How Media Companies Are Staying Relevant + What Makes a Great CEO – With Alan Murray

In place of Office Hours this week, we’re sharing our interview with the CEO of Fortune Media, Alan Murray. Alan discusses stakeholder capitalism, what makes a successful CEO, and the evolving digital media landscape. Follow Alan on Twitter, @alansmurray. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:01Scott Galloway?

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• 1:27Scott Galloway?

  Welcome to another episode of the Prop G Pod. We are officially on holiday here at Prop G. So in place of office hours, we are bringing you our conversation with Alan Murray, the CEO of Fortune Media and author of several books, including his latest, Tomorrow's Capitalist: My Search for the Soul of Business. Well, you're not going to find it, Alan. Anyways, he struck us as a thoughtful person, and we trust you'll enjoy hearing his take on stakeholder capitalism, the qualities of successful CEOs, and the state of digital media. We'll be back with our regular scheduled programming in 2023, so please send in your questions about business, big tech investing, career pivots, or whatever else is on your mind. You can also do so by emailing a voice recording to [email protected]. Again, that's [email protected].

• 2:12Scott Galloway?

  Okay, here we go. Here's our conversation with Alan Murray. Alan, where does this podcast find you? I'm in Madison, Connecticut. So you've written a lot about stakeholder capitalism. Give us a state of play here.

• 2:26Speaker 02

  Well, look, you know this as well as I do, Scott. I just think as somebody who's covered the relationship between business and society for four decades now, that something dramatically has changed in the way business leaders talk about their jobs and their responsibilities to society, their responsibilities to their employees, to the climate.

• 2:49Speaker 02

  And in my view, I've spent some time trying to figure out why it was happening, how permanent it was. In my view, it's been growing for over a decade, particularly in the US. It kind of really took off after the pandemic hit. I mean, if you, just as one, one metric, if you look at the number of Fortune 500 companies that have made net zero commitments to the environment, it's probably increased 300% since the pandemic began. So it became clear to me that something very different was going on. And I, I, I wrote the book to try and understand what it was that was driving this and whether it was going to last.

• 3:30Scott Galloway?

  So just let me, before the thesis can respond, I think I worry that we see movement in the private sector towards climate change or, you know, net zero. They were throwing the term stakeholder capitalism. But if we're going to wait on the better angels of corporations to show up, I think that's a dangerous strategy and government and regulation are required to make any, in my view, kind of the requisite investments or long-term investments in things like climate change. You know, won't corporations be corporations here? And we, we, we need regulation to, to ensure or enforce these, this change?

• 4:12Speaker 02

  Scott, I'd flip that on you a little bit. As somebody who spent the first half of my career covering government, if we're going to wait for government to deal with this problem, we are in big trouble. I mean, take a look at the US Congress. Now, I give the Biden administration and the Democratic Congress some credit for making some progress, but they did it on a completely partisan basis. If Republicans take sufficient control of Congress, everything they did would probably be immediately reversed. I despair of the ability, in the US in particular, of government to take credible action. And sure, would it be preferable if you did something like a carbon tax to create a market

• 4:57Speaker 02

  to make this happen? Yeah, you bet. But it's not happening, Scott. And in that instance, I think it's great that so many big companies have decided that it's important to them, to their employees, to their investors, and to their customers that they take action. So is it a silver bullet? No. Does it solve all our problems? No. Would it be better if you had public-private partnership? Yes, indeed. But in absence of that, I think what companies are doing should be applauded.

• 5:28Scott Galloway?

  At the end of the day, the corporations, I think, will mostly respond to what consumers want. So if you've seen a shift in corporations, doesn't that mean there's been a subsequent shift in consumer behavior or preferences?

• 5:38Speaker 02

  There is some shift in consumers, but the real driver here is not consumers, but employees. And it reflects a change in the value drivers at corporations. There was a study done a couple of years ago, looking at the Fortune 500 companies to say, where's the value coming from? And if you did a study of the balance sheets of those companies 50 years ago in the 1970s... More than 80% of the value on the books of Fortune 500 companies came from physical stuff. It was plant, equipment, oil in the ground, inventories on the shelves, stuff that you needed capital to invest in to build. And then if you had that, you could

• 6:18Speaker 02

  create value. If you do the same exercise today with Fortune 500 companies, more than 85% of the value is intangibles. It's intellectual property, connection to consumers, all things that are tied to human beings. And so we're in an economy where human beings drive value way more than physical stuff and financial capital. And some of that is definitely customers, but a lot of it is employees. And when I ask CEOs, why are you doing this? When they tell me about some social initiative or environmental initiative, the first answer I always get is because my employees want me to.

• 6:58Scott Galloway?

  That's actually, that's Alan, that's a really interesting insight. I hadn't thought of that. And that's a great stat. It used to be that GE had patents or Exxon sat on top of oil fields. And now it's, you know, the majority of the most valuable companies. It really is the assets go home in the elevator. Do you, and maybe this is the boomer in me, I find some of these walkouts at these tech companies, they're upset about something and they walk out. I always thought that it would probably subside once, that a recession would take care of that, that this was evidence of a strong economy where these employees had the upper hand. You're saying it's a structural shift, that employees are, are driving a lot of change and that that's not going away?

• 7:40Speaker 02

  I think so. Look, I'm sympathetic to your argument. I mean, you may remember that there was a bubble of corporate interest in the environment prior to the Great Recession. Companies like GE, Duke Power had created something called US CAP that was actually advocating for a carbon cap, a national carbon cap. And so there was a growing number of companies, this is like 2006, 2007, and then the Great Recession hit and all that disappeared.

• 8:11Speaker 02

  And so when, when the pandemic hit in March of 2020, my first reaction was, oh, I've seen this movie before. Everybody's gonna see, we're gonna have a recession. Everybody's gonna see their profit go to zero. And all this talk about ESG is gonna be put on the back burner. So we can't afford this social initiative right now. Thank you very much. We gotta focus on the bottom line. And what was so interesting about the pandemic was the exact opposite happened. I think in part because of the nature of the pandemic. I mean, it really was a stakeholder crisis. Your employees were in danger, your customers were in danger. And so it wasn't a time to turn away. Now, it'll be interesting to see if this next recession, if we're gonna

• 8:55Speaker 02

  have one, has a different effect. But I can tell you what our current surveys of Fortune 500 CEOs tell us, which is, two thirds of them think we're headed for recession. But when you ask them, what's the biggest challenge you face? You know what they say? They say talent, people. So it certainly hasn't changed yet. And, and I think going back to those fundamental numbers that you and I talked about, I think that's a, that's a reflection of the changing drivers of economic value that isn't going to be reversed.

• 9:30Scott Galloway?

  How do you think the attributes or the pillars of what makes a successful CEO have, have evolved?

• 9:36Speaker 02

  Yeah, it's a, it's a great question. And I, you know, the nice thing about my job is I have a lot of opportunities to have these conversations with CEOs. And, you know, you can't always take them at their word, but at some point, when you hear it over and over again, it begins to make sense. I would say the number one thing I hear today that I didn't hear 10 years ago, 20 years ago, 30 years ago, is the importance of empathy, importance of, you know, in a world where you take, you take Bob Chapek of Disney as an example, in a world where your success as a CEO can be affected by so many different people, by

• 10:15Speaker 02

  the creatives who create your movies, by the legislature in Florida, by your shareholders, clearly, or by activist stockholders. But, but so many different forces can affect your future. You've got to listen. You know, and you got to pay attention and you got to understand what's driving them and then be able to forge a strategy that's reflective of that. So I, I think that's certainly one of the big changes. Another big change is driven by social media. It's just that these, these folks used to be able to hide under their desks when faced with a controversial topic. These days, they live in a fishbowl. Everything becomes very public very quickly

• 10:57Speaker 02

  and gets fought out on social media. So I think that's changed the job pretty dramatically as well.

• 11:04Scott Galloway?

  So give us some role models of who you would call the kind of the modern CEO and if you're willing, CEOs you think are going to have trouble operating in this, this new world.

• 11:13Speaker 02

  Yeah, well, I, I'll tell you one, one CEO that I'm very impressed with is Doug McMillan of Walmart. I mean, Walmart is not a woke corporation. This isn't a West Coast tech company. This is, you know, an Arkansas company led by a guy who spent his whole life in the South and operate with customers in the reddest of red states. And yet he's made it, he's been part of an amazing transformation of that company on the environment. They're reaching out to their suppliers and working to get their suppliers to take a gigaton of emissions out of the environment. That's powerful. You know, you talk, you were talking about, geez, shouldn't we leave this to the government? Well, let me tell you, if

• 11:57Speaker 02

  you're a supplier to Walmart, they are the government. If they tell you, you need to pay attention to the environment, you pay attention to the environment. It's the biggest retailer in the world. And also the, the change in the way that the company has approached its employees. I mean, they're obviously still not the best paid people in the world, but I'm pretty sure Sam Walton's view was that labor was like every other input and you push the price down as far as you possibly could. That's not the approach they take today. They really have, have changed the direction and the way they set wages in order to try and ensure that their associates have a better life. So I'd cite him as one example.

• 12:42Speaker 02

  I'll give you another example, and we can argue over whether she was being proactive or reactive. But when Mary Barra, the CEO of GM, said in January of last year, we will only make electric vehicles.

• 12:58Speaker 02

  By 2035, that was a profound statement. I mean, you have long lead times on investments at GM. I can tell you everything they're doing at GM these days is influenced by that statement. It was not justified by what was happening in the market at the time or what's happening in the market even now. There was not enough demand for electric vehicles to justify that transition. And maybe it'll turn out to be a bad bet on her part, but that's a pretty significant big bet on where the future of society is headed or needs to head. So there are a couple of examples. Those are the good examples. Bad examples, I think Bob Chapek at Disney stands, you know, loud and strong. He didn't

• 13:43Speaker 02

  listen to the creatives who make the magic at Disney. He didn't understand them. When he got into the Florida mess, he thought he could get away by hiding under his desk and not saying anything. And those people who create the value at Disney said, you can't do that. And then he did sort of the worst possible thing, which was not say anything for two weeks and then come out against the bill, which got the Florida legislature mad. So I think that's a sort of a perfect example of someone who, and I'm not saying this is easy. I'm not saying I could have done it, but somebody who clearly didn't understand the new sources of power in his job and mishandled it and now is out.

• 14:28Scott Galloway?

  We'll be right back.

• 14:32Scott Galloway?

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• 16:57Scott Galloway?

  So I can't resist. Give us your valuation of the CEOs of Tesla, SpaceX and Twitter.

• 17:02Speaker 02

  So Elon Musk is of course the great example because the S and P, you know, kind of amazed me when they came out and said he failed our ESG test. And you can easily understand how he failed their test. If you're doing a check the boxes exercise, Elon Musk is, you know, he paints outside the lines. He's not going to check the governance boxes et cetera. But I don't think there is any CEO or any company around that has done more to drive the climate transition than Elon Musk has. In fact, Mary Barra probably wouldn't have said what she said in January of last year if Elon Musk hadn't already led the way and gotten, you know, seen a soaring stock price that made her say, well, I'm

• 17:47Speaker 02

  not going to let, I'm not going to be beat out by him. So I think you, as annoying as he may be, you have to give him a lot of credit. In terms of democracy and civil conversation, Twitter, Facebook have really been terribly bad influences on our society. And again, I don't think it's easy to fix, but I don't see Musk doing anything there that's going to help us in that regard.

• 18:13Scott Galloway?

  Yeah, I look, I'm a big critic of Musk, but I think you're right. I think we just wouldn't be where we are with, with respect to EVs without Musk's leadership and inspiration. I think you're 100% right. So let's, let's pivot and talk about the state of digital media. I'll ask you just a very blunt question. How does, how does Fortune stay relevant?

• 18:36Speaker 02

  Yeah. Look, it's when I came to Fortune eight years ago, it was principally a print magazine, because that was the way Time Warner and Time Inc. were running. For a while, I was chief content officer for all 24 Time magazines. And most of them were still getting 70% of their revenue from the print magazine. That was

• 18:56Scott Galloway?

  Remember that? Remember, remember. So by the way, I just, Chip Bukas is a role model and a mentor of mine. And I just remember the days when that was a very profitable unit, a Time Warner, the magazines.

• 19:08Speaker 02

  It was, but you know, they ring fenced it. So, so Fortune, uh, when I got there, Fortune had never had a website because Jeff Bukas's company had basically said, we're going to give all the, the digital assets to CNN money. And Fortune wasn't creating video because Jeff Bukas said, we're going to let the, you know, Warner Brothers handle video and your job time is to make print magazines. Well, that, that was, that was a death sentence. I mean, print magazines have been declining, you know, on a revenue basis, 10% a year for 20 years. Uh, so how does Fortune stay relevant? It's, uh, we want to keep, we want to keep putting out

• 19:49Speaker 02

  a print magazine for a long time, but that's now 20% of our business overall. We have a very, uh, successful and profitable executive, uh, convening business that is a third of our revenue and probably more than that of our profit. And we're creating some new platforms. We have a, we have something called Fortune Connect, which I'm super excited about. We created it during the pandemic. It's a platform for training the next generation of business leaders in the principles of purpose-driven leadership, in the principles of stakeholder capitalism and the principles of inclusive leadership. And, and finally, I'll just say,

• 20:31Speaker 02

  part of the way we stay relevant and successful, we're having a very good 2022, is by standing for something. We are in this to make business better. We have a clear view of what, a clear eyed view of what that means. We do believe companies driven by leaders who have a purpose beyond profits make better companies. We do think we live in a complicated world where we're having ambitions that go beyond just making money matter for the company and for the world. And we do believe that companies that take an inclusive approach to their employees and to their leadership are going to have a, a better stake in the future. So, so part

• 21:16Speaker 02

  of the way we stay relevant is by having a clear purpose and point of view and working with partners who share that.

• 21:23Scott Galloway?

  From a revenue standpoint, what is the fastest growing piece of the business? What do you look to as the growth part of the business?

• 21:29Speaker 02

  In the past year, the fastest growing piece of the business has been digital advertising, and that's where those partnerships come into play. Because it's not, you know, the programmatic advertising, although we do take programmatic advertising, but it's deep partnerships with a handful of companies like Salesforce, Workday, Accenture, BCG, there are, you know, 15 or 20 of them that I could tell you about. I love them all, but it's deep partnerships with them, with companies that share our values.

• 22:05Scott Galloway?

  I'd love to just hear your view, big picture. Any thoughts you have around streaming, social media, like any bets you would make or not make?

• 22:17Speaker 02

  I guess the answer for anyone in media is two things. One is know what you stand for and find the people who are willing to support you because they agree with what you stand for. That gets back to what I was saying we're doing with our partners. And two is, man, you better diversify revenue sources because the traditional ones are just getting weaker every day.

• 22:40Scott Galloway?

  And final question, a piece of media you would recommend? Anything that you've binged recently?

• 22:45Speaker 02

  I read lots of books and I read lots of email newsletters. You know, I like what Jessica Lessin is doing with the information, but again, that's not, that doesn't suit democracy because it costs a lot of money, but it's good information.

• 23:03Scott Galloway?

  Any others, any, do you, do you Puck or do you do Semaphore? Your go-tos, other magazines you read or other?

• 23:11Speaker 02

  I'm watching Semaphore. It's fair, you know, in terms of traditional magazines, I read The Economist, I read The New Yorker, I read The Wall Street Journal, I read The New York Times. And then like everybody else, I read a ton of stuff online. So it's disaggregated and you find different bits and pieces in, in different places, just like you.

• 23:35Speaker 02

  I have, I have learned over my career to judge what's good information and what's bad information and whether it's coming from a place that has standards and whether it's coming from a place that corrects its errors and whether it's coming from a place that tries to find both sides of the story. And you can discern that pretty quickly with a practiced eye, but sadly, most people don't have practiced eyes and aren't being very discerning in what they consume.

• 24:01Scott Galloway?

  Alan Murray is the CEO of Fortune Media, where he oversees the business and editorial operations of the independent media company and is known for expanding its digital and conference franchises. Alan also writes a daily newsletter for Fortune called CEO Daily. I actually, I refer to your newsletter on a regular basis, Alan. He's authored several books, including his latest, Tomorrow's Capitalist: My Search for the Soul of Business. He joins us from his home in Madison, Connecticut. Alan, we appreciate your good work.

• 24:30Speaker 02

  Thank you, Scott. Great to be with you. Love what you do. So glad to join you today.

• 24:40Scott Galloway?

  That's all for this episode. Our producers are Caroline Chagrin and Drew Burrows. Sammy Resnick is our associate producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prophesy Pod from the Vox Media Podcast Network. We will catch you next week.

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