Stanford GSB News

Be Sure You Really Want Honest Answers, Advises Jeffrey Bewkes

STANFORD GRADUATE SCHOOL OF BUSINESS—Jeffrey Bewkes, MBA '77, president and chief operating officer of Time Warner Inc., admits his early career choices might seem "pretty boring."

He could have gone into television ad sales and made twice what he was offered as one of 250 MBAs hired to do commercial lending at Citibank. But he wanted grounding in many different disciplines, and so he joined the bank's international shipping division. He played up the international angle to classmates incredulous that Bewkes would make such a seemingly unglamorous move.

But Bewkes took the longer view.

"All these [job] choices can be unconventional or conventional depending on how you do them," he said. "All can be adventurous," he told a Stanford Graduate School of Business audience during a student-sponsored View from the Top speech May 10.

His first adventure taught him a precious business lesson. He was working in international accounting, lending money to ships, when Greek shipping heiress Christina Onassis called frantically and asked Bewkes to move $24 million in gold from Athens to New York. It was a height of Cold War tension and she was sure the Soviets were poised to invade.

As Bewkes recalls, he panicked. It was lunchtime and his bosses were gone. He went in search of advice and happened upon a back office where the "overlooked, overworked, and underpaid" clerical staff worked. There he got advice from a savior.
"Jeff, you don't ship gold," she said. "You sell it in Athens and buy it in New York."

Twenty seconds later, it was done. She had saved him from his first client disaster and given him his first leadership lesson: Business leaders—CEOs especially—need help from everyone around them. A leader's success depends on getting honest answers, Bewkes said.

And that depends on whether you want to hear an honest answer. "Everyone always knows what is true and sincere. They can smell it," Bewkes said. If a CEO is going to shoot the messenger, employees sense it and change their answers accordingly, he said.

Bewkes made another seemingly strange career move in 1979 when he left Citibank for a $20,000-a-year job at HBO, then a fledgling cable company with 200 employees.

"HB what?" Bewkes' boss said when he heard.

But Bewkes was drawn to a company determined to revolutionize television.

At the time, HBO was trying to figure out a way to get viewers to pay for programming while the networks were giving away quality shows for free. The concept defied logic and invited failure, and in that sense it liberated HBO employees to get creative about staving off collapse. Its leaders created a culture of debate in which dissention was actively courted to come up with the best path through an uncharted industry.

HBO grew steadily by playing movies and encouraging cable companies to deliver big audiences, offering a 25 percent discount when a cable company's HBO customer base reached a given size. Back then it was gospel that HBO should never make its own TV series. Networks had 100 times more money to spend on original content, and six of seven new shows failed. HBO could afford to make three new shows.

This way of thinking carried HBO for more than a decade, but when Bewkes took over as CEO in 1995, he and his colleagues "could see that movies were going nowhere," Bewkes said. HBO would have to go into programming. The Sopranos, now in its sixth season, was HBO's first big gamble. Then came Sex and the City, another mega-hit.

Bewkes' history of long-term thinking came in handy when AOL purchased Time Warner, HBO's parent company, in 2000. At the time, AOL was a $160 billion company with a massive subscriber base. What no one foresaw—not the analysts nor the executives at Time Warner—was the impending internet bust. Households started moving to broadband and the value of AOL plummeted. It was selling for $15 to $25 per month what other companies were giving away.

Last year, AOL began offering its content for free, and it has been a "huge success," with ad revenue up by more than 40 percent, Bewkes said. AOL went through painful cuts and reorganizations, but now its employees have something they "can focus on and believe in and really take a long-run view of," Bewkes said.

His long-run view of the television world is one in which viewers choose what they watch and when they watch it, either on demand or on the internet. He doesn't see that as a threat to companies like Time Warner.

"Brands matter," he said, citing HBO, CBS, and TNT as examples.

Most content on television and the internet is supported by advertising, and he believes that will continue in an on-demand setup. Brands might tweak their delivery, but customers will still use them to help sort through the content they want to watch, he said.

—by Sarah Ruby

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