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Unformatted text preview: This book has been optimized for viewing at a monitor setting of 1024 x 768 pixels. All the Money in the World Contributors Paul Berger Anna Isgro Gwen Kinkead Alex Ulam All the Money in the World How the Forbes 400 Make– and Spend– Their Fortunes E D I T E D BY Peter W. Bernstein A N D Annalyn Swan Alfred A. Knopf New York 2007 this is a borzoi book published by alfred a. knopf Copyright © 2007 by ASAP Media, LLC All rights reserved. Published in the United States by Alfred A. Knopf, a division of Random House, Inc., New York, and in Canada by Random House of Canada Limited, Toronto. Knopf, Borzoi Books, and the colophon are registered trademarks of Random House, Inc. Forbes 400 is a trademark of Forbes LLC. Image of Sam Walton (p. 17): AP Photo/Danny Johnston; image of Warren Buffett (p. 17): AP Photo/Seth Wenig, File. Library of Congress Cataloging-in-Publication Data All the money in the world : how the Forbes 400 make—and spend— their fortunes / edited by Peter W. Bernstein and Annalyn Swan. p. cm.—(A Borzoi book) Includes bibliographical references and index. eISBN: 978-0-307-26770-2 1. Rich people—United States. 2. Millionaires—United States. 3. Wealth—United States. I. Bernstein, Peter W. II. Swan, Annalyn. III. Forbes Inc. HC110.W4A436 2007 305.5′2340973—dc22 2007015676 v1.0 Contents Acknowledgments Introduction vii 3 Part One: What It Takes 1. 2. 3. 4. Education, Intelligence, Drive Risk Luck—and Timing Winning Is Everything 23 46 68 87 Part Two: Making It 5. 6. 7. 8. Blue-collar Billionaires West Coast Money Entertainment and Media Beyond Wall Street 109 131 156 176 Part Three: Spending It 9. 10. 11. 12. 13. Conspicuous Consumption Heirs Family Feuds Giving It Away Power and Politics 205 230 252 276 306 Afterword: Money and Happiness 327 Appendix: The Forbes 400, 1982–2006 Notes Index 331 361 397 Acknowledgments For the past twenty-five years, Forbes magazine has compiled its now legendary list of the four hundred wealthiest Americans and considered the state of the nation’s vast fortunes. Its issues on the subject have been rich in facts and figures, on who’s up and who’s down, on whether Bill Gates (or Donald Trump) has a billion more or less. But the list is perforce numbers-driven; the issues focus less on the character of the people and the peculiar world they inhabit. What makes the Forbes 400 members tick? Who gets to the top—and why? How different are they from more average Americans? Are they happy? What lessons about money and life can we glean from them? In All the Money in the World: How the Forbes 400 Make—and Spend— Their Fortunes, we set out to answer these questions and to create a collective profile of America’s superrich over twenty-five years. While this book was created in collaboration with Forbes, much of the information comes from our own interviews, original research, and never-before-compiled data. When we first approached Tim Forbes, the company’s chief operating officer, with the idea for the book, he enthusiastically endorsed it. Throughout the research and writing, many at the magazine eased our way, sharing insights, opening archives and files, providing phone numbers and e-mail addresses, and helping in every way possible. Pete Newcomb, the longtime editor of the Forbes 400 list, was an inexhaustible source of information about members of the 400, as was his successor, Matthew Miller. James Michaels, the first editor of the Forbes 400, shared with us information, anecdotes, and insights from the early years. Additionally, Mitchell Rand, director of information technology, provided original and insightful analysis of Forbes 400 data over the last twenty-five years, while Barbara Strauch, director of Forbes’s book division, reviewed the data and manuscript and compiled the definitive list of all Forbes 400 members. Their efforts are immediately evident in the many charts, graphs, and tables throughout the book, to which designer Nigel Holmes has brought his distinctive flair. At the heart of All the Money in the World are the voices of the Forbes 400 members themselves, as well as those of their families. Many gave us extensive viii Acknowledgments interviews. (A few requested anonymity; we honored their wishes.) Others responded—sometimes at length—to a questionnaire we sent. Still others maintained an e-mail correspondence with us. We are most grateful to them for their time and insights into every aspect of Forbes 400 careers, philanthropic causes, and much more: Sheldon Adelson, John E. Anderson, Leon Black, Timothy Blixseth, Michael Bloomberg, Eli Broad, Peter Buffett, Susie Buffett, S. Truett Cathy, Jim Clark, Mark Cuban, David Duffield, Red Emmerson, Ken Fisher, Ted Forstmann, Daniel Gilbert, David Gold, Stanley S. Hubbard, J. B. Hunt, Jon Huntsman Jr., Michael Huffington, Wayne Huizenga, David Kaplan, Vinod Khosla, Charles Koch, David Koch, Jerome Kohlberg, Herbert Kohler Jr., Bruce Kovner, Ronald Lauder, John Malone, Ross Perot, Ross Perot Jr., T. Boone Pickens, Marc Rich, Julian Robertson, Arthur Rock, Wilbur L. Ross, Richard Mellon Scaife, Charles Schwab, Steve Schwarzman, Charles Simonyi, Ram Shriram, Robert F. X. Sillerman, John Sobrato, James Tisch, Donald Trump, Ivanka Trump, Mortimer Zuckerman. This book has also benefited greatly from the wisdom of many writers, professors, and analysts who have thought and written about wealth. Each is credited in the Notes section, at the top of the chapters in which they are quoted. We owe a number of them special thanks: the writers Nelson W. Aldrich Jr., Ken Auletta of The New Yorker, Dr. Paul Babiak (industrial psychologist and author), Ron Chernow, Richard Conniff, Edward Jay Epstein, David A. Kaplan of Newsweek, Dr. Michael Maccoby (psychoanalyst and author), Washington Post business columnist Steven Pearlstein, Matthew Symonds of The Economist, and Thayer Cheatham Willis. A number of professors gave generously of their time and insights: Raphael Amit (Wharton School, University of Pennsylvania), Joseph Astrachan (Kennesaw State University), John C. Coffee (Columbia University Law School), Pablo Eisenberg (Public Policy Institute, Georgetown University), K. Anders Ericsson (Florida State University), Charles Geisst (Manhattan College), Alexander Horniman (Darden School of Business, University of Virginia), Christopher Jencks (Harvard University), Steven Kaplan (University of Chicago Business School), Andrew Keyt (Chicago Family Business Center, Loyola University), Josh Lerner (Harvard Business School), Anthony Mayo (director, Leadership Institute, Harvard Business School), Eli Noam (Columbia University Business School), Peter Singer (Princeton University), David A. Skeel Jr. (University of Pennsylvania), George Smith (Stern School of Business, New York University), James Allen Smith (Georgetown University), Roy C. Smith (New York University), Robert J. Sternberg (dean of the School of Arts and Sciences, Acknowledgments Tufts University), Jonathan Taplin (Annenberg School for Communication, University of Southern California), David Waterman (Indiana University), and Jerry White (Caruth Institute of Entrepreneurship, Cox School of Business, Southern Methodist University). In many cases, they are also the authors of well-known books, which are listed in the Notes section. A major theme of All the Money in the World is how the Forbes 400 spend their money. Many are philanthropists and have created foundations of their own. Others try to influence politics. Several people were particularly helpful in describing the universe of charitable giving and the ways in which money can buy power. William Luers, former president of the Metropolitan Museum of Art in New York and now head of the United Nations Association of the USA, was a valuable guide, as was Vartan Gregorian, president of the Carnegie Corporation. Others whose insights enrich the book included Rich Avanzino, president, Maddie’s Fund; Joe Breiteneicher, president, The Philanthropy Initiative; Kathy Bushkin, chief operating officer, United Nations Foundation; Chuck Collins, cofounder of Responsible Wealth; William Dietel, president, F. B. Heron and Pierson/Lovelace Foundation; Joan DiFuria and Stephen Goldbart, codirectors, Money, Meaning & Choices Institute; Sara Hamilton, of Family Office Exchange; Dr. Lee Hausner, of the family-wealth consulting firm IFF Advisors; John Healy, former president, Atlantic Philanthropies; Todd Millay, executive director, Wharton Global Family Alliance; Aryeh Neier, president of the Open Society Institute; Judith Stern Peck, director of the Money, Values and Family Life Project, Ackerman Institute for the Family; Tim Stone, president, and Ryan Nguyen, research manager, NewTithing Group; Celia Wexler, vice president for advocacy, Common Cause; and Rod Wood, Wilmington Trust. The “Beyond Wall Street” chapter benefited, in particular, from the advice of experts who helped us navigate the often arcane world of high finance. We are grateful to John K. Castle, former president of famed Wall Street investment-banking firm Donaldson Lufkin & Jenrette and now chairman of Castle Harlan, for giving us the benefit of his encyclopedic knowledge of the history of Wall Street and of the various financial developments of the past twenty-five years. Also providing insight were Zachary Bagdon, executive director, International Center for Finance, Yale School of Management; Steve Drobny, cofounder and partner of Drobny Global Advisors and author of Inside the House of Money; Steve Greenberg of Allen & Company; Erik Hirsch, chief investment officer, Hamilton Lane; Michael Karagosian, MKPE Consulting; Alan Kosan, managing director, RogersCasey; Dick Kramlich, ix x Acknowledgments cofounder and general partner of New Enterprise Associates; Bruce McGuire, president of Connecticut Hedge Funds Association; Michael Peltz, executive editor, Institutional Investor and Alpha; Charles Taylor, National Venture Capital Association; and David B. Williams, managing partner, Williams Trading LLC. We are also grateful to the following for their help on an array of subjects, ranging from how money works in Hollywood to how members of the Forbes 400 enjoy themselves and invest their money: Banker Mark Buchman; Diane Byrne, editor, Power & Motoryacht; George Cooke, entertainment lawyer, Manatt, Phelps & Phillips, LLP; Janet Healy, former Walt Disney Company studio executive and producer; Gregg Kilday, film editor at The Hollywood Reporter; Tobias Meyer, worldwide head of contemporary sales, Sotheby’s; Craig Moffett, Stanford C. Bernstein entertainment analyst; Tom Pollock, ex-chairman of MCA/Universal Pictures and co-owner of Montecito Picture Company; Farhad Vladi of Vladi Private Islands; William D. Zabel, founding partner, Schulte Roth & Zabel, LLP. Additionally, Louise Grunwald and Mary Sharp Cronson provided insights into the manners and mores of the wealthy world. Family and friends not only shared stories and offered support but in many cases helped with contacts and arranging interviews. Throughout our work on the book we were aided by a number of talented young researchers. Karl Moats, a student at Columbia University, proved indefatigable in compiling vast lists of data about everything from which sectors create the most wealth to the number of immigrants and women on the list. He was ably assisted by Erin Gaetz, Courtney Myers, and Mary-Catherine Lader, all members of the Forbes summer intern program for college students. Whenever we encountered problems in running facts or people to ground, we consulted Anne Mintz, director of knowledge management at Forbes. In the final stages of editing we benefited from the fact-checking of Cesar Suero and Jason Storbakken at Forbes. We are also grateful to Monie Begley Feurey and Laurie Baker at Forbes for their interest in, and promotion of, the book. At Knopf we were fortunate to work with Erroll McDonald, a superb editor in every sense of the word. His suggestions about how to use the fascinating data compiled from twenty-five years of Forbes 400 issues proved especially important to the collective portrait that emerges from these pages. Against all odds Robin Reardon mastered the many moving pieces— manuscript, charts, graphs, boxes—and kept us on course, as did Kathy Hourigan, Ellen Feldman, Andy Hughes, and Tracy Cabanis. Virginia Tan’s Acknowledgments design elegantly weds the two parts of the book—the running text and the graphic elements—and Peter Mendelsund’s cover design is both classy and powerful. Knopf publicists Paul Bogaards and Erinn Hartman gave enthusiastic support to the project. And from the beginning, our lawyer, Robert Barnett, was there behind us, supporting the idea in every way. Above all we are deeply grateful to the wonderful team of writers and reporters who spent months fleshing out the themes of the book in the various chapters, and then helped us through the endless checking of every detail. Their knowledge and command of their subjects illuminate every page: Paul Berger, Anna Isgro, Gwen Kinkead, and Alex Ulam. A brief biographical sketch of each writer is included below. To them all, our deepest thanks. Paul Berger is a British freelance writer based in New York. His work has appeared in the New York Times, the Washington Post, U.S. News & World Report, Online Journalism Review, and Denmark’s Weekendavisen. He is a contributing editor to three books, including the New York Times best seller Secrets of the Code. (Chapters 2, 3, 9, 10, 11, 13) Anna Isgro, a freelance writer and editor based in the Washington, D.C., area, was an associate editor at Fortune magazine and editor of US News Business Report. She has contributed to a variety of book projects, including The New York Times Practical Guide to Practically Everything and the TurboTax Income Tax Handbook. (Chapters 1, 5, 11, 12) Gwen Kinkead, a prizewinning journalist and author, was a senior editor at Worth and Fortune magazines, and has contributed to The New Yorker and the New York Times. (Chapters 4, 7, 8) Alex Ulam is a New York City–based freelance writer who specializes in architecture and urban planning. His work has appeared in Architectural Record, Landscape Architecture, Wired, Archaeology, and the National Post of Canada. (Chapter 6) xi All the Money in the World Introduction T he Forbes 400 is the dominant symbol of wealth in America. It recalls the earlier 400 list of Mrs. Astor but differs from hers in one telling respect. Whereas the original 400 referred to the collection of socially prominent New York families who filled the ballroom of Mrs. Astor in the late nineteenth century, the Forbes index spotlights individual wealth. It measures the size of this or that personal fortune. It asks not where you came from or who you work for, but who’s richer? It’s the big-banana index—simple, primal, direct—and for those reasons irresistible. Malcolm Forbes, a passionate believer in fortune-making, established the list in 1982. There was nothing elitist in his ebullient approach to wealth. Forbes was unashamed by his fortune; he relished the idiosyncratic (and he knew the value of publicity in promoting his brand). His favorite form of transportation was neither the everyman’s Chevy nor the aristocrat’s polo pony, but a motorcycle and a hot-air balloon—both of which kept him and his eponymous magazine, Forbes, in the news. Several years before the creation of the 400 list, Forbes developed a Cost of Living Extremely Well Index (CLEWI), a cheeky riff on a traditional Cost of Living Index, which measures the price of staples. The CLEWI (see page 207) charted the changing prices of yachts, caviar, cigars, and private planes. Similarly, Forbes presented its 400 as celebrities, treating them the way People treated actors or Sports Illustrated home-run hitters. The reported numbers had a kind of celebrity flash: A fortune was a batting average. It seems remarkable that the Forbes 400 list, today endlessly quoted around the world, is only twenty-five years old. (B. C. Forbes, Malcolm’s father 4 All the Money in the World and the magazine’s founder, published a brief precursor of the list in 1918, naming the thirty richest Americans of the time, but it did not take hold.) The Forbes 400 is a particular product of its era, a living reflection of recent history. It captures a period of extraordinary individual and entrepreneurial energy, a time unlike the extended postwar years, from 1945 to 1982, when American society emphasized the power of corporations. The gross domestic product (GDP) in the United States has more than doubled since 1982, and may soon triple. The size of American personal fortunes has more than kept pace. In 1982 only thirteen billionaires were on the Forbes list, and you needed $75 million to make the cut. Today you must be a billionaire. In 1982 the combined net worth of the 400 represented 2.8 percent of the GDP. By 2006 that figure had risen to 9.5 percent. (The percentage actually reached 12.2 percent of the GDP in 2000, during the Internet boom.) More generally, in 2005 the wealthiest 1 percent of Americans claimed a percentage of the national income not equaled since 1928. Only the Gilded Age, the period from the Civil War to the 1890s, and the 1920s can withstand comparison to the last twenty-five years in terms of wealth accumulation. For many people (not least, before his death, Malcolm Forbes himself) the Forbes 400 represents a powerful argument—and sometimes a dream— about the social value of wealth in contemporary America. In this view, great wealth does not (at least in the United States) suggest an aristocratic or privileged group of people who inherited their positions. It means enterprising individuals, a marvelous meritocracy of money. Those who make fortunes are an ever-changing, ever-churning group of remarkable people who flourish in the land of opportunity. They bring jobs, energy, ideas, and even joy to their society. They have been responsible, in the late twentieth century, for extraordinary advances in technology, the invention of new financial instruments, and the efficient restructuring of American industry. Money is fluid. Money is restless. In 1982 twenty-four Du Pont heirs were among the four hundred wealthiest Americans. By 1999 no Du Ponts remained on the list. New money was supplanting old. It was wealth’s way. To be sure, many take the other side of the argument. Why commemorate greed, competition, and dollar one-upmanship? What does it say about America that the wealth of four hundred individuals should, in 2006, equal almost one-tenth of the annual output of a nation of 300 million people? To skeptics, the Forbes 400 symbolizes a period of avarice, excess, and selfishness. All the Money in the World does not join in these arguments. Instead it recounts a more nuanced and personal story. At times anecdotal, at times Introduction 5 6 All the Money in the World analytical, All the Money in the World tells the story of the individuals who actually made the money, many of whom were interviewed for the book. Taken together, their stories illuminate how fortunes are made, lost, and spent today. The book is organized into three sections. The first, What It Takes, examines the character of fortune-makers, looking at such factors as risk taking, luck, and education in helping them get ahead. The second, Making It, explores how their money was made, with particular emphasis given to the booming fields of technology, finance, and entertainment and media (while also reporting on the more traditional, so-called blue-collar fortunes). The third, Spending It, looks at what the wealthy do with their money, focusing on conspicuous consumption, heirs, family feuds, and philanthropic and political activities. All the Money in the World also contains a rich collection of charts and graphs that detail intriguing facts about wealth (many analyzed here for the first time) gleaned from the twenty-five years of the list. A few of the highlights: • In...
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