something I want to highlight to you that's very common, I think very surprising for people that don't read biographies, is how in every single one of these stories, these people are filled like everybody else with periods of intense doubt. The example I keep using lately is Bill Gates sitting there, not knowing what to do with his life, saying he's depressed in bed, looking up at the ceiling. So at this point, he's feeling depressed. He says, "I feel like hell myself. I sit all day in one place in half a trance and stare at a spot. I'm afraid my intellect is giving away. Complaining of this sort was entirely..." This is a little insight into his personality. "Complaining of this sort was entirely uncharacteristic for Hearst, who never revealed his interior thoughts to anyone other than his mother." I guess I'm a failure, he wrote to his mother about this time.

• 38:39David Senra?

  And a large part of what's making him upset is he's comparing this. I love this, this quote, that comparison is the thief of joy. He's depressed, not because his newspapers doing bad. It's because he feels that Teddy Roosevelt has accomplished more than he does. So again, he kind of gave, gave way to his inner scorecard and then switched to an outer scorecard temporarily and then, no surprise there, he's, he's depressed and upset. I think I could do a separate podcast that has nothing to do with the background biography information on Hearst with just of his refusal to watch costs. I mean, the entire book, over hundreds of pages of people complaining to him, his mom, his dad, when he's alive, every account he ever has, his partners, everybody stopped spending money and he just can't. He compared later in the book, he compares himself to an alcoholic, just can't stop

• 39:21David Senra?

  drinking, he can't stop buying antiques, art, all kinds of weird stuff. So it says, his newspapers were now the largest selling dailies in the city, but they were also losing more money than ever. Hearst kept his job in the end, his mom tried to fire him, but was forced by his mother and her accountants to institute cost cutting measures. And just an example of this is why I said, hey, if I was, if I had to choose two people, if I had to invest in, in, in which company, run by Pulitzer, Hearst, I'm definitely choosing Pulitzer. Then I left myself as this guy is terrible with money. I have, I don't know, 15 notes in the book like this. By 1902, she, meaning his mother, had loaned him a total of $8 million. That's $8 million in 1902 money. That's probably the equivalent of hundreds of millions in today's money. $8 million to purchase and upgrade his New York and Chicago papers.

• 40:03David Senra?

  According to Hearst's own testimony, she then canceled the loan. There's so many times in his life that people he did, there's a few times where he doesn't fulfill, like he's over leveraged and he's, they could take the property. It could be his real estate, it could be his mines that he inherits, it could be his media properties. And the only thing that saves him is personal appeal, saying, hey, I understand, I can't pay you, but please do me this favor. And they relent. In this case, his mom's doing, I can understand your mom doing it, but I'm amazed that he's able to talk other people into doing that that he was not related to. She told me that she felt that I was morally entitled, under the terms of my father's will, to half his estate. That's her reason for canceling the loan. Another example of him being mysterious and hard to know. Hearst kept his distance from the public.

• 40:47David Senra?

  He was personally shy and professionally wary. Perhaps because he knew how the press worked, he never spoke informally or off the record and did not invite the press to his home. He remained a man of mystery. So I'm omitting, I'm skipping over all of his political career. He winds up being, he serves two terms, I think, as a congressman. He runs unsuccessfully for the mayor of New York City, the governor, and runs unsuccessfully for the governorship of New York City. And I think he fails to get the nomination for president as well. That's a large part of his ambitions, a large part of the story. Skipping over all of that. But in this case here, he's just been diverted. The reason I wanted to bring this up is because he's diverting his attention. His newspapers are still not profitable. They still rely on the funding from his family and from other creditors.

• 41:31David Senra?

  And yet, he spent all his time running and focusing on politics. And so now, he's on the verge of a breakdown. And he says, "I've had an awful night's sleep here. I have stopped giving the slightest attention to politics and have been working truly day and night to straighten things out." At his newspapers with his, uh, straighten things out at his newspapers and with his finances, both of which had deteriorated while he was on the campaign trail. Derek Coe from Hearst here. "I go to, uh, I get to bed about 3:00 in the morning and frequently up at 5:00 again, walking the floor and trying to think things out. I have not had one night's sleep. As a result, I am pretty sick and miserable and blue." And as we fast forward in the story, nothing's changing. At this point, he's 43 years old. Nothing's changed. He's still in debt. "Mr. H. is in danger. He owes nearly $2 million." That's just to one creditor.

• 42:16David Senra?

  "He's an able newspaper man but does not look ahead in financial matters." So that is, he's being spied on by his, the financial advisors in the company and they're writing to his mother. More on his personality, this idea that he's apart from the world. "He listened to no one. He trusted no one. He does not work with other people. He does not support. He simply has a movement of his own." And I don't know if I would say he has contempt for other people. I feel like he would, he views them as just, from an outsider's perspective, just as, like, he's watching a movie in other people's lives. This gives you an idea of his personality. He's just, he just doesn't care. He says, "Any kind of success arouses envy and hatred. The best punishment is to succeed more." The note I left myself on this page is, "This is not smart." I think at this point...

• 43:02David Senra?

  WR is 50 years old. When he saw an item he wanted, he bought it, regardless of whether he had the money in the bank to pay for it. His spending had always been extravagant, but as he approached the age of 50, yeah, he was, it ballooned out of proportion to his income. Convinced that his publishing revenue would grow faster than the interest on his debts, he bought whatever he wanted. Real estate, art, newspapers, magazines, on credit, and delegated Edward Clark, that's the family's and the business's accountant, rather, to find the money to meet his obligations. Howard Hughes said the exact same thing to Noah Dietrich, who ran his company. Just find the money. When he had exhausted his own credit, he borrowed more by getting his mother to co-sign his loans and mortgages.

• 43:46David Senra?

  And when I read that section, one of the great things about reading all these books and spending so much time, you understand, you get an understanding of how they think. And then some people say, you know, you can build mental models. I like the thinking of, like, I have a little version of Charlie Munger on my shoulder at times. And I always say, like, what would Charlie say about this? And he has a great quote that, and there's actually two different notes. I'm looking at this page anew. I didn't know I left the same note to myself twice. I'll read it again to you when I get to the other part. But he says it's just, just try not to have a lot of silly needs in your life, is what Charlie Munger says. I think later on, he says it's a protection against inflation, that you just don't need that many, I think the quote's like, you don't need that many material goods. And I think if he was looking, so as I'm reading this book, I'm saying, okay, what would Charlie think about the behavior of William Hearst?

• 44:30David Senra?

  And he would say it's silly. Like, this is not smart behavior. So much so that he, again, he's addicted to spending money. He even says so. And even when, you know, they're flying out, and they're like, all of his advisors later on the story, right before he loses his entire empire when he's 70 years old, they essentially have to like trap him in a room, like, you do, do you not understand what's happening? Like, you are bankrupt. You have no money. And sure enough, he loses control of his entire estate to his creditors. Luckily, he survives because he dies at like 88 or something like that. But it's like a decade. Imagine being 70 years old and not having any money anymore after being one of the quote unquote wealthiest people in the world. It's just terrifying experiences to go through, especially when it was self-imposed. And he continues down this path.

• 45:15David Senra?

  And the only thing that changes, because his mom keeps relenting, even though he's spending, I think at this point, he's already spent over half of his father's, what she thought was morally right, like his version of the state, but she dies. And then there's nobody restraining him. So it says, "WR was putting the best possible gloss on his financial situation. Advertising had plummeted during the war and his newspaper circulation had been affected by the adverse publicity and boycotts his enemies had incited." They're talking about one of the biggest criticisms where people feel like a lot of the problems he had later on were self-inflicted is because he used his newspaper as like a giant bullhorn of his own personal opinions.

• 45:56David Senra?

  And he would draw a line in the sand and his political opinions could offend other people. And if they're gonna, if you wind up offending everybody, they're just not going to buy your newspaper. And so the circulation drops and then your advertising drops and this, and then he winds up being boycotted because he has like a lot of, he's just very outspoken and controversial. That's what they're referencing there. "Instead of retrenching until his newspapers began to earn money again, he'd gone deeper into debt to financing his motion picture business. The combination of debts owed his mother and those incurred by his company, his primary holding company, made it impossible for him to seek further credit from the banks, which he required regularly to refinance outstanding loans." So this is what he would do.

• 46:38David Senra?

  He'd go into hawk and eventually when the payments come due, he'd find somebody else to loan him more money and pay off his pass carders and just keep rolling it up and putting it off further into the future. Okay. Phoebe bailed him out again by agreeing to write off another 1.8 million, which is equivalent to $19 million in today's currency and even more because this book is about 20 years old. And right after this happened, this is where his mother dies. She actually dies from the Spanish flu, the pandemic. The influenza that the soldiers had brought back from Europe, this is 1919. Phoebe Hearst died in her sleep and something he's spending a ton of money on, including, you know, he's addicted to buying antiques and all sorts of stuff, buying newspapers, some of which never turn a profit. He built this thing called Hearst Castle.

• 47:21David Senra?

  I actually saw it in person. I went on vacation with my family last summer. And it's this gigantic, it's so big that he gave it to the state of California upon his death because he knew there wasn't any single individual that could actually pay for the upkeep. And so I just want to read this section real quick because I want to read the biography of his architect because she sounds really interesting for a future episode. So I just want to introduce this as this idea that books are the original links. They introduce us from one person to the next, just like the modern internet does. He says, "Julia Morgan was the perfect choice, only five feet tall and weighed no more than 100 pounds, but she was as indefatigable as her employer. Wearing tailored suits and French silk blouses, her biographer Sarah Boutel had written that she clamored over

• 48:06David Senra?

  scaffolds and descended into trenches to make sure that the walls and drains met her high standards. She was the head of a busy, prosperous practice and she worked quietly and alone." She winds up having a partnership, oh, I think almost the day he dies, right before he dies. I think there were 20 or 30 years on this property. His family, he inherits the property from his father. It's halfway in between San Francisco and Los Angeles, right next to the Pacific Ocean. I think they own 80,000 acres. It was a cattle ranch. When I took the tour, I think the state of California owns everything except...

• 48:45David Senra?

  There's like a few houses on the property. And I know they said there's like a runway for their private jets that they don't own. So essentially, they own, now the state of California owns and runs and maintains it. But the family is able to access a small portion that whenever he gave it to state of California, it was excluded just to kept for the family. So his mom is dead, there's no one left to restrain him. And he is a, like a empire builder is the way I would describe him. And he winds up just constantly buying more and more properties. Now, this winds up being both a gift and a curse because he forced to sell almost every single possession, which I'll get to in a minute. But the empire, the media empire he built, which still exists to this day, by the way, it's still a privately held company by his heirs.

• 49:30David Senra?

  And, you know, they do tens of billions of dollars in revenue, if I'm not mistaken. So the curse is that a lot of these are a drain on his resources. And there's like a series of booms and busts, depending on what's happening in the newspaper industry, right? But it was, in the long run, a good idea to do that. It just, they took so long to recoup the profits and he was not constrained in other areas. He didn't have the financial discipline and he never had the ability to watch any kind of costs, where it put him in a precarious position. And it's, everything in the end worked out well, right? Other than, you know, going through a decade of despair when you're 70 years old. But those properties were very valuable. They eventually became profitable.

• 50:15David Senra?

  So I'm trying to, I don't know if you, I don't know if I'm being clear, but the decision was right, the execution might not have been. And in time, he was lucky that he didn't lose it. Because again, he, they had, and his creditors in many cases, had the legal right to take his assets from him and they didn't do that. Now, eventually, they do put somebody else in charge of him. But the fact that he was able to talk them not into it, and then he gains back control of the company, now the company still exists to this day, it was a good idea. But this is an example of him spending money like water. The fight is, this is-

• 50:50David Senra?

  Another financial advisor. "The financial situation of your various companies is in an alarmingly serious condition. The chief went blithely on and was spending money like water. When he learned that the publisher Frank Muncy had bought a castle in Germany, he directed his chief correspondent to Germany, this guy named Carl, to find a really fine castle for him. This, at the very same time, he was spending hundreds of thousands of dollars annually constructing his castle at San Simeon." That's the Hearst Castle, the one that he's working on with Julia Morgan. And now we get to the part where this is not where you want to be. You're almost 70 years old, you're over-leveraged, and you're going into the Depression. It says, "The problem was that Hearst, approaching 70, had neither the time nor the energy nor the capital to invest in such ambitious ventures.

• 51:35David Senra?

  While he had tried to create a reserve fund for new projects, it had long been exhausted. He was overextended with long-term and short-term debt, bloated payrolls, real estate mortgages, construction and renovation costs, and huge bills to art dealers and auction houses on both sides of the Atlantic. There was no ready capital available to invest in morning newspapers, nor in the midst of the Depression was it going to be easy to borrow money for this purpose." And we see this idea that your greatest strength can also be your greatest weakness. He was an incorrigible optimist. It says, "W.R. was an incorrigible optimist, and he was the last man to believe in the Depression." And what they mean about not believing in the Depression, he said, "Okay, yeah, it's

• 52:18David Senra?

  temporary, it's gonna be fine, it's just a tiny blip. Yeah, my company's not making as much money anymore, but I can keep on spending because this will be over in no time." And while he's doing this, he also picks a fight with FDR. So again, more about now he's over-leveraged and his business is decreasing because FDR is extremely popular and people are choosing FDR over Hearst. "The result of the chief's anti-communist, anti-Roosevelt crusade had been a loss of circulation and advertising which no about-face could reverse. Readers forced to choose sides between the president and the publisher had voted twice,

• 52:59David Senra?

  at the ballot box for Roosevelt and at the newsstands against Hearst." Now I fast-forward into the Depression. "Seven years of Depression, combined with the anti-Hearst boycotts, had a devastating effect on the Hearst empire." Had Hearst reduced his spending to compensate for the loss in revenues from circulation and advertising, he might have been able to weather the storm. But aside from the temporary wage cut that had been forced on him just four years earlier, he had taken no effective cost-cutting measures. Worse yet, he had accelerated his spending on real estate, art, and antiques. And this is where he's admitting he has a problem. "I'm afraid I'm like a dipsomaniac." I had to look up that word, just another word for like somebody addicted to alcohol.

• 53:44David Senra?

  "I'm afraid I'm a dipsomaniac with a bottle. They keep sending me these catalogs and I can't resist them." He buys so much stuff, he has got warehouses everywhere, he never even looks at half the stuff. It's very bizarre behavior, I don't even understand it. His financial advisers pleaded with him to slow down his spending, to institute real economy measures, and to consider selling off some of his assets, particularly those newspapers that continued to lose money. Hearst, hoping that the economy would magically rebound, refused to listen. Imagine putting your faith in just hoping the economy magically rebounds. It's probably not a good plan. And this is where we get to the point where his bad financial habits finally catch up to him. They also, Joe Kennedy is a good friend of his, and somebody that plays a large role

• 54:28David Senra?

  in this story. Hearst goes and asks him for help to sort all this out. Kennedy never had the financial problems that Hearst did. Kennedy and some of his associates poured over his accounts. They discovered that the situation was far worse than any of them had imagined. The chief and his corporation owed $9 million to Canadian Paper Mills. So remember, this is in 1937, $38. So much, much more today. I guess he's gonna say right here, "They also owed $78 million to banks." So they say that would be about a billion dollars in 2000, the year 2000. They owed 78 million to the banks and holders of the Hearst corporate bonds. Another $39 million of debt that was scheduled for repayment within the next 12 months. Oh, boy.

• 55:12David Senra?

  Hearst had been on the brink of fiscal catastrophe for decades.

• 55:17David Senra?

  But in the past, he'd always managed to find a way to refund some of his old debts by raising new capital through bond or stock issues. As long as the Hearst newspapers and magazine had churned out sufficient income to pay off the interest on their loans and the dividends on their stock and bonds, no bank officer or broker was going to turn a request for refunding. The chief had learned, this is a really bad lesson here. The chief had learned early and well that there was no shame in being in debt. Debt was, obviously, the author saying he was wrong on this account, but this is Hearst's belief, there was no shame in being in debt. Debt was, on the contrary, the magic ingredient that had made it possible to build his castles and buy his art collections.

• 55:59David Senra?

  He did not believe in the Protestant ethic or trust in poor Richard's aphorism. And to that degree, I would say Hearst is extremely different than almost every single other person that we studied in the podcast. There's a lot of themes that you can tie together and patterns you can match as you read these biographies. None of them are like Hearst. Because you act like this and you, not only do you organize your family or personal finances like this, but if you organize your business finances like this, you're going to be, you're going to go bankrupt. He didn't believe, so he says he didn't believe in the Protestant ethic or trust in poor Richard's aphorism. A penny saved might be a penny earned, but a penny borrowed was worth even more. So Hearst is realizing, hey, I was completely wrong about this.

• 56:42David Senra?

  It had taken almost half a century, but his debts had finally grown to the point where no banker in his right mind would consider refinancing them. For 50 years, Hearst had ruled his empire as autocratically as his heroes Julius Caesar and Napoleon had theirs, their empire. He had trusted no one, rejected suggestions that he share power or delegate decision-making, and refused to name his successor. At age 74,

• 57:08David Senra?

  He was as hardy as ever and convinced that if left alone, he could once again pull off a miracle. But no one believed him capable of making the tough decisions that were necessary. He was a builder, not a wrecker. An accumulator, not a liquidator. The banks and the paper mills refused to loan the corporation anything as long as the old man was in control. The reality was that Chase National Bank and Hearst's other creditors were now in charge. And the note I left myself was night, night, knockout punch, game over. So at this point in the story, he's no longer in control. He still controls the editorial stance for his media companies, but he has nothing to do with the finances. They've taken control.

• 57:50David Senra?

  They will only refinance and loan more money if somebody else is in charge. This lasts, I think, like, I want to say eight to 10 years. It might be eight years, if I'm remembering correctly. And they're liquidating everything. The only thing he's able to hold on to is, you know, he's got some mines he keeps, some real estate he keeps, his newspapers and stuff like that. The note I left myself on this page is, what was this guy thinking? All of his possessions are going to be sold and you're going to see some just really ludicrous, ridiculous behavior. Before anything could be sold, the contents of the San Simeon, Sandpoint Estate, all the words I'm saying here are all these different houses that he owns all over the world, and they're full of junk, all of them.

• 58:32David Senra?

  So it says, before anything could be sold, the contents of San Simeon, Sandpoint, the Claridon, St. Donitz, the Ritz, and warehouses in the Bronx, Manhattan, warehouses in San Simeon, in San Francisco, and in Los Angeles, had to be inventoried, catalogued, arranged into lots, and priced for sale. This is what I meant about he just accumulates stuff, buy it and never even look at it. Teams of experts, this is so ridiculous. Teams of experts sorted through Hearst Holdings on two coasts and two continents and segregated them into 15 discreet collections. And how embarrassing. He's world famous at this point and they're having public auctions. Some of them are in department stores, some of them in the newspaper. But listen to this. 15 discreet collections.

• 59:12David Senra?

  Armor, tapestries, paintings, furniture, gold, silverware, arts, pottery, china and glassware, buildings and parts, autographs, manuscripts and original drawings, stained glass, miscellaneous hangings, jewelry and precious stones, flags and banners, rugs, mats and, and other objects. I mean, what do you need armor for? You're going to dawn it and go into battle? Like, this is ridiculous. And so this is where, um, on the note of myself on this page is the full quote I was trying to reference earlier about Charlie Munger. He says, "One of the great depress-, or excuse me, one of the great defenses, uh, if you're worried about inflation is to not have a lot of silly needs in your life. You don't need a lot of material goods." And so not only did he put himself in danger, but his five sons are used to getting allowances.

• 59:57David Senra?

  These are grown men, not used to having jobs. Some of them are alcoholics. Um, you know, well, there's a lot of, there's a lot of cautionary tale to, to Hurst's lifestyle. Um, he winds up leaving his wife. This is before, uh, like decades before in the story. So he leaves his wife at 51 years old. He leaves his wife, the mother of his five children, uh, for an 18-year-old actress and she winds up living with him for the, till he dies for like the next like 32 years. He never gets divorced, but he has to cut back on his wife's allowance, his kids allowances. Then he tells his kids at one point, "You have to sink or swim." These are grown men. They've never, they've never had a job, never held down anything, never did anything serious in their life. Um, and now you're telling them, "Hey, go find a job on the open market." Um, it's just, it was really devastating, really heartbreaking.

• 1:00:42David Senra?

  So I'm really hounding on this because it's just something that was easily avoidable, especially for somebody like, like WR who, you know, who's a student of history, very well-read, uh, not a stupid person by any means. And there's tons of stories in history where people, the same outcome that happens to him befall others. Like it's very, you can avoid this. Um, and the weird part about it is he didn't seem to understand what was happening to him. And he's not, he's not suffering from dementia, it's not like that. He just refused to believe it. So it says, "What the chief was unable or unwilling to recognize was that until the corporation had paid off its debts, the creditors would be making the decision." "The most disheartening thing of the whole situation is the fact that he has no realization

• 1:01:24David Senra?

  of his own status. The tragic fact is that these days he can no more understand what is necessary to rehabilitate himself than he could understand in the old days that his extravagance could bring him disaster." And listen to the description of him, which is just devastating. "At age 75, the bad boy of US journalism is now just a hired editorial writer who had taken a salary cut." And during this time, he's being humiliated in the press. A movie, which is still really well-known today, Citizen Kane, is actually created, and it's not like they were trying to hide who the main character is. It says, this is by Orson Welles, "Mr. Welles says the film, which deals in the life of a fictional figure who owns a chain of newspapers, who unsuccessfully runs for governor of New York, who boasts that he started the Spanish-American

• 1:02:08David Senra?

  War, who marries an obscure singer and attempts to gain recognition for her as an opera star through his publication, he never marries her, but in fictional county does, and who finally retires to fabulous castle to die while his newspaper empire crumbles, is in no sense biographical." And, well, Orson Welles is saying it's not biographical because he obviously doesn't want to be sued for libel. "The lines between the fictional and the real person have become so blurred today, almost 60 years after the film was made and a half-century since Hurst's death, it is difficult to disentangle the intermingled portraits of Charles Foster Kane, the main character in Citizen Kane, and William Randolph Hearst. Both were powerful, both

• 1:02:48David Senra?

  were enormously wealthy, both had big houses and big egos. But Welles, Kane is a cartoon-like caricature of a man who is hollowed out on the inside, forlorn, defeated, and solitary because he cannot command the total obedience, loyalty, devotion, and love of those around him." This is actually a benefit to Hearst, his incorrigible optimism. "Hearst, to the contrary, never regarded himself as a failure, never recognized defeat, and never stopped loving Marian, that's his mistress, or his wife. He did not, at the end of his life, run away from the world." And luckily, because the last about, let's say, seven to eight years of his life, he actually regains control and ownership of his company, he's able to pass it down to his heirs.

• 1:03:31David Senra?

  This I found very interesting. "He faced a crisis of bankruptcy and liquidation by himself. There is no evidence that he confided in anyone."

• 1:03:40David Senra?

  And if you think about the fact that he survived long enough to gain control back of his company, you know, it's a relatively happy ending. His life's work could have easily been washed out and it wasn't. Not only did the people in charge cut costs, they were also increased revenue. After World War II, you had a huge boon in newspaper industry, like as you could imagine anywhere to do, and Hearst and media properties benefited from that. So it says by early 1945, after almost eight years in exile, William Randolph Hearst, at 82 years old, was again in control of his finances. The empire that was returned, though, was reduced in size but remained formidable, with 17 newspapers, four radio stations, nine American and three English magazines, a wire service, a feature service, and a Sunday supplement.

• 1:04:25David Senra?

  And through it all, he never lost the Hearst Castle, which was by far his favorite place in the world. And I'll end on this, by early 1947, the chief developed a dangerously irregular heartbeat and may have had a mild heart attack as well. His doctors demanded that he cease working and leave San Simeon, which was hundreds of miles away, that's where the Hearst Castle was, which was hundreds of miles away from the specialized care required by an 84-year-old man with a heart condition. Hearst agreed to move to the house that Marion had purchased in Beverly Hills. On May 2, 1947, as Hearst and Marion were driving down the winding five-mile roadway from San Simeon's hilltop to the landing strip below for the flight to Los Angeles, Marion noticed that tears were streaming down the chief's

• 1:05:10David Senra?

  face. She leaned over to wipe them away. "We'll come back, WR. You'll see." They never did. There's so much more to the story. He lived a broad, unbelievable, amazing life. If you're interested to learn more, if you want to buy the book using the link that's in your show notes or available at founderspodcast.com, you'll be supporting the podcast at the same time. That's 145 books down, 1,000 to go, and I'll talk to you again soon.