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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  March 25, 2018 10:00am-10:30am EDT

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♪ david: what propelled you to want to join this company? brian: i always wanted to work for my dad. david: did he say you start at the bottom and work your way up, or did he say you could start at number two? brian: that is what i wanted to happen. david: did everyone wonders you are ready to be president yet? brian: everybody, including myself. david: have you ever had problems with your cable? brian: sure. david: is it intimidating for the cable repairman to come to your house? >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist.
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i began to take on the life of being an interviewer, even though i have a day job running a private equity firm. how do you define leadership? what is it that makes somebody tick? ♪ david: when you graduated from college in 1981 -- you went to the university of pennsylvania. you then joined the company your father had started, comcast. at that time, it was a relatively small company. did you ever, in your wildest imagination, think it would become the leading company in the telecommunications area? brian: we had about $20 million in revenues that year, and my father, when asked that question many years later would say, "of course." the reality is no way either of us dreamed we would be lucky to be comcast nbc universal, sitting here with the kind of products and company we have. i pinch myself every day. david: did you ever say to your father, i don't want to join the company, i might do something
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else? what compelled you to want to join this company? brian: i thought about that. i just always wanted to work for my dad. he used to be in the men's belt and suspender business, way back before he started comcast, men's cologne. we used to play with the cologne growing up as kids, and he had a passion about it. he just made it seem fun for me. he never pushed me, even a little bit, to want to work for the company. david: what was your father's background? brian: he got out of the navy, he was living in philadelphia. he met my mom, and got married. they were married 72 years until he passed away a couple years ago. he was very interested in business. also went to the wharton school. and he was an entrepreneur, he made golf club putters. he went into muzak and did some marketing, worked for senator benton in advertising, so he liked the marketing and advertising products side. one day, he got into men's cologne, and he just loved the smell and the marketing aspect. and then the same with a product
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like a belt or suspender. technology came along, and he got himself convinced that santa bell slacks, that is, polyester pants without belts, would be the technology that could put him out of business, so he sold his business. he was walking around philadelphia, apparently, 1963. and a guy came up to him and said ralph, i have a new venture for you. you ought to buy a community antenna television system in tupelo, mississippi. as he told the story, he said where is tupelo, and what is community antenna television? the answer was the birthplace of elvis presley. and in tupelo, they could not get cbs from memphis, it was a valley town, so they put up a big antenna on top of the mountain and ran a community antenna, catv, and those were the early roots of cable television. david: television was for free in those days. now, you have to pay for it in tupelo.
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was that hard to convince people to pay for television? brian: what he liked about the business was the subscription nature. so in belts, cologne, any other businesses he had been in, you have a product, you sell it, if you get sick next month, you're out of business. in our business, and what he liked about recurring revenue, you have to borrow a lot of money, build it, and hope they will come, then you have a recurring business that will have a base to work from. david: where did the name "comcast" come from? brian: great question. it does not get asked very often. it's amazing, in 1963, being a community antenna television company, he dreamed up the name comcast. "com" was "communications," "cast" was "broadcasting," and we were going to merge. be in the future of communications and broadcasting, so he was very visionary in that respect. david: you buy the cable franchise in tupelo, mississippi. how much did he pay for that? brian: i think a few hundred thousand dollars. david: ok, and what did he do
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after that? he started buying other franchises like that? brian: yes. the next-door town was meridian. and he would go down to tupelo -- he never moved there. he had a philosophy of decentralized management. in that you would have a local manager, and they should feel like they own the business, so there was a general manager in tupelo, they went and bought meridian, then he got into michigan, new jersey, pennsylvania. we started buying other operators. and as the business evolved to the 1980's, one day, it was not just a valley town business and a rural business. espn, hbo, and cnn came along. it was suburban and urban. and so there were 30,000 cable franchises awarded, and eventually they needed to consolidate to be more like a tv business or phone business, where you had larger service areas, and that is when comcast really stepped on the pedal. david: so in 1972, if i had bought your stock, what would i be -- brian: if you had bought 1000
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shares, it came public at $7, went down to $.25, i think, at the all-time low -- that is another story -- you would have over $11 million today, and 18% plus compounded return for 45 years. if you put the same $7,000 in the s&p 500, you would have just over $500,000, with a 10% return. david: not bad. brian: not bad. david: when you joined the company, did he say you start at the bottom and work your way up, or did he say you could start at number two? brian: that is maybe what i wanted to happen. no, he definitely put me through a wonderful kind of de facto training without either of us ever really talking about it that way. so one summer, i climbed poles and learned to be an installer. had real trouble holding a ladder, because i was 15-years-old and pretty weak. another summer, i sold door-to-door hbo and cable subscriptions, it was brand-new in west moreland, pennsylvania. another summer, i went and sold
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muzak, a business comcast was in at the time, installing and selling. when i got out of wharton school undergrad, i was like a finance major, and i said let's go do deals. he said, no, move to trenton, new jersey. i never worked in cable. that was one of my later businesses in life. my dad was in his 40's when he started comcast. which is a great lesson for people. if you have not found your thing yet, and you are 40 years old, it is not too late. many people think it is way too late. and he said, "i will never know this business, why don't you learn it as well from the bottom up?" so i moved to trenton and learned the billing system, worked the counters when customers paid their bill, and when the truck delivered the new system in trenton, everybody got out, roll up their sleeves, and unloaded the warehouse. i had the pleasure of learning the job. something for me just clicked. i loved the business. i love being around people.
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i loved being in management at a young age. david: when you are in business with your father, did you call him dad in front of other people, or did you call him ralph? brian: i called him ralph. when he had all his grandkids, he had all the grandkids call him ralph. one of the great things he did for my daughter, who has now just had her own child a few weeks ago, he said, every kid learns the word "no." that is one of the first words they know. so he got on the ground with all the little grandbabies and would go like this -- "yes, yes." one of amazing things my wife and i enjoyed with my dad, my siblings did, and his wife, was his positive attitude about life. it came out for all employees. he had a yes attitude. david: you became an employee in 1981 when you joined, but became the ceo in 19 -- brian: we did not use that title. not between me and my dad. 1990, i became the president. i was about 30 years old. david: did anybody say, is he
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ready to be president yet? brian: everybody, including myself. but i was very eager to -- having worked for many years, half a dozen years in different jobs in trenton, in flint, michigan, in dallas, in pittsburgh, and then trenton again, back in philadelphia, then in the corporate side in finance -- my dad was still active but he was 40 years older than i was. i was 30, he was 70, and he wanted to begin continuity without an abrupt change, so we worked as partners from then on until he died. david: there is a concept called "net neutrality." brian: to me, it can also be called regulation. oftentimes, if someone -- you hear we are against net neutrality, but that is not the case at all. we really have a great interface called xfinity x1. you can come over, see our guide. you can come over and go back,
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do on-demand. and this is all coming from the cloud. it was really a game changer. every click is going out and back faster than you can click, just looking at it. if you say "tom brady versus russell wilson," you are a sports fan, and we have now added data right there. you can pull up the stats. ♪
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♪ david: people like products, let's say amazon, or they like the products of apple, starbucks, and therefore tend to like the companies. why do you think comcast and other cable companies are not that well-liked, unlike other companies whose products are popular and the companies are liked? brian: it is a great question. television used to be free, and
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now most americans are paying a lot of money for it. every year, it can get more expensive. that is the sum total of sports, and the cost of actors, and the cost of many more channels, high definition, technical capabilities, and if we are passing all of those increases along that we have experienced, no one remembers that. so that is partly why it is an industry issue. but that is not a good answer. so what we have set about it at comcast was to not accept that and to try to find a way to emulate some of the companies you just referenced who have a lot of goodwill. and so we thought that by making our products better, we changed the name of the company to "xfinity." we came up with a product called x1. it took about 10 years. we are building a technology center here in philadelphia, and we are trying to pivot the whole company to have a rapid deployment of new products that delight and surprise you all the
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time. back that up with advertising and messaging and understanding by the consumer of what it is you get -- and then, maybe the link that was missing, after we achieved that with some of our products, was service. showing up on time, getting it right the first time, having the network be reliable. david: you ever have problems with your cable? brian: sure. once in a while. david: what do you do? you call somebody, call your office, what do you do? brian: i use it as a learning experience, first of all. we are constantly trying to improve and have a virtuous cycle of repair and improvement. if my cable is out, i use my app. i then will go back and see how many customers are affected. and there is a culture i believe we have improved massively. but we have ways to go. david: but is it intimidating for the cable repairman to come to your house? i mean, they know they better get it right? or they know it is you? brian: hopefully a little bit of both, but i ultimately try not
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to get so much different treatment that is out-of-touch with what our customers are experiencing, but i am sure there is some of that happening. david: cable tv blossomed in the 1980's and 1990's, and you grew to 20-some million customers, and then at some point, broadband came along. in effect, you had built cables in everybody's homes, then you realized you could use as cables for internet access as well. when did it dawn on you that you could sell more than cable tv to those same customers? brian: there was an "a-ha" moment on that. that was a meeting in seattle of a group we formed with other cable companies called cablelabs. we went to see intel, oracle, and microsoft. while we were at microsoft, bill gates was talking about someday the data business will be bigger than your television business. i said to bill, would you consider investing in our industry? because we are putting all of these fiber optics that no one heard of. wall street hated it. our stocks were low.
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we were spending capital. is is one of those cycles where you cannot always know the answer, but feel like you should invest and hope that it will work. and he said, i think fiber would change the game for you. how can i help? i said why don't you buy a percentage of the room, and everybody laughed. and i said ok, just buy comcast. he put $1 billion from microsoft into comcast. non-voting stock, no board seat, no microsoft products. david: what kind of return did he get on that $1 billion? brian: 400%. and it started the broadband wars that have been the beneficiary by consumers the last 20 years. david: are you worried that maybe people will say i don't want to buy my cable tv and will get everything through the internet. is that a problem you have? brian: first of all, that reality is happening. we have seen it coming. the other "a-ha" moment for me was another great leader, steve jobs, who we were visiting, trying to see if we could collaborate with apple a decade ago.
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he said why don't you put wi-fi in all your cable boxes? david: and you said what is wi-fi? brian: i went, what is wi-fi? because that was before anybody else. now, we have more wi-fi than any company in america and the fastest wi-fi. david: you bought from ge nbc universal. was that something natural for you to do, or were you afraid you should not be in the content business? brian: there were people who had that worry. we had a dream that the perfect company, if you could create it from scratch, would be in the distribution, but also in content. both are good businesses, they are kind of symbiotic. so we had got into a certain scale, and scale matters. we dabbled in content. we owned the golf channel, we owned e! entertainment, we owned some regional sports networks. and along came the recession of 2008-2009, and the financial crisis. and ge wanted to sell nbc universal. we had been knocking on the door for a decade. and one day they said ok, and we
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jumped at it. david: things like hollywood studios, sometimes people who own hollywood studios like to go out and hang out with the stars. that is not you? brian: that is not me. i care about movies, but i have never been on a movie set. david: there is a concept called "net neutrality." which 99% of americans probably do not fully understand. can you explain what net neutrality is and why it is a big deal? brian: to me, it can also be called "regulation." and so, what do i think we stand for? what we have tried to say, from the day bill gates helped us with the idea of the internet, was that you could go anywhere you wanted and you could do so without being slowed down or delayed, or in the case of privacy, someone knowing your behavior in a way you don't want. and how do you have a set of rules that gives you, the consumer, that confidence and certainty, and at the same time, allows for investments in innovations as new applications come along?
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and we have always said we stand for certain principles. those principles were codified by the fcc. and then the court said the fcc did not have authority to codify those principles. so another fcc came along and said here is another way to do it. let's put it under something called "title 2," which is a regulatory regime designed for the phone system back in the 1930's. and we did not agree with that. and that can get bundled in a phrase, "net neutrality." often times people will say you are against net neutrality, and that is not the case at all. david: do you go to from washington time to time to talk to legislators and other people, and is that a painful part of your job? brian: i like advocating for comcast. i am passionate about our company and our beliefs. i think we represent what the american dream is all about. you start from literally tupelo, mississippi, no business, take risk capital. we have never had a guaranteed rate of return, like a phone company. we have borrowed $60 billion to
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build the company. no one says we will be here in 50 more years, we're 50 plus years old. we have created 150,000 jobs, and they are all, mostly, 90%, 95% here in america. so from time to time, depending on where the pendulum is going, there are proposed things that are going to have real implications, and you try to articulate and navigate for that. david: you have cable, broadcast channels, movies -- how do you have time to watch all the things that your company is producing? brian: well, i don't see everything we do. i try to see some of a lot of it. david: if you see something you don't like, do you call them up? do you just -- brian: no. i have a point of view, but i know what i can do and what i shouldn't do. ♪
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♪ david: you have cable, you also have broadcast channels, movies -- how do you have time to watch all the things your company is producing? brian: well, we grew up in this business. when i started back in 1981, they were just coming out with cable channels. and i was very lucky when ted turner called me up and asked me would i come on his board? i was in my late 20's or early 30's, the youngest person on the board. and i saw him literally change the world with cnn. literally change the world by putting nfl games on a new network, tnt, and taking the mgm library and bringing it to cable television. and building new channels -- cartoon network. so i always thought someday, it
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would be nice if comcast could help do that as we continue to evolve more and more niches in television. so how do i have the time? well, i don't see everything we do. i try to see some of a lot of -- david: if you see something you don't like, do you call them up? brian: no. i have a point of view, but i also know what i can do and what i shouldn't do. i try to have some discipline on that. i sometimes just share opinions, but i think -- we have some of the best professionals. david: on technology, right now, you have to be at the forefront of all kinds of technologies. do you personally review all the new technology inventions? brian: we are building a new technology center, which i am very involved and excited about. but i can't do every invention. but since it comes down to one remote control and one guide, i do get fairly involved and see things before they come out, try to help the team. david: what gives you the greatest pleasure in the job you have? brian: the fun is that that
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answer changes over time. it has not been the same old thing my whole life. today i mean -- sadly, my dad is not here, so there was a wonderful moment that went for a long, long time, and we were so lucky. today, we are, as a leader, trying to figure out where this industry is going, and that dynamic change of technology and innovation in things like artificial intelligence and the cloud and the competition, which has never been greater, stimulates you. and over and trying to think through how to build value for shareholders. david: in college, you were a squash player. you were an all-american squash player. brian: i love the sport. the best players in the world, which i never was close, are super and superb athletes, and as good as any athletes, i think, in any sport. when i got to penn, i had a squash coach who was the opposite of my dad. i have always said maybe the second or third most influential person in my life, one of the top is --
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david: coach malloy. brian: coach malloy. he was a marine -- or an ex-marine. and he really drilled into me hard work, winning strategy, tactics, and i went on and played a great run in squash and had a chance to compete internationally after college. david: so now you compete still. at the maccabiah games, you have won the gold medal and silver medal and will play again there? brian: my children have both done it, my two daughters, and my son said, let's you and i do it, dad. so we will go this summer to israel and compete one more time. it will be my sixth time. i proposed to my wife on one of the trips. it has had a real significant meaning to my life to be able to compete, represent our country, be a jewish athlete, and share my family experiences as we have all played the sport and had a lot of fun with it. david: you are now in your 50's. is it hard to get into shape? brian: i was retired for about 10 years, and it is very hard.
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that is the short answer. every bodypart of mine hurts right now from training, but it gives you a purpose. i guess i like goals. it is very similar to comcast. you don't always win, but it is fun to try. david: are your children interested in coming to the company? brian: to me, it is a really clear answer. you should do what you want to do with your life, not what your parent wants you to do with your life. and for me and my family, that is how you end up having a happier life. and if it is something you want to try out, great. it comes with the presumption that you're not that good. you only got there because -- so it is a higher burden. so as i talked to my own kids as they figure out their lives, there are different answers to that question. david: what are your great philanthropic interests? brian: we've just made a really cool involvement with the children's hospital of philadelphia here. we are going to do a genetics center. philadelphia's children's hospital is arguably the number
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one children's hospital in the world. so as genetics technology comes along and research, can they continue that leadership? so we created a genetics center. we have been involved in the arts. my wife chaired the building of the new barnes in philadelphia. something really special for this city. dr. barnes' collection was maybe the best impressionist collection outside the louvre in paris. and for philadelphia, it really gave it some additional world-class stature. david: your father was in the company a long time. you could do this another 20, 30 years. is this what you intend to do for the rest of your professional career? brian: i love what i do. it is hard to imagine something else. but i also recognize that you got to keep the company fresh, so we will take it one day at a time. ♪
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♪ david: fresh out of west point, he led a platoon of 22 young soldiers. now he leads 134,000 employees at a company worth over $350 billion, johnson & johnson. ceo alex gorsky took the helm when the iconic image of johnson & johnson was a bit tarnished and made changes to get the company back on track while making the biggest acquisition in the company's history and managing the transition to obamacare. after donald trump was elected president, he helped to represent a growing health care industry that already accounts for over 17% of the u.s.


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