Very interesting piece from Fast Company on how
Al Gore has gone from failed politician to tycoon and (potentially) kingmaker.
Udhay
http://www.fastcompany.com/magazine/117/features-gore_Printer_Friendly.html
Fast Company
Al Gore's $100 Million Makeover
Not long ago, he was the butt of jokes--lockbox,
earth tones, a postelection beard. Then he dusted
off an old slide show and jumped with both feet
into the private sector. The untold story of how
an epic loser engineered what may be the greatest brand makeover of our time.
From: Issue 117 | July 2007 | Page 70 | By: Ellen McGirt
Al Gore is a funny guy. And, for his $175,000
speaking fee, he tells this story: after leaving
the White House and heading back to Tennessee
sans motorcade--"in a rented Ford Taurus," he
sniffs--he and Tipper stop to get a bite to eat
at a Shoney's, "which, as you may know, is a
low-cost family restaurant." The people in the
restaurant "made a huge fuss...over Tipper."
Then, a man spies Gore and stage-whispers,
"Didn't he used to be the Vice President? He's
fallen so low." Peals of delight from the
audience. Gore smiles back. It's a nice moment.
But wait, there's more. Later, he goes on, he
attempts the same story in Nigeria. Punch line,
laughter, applause--no problem. The next day, an
official at the airport yells out to him, "Call
Washington!" Hmmm. "What could be wrong in
Washington?" he muses, scratching his chin.
"That's when I remembered it could be a lot of things." The crowd goes wild.
Come to find out, Gore explains, a reporter in
Nigeria had lost a bit of the story in
translation. "Vice President Al Gore announced
yesterday that he and his wife, Tipper, have
opened a low-cost family restaurant called
Shoney's and will be running it themselves," Gore
intones. By the time he landed in the United
States, the story had hit the wires, and he
was--again--the butt of jokes on Leno and
Letterman. Three days later, he received a
handwritten note from Bill Clinton,
congratulating him on the Shoney's deal. "We like
to celebrate each other's successes in life,"
Gore deadpans to uproarious laughter.
Funny guy, indeed. In one well-delivered
anecdote, Gore manages to make fun of himself,
the election, his relationship with his former
boss, the Bush administration, and the media--and
still come out on top. Gone is the robo-candidate
who provided fodder for conservative bile and
late-night merrymaking. (For a good time, google
"SNL" and "lockbox.") After the 2000 election,
Gore might have slunk away to a loser's life: a
memoir here, a visiting professorship there, the
occasional keynote speech or celebrity golf
tournament. Instead, in what may be the greatest
brand makeover in history, Gore is being hailed
as a visionary who was right about everything
from global warming to Iraq. At 59, he's an
Academy Award winner, a bestselling author, a
front-runner for the Nobel Prize, and a concert
promoter who turned out to be a bigger rock star
at this year's Grammys than the rock stars themselves.
What no one is talking about is that he has also
become a stunningly successful businessman--and
that has fueled his comeback. Since his
nonelection, Gore has become a millionaire many
times over, bringing him, in financial terms,
shoulder to shoulder with the C-suite denizens he
used to hit up for campaign cash. In addition to
the steady flow of six-figure speaking gigs, he
has become an insider at two of the hottest
companies on the planet: at Google, where he
signed on as an adviser in 2001, pre-IPO (and
received stock options now reportedly worth north
of $30 million), and at Apple, where he joined
the board in 2003 (and got stock options now
valued at about $6 million). He enjoyed a big
payday as vice chairman of an investment firm in
L.A., and, more recently, started a
cable-television company and an asset-management
firm, both of which are becoming quiet forces in their fields.
Financial disclosure documents released before
the 2000 election put the Gore family's net worth
at $1 million to $2 million. After years of
public service--and four kids needing high-priced
educations--Al and Tipper used to fret
occasionally about money. Not anymore. They have
a new multimillion-dollar home in a tony section
of Nashville and a family home in Virginia, and
have recently bought a multimillion-dollar condo
at the St. Regis condo/hotel in San Francisco.
Available data indicate a net worth well in excess of $100 million.
It's good to be the president, even
metaphorically, of Al Gore Inc. And that helps
explain why he's wary of reentering the political
fray. Here, then, is the untold tale of Gore's unlikely rebirth.
Gore greets me at the door of his suite at the
Regency Hotel in New York in late May: "I haven't
seen you since Orlando!" He is in the city to
promote his new book, The Assault on Reason. I'd
first been introduced to him several weeks
earlier at the Tribeca Film Festival, and we
chatted again briefly in Orlando, Florida, at a
tech-geek conference of Adobe software
enthusiasts (who were treated to his
global-warming speech, including the Shoney's
bit). But this is our first official interview,
and he begins with his game face on. Ever polite,
he has been fielding questions about politics
nonstop--including at a taping of the PBS show
Charlie Rose the night before. He visibly
relaxes, though, when we start talking about
global business. "I have really enjoyed the
business world much more than I expected," Gore
says, settling back in his chair. He speaks
animatedly about incentive structures and how
information flow creates opportunities.
One problem he had in politics, he says, was
identifying an issue too early--"'predawn' is the
term I use"--to be able to act on it. But "in the
business world, particularly at a time when
things are moving so swiftly, if you can see it
early, you can make a business opportunity out of
it." He pauses. "For whatever reason, the
business world rewards a long-term perspective
more than the political world does."
By his own account, his makeover has been less
the result of a conscious strategy than of a few
smart initiatives that happened to ripen in
sync--from Google's towering growth to the recent
profitability of his media startup, Current TV.
"I've remarked to Tipper how amazing it is that
both Current and Generation [Investment
Management] have reached the next stage of their
development at almost exactly the same time."
What defines the ventures he has taken part in,
he says, is "a revolutionary and transformational
concept" in industries that badly need change.
But did he expect such enormous financial
success? He pauses. "It's all been a pleasant surprise. And a lot of fun."
That's not how things looked in the first years
after that trip back to Nashville. In the spring
of 2001, Gore returned from a vacation in the
Mediterranean with an unfortunate beard, and the
late-night jokesters had a field day. His first
business move--signing on as an adviser to
Google--proved prescient, but Google wasn't yet a
powerhouse. Almost no one took note. (On his
first day at Google, Gore recalls with a laugh,
"Larry [Page] and Sergey [Brin] and the entire
executive team had false beards on.")
His most public effort was dusting off a slide
show on global warming he had put together in
1989. It was full of depressing data about
melting ice caps and killer hurricanes--not a
likely vehicle to spark a resurrection. As
recently as May 2004, he took some serious
ribbing for presenting a version of it at an
event timed to coincide with the goofy
global-warming film The Day After Tomorrow. A few
months later, when television producer turned
environmental activist Laurie David invited her
A-list pals to see the slide show, she had a hard
time getting them to attend. "People were still
mad about the election," she recalls. "And nobody cared about global warming."
What has changed since then is, in part,
political: John Kerry fared worse than Gore at
the polls, and President George W. Bush has seen
his approval ratings tumble. Hurricane Katrina
played a role, too, stirring fears of climate
change. But Gore's business efforts have also
come together in a crescendo that cannot be
ignored. In fact, to understand the personal
drive and vision behind Gore's revival--and the
philosophy that continues to take his business,
if not his political, brand forward--the place to
begin is with his two entrepreneurial efforts, Current TV and Generation.
Joel Hyatt is comfortably ensconced in his
loft-style San Francisco office at Current TV, Al
Gore's now-profitable cable network. Hyatt, the
CEO, is a longtime friend of Gore's who made his
millions by founding Hyatt Legal Plans, a
provider of low-cost legal services that was
acquired by MetLife in 1997. He has taught
entrepreneurship at Stanford's business school
and chaired the Democratic finance committee
during the 2000 election. He doesn't talk easily
about his front-row view of Gore's disputed loss,
and when he does, his voice shakes with emotion.
"It's hard to move on from something like that," he says.
But he did. After the election, Hyatt began
talking with Gore about the sorry state of
television and the role that the broadcast media
play in the public sphere. "The line between news
and entertainment is blurred," as Gore now puts
it. "Much of TV is mind deadening. It's a one-way
conduit of knowledge." The two men discussed what
Hyatt calls "an utter lack of innovation in the
media industry"--a barely disguised oligopoly, as
they saw it, controlling both content and
competition. "We decided that we wanted to build
a new kind of media company to democratize--small
d--television first and the media industry
generally," Hyatt says. They would give viewers
from 18 to 34 the means to create and control
what went on the air--a user-generated model now
familiar thanks to the likes of YouTube and
MySpace, but a shot in the dark for TV back in 2002.
Undaunted, Gore and Hyatt went looking to buy a
cable-TV network. The effort quickly became a
disaster. Meetings were taken, favors were called
in, but nobody wanted them. "We were told
repeatedly, 'You're not going to start a
cable-television company,'" Hyatt recalls.
"'There's no room in the industry for you.
Period.'" The only possibility they could find
was a yawner of a Canadian news network, called
Newsworld International, or NWI, owned by the
French company Vivendi. Yet even here, Gore and
Hyatt were initially rebuffed. Gore had to tap
then French president Jacques Chirac to arrange a
meeting with Vivendi executives. Negotiations
dragged on for months. "There were probably at
least seven or eight times when [the deal] was
dead and all but buried," Gore recalls. Finally,
after nearly a year of nail biting and a cameo
appearance by Barry Diller, who owned a part of
the entities--Gore lobbied him in person--Gore
and Hyatt snagged NWI in May 2004 for $70
million. (Their investment partners included
former Goldman Sachs senior director Philip
Murphy, who is now the Democratic finance
committee chair; Richard Blum, husband of
California Senator Dianne Feinstein; Sun
Microsystems cofounder Bill Joy; and Bob Pittman,
former chief operating officer of AOL Time Warner.)
They had the network, renamed Current TV, but
they still didn't know precisely what it would
air. At a meeting around Hyatt's kitchen table in
the summer of 2004, the nascent management team
kicked around ideas--and kicked them to the curb.
One option was to give 200 talented unknowns all
around the world video equipment, train them, and
set them loose to tell stories. Hyatt and Gore's
response: Not good enough. Gore was looking for
something "transformational," recalls Current
exec Joanna Drake Earl, a veteran of Paul Allen's
Moxi media startup. "Transformational?" Earl
remembers with a laugh. "I mean...that's hard to manage to."
As Current's August 1, 2005, launch date
approached--the old Canadian news programming
would end July 31--tensions ran high. "At one
point," says president of programming David
Neuman, who had produced sitcoms on NBC and Fox,
"I got down on my hands and knees and begged for
more time." Finally, the team agreed on a
formula. They would hire a crew of "vanguard
journalists," but work toward the goal of
creating a network largely shaped by its viewers,
via a Web site that functioned like a production community.
Current TV, Gore's cable channel, turned a profit in only two years.
Today, less than two years in, at least 30% of
the network's content is viewer generated, called
VC2. Amateur filmmakers, some in their teens,
upload three- to eight-minute documentary-style
nonfiction segments, called "pods," to the
Current Web site. Online modules help aspiring
filmmakers navigate everything from framing a
shot to negotiating music rights. The online
community comments on the videos and votes to
"green-light" pods that they want to see on air.
Makers of the pods that are aired get $500;
Current gets a library of content to use in
perpetuity--with no production costs.
The result is surprisingly engaging and unlike
anything else on TV. The pods shuffle through
everything from cutting-edge bands and dogsled
races, to African villagers struggling with
HIV/AIDs and dispatches from soldiers serving in Iraq.
Current has also worked with advertisers to
create viewer-generated commercials, or VCAMs. To
date, some 32 VCAMs have hit the air. "Once we
heard the concept, we got on board early on,"
says Brett Dennis, director of media marketing
for T-Mobile, which also runs traditional spots
on the network. "It provided us with a
groundbreaking way to reach customers, and to
encourage them to engage with our brand." Plus,
it's delightfully cheap: $1,000 for every
commercial that gets on the air. (If the ad is
distributed on other networks, the fee can go up
to $50,000.) T-Mobile has already selected three
VCAMs, and hopes to do more; other VCAM
advertisers include Pop Secret, Sony, and
L'Oréal. Says Dennis: "It's the best example
we've seen of the convergence of a traditional
network model and the user-generated Internet model."
Gore is clearly happy with Current TV's progress
and optimistic about its future. "The more people
who are watching, and the more people who are
contributing, the higher and higher the quality
goes of the pods from which we select." He adds,
"One of the happy problems we've had is
explaining Current TV to investors and
distributors. Nobody would believe how low our
production costs were, or how good the business
model was." Current TV is now in 38 million U.S.
homes via DirecTV, Comcast, Dish Network, AT&T
U-Verse, and Time Warner Cable. Its expansion
this year to the UK and Ireland on BSkyB and
Virgin Media will put it in another 8.2 million homes.
"We have a belief that explicit recognition
of environmental, social, governance, economic,
and ethical factors affect business," says Blood.
Current TV is making money, about a 10% margin on
cash flow, after less than two years, according
to analyst estimates; new cable networks
typically take four to six years to go into the
black. "Partly it's because they inherited some
distribution on DirecTV when they acquired NWI,"
says Derek Baine, a senior analyst with Kagan
Research. He estimates that Current's license fee
is about 12 cents per month per subscriber,
roughly what an established player like Lifetime
gets, and projects that advertising, now 24% of
revenue, will pass the industry average of 43% by
2010. "I think their model has made other networks sit up and pay attention."
While Gore was struggling to launch his cable
network in late 2003, he was also moving on
another front: starting an investment firm based
on a new definition of sustainability.
Metropolitan West Financial, an L.A.-based
asset-management outfit where he'd been vice
chairman for two years, had just been sold to
Wachovia. (Gore's former Senate chief of staff,
Peter Knight, was a Met West managing director
and had recruited him.) Gore had his hefty payout
from the deal, plus a desire "to incorporate
sustainability values into the financial-services
work that I was doing." Goldman's Murphy
introduced him to David Blood, then CEO of
Goldman Sachs Asset Management. "They were both
talking to me about similar things," Murphy
recalls, "deep conversations about emerging
markets, sustainability issues, and new ways of
making investments. They were both asking, 'Can
this make money? Can this be a business?'"
"I was interested in creating a business around
investing, which I love, and philanthropy," Blood
says. He and Gore met many times, both in London,
where Blood is based, and in the United States,
to talk about values and skills. "It's not
exactly like choosing a spouse," Blood says of
selecting a business partner. But it's close.
"You have to know that you can work together,
have the difficult conversations. You need 100%
trust and confidence." They worked together on a
statement of values for their company, which they
named Generation Investment Management. When they
launched in August 2004, they made no move to
attract outside investors--which, despite the
catcalls from Gore detractors, was entirely by
design, says Blood. "We spent a year playing with
our own money," he says--a pool of about $100
million from himself, Gore, Knight (whom Gore
brought in from Met West), and three other
founding partners. "We didn't want to raise money
first and then come up with an idea," Blood says.
"What we really needed to do was invent a new language."
Rather than rely on short-term earnings
projections, they thought long-term investment
potential--and good management--could be better
gauged by looking at factors such as whether a
company was preparing for a carbon-neutral
future. Environmental stewardship, though, is
just part of how Generation defines
sustainability. "We think about how businesses
attract and retain employees, governance,
branding; how they operate in the community; and
how all of that drives their business strategy,"
Blood explains. "We have a belief that explicit
recognition of environmental, social, governance,
economic, and ethical factors affect business."
Generation's research team, led by Colin le Duc,
has both environmental economists and traditional
buy-side equity analysts, who have learned to ask
a wider range of questions of the companies they
cover. The firm plans to build a long-term
portfolio of only 30 to 50 companies. Blood
claims that returns so far have exceeded
expectations, although he won't divulge
specifics. (See "An Inconvenient Portfolio" for some of the firm's holdings.)
The firm now has nearly $1 billion under
management, from 15 institutions, plus a few
individuals. And it has turned down some
investors. Says Blood: "Anybody who is expecting
a monthly report on how their stocks are doing isn't for us."
A few million people saw An Inconvenient Truth,"
says Kevin Wall. "I plan to deliver 2 billion
eyeballs." Wall is the producer of this summer's
Live Earth concerts--nine simultaneous events
across seven continents on July 7, on the model
of Live 8, to raise awareness for global warming
and money for the Alliance for Climate
Protection, a nonpartisan advocacy group of which
Gore is chairman. "The artists are not being
paid, I'm not being paid," Wall notes.
His biggest unpaid superstar is Gore himself. On
the night of the Grammys this year, Gore went
from dressing room to dressing room backstage,
recruiting performers. He was in the midst of
lobbying the Red Hot Chili Peppers when he was
called to the stage to present the award for best
rock album--to the Red Hot Chili Peppers. When
the group came out to accept the award, they told Gore they'd do the concert.
Live Earth was inspired, Wall says, by An
Inconvenient Truth. After he saw the film at its
premiere, he talked to NBC Universal chief Jeff
Zucker about broadcasting the concerts across the
NBC properties and lined up the BBC and MSN as
partners, then reached out to Gore. "I told Al,
'I don't need anything from you, I just want to hand you the mike.'"
That Gore now finds himself the celebrity draw is
ironic, given that his star "performance"
revolves around a slideshow. When Laurie David
and the documentary team she'd
assembled--director Davis Guggenheim, producer
Lawrence Bender (of the Kill Bill movies),
producer Scott Burns (famous for the "Got Milk?"
ads), and coproducer Lesley Chilcott--went to San
Francisco to lobby Gore about making a movie, he
was reluctant. His global-warming spiel was just
a lecture, he said. How would it work as a film?
He relented, though--in part because he was so
passionate about the slide show. Working first
with flip charts and a slide carousel, and now
with Apple's Keynote software, Gore found he
could talk to people in his own voice, without
the handlers, image consultants, and
intermediaries that turned him into a
sound-bitten, earth-toned version of himself in
2000. Gore was happy to continue traveling the
country with his slides, but David had a more
aggressive agenda: "Let's get it out there!"
The production schedule for An Inconvenient Truth
was so compressed that Gore joked it was like
making "Kill Al, Vol. Three," a friendly jibe at
Bender. Filming began in July 2005; the premiere
was at Sundance the following January. In
between, Katrina hit. "I was scheduled to give
the slide show in New Orleans that day," Gore
says. "The audience was the state insurance
commissioners who wanted to learn more about hurricanes and global warming."
The movie was released theatrically in New York
and Los Angeles in May 2006, in wide release in
June. And by March 2007, Gore was thanking the
Academy. Part of the proceeds from the film go to
the Alliance for Climate Protection. The film has
made more than $50 million worldwide; 50,000 DVDs
have been given away to schools and nonprofits,
and 850,000 copies of the book have been sold.
Back in New York, I ask Gore to explain what he
meant when he said he wanted Current TV to be
transformational. He answers with a 10-minute
history lesson on the computer. "It's a geeky
analogy, but you're from Fast Company, so you'll
like it," he says good-naturedly. Sketching a
diagram on a file folder, he reveals just how
geeky he is himself. He certainly needs more than
30 seconds to get his point across.
That helps explain why, despite the interest from
so many Democrats in his political aspirations,
he seems genuinely distanced from the idea of
running for President--at least for now. "What
politics has become," Gore explains at one point
during our discussion, "is something that
requires a kind of tolerance for artifice and
manipulative communications strategies that I
just find I have in very short supply. I just
don't have the patience for things that seem to
be greatly rewarded in today's political system."
Politically, his outsider status makes him a potential kingmaker.
If this is sour grapes over 2000, it doesn't
sound like it--at least not from the vantage
point of 2007. "A politics of ideas, driven by
passion, seems to encounter a headwind," he tells
me. "I do think that the Internet is bringing
revolutionary transformation. I have not ruled
out the possibility of getting into politics
sometime in the future," he says, "but I don't
expect to. Because I don't expect things to
change. If they did change, then I would feel differently."
As a political figure, Gore may be more palatable
as a possible dark horse than an actual
candidate--precisely because he seems incapable
of turning his passions into sound bites. And in
any campaign, he might find himself on the
defensive for his business activities. In his
slideshow tour, he has been paid by many
companies, which could be used to challenge his
integrity. (He routinely cuts or eliminates his
fee for schools and other nonprofits.) He also
headed the Apple board committee that cleared
Steve Jobs of wrongdoing in the stock-options backdating scandal.
Sitting where he is, his outsider status makes
him a potential kingmaker among the Democratic
candidates. He has said he expects to endorse
someone eventually. Whoever gets the nod can
expect Gore's Alliance for Climate Protection to
run its own campaign on the issues.
Gore sees no reason to apologize for not wanting
to jump into the electoral fray. As a
businessman, he can speak with a candor few
successful politicians can maintain. He has made
an enormous amount of money and achieved
positions of influence from technology to
financial services to media. He and Tipper are
even setting themselves up as angel investors for
a few early-stage tech companies they believe in.
In doing one end run after another around the
status quo, he has created a new life: a perfect
amalgam of environmental activism and a new type
of capitalism in which there is more than one
bottom line to consider, more than one master to serve.
Feedback: [EMAIL PROTECTED]
--
((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
