Driven to Success

by Jennifer Reese

Photograph by Robert Holmgren

IN EARLY 1997, Leo Hindery Jr. was living the entrepreneurial dream: At the age of 49, he sat at the helm of Inter- Media Partners, the San Francisco-based cable operator he'd created a decade earlier and built into the twelfth largest company in the industry. With close to one million subscribers, InterMedia Partners ran like a well-oiled machine, and Hindery had earned his stripes as an extraordinarily successful entrepreneur. But early last year when John Malone, the talented but temperamental CEO of severely troubled cable giant Tele-Communications Inc. (TCI), asked Hindery to come help run the company, Hindery dropped everything.
      "I was ceo of my own company and very successful. If you'd asked me to be president of Time Warner or AT&T or IBM, I'd have said no," says Hindery. "I would never have moved to TCI except for an enormous affection for John Malone. He needed me. The industry needed me. It was a unique situation."
      Unlike many entrepreneurs, Hindery doesn't have any problems working in a big-company setting: Hindery may know how to launch a brand-new company, he may be one of the most creative, hard-driving dealmaking talents in business, but he claims he doesn't have the entrepreneurial bug. "I took one great flier and said I think I'll start my own company, and I was very successful at it. I started one company and I'll never start another," says Hindery. "I love someone putting a paycheck in my checking account every couple of weeks."
      Ten months into his tenure as president of TCI, Hindery spoke to Stanford Business from his imposing wood-paneled cor- ner office in San Francisco's financial district. The walls are decorated with photographs of Pontiac stock cars, which are Hindery's passion. Racing stock cars requires such intense concentration, Hindery says, that it's one of the few activities that can take his mind off business. While he now typically works out of TCI's Englewood, Colo., headquarters, he has kept his San Francisco office. He and his family still live in Hillsborough, Calif., so that his teenage daughter can finish high school there. Straightforward, unpretentious, and funny, he talked about TCI, about entrepreneurs, and about his own famously intense work habits and the meandering path that has taken him from the Seattle shipyards to the GSB and prestigious jobs in the mining industry, investment banking, and publishing, and now to the top of the world's largest cable company.
      "I was raised in Nowhereland," says Hindery, who describes his childhood in the Pacific Northwest as "difficult." He started picking crops at age 9--"If it grew, I picked it," he says--left home at 13, and joined the Merchant Marine at 16. He went to Seattle University, where he majored in economics and political science, and worked nights in the shipyards. He says he grew accustomed to a grueling schedule early on, and to this day, Hindery sleeps no more than five hours a night.
      "The habits we establish early in life carry through to adulthood," he said in a recent speech at the GSB. "My colleagues at TCI sometimes think I'm a driven man working around the clock, but I think the real reason I don't sleep now is I couldn't afford to sleep then. Because I couldn't afford it, I realized that I didn't really need it."

Hindery entered the GSB in 1969: "If you get in, you go. Stanford is Stanford," he says of the decision. But he had very little idea of what he wanted to do with his life. After two years at the GSB, he interviewed for a job at Ralston Purina simply, he says, because he knew what the company made. Management consulting also appealed to him, and he considered taking a job with McKinsey and Company. "I thought I was very clever, so I thought it might be fun," he says. But when Dean Arjay Miller suggested Hindery interview with Ed Littlefield, MBA '38, chairman of Utah International, then the world's largest mining company, Hindery was reluctant: Mining sounded boring. "This was a company with mines in Canada and Latin America, Farmington, New Mexico, and Cedar City, Utah, and I'm this hotshot from Stanford and you want me to go work for a mining company? In your dreams, Jose," says Hindery. "Then I walked into Ed Littlefield's office, and I swear to God I was there 10 minutes and I knew that more than anything I'd ever wanted in my life, I wanted to work for him."
      Hindery likes to say that he owes everything that's followed in his career to Ed Littlefield, then one of the best known executives in the country. Littlefield was chairman of The Business Council and sat on the boards of General Electric, Chrysler, and SRI International. "He was a captain of industry in the most positive sense of that phrase," says Hindery. "This is a man who was unbelievably capable, gracious, and generous, and had I gone to work for a much less corporate individual and developed the affection for that person that I did for Ed, I might have become a more noncorporate sort. But Ed was the chief executive of a very large company and became for me a hero, a mentor, a father figure, a teacher."
      Hindery worked for Littlefield for 10 years. He learned valuable lessons, he says, about managing and mentoring--and finance, acquisitions, and development. He calls it the most magical period of his life. After General Electric acquired Utah International in the late 1970s, Hindery spent four years on Wall Street as managing director and CFO of Becker Paribas, an investment banking firm. In 1985 he landed at the Chronicle Publishing Company in San Francisco. This sparked a major change in Hindery's career focus: Chronicle was involved in the newspaper and broadcast television industries, but it also owned major cable TV properties.
      By this time, John Malone at TCI was known as the lead man in the burgeoning cable industry. A dealmaker extraordinaire, he was also brilliant, complicated, and difficult. But he and Hindery immediately clicked. "I'd make every damn excuse in the book to go to Denver," Hindery says. "I'd call John and say I was going to be there, could he see me. I had a million ideas: I was going to buy TCI, he was going to buy Chronicle, together we were going to buy IBM. From the day we met we enjoyed each other."
      And Malone was crucial to Hindery's next big career move. In 1988 Hindery started thinking about starting his own cable company. The stakes were high: He had $20,000 in the bank, a young daughter, and a borrowed office. "I started dialing for dollars, calling everyone I knew. I told outright lies. I said John Malone will put in money if you do," says Hindery. As Gregg Vignos, a San Francisco lawyer who worked with Hindery on the start-up, recalls: "Leo wanted to raise $100 million or $150 million, which is a staggering amount. I asked, what if you raise only $30 million or $40 million? He said it wasn't worth his time. And then he went and raised $200 million. He reaches for what most people would think impossible and achieves it by an absolute unwillingness to take no for an answer."
      Hindery's stamina is legendary. "When he was in San Francisco, he took great pleasure in calling his bankers in New York and leaving messages before they arrived," says Brian Deevy, CEO of the investment banking firm Daniels and Associates. Says Vignos: "We'd be in the middle of a deal and I'd think this was the one that was going to get away, but every time he pulled it off. He never wavered one iota." Hindery would argue that his stint as an entrepreneur was actually very short, that once the financing began pouring in he was no longer working for himself. "Even though I had the title CEO I was still working for the Bank of New York, for Sumitomo, for John Malone. I saw myself as essentially on their payroll," says Hindery. But, in fact, this was only because he was such an effective entrepreneur: His company didn't stay small and shaky for very long.

Photograph by Robert Holmgren

As a onetime poor kid who worked his way through college, he took his job very, very seriously. "I think of entrepreneurs as men and women who, with pretty great abandon, will fall off the mountain as easily as they climb it. I have a different style of personality," says Hindery. "For me, the biggest sin is to lose someone else's money, and I think that's because I know how unbelievably hard money can be to make."
      By the mid-1990s InterMedia was thriving. But looking at the rest of the cable scene, Hindery saw a major problem: TCI, which piped cable into more than 25 percent of the nation's households, was a total mess. The company was alienating customers everywhere. There were rampant complaints about service people who never appeared or who were rude when they did. Furious consumers complained to politicians, local regulatory authorities were disaffected, and employees were demoralized. All of this was reflected in the languishing price of TCI stock.
      "The way I saw it, a life-threatening illness at TCI could be downright contagious to the rest of us," says Hindery. "The largest company in any industry has a very strong fiduciary responsibility because it influences perceptions. It can influence the equity values of smaller companies and their reception in the debt markets. And TCI's not just the biggest: It is humongous. There's much more truth to that phrase 'what's good for GM is good for the country' than some social historians would like to admit."
      And so, in March 1997 after John Malone offered him the job, Hindery stepped in as president of TCI. Malone retained the title of CEO, and the two have forged a solid working partnership. "With the possible exception of Ed Littlefield, John is the finest man I'll ever know in my life, ethically and intellectually," says Hindery. "But John has a problem and he's very frank about it: He doesn't brook idiots well. He was trained as an engineer, and it's been hard for him to work in political settings."
      Not so, Leo Hindery. "He's a wonderful guy and people love to work with him," says Bill Fitzgerald, TCI's executive vice president of corporate development. By all accounts Hindery is a people person and a good motivator. He has to be. Hindery flew some 300,000 miles last year to talk to the various disgruntled TCI constituencies. "It was a whole lot easier to just build the wires and screw the niceties," says Hindery of the way TCI had been doing business prior to his arrival. "In hindsight, that's a pitiful way to run any life, any career, any business." He thinks TCI got into its current mess because the company didn't know what business it was in. He uses an analogy from the oil industry: Pipelines deliver oil, but gas stations market it to actual human beings. And TCI was a gas station company acting like a pipeline company. "If you think of yourself as distant from the customer, you end up giving that customer unresponsive products, you don't know how to price those products, you don't know how to compete. You certainly don't know how to give them service," says Hindery. "Running a pipeline business is a pretty easy business--you just turn on a pump. Running gas stations is really a hard business."
      In characteristic gung-ho fashion, Hindery has refused to tackle one of TCI's problems at the expense of another. He has, quite literally, refused to prioritize. Instead, he has thrown himself with full force at all of TCI's problems, from the angry customers to the way TCI's assets are distributed. Thanks to his unstoppable energy, he's managed to pull it off. "It would be inappropriate and rude for me to say this constituency is more important than that one, so I'll attend to the former rather than the latter," says Hindery. "I think it's especially inappropriate for an executive to try to grade someone's pique. If customers are upset, fix it. If regulatory constituencies are upset, fix it. So we've been scrambling around pretty hard."

The work has started to pay off. "It's simple stuff," says Hindery. "It's making sure the phones are answered and that the people who answer them are polite. And that if we say we're going to do something, we do it. I'm not telling you it's fixed, but anyone will tell you it's better today than it was yesterday, and it was better yesterday than the day before."
      TCI's Fitzgerald agrees. He is personally struck by the internal changes for the better at the company: Hindery has lifted barriers between different business units within TCI so that employees increasingly feel they are part of a unified effort to create better products and services. Morale has improved dramatically. And in his first year, Hindery has helped TCI consolidate its cable properties, which will simplify administration and marketing. "He's as good as they get in creating momentum and putting wind behind the sails of deals," says Fitzgerald. "I can't think of anyone who would have been able to help marshal as many of the different transactions we've put into place as Leo has. We've been able to get a lot more done in one year than what most companies consider to be normal activities for a two- to three-year period."
      Wall Street has noticed: TCI's stock has more than doubled, from $10 to $25 a share, in Hindery's first 11 months on the job. That's a fairly stunning endorsement. But no one has done more to earn it. "I work very hard," says Hindery. "I love what I do. And I always have."