#173 Louis B. Mayer (MGM Studios)

What I learned from reading Hollywood Rajah: The Life and Times of Louis B. Mayer by Bosley Crowther. ---- The reason so many people showed up at his funeral was because they wanted to make sure he was dead. [0:50] He is in that phalanx of men of aggressive bent who seized on the opportunities that an expanding civilization exposed. With them, he ascended to high places along an upwardly spiraling route that was there to be ascended by those who had the necessary stamina and drive. And, with some of them , he was unsettled and rendered dizzy by the heights, so that he could not control his footing when the road itself began to narrow and fall. [2:07] His own recollections of his early childhood were mercifully meager and dim. They were mainly recollections of being hungry. That was the only memory Mayer had of himself as a little boy. [7:01] How powerful and violent were the urges in the depths of the growing boy to break out of his immigrant encasement. [10:27] One of his favorite maxims had to do with behavior in adversity. “When you come to the end of your rope, tie a knot in it and hang on." [11:55] He wanted to be a film producer. He wanted to get into that realm of fabrication and creation where glamour and excitement were. [27:00] My unchanging policy will be great star, great director, great play, great cast. You are authorized to get these without stint or limit. Spare nothing, neither expense, time, nor effort. Results only are what I am after. [33:00] It was not all sunshine and profits with Mayer’s company during these embryonic days. Mayer was far from being one of the top producers of Hollywood. He was a small, enterprising operator. There were many others like him, clawing to get minor stars and unattached directors to make their pictures and help them to get ahead. On some films they picked up profits, on others they definitely did not. The business was always a gamble for them, as it was for Mayer. [39:13] The radical and profound transition (sound in movies) was spread over two or three years. Compulsion more than planning impelled it, against resistance within the industry. [49:57] The system (sound) was not regarded as anything more than a novelty by the remainder of the industry. [54:45] Mayer was no doubt a brilliant man, with vision and understanding in the business of manufacturing films as well as a fervor for investing in talent in every phase of production, to the point of extravagance, he was also a careless manager, a favorer with stubborn likes and dislikes, and a braggart who wasted his time and the time of others telling them what a great man he was. [1:01:33] Mayer had a psychopathic need for power. [1:07:40] ---- 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

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• 0:00David Senra?

  Mayer was dead now, his body wasted by the violent disease that had come upon him in the last bruising clash of his career. And so it has come to this funeral, the last ritual of the long and stormy career of Hollywood's most dynamic and momentous film producer, Louis B. Mayer. But how many in this solemn gathering knew the departed man? Who had seen beneath his surface? Did they know that he had often struggled through sleepless and terrifying nights, lashing himself with anxieties and piercing himself with doubts and fears? Did they know that he went into tantrums that were something quite different and apart

• 0:42David Senra?

  from the bursts of anger that he often put on to make a point? Did they know that in the silence of his bedroom, he would sweat and grovel and moan? Samuel Goldwyn, who never loved Mayer, remarked at the end, "The reason so many people showed up at his funeral was because they wanted to make sure he was dead." It is no wonder that Mayer, with his concentration of power and his unassailable position from which to throw weight in the community, was one whose attentions and favors were sought and whose counsels on matters largely swayed the movie industry. Those whom he favored regarded him as a demigod; those whom he did not thought of him as a

• 1:26David Senra?

  monster. Studios and stars, individuals and companies waxed and waned. Mayer held strong for three decades. David Selsnick proclaimed that Louis B. Mayer was "the greatest single figure in the history of the motion picture industry." It is my hope that this observation of the life and times of Louis B. Mayer will help serve to illuminate more than a Hollywood type, more than the monolithic figure of Mayer, for I find that this man is characteristic of a large group of magnates and tycoons who have marched across the landscape of industrial America.

• 2:07David Senra?

  With them, he is in the phalanx of men of aggressive bent who seized on the opportunities that an expanding civilization exposed. With them, he ascended to high places along an upwardly spiraling route that was there to be ascended by those who had the necessary stamina and drive. And with some of them, he was unsettled and rendered dizzy by the heights, so much so that he could not control his footing when the road itself began to narrow and fall. I wish to offer this volume as an inspection of one of those giants. It embraces a long and lusty drama, and it ends in tragedy.

• 2:53David Senra?

  That was an excerpt from the very old book that I'm going to talk to you about today, which is Hollywood Rajah: The Life and Times of Louis B. Mayer, and is written by Bosley Crother. So this book actually came out in 1960. And the way I found this, I was actually reading, I constantly reread through my highlights of past books that we've studied on Founders, so I can remind myself of the lessons that we're all learning. And on Founders number 111, I covered the biography of David Geffen. So that book is called The Operator: David Geffen Builds, Buys, and Sells to New Hollywood. And in that book, this book is mentioned twice, and that's how I discovered it. So David Geffen read this book. He was around 20 years old when the book came out, and he used it as inspiration throughout his career.

• 3:37David Senra?

  So I want to read two quotes from The Operator that puts into context how influential this book was to David Geffen, and then how I arrived at essentially the opposite conclusion that David Geffen did. So it says, "Arriving in Hollywood for the first time, David thought he had found paradise. It was even more intoxicating than he had imagined. His life ambition was soon established after he read a new biography of MGM studio boss Louis B. Mayer, written by Bosley Crowther. It was called Hollywood Rajah. I want this job," he thought to himself. And then the second quote was, "Geffen was riding high, yet he remained unsettled and pl-" Okay, so this is really interesting, actually.

• 4:19David Senra?

  As I read these next three sentences to you, this is a description of David Geffen from his biography. But really, this is, could be, word for word, a description of Louis B. Mayer and why I find his tale more of a cautionary tale. The beginning of his life is very, obviously, inspirational. Starts out unbelievably poor and works his way up to being one of the most influential, if not the single most influential person in the movie industry history. But he loses his way along the way after he finds a lot of success. And he's very deficient as a personality and very similar to how I felt David Geffen was as well. So it says, "Yet he..." So again, this is a description of David Geffen, but really, now rereading it, it's a description of Louis B. Mayer.

• 5:04David Senra?

  So it serves a dual purpose here. "Yet he remained unsettled and plagued by feelings of insecurity and dissatisfaction. He was driven by a devil that constantly told him he needed to be bigger, more, and something else. He simply was not the kind of man who was going to stand in place for very long. He decided suddenly," and this is David now, "he decided suddenly that now was the right moment to turn his attentions to fulfilling the fantasy he had since reading the biography of Louis B. Mayer. He wanted to be a power broker in the movie business." Okay, so I want to start in his early life. Actually, before I get there, I guess I'll tell you, a lot of what I have, what I want to talk to you about today, is not really specific, it's not really specific to Louis B. Mayer.

• 5:49David Senra?

  What I thought of when I was reading this book, a lot of his life is just a metaphor. It's a study of human nature. And we're going to see a lot of parallels between the very beginning of the movie industry to that multiple part, I think it did, what, like 10 or 12 different books, on the very beginning of the automobile industry. Just like in the very beginning of the automobile industry, you could not really predict who was going to be the actual winners. And we're going to see Louis B. Mayer, for much of his early career in movies, he was very understinked. He was just one of many, many hundreds, if not thousands, of other young movie entrepreneurs trying to succeed in this, at the very beginning of this industry. So, all right, let me start with the first part of the book I found most inspiring. The second part is a cautionary tale.

• 6:33David Senra?

  First part, his family was, he came, he was unbelievably poor. He was born, they were Jews in Russia that had to escape, and they escaped to America. So it says, "The father, Jacob, had been a poor laborer and sometimes tradesman in a little town near Minsk." And Mother Sarah was a woman of peasant stock. They were propertyless, hand-to-mouth descendants of long generations stretching back into the dark and nameless ages of wandering Israelites. And this is what he remembered about his early life, and this tells, I mean, this is one paragraph, it tells an entire story. "His own recollection of his early childhood was mercifully meager and dim. There were mainly recollections of being hungry. That was the only memory Mayer had of himself as a little boy."

• 7:18David Senra?

  And his family realizes, at this time, there's no, there's no opportunity in Russia. They arrive in America, this is the description of the family, once they get to America. "They were poor when they arrived in the community, agonizing poor, which means that they had practically nothing but the clothes they wore on their back." And what's really fascinating, think about the juxtaposition between where he's starting, right? They arrive, they're immigrants to America, they don't have anything but the clothes on their back, they could barely afford food. For nine, almost a decade, Louis B. Meyer will be the highest-paid person in America, as far, in terms of salary. Work for them meant doing anything they could find, anything to get themselves started and have pennies to buy food. And food oftentimes consisted no more than a stale loaf of bread and a few potatoes.

• 8:03David Senra?

  And so at this point, Louis is just a young boy, he's got to help out in the family business. They, they're like peddlers, they go around and collect junk, like scrap metal, and try to resell it. And he's trying to do, his family's trying to have him do two things at one time. They're trying to help, have him help out in the business and go to school. And we're going to see, you know, those things are going to be in conflict, he's never going to be really good at school as one could expect, so it says. And so it was that Louis, compelled to help add to the family funds, was out on the streets ragpicking and collecting scraps at all hours when he was not in school. When he was in school, he ranked poorly among his contemporaries. It would hardly be expected that a boy from a foreign land, whose language was only Yiddish until he was five or six, and who was forced to work all his spare time at a fairly exhausting

• 8:48David Senra?

  toil, would be an exceptional scholar among the more fortunate youngsters of the town. And so not only is he poor, not only is he having to go around looking for scrap metal, doing physical labor anytime he's not in school, but there's a lot of antisemitism. Him and his brothers are chaste, and there's like these different street gangs where they're living, and they're usually in ethnic factions. So you have like an Irish gang, a German gang. What all the different gangs had in common is they did not like Jews. So they hunt and fight people like Louis and his brothers. But what was really interesting is he relished the violence as an outlet for the otherwise poor state of his life.

• 9:32David Senra?

  So it says, "It wasn't uncommon for Louis and his brothers to have to fight their way home in evenings through the gang of kids that lived in the slums." They called it "Jubating," is what the author refers to it as. "Jubating was a pastime Louis came to know." Now, this is a weird, his odd perspective, right? Most people would be fearful, they would run away. I don't want to have to fight all the time. He wanted this outlet. "Fighting provided an easy and convenient release for him. He had a lot of natural aggression that came out in rough and tumble bras." And this is where we see that Louis is not a normal person. I remember reading the biography of Arnold Schwarzenegger, and he says that his dad was an unbelievable disciplinarian, and that most people would break under the

• 10:17David Senra?

  discipline. But Arnold instead channeled it into drive. And so we're seeing a lot of people would break under such a terrible life situation. Louis largely took his shitty life situation and added it and used it as fuel for his ambitions. So it says, "How powerful and violent were the urges and the depths of the growing boy to break out of his immigrant encasement?" Even as a, this is a description of him, even as a kid. "Certainly aggressiveness and ambition were outstanding in Louis Meyer. He was persistent and tireless in his efforts to get ahead." So one day, he's out looking for scrap metal.

• 10:59David Senra?

  There's a debate over whether he was breaking into another person's junkyard to steal from it. But the owner is a couple decades older than Louis, and he doesn't react in a way, he doesn't press charges. He winds up taking an interest in Louis. And this is one of the most important influences in the young life of Louis Meyer. We've seen this over and over again in the books. Somebody older, somebody wiser, takes an interest and fundamentally changes the trajectory of somebody's life. And so much so that years later, when the merchant dies and Louis goes back to his hometown, he always goes to his grave to put flowers on it. And so this is some of the lessons that he learned from him. He says, "The merchant and the lad became good friends. Wilson was sage and understanding. He was free with encouragement and help.

• 11:42David Senra?

  He strongly impressed upon the youngster some of the good basic rules of life and gave him a sense of the importance of being able to draw strength from within oneself." One of his favorite maxims, which stuck in the mind of the boy, had to do with behavior and adversity. This is a quote from Wilson. "When you come to the end of your rope, tie a knot in it and hang on." I'm going to repeat that because I want you to remember this very later. "When you come to the end of your rope, tie a knot in it and hang on." All right, so I want to fast forward because he makes a momentous decision, a very important decision, when he's around 20 years old. He decides to go to Boston.

• 12:24David Senra?

  He's like, "Okay, there's no hope for me in this small town." The entire family's engaged in this scrap business, right? But it's not very successful. He's like, "I'm going to go to a bigger city, and I'm going to do the same thing. Yet, since I'm in a bigger city, I'll be able to grow the business larger." And so this is on his decision to move away from his family and to seek opportunity in Boston. Old terrors battled with ambition inside the vigorous young man. Ambition won, of course. So that's a good way to think about. The dichotomy that's raging inside of Louis B. Mayer, maybe till he dies. And the fact that he's extremely ambitious, but he's got these internal demons. It does remind me, it's spooky, how much of Louis B. Mayer's life parallels with David Geffen.

• 13:09David Senra?

  The fact that there's these deep insecurities that are driving them, they never feel good enough, they both are insecure about being Jewish and small and want to be rich and powerful. They both want to seek the adulation of other people. They're both extremely money hungry. They both don't get along with people. There's fistfights. In David Geffen's case, he's getting punched in the face, he's getting eggs thrown in him. They fall out with partners. I mean, their stories are almost the same, just separated by a few decades. But again, think about that old terrors battled with ambition inside the vigorous young man. Ambition won, of course. It won always, but not without struggle and pain. So he moves to Boston. He's going to think, hey, I'm going to do, I'm going to do the scrap metal business.

• 13:53David Senra?

  He starts off, he's not having success in Boston. He hears that there's a better opportunity to move to Brooklyn. Okay? So he's chasing, basically what I'm trying to tell you is that he's chasing opportunities and he's failing. And he's close to being bankrupt and he's got two young kids and a wife to support at this time. He's still really young. Just imagine being in his shoes at this moment. The Brooklyn venture was a fiasco and Mayer began to lose the unqualified expectation of prosperity in the great United States. The one business he knew, the junk business, was not panning out for him. Mayer finally gathered up his little family and crept back to Boston to return to the home of his in-laws. He can't even afford to support his family. He's got to live with his wife's family, right?

• 14:38David Senra?

  And now he's going to start all over again. He was close to being bankrupt and as he told his friends dismally that before he came to that dishonor, he would kill himself. Okay, so he's at rock bottom, almost bankrupt, very depressed, can't support his family. This is where he learns, this is gonna be the very beginning of what's eventually going to morph into the movie industry. So he's got a friend. One of his friends owns these things called Nickelodians, okay? So it says, "In 1907, there was sweeping the United States a new entertainment phenomenon. It was the Nickelodeon craze. The Nickelodeon was a species of theater or playhouse devoted to the showing of new moving pictures," is what they called them.

• 15:21David Senra?

  The reason they were called Nickelodians, because they would charge, it was a nickel per customer. So his friend is running a Nickelodeon, and Louis starts working there part-time. So he says, "He was not above doing occasional jobs for him, such as standing at the door and taking tickets, or handling the box office. Immediately, this form of commerce attracted and fascinated Mayer. He saw it as something much more likely to return quick profits than buying and selling junk." So he sees his friends having a lot of success in Boston with his Nickelodeon. His friend tells him, "Hey, I have an opportunity to buy another Nickelodeon in this small rundown town. I'm not gonna pursue that, but maybe you wanna do it if you wanna invest in this business."

• 16:03David Senra?

  And so they go and they see this, it's in a small, little town in Massachusetts, and it's a rundown theater that's currently closed. It says, "It was dirty, dank, and dismal, and had gone by the name of 'The Gem.' Disgusted citizens called it 'The Germ.' What a contrast between Joe Mack's gold mine and this shabby dump." Joe Mack is his friend that obviously owns the Nickelodeon. Should Mayer, and it was $50 for this opportunity, but he doesn't have the money, he's gonna have to borrow this money. So it says, "Should Mayer risk his $50 on an off chance? He did. This was probably the toughest and most critical decision he ever made." That's just for the rights to it. He's gotta invest a lot of money, so he's gonna wind up taking this risk and going back and raising, borrowing money from everyone he can, and trying to make a go of this tiny little Nickelodeon.

• 16:47David Senra?

  "This was probably the toughest and most critical decision he ever made. He returned to Boston full of steam and started talking enthusiastically among his skeptical friends and in-laws. It was, by the most extravagant of calculations, a modest debut."

• 17:02David Senra?

  So now I fast forwarded, the little theater's up, he's painted it, he's tried to to basically emulate what he saw his friend do with the success of his Nickelodeon Boston. In its first month, the little theater survived and little more. Attendance was not, oh, excuse me, attendance was good, but not excessive. It was very touch and go. So he's not really making much of a success. He has, and this is very common in his life and career a few times. He has several breaks where these just massive hits lift him out of where he's at and brings him to the next level. And this is one of it. He's really smart, too. I would consider him like a suction cup, like the Henry Kaiser was described.

• 17:45David Senra?

  He was constantly studying and analyzing what other people were doing, trying to learn from the people that came before him and his competitors. And so he winds up hearing about this, this show. And it is the story of Christ. And it's like, almost like, remember, there was a few years ago, there's massive success Mel Gibson had with the movie Passion of Christ. And I think it was one of the most profitable movies ever. And it was very similar where you'd have just tons and tons of churches and people, a part of that religion, that would rent out theaters and just encourage everybody to go see this movie. So there was a story called Passion Play. And it was a massive success in other cities.

• 18:28David Senra?

  Remember, this is early 1900s, not like information flows very easily. And what he realizes, like, this Passion Play is working out in all these other cities. Why don't, it's Christmas season, why don't I try to get the rights to this movie? Movie's not really the term. Show is what, think of it, is how you would think of it now, in this period of history. And so he's like, okay, I'm gonna take the risk. I'm gonna assume, because it was successful other where's, other cities, that it's gonna be successful here. And it was a massive, massive success. And he winds up taking the money that this one hit play, hit show is going to do, and is going to, to give him the finances. And he's gonna leverage that and start buying a bunch of other theaters.

• 19:12David Senra?

  Now, again, this is the very early days of, this is way before he's, he's gonna become a theater owner, then a distributor, and then finally, he's going to be a producer, which is what he does at MGM, okay? So it says, "What was the most important was that Passion Play cleaned up for Mayer. It earned him several hundred dollars during its engagement of one week and permitted him to have the satisfaction of success. The miracle had happened. By one bold move, he had salvaged himself. He was soon able to disassociate himself from Joe Mack and cut loose as an independent showman." So now this is where he goes around and opens a few small theaters, theaters like The Gem. "This little success at starting theaters only whetted his appetite for more. He was bitten by the bug of show business." This again, sounds like David Geffen.

• 19:55David Senra?

  "He wanted to move into the big time, to make ever more money. He was convinced he knew the magic that would make him a big man in the theater world." And before I tell you his next move, I want to give you a little background on the actual nascent movie industry. This is exactly like the early automobile industry. There's this thing called the Selden patent, I think it was called, where you have people that there's new inventions at the very beginning of the industry, they try to patent it, they try to build a monopoly. Most, a lot of the early automobile manufacturers would just pay up. I think Henry Ford was the first one to actually break the patent. And we're going to see the same thing with the early movie entrepreneurs here. So it says, "The control of early patent holders and manufacturers of films and machines

• 20:39David Senra?

  had thought to monopolize the business by forming themselves into a trust. This was rapidly challenged and broken by candid pirates and business buccaneers who came tumbling and slashing into the area as soon as its money-making potentials were seen. Some were connivers and con men, but a few were smart entrepreneurs who gathered and shaped the primitive business into the cells from which corporate giants would grow." Louis B. Mayer being one of those early smart entrepreneurs that wound up doing this. And he's going to join up. He did not start MGM. He was actually, his company was folded into it, was bought by this other guy. And his name was put on at the end. He had a collection of small companies and he was trying to make into a larger company.

• 21:24David Senra?

  And why he did that was really fascinating. It was really counterintuitive at the time. I'll tell you more about that. But we're going to see Louis is just one of, again, hundreds, maybe thousands of aspiring early movie industry entrepreneurs that are just trying to figure out a way of like, what is going to be successful? In this new industry and the way people made money at the very beginning is going to change. So Louis right now is a theater, he owns theaters, right? He's going to, the first jump he wants to do is like, well, there's more money in distribution. Cause he's buying, he's, that's who he buys the films for. So you have the people that make the films, then they sell it to distributors, then distributors sell it to theaters. Eventually you're going to have some companies that are going to combine all three of these, these activities, right?

• 22:08David Senra?

  This is how distributors made money at this point in the industry though. A distributor would purchase the rights to peddle a film for a specific sum. And usually they, they did it on a geographic basis. Maybe you have the rights in New York, maybe they have rights in Massachusetts, whatever the case is. And it's usually for a limited time. The income of the distributor would depend upon what he could get for the film from the theaters. That's his customers, usually on the basis of how much per day or per week. This is a business that attracted many budding entrepreneurs who were soon able to rise to high positions in the spiraling film companies. They were little fellows who scrambled over each other and shoved and clawed in a battle to the top. One of these was Louis Mayer.

• 22:51David Senra?

  So at this point, right before Louis is about to have another big break, this you have a severely fragmented industry, right? And a lot of the people that made films, they weren't, they didn't consider themselves business people, right? They just wanted to make a film. So a lot of them would sell out to distributors and get terrible deals. And in this case, Mayer is going to wind up making over a million dollars from somebody else's film. And it's the film, The Birth of the Nation, right? And what's, there's actually really interesting, there's two, two lessons here. One, if you're making something, what did James Dyson tell us all the way back on founders number 25? If you make something, sell it yourself. You're in the best position to convince the, you know it intimately, you know your product. And you're in the best position to convince customers why it has value to it, right?

• 23:35David Senra?

  And then not doing so, and he learned from being mistaken, you get ripped off by other people that do that. Ripped off maybe is not a right word. You get taken advantage of other people are going to wind up making more on your creation than you can. If you just learn the skills of salesmanship, you can avoid that, right? So the second thing is the importance of being vastly different. So at this time, The Birth of a Nation is going to resemble more of what we think of movies. Remember, there's no sound in movies yet, there's no color, right? But it was two hours long, and it cost $100,000 to make. This was all unheard of at the time. And so what was interesting, too, is how you might know that you have a successful

• 24:17David Senra?

  product, rather. People either loved The Birth of a Nation, or they hated it. So this is a description of the movie, but really it's a metaphor for what's happening in Mayer's life. It would tell how a stubborn visionary struggled and succeeded in breaking through barriers set up by early customs as to the size and dramatic scope of films. The picture hit the public like a tree-topping storm, overwhelming it with vivid evocation of the great dark crisis that still troubled hearts and minds. And it would show how the system of distributing motion pictures in those days was so naive that the lion's share of profits of this great venture finally went to the fellows who hawked it, such as Mayer. So the people that resold it are going to make all the money, not the actual filmmaker.

• 25:00David Senra?

  And the problem is that one of the filmmakers, I think it might be the actual main, it's this guy named Aiken, he gives up all the profits. This is a bad move. Apparently, Aiken figured the film would have taken the bulk of what it could get from Boston by then. So the film, I would say it's not very similar to, I think now, movies are released, they make the bulk of their money, maybe the first two, three weeks, maybe first month, right? Sometimes, again, information flowed really a lot slower then. So this guy sold, gave up all the rights to profits. I think he said, I think he winds up giving 90% of the profits to Mayer, because he assumed, okay, it's been out for a while, it's already made all the money it can. So, yeah, I can give up this guy 90%, and he has to give

• 25:44David Senra?

  a down payment. I forgot what it was. It might be $10,000 or $20,000, something like that. But you know, I'm getting the better of the deal because he's not going to make a lot of money out of it. Mayer was, was obviously really driven, but he was a salesman. He was a showman. He was constantly pushing and selling and selling and selling. So he's going to constantly drive and push ticket sales. So it says, apparently Aiken figured the film would have taken the bulk of what it could get from Boston by then. No sooner was the contract signed than Mayer started selling furiously. He's trying to expand the market for Birth of Nation. He realizes that, yeah, it's made a bunch of money, successful in other places, but a lot of people, there's a lot more people that don't know of its existence than have already seen the film. So let me focus on selling it as ferociously as possible.

• 26:27David Senra?

  The experience with Birth of Nation was another turning point in the career of Mayer. In the time he had, he had, in the time he had the picture, he made a million dollars for his company. And just like when he had success with The Passion Play, it enabled him, enabled him to go from one theater to another. He's going to use that money. He's like, okay, first I start out doing Nickelodeon theaters, then I get into distribution of films. Now I want to make films and I want to own it all. Success with Birth of Nation was all it took to embolden Mayer to pursue a still further inclination that had long been enticing him. He wanted to be a film producer. He wanted to get into the realm of fabrication and creation where glamour and excitement were. Okay, so before I get into his move to LA and where he starts making movies, again, he is not successful.

• 27:12David Senra?

  When you see what MGM buys his company for, you, you see that he's, there's, the price of his company, I think it's like 76,000 that he sells to MGM, the, the soon to be combined, combination of MGM. At the time, let me put that into perspective, there's individual actresses that are making double and triple that per year. And that's his entire company. But, so he starts out making films. It's not like he has an abundance of money.

• 27:37David Senra?

  Yeah, he made a million dollars on the, the, on The Birth of a Nation, but he owed people money. He had financiers. I think he winds up being able to take about 200,000 of that after everything's paid, paid off and paying people back. But- What I want to bring to your attention before I get into all that, though, is where I started this thought was something I learned, one of the most valuable things I learned from the biography of Warren Buffett, which I covered all the way back on Founder's Number 100, is this idea that he has about the difference between an inner scorecard and an outer scorecard. It's a very powerful idea. He compares his mother and father. His mother had an outer scorecard. She was worried about what other people thought. Her happiness

• 28:17David Senra?

  was derived on what others thought of her and her family. Warren had a very terrible relationship with his mother. He had a really great relationship with his father, who was the person he respected the most because his father had an inner scorecard. And what Warren means by that is like, he made decisions based on what he thought was best for his life, and he lived with the results of those decisions. As long as he was comfortable with what he was doing, he made decisions that were true to himself, even if other people around him did not understand. Like, his father starts being a stockbroker, like, right after the Depression. People were telling him, "He's crazy. What are you doing?" But this is what he really loved to do, so that's the path he pursued. And what Warren's point in teaching us that lesson is, you're a hell of a lot better off in your life if you can

• 28:59David Senra?

  maintain an inner scorecard. Think from first principles, really get to know yourself, what it is that you want to do, and do that. Regardless, we have, as humans, we have this immense pressure to conform to those around us. But by doing so, we look at these interviews when people are nursing homes or close to death, they all talk about, "I wish I had lived a life more authentic to myself." Having an inner scorecard means that you're living a life authentic to yourself. Outer scorecard, you're driven by the adulation and seeking the approval of other people. And I think that is a fundamental misunderstanding of human nature. We are all extremely self-involved. Analyze your thoughts. Take an inventory of the thoughts you have throughout the day. Almost all of them are going to be on yourself. What's going on in your life? You're hungry, you're tired, you're worried about something,

• 29:44David Senra?

  you're anxious, you want to do this, you have a goal, all these thoughts, right? And so people that have these outer scorecards, they have, in my opinion, like a... A distorted view of human nature. So the reason I bring this up is because David Geffen had an outer scorecard. Louis B. Mayer has an outer scorecard. A lot of the things he does, and you see that because they're relationships. They're not doing things based on what they think. They're doing things because they think if I'm able to achieve this goal, if I'm able to be cut, to build this movie, if I'm able to build the studio, people will love me. They will think highly of me. And they're not realizing that a lot of those, this, this, it's fake love. A lot of the people that claim profess to love Louis B. Mayer,

• 30:26David Senra?

  loved him when he was in a position of power to do something for them. Once he loses that position of power, he's kicked out of MGM after 27 years. He loses his job and then suddenly where's all his friends? You thought they were friends for 25 years. They were not really friends because they're, they were friends with you because of their own self-interest. So I think again, think the way Warren Buffett is able to take ideas and condense them down and just think of it as inner scorecard versus outer scorecard. Am I making this decision because I truly want to? Or is it a decision because I think my parents want me to? Or my girlfriend wants me to? Or my husband wants me to do this or anything else? It's like, no, what, what is that? Only you can know that voice that's inside of you. And I think it's extremely important. There's a, there's a similarity I'm going to bring to your attention right now where Louis B. Mayer

• 31:10David Senra?

  only wanted to make high quality family movies, right? High, in a way, it was very similar to Walt Disney. But the difference was why they were doing it. Walt wanted to make the best of whatever he was working on at that time. At the very beginning, he thought he, he, he just loved. That was his sense of humor, you know? But he always focused on quality. Louis B. Mayer is going to focus on quality too, is what I'm going to read this, this, um, this paragraph to you. But Louis B. Mayer is doing it because that's like the largest market. That's what will give him the most adulation. Walt Disney did it because that's what he was focused on. And his focus changed as we saw when we studied him on the multiple podcasts I've done about him. Eventually he's going to make the best animated movies ever.

• 31:54David Senra?

  And then he falls out of love with animation and what is he going to do? He, he says, okay, my inner scorecard now tells me I don't want to do movies. I want to do theme parks. Everybody around him, just like when he started in animation, said, you're wasting your time. You know, you can't have a full length animated movie. All this other stuff they told him. And just like I told him, you can't do, amusement parks are full of scams and they're dirty. He's like, my park won't be like that, but he was driven by his inner scorecard. So whatever was in front of him, he was going to do, quality was his god, right? But even, you could say Louis B. Mayer, quality was his god, but the reason why he's going after quality, or what he appeared to be quality, were vastly different. So it says, "The measure of his determination to make himself distinctive was evidenced by his systematic efforts to ensure that his production have quality.

• 32:37David Senra?

  Less clever friends in the business tried to tell him that once he had a star, he didn't have to worry about a story, a director, or a cast. The star would sell the picture, which is all he wanted to do. Why spend money on incidentals? Skip in those areas." Meyer didn't go with that thinking. So this is Meyer describing that. He says, "Regarding my idea of a leading man, think of a star, it is the same as my ideas of play and cast," meaning namely the best, is how he summarizes that. "My unchanging policy will be a great star, a great director, great play, and great cast. You are authorized to get these without stint or limit. Spare nothing, neither expense, time, nor effort." This is why I say that's the similarity for Disney, even though their whys are vastly different. "Results only are what I am after." That was Mayer.

• 33:22David Senra?

  Okay, so he's doing that even though you can't really afford to do that. I want to bring this to your attention though, because this is where I feel the deficiency of him as a person, why I consider him a cautionary tale. It's very surprising to me. Not surprising to me, because David Geffen, again, they're very similar, but I just can't believe you would read this biography and be like, "Yeah, I want that," because this guy's life, it's not turned out well. Yeah, he makes a lot of money from the outside, financially successful, but tormented inside, poor relationships, he runs, being estranged from his daughter. Just again, this is not, this is like, when I'm reading this book, alarms are going off in my mind, like, you need to avoid these mistakes. And part of this is he's got no loyalty to anybody. Geffen did this too. So it says, "Indeed, his old friends in Boston were considerably shocked and provoked

• 34:07David Senra?

  at the way he apparently dropped them, once he was on his new road." So he moves to LA. This ton of people that helped him out in the beginning of his career, he just leaves them to the side. Skip over the names, it's not important. But these two guys had furnished his chief financial aide. They became disillusioned and resentful because he did not cut them in on future deals. He had a loyal employee named Tom. He left him behind in Boston to run his businesses. So he's still got the theaters and his distribution in Boston, while he tries to make the, build a new company in LA producing films, right? So he leaves Tom back and he's like, yeah, just do this job for a little bit and then come out west and just start working.

• 34:50David Senra?

  So it takes Tom a few years to wrap up all Louis' businesses. He tries to go to LA and my mayor's like, oh, no, no. You know, just stay where you are. You're better off just going over there and just completely ditching him. So he's constantly doing this. He does this to family members. He does it to friends. He does it to past employees. As soon as you are in a case of like his family member, you disagree with him. He has a falling out with his daughter over politics. Like that's silly nonsense. But in the professional capacity, as soon as you, your value to him is used up, you don't exist. So I want to switch gears here for a second because I thought this was fascinating. The similarities between Detroit in the very early days of the automobile industry

• 35:34David Senra?

  and Los Angeles in the early days of the movie industry. LA is about to boom. At the very beginning of the movie industry, though, it was not the sole place, right? So it says, he starts moving, talks, I'm going to skip over this part. He's moving from the East Coast to Los Angeles. So it says, although at that time, as many pictures were being produced around New York as were being made in California, but the swing to the west was on. So it says, mayor was but one small producer in the large migration that immediately followed the First World War. This is important. There was no sign that he was going to be, at this point in his career, there's no sign that he's going to be the most successful of the early studio heads, right? Considering the present metropolis, it was amusing to recollect, to recollect Los Angeles as it was then.

• 36:16David Senra?

  It was a sprawling provincial city on the threshold of its first major boom that was sparked by the oncoming industries of motion pictures and oil. Hollywood was not many years removed from a citrus grove.

• 36:31David Senra?

  The Los Angelinos at the time regarded these mushrooming picture studios as boomtown enterprisings, as about as settled as traveling circuses. And this was the description of Mayer in the early days of moving to California. "He was a new sort of person, a tough little man who rode around in a Ford and boasted confidently that he was going to become the best producer in the world. He seemed to have no inhibitions, no sense of embarrassment at his unrestrained self-promotion." And yet, we see underneath that self-promotion, some, a part of him that he's not showing to other people. And yet, in those days, Mayer also had secret attacks of sudden, paralyzing depression and emotional instability.

• 37:16David Senra?

  Many times, when he had an appointment to see someone he regarded as, quote unquote, "big" in the industry, his secretary would go into his office before the person arrived and find him sitting in frozen terror, tears pouring from his eyes. A few minutes later, when she took the visitor into his office, Mayer would be sitting there and would jump out to greet the arrival with the cheer and self-assurance of a man thoroughly collected and in supreme command. Something that was also similar to the early days of the automobile industry is the fact that there is a literal fistfights. I can't tell you how many physical altercations Mayer gets into this book. I don't know, like 10? It's a lot. And this is the time, there's still no sound.

• 38:01David Senra?

  I'm going to get to the importance of what sound and that new technology did to the motion picture industry, but this is all silent films. Charlie Chaplin is one of the biggest stars at this time, and he's, I forgot even what he says, but Mayer gets into a fistfight with him. So it says, "Mayer got up and went to the lobby. Charlie Chaplin and another gentleman followed him. There, Mayer said something to the comedian that he did not wish for anyone else to hear. 'Take off your glasses,' Chaplin challenged. Mayer removed his glasses with his left hand and with his right clipped Chaplin neatly on the jaw. The comedian tumbled backwards into a potted plant. Other people intervened. Chaplin was led away bleeding. This was not the last incident of fist swinging in which Mayer was to be involved.

• 38:45David Senra?

  He was one of the frequent scrappers in the boom days of Hollywood." And the weird thing is like, He's having a conversation with somebody, gets into a disagreement, and suddenly, without even saying anything, he just jumps through, like, through the other side of his desk and just immediately starts fighting these people. So Mayer starts having a fight with talent, he fights with competitors, there's fistfights between other, like, actors competing for the same role. There's just a lot of violence in the, in these early, in the early days of this industry. So this is a little bit more on the struggle at this time, because, again, this is before he's at MGM, he's got this small, little, struggling studio. And so it says, "It was not all sunshine and profits with Mayer's company during these embryonic days. Mayer was far from being one of the top producers of Hollywood. He was a small, enterprising operator."

• 39:28David Senra?

  This is, I know I'm repeating myself, but this is brought up and explained in different ways multiple times. I think it's one of the most important parts of the book. The fact that, you know, there's many different Mayers. You need a lucky break, obviously, but also, he's one of the few people that didn't quit. There's a ton of examples in the book of people starting out, they make money for a few years, first sign of struggle, they quit. And so, the longer he goes on, the longer he's able to not quit, the few competitors he actually has. I think it's an important part of, important lesson in this book. "There were many others like him, clawing to get minor stars and unattached directors to make their pictures and help them get ahead. On some films, they picked up profits, and on others, they definitely did not. The business was a gamble for them, as it was for Mayer."

• 40:13David Senra?

  Okay, so this is, this is really one of the fascinating parts, because Mayer needed a lucky break. MGM stands for Metro, Goldwyn Mayer. Goldwyn is a company that was being run by some other guy. After the founder, Sam Goldwyn, the guy at the beginning who says people showed up at Mayer's funeral just to make sure he was dead, he was kicked out of his own company. So he got this other guy that's running it, and eventually, he's like, I got, there's a, there's a contraction in the early film industry, a lot of them are going bankrupt. And he's like, I want to sell Goldwyn. And so this guy is going to sell Goldwyn. He's going to sell to the guy named Lowe, the founder of Lowe's Theater, right? Lowe is the one that has the idea, the counterintuitive, and I think really interesting,

• 40:56David Senra?

  winds up being a really smart idea, that when everybody else is contraction, contracting, that's when I need to expand. So Lowe's having a conversation with the guy that owns Goldwyn at the time. I'm going to skip out on, I'm going to move quickly through this part and just tell you the important parts. He let it be understood that he'd be glad to make an arrangement whereby Lowe could take the whole business off his hands. A little light came on in Lowe's brain. Rather than abandon his Metro studio, why not build it up? Remember, there's a recession and other studios are in retreat. So he's like, well, everybody else is doing that, that's, that, maybe I'll have success doing the opposite. Why not merge the Goldwyn company, use its facilities, and develop a smart producing operation, which would be able to provide his theaters, Lowe's theaters, with a full and economical supply of films?

• 41:41David Senra?

  This is where we see, when I talked about earlier, the fragmented aspect of the nature. Well, there's money to be made in bundling and unbundling, right? In this case, they're bundling. It's like, well, what if we make the films? We finance and make the films. We distribute the films to our theaters. Like, we can control and make all the money. And that's what MGM is trying to do. It's going to wind up being MGM, but it starts out in the brain of Lowe. And Lowe's going to die really soon. So he says, why don't we merge all this together? And he needs somebody to run it, though. So this is also another important point. Mayer is not a sure bet at the start of MGM. Lowe was impressed with Mayer's performance, but he knew he would be gambling on him. So he's going to hire Mayer to run this new collection of, this new studio.

• 42:26David Senra?

  Mayer was in a strong position of having a successful studio that was well-staffed with young Thalberg. Thalberg is, I would say, I would call him the creative partner for, that Mayer has at this time, the one that's actually making, capable of making good films. Mayer is more of somebody that can administer the business and it kind of like, keep everybody running. Thalberg is much younger. Mayer considers him a son. They wind up having a falling out because Mayer has a messed up personality. He's just inherently flawed person. So he says he has Talberg, he's got a bunch of good directors and if not, an impressive group of stars. So a small, semi-successful company, but small.

• 43:09David Senra?

  And I want to bring you attention to a good idea that Mayer had. I'm really harking on the fact that he was a deficient person. I think reading this book or studying his life is really a lesson into like what to avoid. But he's obviously got good traits, too. No one's all bad, no one's all good. And this is a smart provision that Mayer insisted on. And originally Lowe's going to bring him over. He's like, you're going to run everything, but no one's going to know it's you. It's almost like I was, there's a, I'm eventually going to cover the biography of Ralph Lauren. But one thing Ralph Lauren did that was really smart in the early days is like, even at the very beginning, he had no shot, no money. He knew he wanted to be a, to design his own clothing line. He gets a job, I think it was like Bloomingdale's, some large department

• 43:54David Senra?

  store. And they love his designs, but they say, okay, we want you to be our designer of our house brand. So it's not going to be Ralph Lauren. And I think he was, the first thing he designed was like ties or something like that. He says, but you know, it's not going to be, you want them to be Ralph Lauren ties. I said, no, it's going to be our house brand. And he said, absolutely not. And even when he didn't have any resources, he had no business turning down a job, he knew that's not, that's not served his end goal. He had to continue to struggle until he found a way to build his own brand. Meyer does the same thing. He learned from the mistakes of people that came before him. There'd be a lot of successful film producers. They merged with other larger companies and then they disappear into that company. Meyer refused to let that happen to him. This is really smart. He insisted on this.

• 44:39David Senra?

  In all advertising and paid publicity, the name Louis B. Mayer should The name Lu, I just call him Meyer, wasn't I? Mayer. In all advertising and paid publicity, the name of Louis B. Mayer shall be prominently mentioned as the producer of the motion pictures. Mayer undoubtedly remembered how Louis Selznick's name had been lost when he formed the Select Company with Adolf Zuckr. He would not let that happen to him, so that's also something smart. Now, this is what I mentioned earlier. The figure eventually paid for Mayer's company was $76,000, which shows the small value of the company in everything but skills.

• 45:19David Senra?

  There's individual actresses making double and triple by themselves than his whole company goes for. Now, I want to go back to, there's still, I want to point out a couple of points that are interesting in this deal, and I don't understand why Lowe did this. So, one of the surprising things I learned from reading this book is Mayer didn't have any equity in the company that he ran, but he had a share of the profits of the films. So, I think Lowe did this because he wanted to protect maybe the profits of his other, like, the distribution part of the business, like, the actual theaters. But, so, this is what Lowe says, "I would rather make you shareholders in the pictures than stockholders in the company." Okay, but this is going to cost you millions and millions of dollars, because that means

• 46:03David Senra?

  if you have a, this is a hit business. You have a massively successful hit, and even if your other company's losing money, Mayer's still going to make money on, because he owns part of the films, right? The profits. So, he says, Lowe said, "Thus choosing a form of inducement that was to cost Lowe's Incorporated millions of dollars over the year. For the share of profits arrangement, which seemed fairly safe and conservative at the time, became a goldmine for Mayer when the company was swept to prosperity, because it's going to be swept to prosperity on the big hits, the big movies that succeed." And so, in addition to Mayer's high salary, like I said, for 10 years, I think, starting in like 1937, somewhere around there, I think it's 1937, 1940 something, maybe 46, somewhere

• 46:47David Senra?

  in there, he's the highest-paid person in the United States, but he's also getting, he's going to make a lot of money. His equivalent, he's making like 20 to 30 mil, it would be in today's dollars, like 20 to 30 million a year for over a decade. But, we're not there. I want to bring out this point, because I thought this was very fascinating. It tells you the insight and how others react. So, the news is announced. Lo is combining his Metro with Goldwyn and then Mayer. They're going to make MGM. And this is what the competitors at the time said. They just weren't, absolutely not worried about it at all. In general, the new amalgamation was seen as a desperation move, designed as an attempt to rescue two tottering studios. And Mayer, far from being regarded as an executive with miraculous powers,

• 47:32David Senra?

  was figured as a shrewd opportunist with more to gain than lose. That's probably an accurate description at the time. Mergers had become, and this is why they just didn't care. They weren't worried. Mergers had become so common and so often futile in the growing industry that the chances of this one succeeding were quoted at even. No more. So 50/50 chance that this even survives. Much, no one's predicting this is going to become the most powerful studio, which it obviously becomes at the time. I think that's really important. Another thing I took away from Mayer that's positive. I use this, let's distill this idea down to two words, a maxim that we can live by, default optimism. However, that sort of skepticism, meaning skepticism is you've got a 50/50

• 48:17David Senra?

  chance of even surviving, much less thriving. However, that sort of skepticism had no place in the thinking of Mayer. He was fired with optimism. For him, the miracle had happened in a matter of less than six years. Remember where he had come from at this point, right? His early adversity winds up being an asset because he's like, I used to walk around as a young boy and collect scrap metal. Now, in six years, I have become the head of a studio. It's a head of an extensive studio, a fine productions facilities, plenty of talent, experienced artists. And experienced artists were at his command. If he couldn't make them make good pictures, he figured it couldn't be done. So he's got default optimism.

• 49:01David Senra?

  That's his modus operandi. Okay. So I want to skip ahead.

• 49:06David Senra?

  I want to talk about the effect that a new technology can have on an existing industry and how it can completely transform everything. And this is what I meant. It was like, not really specific to the life of Louis V. Mayer, but really specific to how humans react. Our nature doesn't change. Throughout history, if you expose humans to the similar stimuli, they're going to act in a small range of rather predictable ways. And so this is the reaction of the industry as a whole being fundamentally changed because they were just doing silent films. Now, sound, this new technology, is going to come in and we're going to see how they're dismissive of it. So it says, "The coming of sound to motion pictures and the pressures that this inevitably

• 49:49David Senra?

  put upon the whole creative process and thus upon studio personnel did not occur in a brief time, though that now seems to generate an impression. The radical and profound transition was spread over two or three years. Compulsion, more than planning, impelled it." Let me pause right there. We've seen that before. I forgot who said it, but there's a quote in one of the books I read in the early automobile pioneers. Like, who planned the automobile? You don't plan industries. Who planned the automobile industry? It evolves organically, right? You have hundreds, thousands of little, small companies, very similar to what nature does. You're doing all these little experiments and the result of that experience, those experiments, can be the birth of an industry if successful, right? "Compulsion, more than planning, impelled it."

• 50:34David Senra?

  Against resistance within the industry. I want to compare this to what Edwin Land taught us. At the beginning of Edwin Land's career, before he develops consumer products and before he developed the Polaroid camera, he was selling his inventions and technologies to existing industries. I don't have the quote in front of me, but he says something like, "Entrenched industry will always be against change longer than the private consumer." And that, and that quote of his, is why there's always opportunity for new companies, right? "Entrenched industry will always resist longer than private consumers." So he's like, "Forget selling to the automobile industry." I forgot the other industry he was selling to, but maybe the military. And he says, "No, I'm just going to go direct to the consumer, right?

• 51:16David Senra?

  And if I create something that's unique and I explain to the consumer why it would benefit them, they will buy it." So again, sound. It has extreme resistance against the industry and that resistance is an opportunity for new companies. So we know, one of the companies, the early companies that actually bets on sound is a, at the time is a tiny company called Warner Brothers. That company still exists today. It's opportunity, the thing that actually propelled it to be able to succeed is the fact that it had a difference of opinion, realizing, okay, once you, once, um, once consumers, your silent film consumers are exposed to sound, they're not going to want

• 52:01David Senra?

  your silent films anymore. And that seems obvious to us, right? But what's fascinating is that the people, that their livelihood depended on selling silent films, didn't see that. Okay? So it says, "Sound as an adjunct, as an adjunct for the flickers was actually an old idea." So flickers is in quotation marks, that's what some people were calling these silent films at the time, okay? And this is really surprising. It's an old idea, right? So it says, "Thomas Edison had intended in the beginning to combine pictures that moved with his phonograph. Dozens of inventors had tried to do it with something less than success, mainly because the mechanisms all lacked an efficient amplifying device." So this is from the late 1870s, or excuse me, 1880s maybe, all the way up until we're

• 52:46David Senra?

  in the 1920s, right? You had this idea, but you didn't have the technology. They knew it would be successful, they just didn't know how to do it. It took efficient amplifying devices, which happens in the 1920s, to radically change. It was not until the early 1920s that this essential appliance was devised by Western Electric researchers. The Western Electric people, working for the Bell system, the telephone system, it's very fascinating that an idea or an invention in one domain is going to be applied to another. So you have Western Electric trying to solve a problem for the telephone system that is then going to be applied, applied to motion pictures. Fascinating. So they tried hard to interest film producers in the device for adding sound. None of the large producing companies was remotely interested.

• 53:29David Senra?

  That's the opportunity, that's the wedge for Warner Brothers. Why should they endeavor to tamper with their satisfactory medium of silent films? And what is their objection? Listen to this nonsense. The addition of mechanical audio would only be an expense. Existing companies thought of an improvement to their product, which we're going to call that improvement, sound, as an expense. It's not an expense if it makes your market larger. The amount of people that will watch a silent film and have to read subtitles is a lot smaller than ones that now you're making them do less work. Now, instead of sitting there and reading, they're sitting there and watching. That is less work because the sound does the work for them.

• 54:14David Senra?

  It is expanding the market. It is not an expense if it expands the market. This is where we see the small company at the time, Warner Brothers, makes a few short musicals. Right? These are not movies. These are, you know, I think seven, 10, maybe 20 minutes long. Very short. And the public, this is the reaction. Okay, so the public goes crazy. They love these little musicals, right? This is the reaction. And I'll explain more why you know it's a winner based on the customer reaction in a minute. But this is the reaction from the existing industry. The system, meaning the system Warner Brothers used to make these musicals, to add audio to film. The system was not regarded as anything more than a novelty

• 54:58David Senra?

  by the remainder of the industry. We've seen this in the early technology industry in our days. A lot of times when you hear the reaction, this is just a toy. This is just a novel. That should be alarms going off in your mind that that could be the birth of a giant industry in your at the very beginning. This is very constant human reaction. Oh, it's just a toy. It's nothing major. Toys turn into industries. So let's go back to the consumer reaction. How you know you have something, right? This is a description of the film. He, meaning the actor, faced the audience and for the first time spoke in audible words instead of printed subtitles. The effect was galvanizing. Suddenly, the character was brought alive and made capable of giving vocal expression

• 55:42David Senra?

  to the already tearful sentiments of the plot. The illusion was so effective that the audience cried and cheered. Bingo. Right there, you have to go all in. Your product evoked emotion. You win. Now, that's obvious, right? Let's, this is, this is, this is mind blowing. This is maybe my, the most important lessons in all the book. This is what the existing industry, they saw the same thing. This guy speaks, this actor speaks to them, the audience cries, they cheer, they're emotional. Theater men saw no advantage in going into the expense of installing costly equipment while attendance was falling off because at the same time you have this innovation of technology, you have a financial contraction.

• 56:25David Senra?

  Financial contractions are temporary, but a new technology can grow and it can be so much larger in the future, as we've seen over and over again. They dourly accepted the premise that this was a cyclical drop and all they could do was seek the shelter of stiff economies, meaning they could, they're contracting, they're firing people, they're, they're building less movies, all that stuff. While they tended to blame their misfortune on the new wonder of broadcast radio, now this is very fascinating because what is also happening at the time that you're having sound in movies, you're having radio in homes, right? And the author makes a very, very important point here. So he says, "which swept into the great popular favor in the mid 1920s and became a fixture in millions of American homes." Right? So you got people that are used to being entertained in audio format that is evoking

• 57:08David Senra?

  emotion, that is, that did not exist previously, and now you have millions of them in homes. "They regarded this new medium as merely a competitor for the customer's time." They're talking about the silent film movie makers, right? Those people in, already in the industry, view radio not as a new great technology that they could apply, right? They said, "Oh, it's merely a competitor for the customer's time." They did not realize what that new product is doing and training their, their customer base. "They failed to grasp that it was rapidly rendering the silent film commercially obsolete. They did not conceive the crisis in its broader terms, namely that a basic evolution in the

• 57:47David Senra?

  mass mechanical entertainment was occurring with the exposure of the public to image-forming sound."

• 57:56David Senra?

  The misgivings of industry leaders were substantially the same as before. What the hell is happening here? How could you have, you have two parallel technological revolutions that customers are responding to in droves? You have them buying radios, spending hours listening to audio. You have people watching short films and crying and cheering now the authors are speaking directly to them. And it says, "The misgivings of industry leaders were substantially the same as before." What did Edwin Land tell us? Industry will always resist longer than private customers. Bet on private customers. That is the most important lesson in the book and the one I hope you remember because

• 58:37David Senra?

  don't think of it just in terms of radio in the 1920s and silent films, switching to to sound films. It, it, you're, we are going, multiple, hopefully have multiple decades ahead of you. You're going to see this play out over and over again. And the opportunity for the person that bets on private consumers, especially when their, the existing industries are ignoring them, that's where you can build companies, that's where you can find wedges, that's where you can find future products to build and companies to grow. Like, it's so, so important. I want to go back, though, to this, again, I think not only, okay, hopefully we're learning lessons that are helpful to our jobs and career, that's the main point of founders, right? But it's also to have a good life. I think entrepreneurship, I think having a swell, being as good as you can and the best

• 59:21David Senra?

  you can at work is going to give you more satisfaction, more satisfaction out of your overall life than, than if you, you lack that, right? So, of course, you want to spend time, personal research and development and gaining the skills, taking the ideas and being as good as you can at whatever it is that you do during the day. But also, it's just a microcosm of having a good life. And one of the, one way to have a good life is don't have an outer scorecard. I want to hit on this again because this guy is not good. I did not, you know, you read the biography of someone, you get the essence of a person. Uh, this is more on his outer scorecard. Mayer was plainly a person who needed his share of praise, uh, who demanded some positive recognition of a, of what a great man he was. So, there's an observer, remember, uh, there's shareholders, a board of directors.

• 1:00:07David Senra?

  And they're making sure now MGM's, I fast forward in the story, MGM's this giant, you know, successful studio and they send in an observer. They drop in these executives. This is, this happened in, with Bill Campbell. There's a book that a couple of listeners have recommended to me, I'll probably do, it's called The Trillion Dollar Coach. He was a mentor for a ton of people, mentored Steve Jobs. He, he was sent in, in the early days of Amazon, when, when, when Jeff Bezos, there's a story about this in the Everything Store, where Jeff Bezos is like 30, 35 years old at the time, and they discreetly send him in just to, he said, just observe him, just to help him out. Campbell reveals in an interview later on that they were, they sent him in there to see if he had ever replaced the CEO, and he goes back to the board, he's like, this guy is out of his mind brilliant.

• 1:00:50David Senra?

  Why the hell would you replace him? And so I think in that podcast on the Everything Store, Founder's Number 17, I think the way I summarize that is there's going to be no Scully at Amazon. Scully's the guy that took over for young Steve Jobs at Apple. So anyways, the same thing is happening back in, we're probably, I don't know, 1930, somewhere in there. They bring in this observer to the studio. He's observing Mayer for the, the owners of the studio and the shareholders of the studio. The reason I bring this to your attention is because we clearly see Mayer's problem here. There's this, this constant need for adulation from other people. And I'm gonna say, like, of course, when people tell you, you know, if you produce something and they think it's great, of course that feels good. But that's not, it shouldn't be your primary reason for doing it, right?

• 1:01:34David Senra?

  So it says, Mayer was no doubt a brilliant man. This is the observer's opinion on Mayer. With vision and understanding in the business of manufacturing films, as well as further for investing in talent in every phase of the production, he was also, but he was also a careless manager. A favorer with stubborn likes and dislikes, and a braggart who wasted his time and the time of others telling them what a great man he was. He felt the need to make people grateful and beholden to him. He literally bathed in the sunshine of his own self-esteem later on. He, because MGM, the growth of MGM correlates with the growth of the overall, what we consider the movie industry today, he thought he owned the medium.

• 1:02:17David Senra?

  So if he's, if you disagree with him what a good movie was, he thought you were wrong because I developed this medium. No, you did not. And they could, they, the author does a great job in the book comparing the medium of movies as a way to tell a story, just like the alphabet or language. Like, you don't, you don't, no one has exclusive domain to that. Podcasts, books, what, any, any form of, where you communicate with other humans. Like, those are just the mediums. Don't confuse that as if you own it. He was very, again, this is David Geffen. Like, this is, there's an ego on steroids here. And we see this in the way he interacts with talent. Like, it's, he's a manipulator. And I, the note I left myself on this paragraph is, I don't want to be on this side of transaction. I don't want to ever put myself in a position where one person can decide whether my career

• 1:03:00David Senra?

  is successful or not. Like, in some cases, you have, in, in industries, like, if you're an actor or an actress, whatever the case is. So, um, he discovers this actress named Joan Crawford. He says, uh, "His adroitness in manipulating Joan Crawford and, and in her manifold wishes by complaint, uh, he used complaints, flattery, threats, and entreaties, was famous around the studio. He would solemnly counsel her and cajole her. And if need be, he would cry a little bit. Then he'd drop a few hints of his disfavor and what consequences they might be." So this is like a very manipulative person. This is what I mean. I don't want to be on the side of transaction. I don't want to be associated with people like this. Uh, "It took a long time for Miss Crawford first to get wise to him, and then to sum up the courage to tell them where he could go." And so as more of these stories get

• 1:03:45David Senra?

  out, as people clearly start to see, because you can, you can hide being a scumbag for a couple of months, maybe a few years. He had a 27-year, 30-year career in MGM. You can't hide it for that long. And so we start seeing this, this, this, this is the beginning of the end. "The dizzying decline was indicated by a gro, by a drop in the gross income from $18 million down to $4 million. So in two years, in two years, the company's gross income was reduced by more than 75 percent. Alarm bells began ringing all over the place. Its studio, this is now the business that he's built, its studio was, was obese, was in an obese and inefficient state. The employee list was loaded with high-priced executives, similar to Mayer, but there were few creative producers who could be depended on for quality

• 1:04:27David Senra?

  films." So, I love this. There's a, there's a story in the book, insanely simple, where there's an ad being shot for, uh, Apple, and this guy introduces himself to Steve. He's like, "Hey, Steve." And Steve's like, hey, what are you doing? Steve goes, and the guy goes, oh, I'm an account executive. And Steve goes, without missing a beat, oh, so you're overhead. And Steve had a lot of admiration for the people that did the work. He did not have a lot of admiration for overhead. And so we see that Mayer has built a top-heavy company, right? Because he thinks he owns the medium. He thinks all this love that he's getting from other people is actually real, not realizing they're just doing that because he can grant them favors and parts and everything else.

• 1:05:08David Senra?

  And so he builds this, this top-heavy organization that has a bunch of executives and administrators, but not talent. You're selling films. You need people to make good films. There's a, there's going to be a disagreement between him and the person that's actually making good films. This is, Thalberg was at the beginning of his career, the guy I told you about earlier. He thought about his son. He went up dying early from a heart attack when he's in like his 30, he had a heart condition. Several years later, Mayer finds another creative, another creative partner who's good at making films, this guy named Sherry. And just like he had a falling out with Thalberg, just like Mayer has a falling out with everybody. He has a falling out with Sherry, and he, so he calls up the owners of the company. And he's like, okay, I'm amazing. I'm the reason MGM's success. I'm going to tell them they have to decide between him or me.

• 1:05:53David Senra?

  Because he thought, he didn't have a, he wasn't self-aware enough to know that he was in a vulnerable position. He's not one built, making the films. And so he's going to say, him or me? And they're like, okay, him. Get out of here. The decision was soon forced by Mayer himself. After another, another fight with Sherry, he got Schneck on the phone. I'm probably not going to pronounce this guy's name, but the guy that's going to make the decision. He got him on the phone. It's either me or Sherry, he stated. Schenk was ready for that question. Knowing what was happening at the studio, he had had the, he had commissioned a full digest of the studio's books, which was an analysis of the record of the company, of the company's product before and after Sherry came.

• 1:06:38David Senra?

  On the basis of the analysis, and Mayer... Recruited Sherry. On the basis of that analysis, he wrote Mayer a personal letter which advised him, all things considered, that Sherry was his choice. The implication was unavoidable. Mayer was being requested to resign. After 27 years as a head of the studio, he was being told to go. This is his end. He was brought down by ego and demanding credit. If you're the leader of an organization, you shouldn't care who gets credit. All you want is the success of the organization that you're leading or the ones you've built. And in Mayer's case, he'd rather see it fail. If it comes down to him not getting credit, he'd rather see it fail.

• 1:07:22David Senra?

  The smarter move is, I don't care who gets the credit. I just want this company, this project, whatever, to succeed. He's brought down by his own ego. That is a cautionary tale. It doesn't matter how successful you become. If you never address, and everybody has defects in their personality, but if you never address them, it could lead to your own downfall. And this is a summary of one of the main problems with Mayer. Less kindly, persons put it bluntly. Mayer had a psychopathic need of power. And this is why, at the very beginning, we see that the author says that his life ends in tragedy. The note of myself is, what a terrible way to die. And remember the advice that he got from his mentor when he was a kid, when he was a young man.

• 1:08:07David Senra?

  He's in the hospital, he's dying from blood, he's got cancer in his blood. And this is after he's had the falling out with one of his daughters over who she's supporting for politics and her husband having a, something inconsequential is her husband having a fundraiser for a politician that Mayer didn't like and them not acquiescing to his desire to control their behavior. And so this is what, and his daughter's name is Edith, one of his daughters, the one that he's going to be estranged from. And this is what a terrible way to die. In the last days, his separation from his daughter Edith apparently haunted him. He often muttered in his hospital room. Has she come yet? Is she outside?

• 1:08:52David Senra?

  He had come to the end of his rope and he hadn't the physical or moral strength to tie the knot and hang on.

• 1:09:01David Senra?

  And that is where I'll leave it. If you want the full story, if you buy the book using the link that's in the show notes, you'll be supporting the podcast at the same time. If you also want to help the podcast and a friend simultaneously, I'll leave a convenient link if you want to buy a friend a gift subscription to Founders. That link is in the show notes as well. That is 173 books down, 1,000 to go, and I'll talk to you again soon.