S.I. Newhouse Sr. (The Secretive Media Billionaire)

Speaker A: He was the greatest buyer of newspapers America has ever known. Nothing gave him more pleasure and no one, not even the legendary William Randolph Hearst, was better at it. Two years before he died, he landed the entire Booth newspaper chain in Michigan for more than $300 million, including Parade magazine with 20 million in circulation. When it was over, Newhouse owned outright some 29 newspapers with combined daily circulations of more than 3 million in 22American cities. Along the way he owned Vogue and Glamour and GQ and House and Garden radio stations, TV stations, cable, real estate. Altogether the greatest fortune ever amassed by an American publisher. That, folks, is Cy uh Newhouse. It is an incredible story. We are going to dive into that in just a minute. I'm Justin Gordon, the host of this show. I'm a founder community builder based in Los Angeles. I've spent years around ambitious people through community building and creating content, writing deep dives on world class founders, a couple years in venture capital as well. This show is about the most ambitious people who ever lived. And I'm excited to get this rolling with the first episode. My main source of all the material for this episode was the book Newspaperman Sy Newhouse in the Business of News by Richard H. Meeker, which was published in 1983. It is a phenomenal book. I enjoyed it thoroughly. Let's get to it. Sandhouse was born May 24th in 1895. Originally he was named Solomon. His parents were miserable. They had a very rough time in America early on. They lived in the Lower east side of New York. His father, Meyer, knew no English. He had no trade. He learned to operate a machine that manufactured the leather ends of suspenders. And he tried to start his own business, which ultimately failed in May of 1905. Cy was nine years old at the time. It's interesting to see this like Cy Newhouse's father was a failed businessman. But his son was so determined not to be. And that motivation 100% stems from his father's failures early on. Cy was the first child. He's Jewish immigrant, small for his age. He grew up to be 5 foot 3 inches tall. He was picked on by classmates. He felt he might never get over the shame he felt about his beginnings. And he said he would see to it that no member of his family would ever be poor again. This reminds me of Jay Z. I did a deep dive on him for Jisco Grind, this newsletter I used to write. And uh, there's a line in one of Jay Z's books said the burden of poverty isn't just that you don't always have the things you need. It's the feeling of being embarrassed every day of your life, and you do anything to lift that burden. And as you'll see in the story, Sy Newhouse did everything possible to lift the burden of poverty. His mother, who was a peddler, uh, was taking orders for dry goods for people in Bayonne, which is in New Jersey, filling them over in Manhattan, when she returned from those shopping expeditions, quote, the pack on her back bulging with sheets, towels, pillowcases, and napkins, it was all her oldest son could do to hide his embarrassment as he watched her trundle from door to door, bent over under the load. This is clearly something that is going to fuel Cy Newhouse just getting over this, quote, stench of poverty. And how he did it is remarkable, to say the least. So at age 13, essentially, he goes to this school that he has to pay $37,50 in tuition for the summer kind of curriculum that they guarantee he'll get a job afterwards. And to pay his way back and forth, he took, uh, a. His really, his very first newspaper job, helping another boy carry bundles of papers on the ferry. And around this time, he sees New York City for the first time, and he is just fascinated with it. But everything about this city is beyond his reach, which is crazy, because years later, he'd eventually live on one of the most prestigious and affluent boulevards in the entire city. But when Sai went through the schooling, this program to essentially get him a job, a prospective employer with, uh, whom his father was kind of helping him with at the time, the moment Psy and his father walk in, the man breaks out in laughter. He says, I can't hire the likes of you. Your head doesn't even come up to the top of the desk. And you'll see in this story, repeatedly, Cy Newhouse is underestimated. He is made fun of, and he just uses it as fuel. He's rejected again and again, and it's one of those things that either breaks you or makes you. And Psy clearly was the type of person that this was going to make him. He was going to find a way to make this work. But the person who ended up giving him a shot was Hyman Lazarus, and he's this. This lawyer in Bayonne. And at first he actually says, like, no, you can't. You can't work for me. But his father was desperate. They had gone to all these other people, and essentially his father said, like, let Psy work a month for free, and if he's useful, pay him what do you think he's worth? And if not, it won't cost you anything at all. So, psy. At the time he was named Sammy, went by Sammy. He swept floors, he typed letters, he carried messages. And by the end of the trial month, it was clear that he should stay. And my thoughts on this clearly is that one, we need father figures and mentors, people to show us the way, because this was clearly a man that was very impactful for Cy. And without him, I don't know where he'd be. I don't know where his life would have gone. And there's a quote from the book. Thus inspired, Sammy did everything in his power to please his employer. The following summer, when the law firm's accountants quit precipitously, Sammy asked if he could try out for the job. So with the training he received from the Gaffney School, that's the program he went through, and his natural facility with numbers, he found keeping the books easy. Soon he was running more important errands and taking care of his boss's real estate holdings in Bayonne as well. He made sure rents were paid, supervised repairs, and still managed to stay on top of his work for the law firm. This is such a great example of doing good work wherever you are. Opportunities will come, more responsibilities will come. If you take on more work and do a great job, you will be rewarded. It's also helpful to see things that are not working out. Um, I'm from Wisconsin, so I'm a Green Bay packers fan. And it reminds me of Aaron Rodgers watching Brett Favre for all those years before he kind of got the chance to be the starter for the team. And Brett Farr threw all these interceptions notoriously for that. And it was honestly crazy for fans because you'd always. You never know if he's gonna make an amazing play or throw an interception. And Aaron Rodgers is basically notorious for being one of the most accurate quarterbacks of all time. This is kind of like Cy Newhouse just on the sidelines, learning as much as he possibly can. And part of this, part of what helped him along the way is his mom. So Rose New house. One of the things she said early on was, this little son of mine is no ordinary man. And over and over again, she pressed on him her belief that if he used his brain and worked hard, he could do anything he wanted. This is just like this documentary on Tiger Woods. And his mom was just, like, very supportive and helped push him, just like his father did. And it's this idea of, like, we all need people to support us and kind of nudge us along. And we, when we have this belief, we really can't be stopped. It's incredibly impressive what obviously Tiger woods was able to do, regardless of his shortcomings. But same with Psy. I mean, given where he came from, a, uh, poor, just poor kid, Jewish being made fun of his entire life. To become what he becomes is truly remarkable. And in 1911, this is a very important moment for Cy Newhouse Lazarus. So the man he's working with so complete control of the Bayonne Times in New Jersey. And at some point he tells Sammy, like, go downstairs and look after the paper. So the law firm is upstairs, the paper's downstairs. Like, hey, go help out. Here's a progression. So he's the office boy at 13. At 14 he's a bookkeeper. The next year he's like the personal business manager. And then at 16, he adds the Bayon Times to his responsibilities. So he doesn't really know anything about the industry, though. Here's a quote from the book. Since he didn't know the first thing about selling ads, Sammy started hanging around Bayonne's biggest newsstand on 42nd street and Broadway to see what he could learn from the biggest city newspapers. Soon he was clipping out, uh, advertisements he thought particularly effective and taking them around to local retailers. We can print something like this for you, he would say. And if a merchant wasn't too interested at first, he kept after him with regular visits, which he's just relentless over and over again. And he also experiments and offers discounts. So he saw that other carriers were doing these special sales for advertising purposes, and he just copies them. He realizes this is the best way to attract advertising. Just give them a price break. And he tries discounts of all different sorts with merchants. And one of the biggest ones that helped him a lot is just basically getting merchants to agree not to advertise in other publications. And he gives them a discount for that. He also gives them discount for running the same ad repeatedly, which at the time, you had to have these, like, mats made to be able to create ads. So if they run them repeatedly, they, uh, essentially just save money. And he's single minded in this pursuit. Like he's offering even to help merchants with their collections to earn their business. Like Cy will do anything early on to get advertisers because he knows this is the lifeblood of a paper, of a newspaper. And a simple lesson he learned too was just keep volume as high as possible with ad sales without denting the profit margin and the big thing with that is make sure you get paid. One of the reasons his father's suspender company folded is just because they failed to collect from customers. They weren't diligent enough about actually collecting the money. And this was something sigh knew, and he definitely made sure that they got paid. One of the other little things he did, which I think is incredibly important, is he memorized, like, the accounts of every individual classified ad, every customer they had. Like, he knew his business cold. He knew everything about the business. And this is just an attention to detail you don't see all the. All the time. And after 12 months of size attention, the Bayonne Times was showing a small profit. So he had accomplished a minor miracle and had done so without touching the element of the newspaper generally considered the key to success. It's editorial content. He didn't touch anything with the editorial content. It was all about the business side of things, which is what he would do his entire life, except for one time, which we'll. We'll get to in a second here. The other thing is crazy. Imagine him walking through the streets. You know, he grows up to be only 5 foot 3 inches tall. So as a kid, he's even shorter, obviously, because he appeared to be a little boy in adult's clothing. People saw him dashing down the streets of Bayonne, and they occasionally just laughed out loud at him. And if Sammy noticed these snickers, it, uh, says in the book, like, he certainly didn't worry about them. This is an important line. He had to get himself and his family out of the mess they were in. And he had no time to fret over what people thought. Just imagine he's poor, he's 13 years old, working full time, and obviously a few years later, you know, he still starts the paper at 16, but he's a teenager. He has to work to support his family. Uh, he doesn't give a care at all about what people think about him. He has to make things work and important note here as well. I mean, in between running errands and doing his whole thing with the law firm, he would go up and down Main street selling ads. And he obviously was in person at the time. It's not like he had the Internet, but he was just going in person, one store to the next, whenever he had time. And by the time he's already working at the paper, he has a work ethic because he's been working full time for three years already. So he already understands, like, he has a great work ethic. And he can make things work and he doesn't stop, stop there. So he obviously dropped out of school. But to make up for this kind of dropping out of high school, he follows Hyman Lazarus's advice, which is to essentially go to night school and work part study, part time to become a lawyer. So he passes the state bar exam one week after his 21st birthday. I think it takes like four years. It's around June 19, 1916. And by this time he asked the judge for a raise, but he doesn't want a salary increase. He does something even smarter. He knows he's good at what he does. He obviously helped the paper and instead he asked for profit shares because he's helping the Times so much. The Bayonet Times is doing well, has made a small profit, much to his benefit. I mean his benefit, sure, but because of his work. So the judge agrees. He gives him a 20% profit share essentially of whatever the paper is netting, which at uh, 21 years old, he's still so astute to understand this already. And he'd been working for, think about this. He's been working for the guy for eight years. He's made a decent salary. He asked for profit share. Proves he believes in his own abilities to improve the paper and make it work. And it's one of those things where you think about like, you don't get what you don't ask for. He was willing to ask because he knew he put in the work and his results kind of spoke for themselves. But he knew he had that on his side to be able to pull this off. It reminds me a lot of Felix Dennis. He has these. His entrepreneur who started Maxim magazine, a bunch of other companies. He died being worth hundreds of millions of dollars if, uh, not being a billionaire. And his thing was always like, try to own as much as you can, try to own part of the upside, if not all of the upside in a business. And Felix Dennis would like pay his employees well and all of that. But he's like, I'm not giving up equity. He wanted to own as much as he could. So at the time though, you got to think about this. SA Newhouse is making, I think it says like $75 a week even before. So he asked for the 21, he asked for that raised. But at, say at 17 years old, he's already making like $75 a week, which is roughly like a six figure salary in today's dollars, which is already a good salary. But he knows that that's not enough for where he Wants to go in life and getting his family out of the terrible kind of situation they're in. So he asked for that profit share, which is just incredible. And the crazy part is like his dad is just, I don't know, he's just the complete opposite of psy. So economy dipped in 1914. The Great War in Europe did actually did wonders for newspaper sales. But Sam's father is like, they could describe him as a fire breathing socialist, unlike his son, who was fascinated by money and success. Meyer hated capitalism, which is just crazy. How different socialist versus capitalists, how different a father and son can be. And also around this time, Cy actually decides that he doesn't want to be a lawyer. And I think he goes through his first case, ends up losing. It doesn't go well. Kind of had the deck stacked against him because they had the jury in their pocket, basically. He ends up choosing the newsletter, the newspaper, I should say. And it's one of those things where like, can you, can you blame Sai, though? Like, his family is in this peculiar situation and poor and all this because of his father. Like, can you blame Sam for wanting to be a capitalist and wanting to make money? I mean, he came from poverty, he came from nothing. He had to work full time since he was 13 years old. Like, of course he doesn't care for socialism. Like, what did that ever do for him? Capitalism is his way beyond his way out. And he actually gets a lucky break from his father because in his absence around this time of the war, it makes Sam the oldest male in his family in Bayonne. And so as the breadwinner, he would be exempt from military duty, which is incredibly lucky because can you imagine, like they said, 4,000 other young men from Bayonne, like, had to go to the war. Sai's life could be totally different. Everything he accomplished, gone. Like, who knows what he would have done? And maybe we still would have had a good career, but he just got lucky. His father left, actually, in some ways he's essentially made the man of the house, the head of the household. He gets his, like his own room, he sits at the head of the dinner table. And essentially his newspaper work was his salvation. Already cleared that early on. And it just balloons from there. And it's funny because even, uh, like he'd have his own room and he'd actually host Saturday night card games for some of the men at the Bayonne Times, which I host like a monthly poker game in Los Angeles. And it's one of the most fun things we do for the LA Grind the newsletter I write. And it's just so funny because I think it's uh, you know, decades later people are still doing the same types of things. And one of the things I have noted from this early stage of size life is that one person can change everything. It's this idea that essentially Sai has saved his family. It took around 10 years of full time work to get in a really good spot and he ends up giving his, his siblings jobs at the uh, paper as well. It's just crazy what one person can accomplish for their family. Like you could be that person. Like we're going to learn a lot about this as this podcast progresses. We're going to cover a lot of interesting people and anyone could be that person for their family. It's one of those things where like there's this, this parallel. Um, Sam puts in long hours. He is waking up most mornings at 5. He says he works at the paper till dinner time, he studies until 10. But once he could afford it. So this is maybe a decade into him working full time. He buys a two seater Ford roadster and he still makes time to enjoy life, which I think is an important point to note that even this, this guy builds a like multi billion dollar empire. Family, uh, members even today are still wealthy from it. He still enjoys his life as he works. And this reminded me of, I wrote a deep dive once on um, Mike Bloomberg and in Bloomberg's book it said, here's the quote from the book, it said that 80% of life is just showing up. I believe that you can never have complete mastery over your existence, but you can control how hard you work. Still, I had a life. I don't remember being so driven or focused that my job got in the way of playing in the evenings, uh, and on weekends. I dated a lot. I skied and jogged and hit the town more than most. I just made sure I devoted 12 hours to work and 12 hours to fun every day. The more you try to do, the more life you'll have. I know that math is when does he sleep? Must, uh, be part of fun. But still, I love the quote. I think it's important. I think psy also kind of exemplified that still wanted to have fun even though he's working all the time. But here's the thing that is also important to how he built his empire and everything. By age 25, he's already well schooled in the newspaper business. I mean he's been in it for nine years already by 25 years old, which I think is always interesting. To see how long someone's been in the industry. But he doesn't stop. So he ends up spending Saturday mornings reading, uh, and learning. And here's a quote from the book. On those Saturdays, Sam would walk home for a quick lunch and then return to the Times building for his self taught course in newspapering. If the weather was good, he would take a big oak chair outside and place beside it neat stacks of periodicals he picked up. During the week. There were regular mailings from the American Newspaper Publishers association, trade journals from the newsstand uptown and Broadway, borrowings from Walter dear publisher of the nearby Jersey Journal, Less specialized newspapers and magazines and anything else the Times young business manager could dig up. My note on this is really simple. You have to learn your industry. And he took the time to do it very early. This is around 1920 and he's finding anything he can to learn. Of course now we have the Internet. There's really no excuse for not being able to learn about your industry and pick up information. And it's clear also at this time that he has a very clear vision. So these Saturday sessions, he's learning about all these different people like William Randolph Hearst and just other icons moguls at the time. And they gave him a bug essentially to buy a newspaper. He really, uh, very much so wanted to buy a newspaper. He's quoted as saying, I intend to have my own chain of newspapers. The only thing. And then there's someone else. He would say that to all his, all his friends and stuff and they, they would tell, they mentioned something that like the only thing I ever heard him talk about was newspapers. He decided that the secret to accumulating wealth was to buy newspapers. And at the time it probably was the truth. Like he knew that, he saw that, he saw how fortunes were being made and he also wanted to be that person. And so m. He obviously ends up buying more newspapers. The first one is, it's in 1920. It's in April of 1920. He's 24 years old. It's in Fitchburg, Massachusetts. He was doggedly persistent in pursuing his partner Lazarus, to put up half the money because essentially he didn't have the money to do it himself. But he finally gets him to back the purchase of the Fitchburg Daily News Company for $15,000, which in today's dollars is about 250 grand. And Newhouse had to clear out his savings and he borrowed from his brothers and sisters, uh, for his half. And then the Times companies of the Bayonne Times Company they bought the other half. But you gotta remember he had been working for him for 10 or 11 years by this point, building trust with Lazarus. And then he was doggedly persistent and still had to convince him to put up money for the acquisition. But he's going to also learn a very, very important lesson from his first one. And just remember this, because we're going to go through a couple more acquisitions and it's just, it's just insane how he learned from this experience. But here's a problem that he didn't think of when acquiring the first newspaper. He was ignorant of the paper's history. Stiff competition from the Sentinel, which had been around 30 years longer, had AP wire access, exclusivity and a 2 to 1 circulation lead. The News had falsified its statements to the National Audit Bureau of Circulation. Fitchburg was a Yankee town. New Englanders, Finns and Germans didn't care much for outsiders, particularly Jews. Employees didn't like him. Merchants didn't like him. A fire swept the offices soon after it changed hands. But even, um, regardless of all of this, somehow Newhouse makes it work. And so these trade journals, they're filled with stories of all this newspaper consolidation. You can, like, buy competitor, close it, charge more to advertisers, uh, in your newsletter newspaper. And I'm gonna keep saying that I'm in newsletters all the time, so I, I apologize. After less than a year, Newhouse went directly to his competitor, Frank L. Hoyt, and made him a compelling proposal. He explained that newspapers everywhere were raising their newsstand prices. He said the Sentinel would lose subscribers if it charged more. And if it bought the news subscription, uh, list and liquidated, the readers would have nowhere else to go. He demonstrated that the arrangement could net an extra 350 a week in circulation, meaning he'd essentially earn back his pay $15,000 in less than a year. And Newhouse asked, if the printing press and equipment were taken out of town, wouldn't that be kind of like a sufficient barrier to entry so no one else could come in? Because Hoyt was worried about that. He also didn't mention at the time that the Bayonne Times needed new equipment anyways so they could make use of that, uh, eight page, kind of flatbed duplex, essentially the equipment that they had, Newhouse was going to use it at the other paper. So in the end, everyone was one. When all the machinery was sold and accounted for, Newhouse and Lazarus were left with a handsome profit. So even though Newhouse convinces his partner to buy this newspaper, they do it. It doesn't go well, he still recovers and within a year, sells it and makes a profit. The problem with this first acquisition, one, you're going to always learn from your first, first anything. So I'm learning from this first podcast. There's people who. Their first acquisition, their first company. You learn so much. But even though through all of that, obviously, Newhouse turns a profit, the important piece from this first experience is that he didn't quit just because the first one didn't work out. Like, he had this vision for owning a newspaper chain. He was inspired by, like, William Randolph Hearst and these other moguls at the time. So just because the first one doesn't work out doesn't mean you're not going to stop. And he learned about this mergers, acquisitions, and all this from his Saturday morning sessions. Like, that is how he understood he could sell this thing and how he could make a, uh, compelling offer. So you just never know when your research and studying will work for you. Like, you listening to this podcast right now, you never know, um, where you're gonna be able to apply this to something in your work as well. And it also reminds me of, again, of Felix Dennis, because I just read that book relatively recently, but that'll be an episode of the show at some point. Felix Dennis saying, like, remember to shut. Remember to try to sell a business before you shut it down. Because there was one time where Felix Dennis forgot to basically. Uh, and obviously he was able to. He was able to do it eventually, but he kind of forgot that you could just also try to sell a business. And funny enough, I did that. I sold a newsletter before, because I remember that from the book, uh, which was kind of funny. So around 26 years old, is doing all this work to make the Bayonne Times prosperity, but the judge is getting 80% of the profits and owns all the stock. So when Newhouse asks for a share of the business, not just a profit share, but, like, equity, the judge turns him down. So Lazarus turns him down. He wanted to save the paper for his children. Newhouse was pissed. So he simply started giving himself a larger share of the profits, uh, up to half of the net revenues, because the judge was inattentive, and he just never caught on. And with that, Cy actually buys his family its first house, their first house, which is kind of crazy and kind of a bold move to do that. But, um, it reminds me again, I was thinking the whole thing, this whole idea of you have to own equity, a piece of the business to get rich. That's how you build wealth, owning things not just getting a salary. And Newhouse knew this right away. He was very much so understood this, and he was not deterred at all. Even though at the time, Hyman Lazarus was like, no, I'm not giving you any equity. He's like, fine, we'll still make something else work. So the second acquisition, it's October 1922. And sign Newhouse is 27 years old. The Staten island advance was for sale. And this area was friendlier to Jews, way more friendly than people of Fitchburg at the time, at least. And the owners were demanding $98,000 for 51% of the stock. It wasn't a bargain, but the daily circulation was about 10,000 or so people. And problems for this newspaper were similar to Bayonne for the last decade, that PSY had been growing this paper. There wasn't enough advertising, There wasn't enough circulation, and there was inefficient production. So guess what Cy does. He learns from all that experience before, and he has years and years and years of experience. He draws on that experience to then remake this paper that he buys. So each morning, he basically attacks the problem. Each morning by sunrise, him and his brothers are, um, on the ferry to Port Richmond and the offices of the newspaper. His first priority was advertising. Here, I'll just read from the book. Not many businesses in the island, so they went to Perth Amboy, Manhattan, Brooklyn, Newark. Day after day, he'd clump ads from the same town together in the paper to give the merchants the sense that they were competing with each other, incentivizing them to run bigger or more frequently. Ads. Since many ads ran in the Bay on Times as well, Newhouse could offer discounts the former owners of the advance hadn't even thought of. So because he owns multiple assets, so he has two different newspapers, he can sell sponsors or advertisers on both of them and give them a discount, which then allows him to sell more ads, which is very smart and which makes me think, like, how can you, if you have two assets at all, like, how can you offer a discount? How can you leverage those in a smart way? And it's one of those things. Also, I think he gets a. Like a full page ad from Macy's from. For the advance, for the Staten Island. Staten island advance. And it makes it more credible for other advertisers. Which reminds me of. I don't know if I heard this on their show or something, but the acquired podcast, which is one of my favorite shows, early on, they just wanted to be associated with, with good brands so they're just refining good brands to be the first sponsors, just purely from like a branding perspective, which makes me think the same thing, honestly, for this show. Want to be associated with good brands. And you'll probably see that very soon on the show, uh, very quickly because I think that association is helpful and sigh is just a phenomenal operator in every respect. And it's pretty crazy. In the first year, Staten island advance grows from around 10,000 in circulation to 15,645, which is already a 50% gain. And the paper doubles its pages, uh, of extra advertising, which is remarkable. He just out hustles people. The other thing that's really important to kind of building this empire is distribution, which it's funny now thinking about AI, all these companies having these products that need to get in the hands of customers. Distribution is so important. It's the same thing like a hundred years ago. And so without Staten island advance running quickly, it wouldn't be able to support his family if he lost the income from the Bayonne Times, which he would eventually. We'll get to that. But independent dealers though, had no incentive to push the advance over other kind of big Manhattan daily papers. So he took something he learned from the Brooklyn Times, which was to establish a private home delivery system by hiring dozens of schoolboys and assign them territories. So he hired Danny Smith to establish like a similar carrier boy system on Staten island. And which was very helpful for him, it turned out. And dealers fought back on, uh, carrying the paper as well. Essentially they refused to carry the advance at their newsstands. But Newhouse had Smith and the new carriers set up makeshift shacks next to the newsstands carrying the Advance. But also, this is the important part, cigarettes at cut rate prices. It wasn't long before the dealers relented. My note on this is like divide and conquer and hire a bunch of these young hustlers, these many young energetic people that had one singular focus which, which was to essentially sell newspapers for the Advance. The other thing is customers just cannot resist a good deal. He has these like cut rate prices on cigarettes. People are drawn in. They end up buying the advance newspaper. It's like very clear why that worked so well, which is the importance of focus and incentives. This matters so much in business. And one of the people he met through this, this process of distribution was Henry Garfinkel. He was a newsboy. He was eight years younger than Cy Newhouse. But like Cy, he was the oldest of eight children born to, born to immigrant Russian Jews on Manhattan's Lower east side. And Newhouse liked him immediately. Uh, he liked his sense of humor, his energy, his ambition, his toughness, all that he admired inside. Newhouse ends up giving Henry Garfinkel a secret interest free loan of $3,000. And with that, Garfinkel buys his first newsstand in the St. George Fairy House. And then Garfinkel goes out to just simply out hustles everyone else and displays the advance prominently at each location, of course, because side New house gave him this, this discount, uh, this interest fee loan I should say. And that actually would pay dividends for like many, many, many years. Which is, it's so crazy look back on how that was so important, that relation actually, that relationship actually pays dividends for like decades. Which is another note of just finding young, young hustlers. Enabling them is so important because then it just helps your business long term, even if you're not sure exactly of, of how. So in 1924 though sign Newhouse is around like 28, 29 years old. And Judge Lazarus tells him that he's not going to go along with buying more newspapers. So, uh, some people might stop at that. They might quit. Like, okay, I don't have any more money. My partner's gone. Like, what do you do? And Newhouse turns it around, he thought, thinks that, well, maybe the judge would sell him his share of the advance because that's what he really wanted. He wanted to have his own, his own newspaper. And thankfully for Newhouse, he accepts. So on May 7, 1924, Newhouse registers the corporation where he has 60% to himself and then 20% each to uh, two partners from the Bayonne Times who are an editor, an ad man, an ad manager, whom he recruited by making them partners rather than paying them more. So these two partners could have stayed, uh, at the Bayonne Times. They could have made more money there. But Newhouse, which is again a lesson incentives. It's just like, I will make you partners and then you'll come over, work for me, work with me for less. It's clear already from this that the ambition was there because in like the notes company uh, Formation documents, it says right away in quote, to engage in, conduct, manage and transact the business of publishing, selling, finding and distribution of books, journals, magazines, newspapers, periodicals and all other kinds of publications by, by any and all means whatsoever. Clearly the ambition was there. And unfortunately, not long after, in November 14, 1924, Judge Lazarus dies. Complications from poison ivy. He's only 52 years old. And then he then essentially full ownership of the events by within three years. Uh, side, Newhouse is clearly the man running the show. He ends up buying out his partners, um, for $198,000. More than half of that came from the events itself. He also brings in Phil Hochstein from the Bayonne Times as his kind of chief editorial adviser, who would end up staying with him for nearly half a century. It's just crazy how long these relationships last. Garfinkel for decades. Is working with Newhouse or helping Newhouse. And it's also a lesson than hiring from past, past places you've worked. We all hear about, like, the PayPal mafia and all these people who did great things from that company and is truly, if you find a good place to work at, you can work with those people for a, uh, very long time. And building relationships with people wherever you are, is important because you just never know when you're going to need them. And also, at one point in time, Newhouse goes against someone. He has some, like, court battle, and he hires a lawyer from the other side that essentially was going against him because this is like his fiercest competitor, uh, at the time, and he just hires him. Which is funny because it reminds me a lot of the show. Billions is like, one of my favorite shows. And in there, Bobby Axelrod is going against Tara Mason. They have this, like, battle finance battle. And then eventually he, uh, Bobby Axelrod, he hires Tara Mason. And people are kind of surprised by that. And it's because he's like, yeah, you're my fiercest competitor. Of course I want you on my team. Like, you're. He loved her tactics and strategies. Ah, their tactics and strategies. And he's one of them on our team, which is so, like, true. That's what you want. And, um, during those first years. So obviously now Newhouse working for the Advance, Working on the advance doesn't. Doesn't have the bay on times anymore. He practically lived at the Advanced. He would arrive at the office at 5:30 in the morning before most of the clerical workers. And if a call came in for, like, a classified ad in the early hours, Newhouse just took the call. And then from 6 to 10, he was a production room foreman. And then only after that was he able to put the publisher's hat on. And even then, he could not relax. So for the rest of the day, he would wander the building, kind of poking into everyone's affairs and doing his best to save the paper money wherever he could, which was a staple of Newhouse. And you'll see from these early Days especially, Newhouse was very hands on. He was in the weeds. He was minding every single detail. And it's funny because, like, you don't partner with someone like Newhouse, you work for them. Actually reminds me of Steve Jobs. Like, you know, instead of working, working with Steve Jobs, working for Steve Jobs, it's the same type of deal. And Newhouse was just in many ways like Steve Jobs and like his focus, but more like not to focus on the product because Newhouse didn't care about the newspaper product per se. Not that he didn't care, just he was focused way on the business side of things. Newhouse knew that he can make the business of newspapering work. He could get his family out of poverty, he could build this empire he eventually wanted to do. And the tactics and strategies that this man uses repeatedly is just like next level. So one time there's competition in, like mid-1927, Michael Caine, who's the editor of the Staten Islander, announces plans to publish daily by the end of the year. And Newhouse's response is just. But it's actually super smart. He. He relaxes the credit policies with major advertisers and he encourages them to run up these sizable debts. And rather than cutting them off, he just lets them keep advertising. So these were the same advertisers that Cain was counting on. So Cain is going daily with this newspaper. He's thinking, oh, um, I'm gonna have all these advertisers. Newhouse just like relaxes the. The policy. He gets them to advertise more. And then on the day the Staten Islander went to publish, Newhouse informs these merchants that it would essentially he would foreclose on the demand notes if any of them advertise in the rival paper, which is just super smart. It's like a trappy set for them. Just like, yep, can't work, can't advertise with them. I'm gonna basically shut this trap close. Which is pretty crazy. I think even like, I think Michael Caine's friend even couldn't advertise with him because he just like kind of got caught in this trap. And so then for distribution, Newhouse told the independent dealers that if he didn't give, they didn't think of the advance a better position than the Staten Islander. He'd bring back his own makeshift stands again. And this time he just wouldn't take them down. So the battle was over before it began. In six months, the Staten Islander shut down completely, even though it was a much better paper, which goes back to my point about, like, product. Newhouse cared less about the product, but he was ruthless and understood business and understood the business of newspapers specifically. So after that battle, he actually gave Kane's son Walter, who was like the best advertising sales rep at the Staten Islander, a job at the Advance. And he told them. And something that I think you should remember, Newhouse, uh, said, quote, your father didn't succeed because he wasn't vindictive enough. I want you to remember that. And my note from this, like, he's. Newhouse is just so competitive, he will lock you in. He understands this is a limited market. There are only so many advertisers in this town in any given town. And exclusivity is very important. Credit can be used as leverage. If you control distribution, it's very helpful. He's just a ruthless competitor. Even with an inferior product, he leverages these different things that essentially make him win. Which, coming back to the vindictiveness, you'll also see that Newhouse, uh, is incredibly vindictive, which I understand him, given where he's come from, given how much he was made fun of, given his height, being a Jew, all these things that he kind of got made fun of or like, he used this all to fuel him for years and years and years. And through this time, uh, Sax eventually, uh, finds a wife named Mitzi. They have their first child November 8, 1927, which is Semi Newhouse Junior. Less than two years later, Donald is born. And Mitzi was great for him. I'll just make that as a. Has a note. And one of the things it says in the book is, like, newhouse always set aside some time each week for his vivacious wife, Mitzi. He met her in the fall of 1923, and she seemed to actually like him. Which is just a matter of, like, always make time for your partner. What's the point of building a, uh, massive business and then having, like, terrible relationships? It's just not worth it. And even when he was courting Mitzi, the thing that stood out to me is talking about in the book, being a newspaper man at the time was low status. And Mitzi's parents come from, like, the fashion world, so they saw sai's low status. He just. He just didn't care. He saw it as a way to build wealth. He understood it, he was good at it, and it didn't bother him at all. And it's funny because, like, in the book, I think. I think Mitzi's mom sees him pick her up in, like, this really nice Cadillac and then she hears about his ambitions to build this kind of like, massive chain of newspapers, and she's like, fine. Like, you can, you can date Mitzi M. Which is just kind of crazy how that all plays out. But one of the things that is focused as psy was as he's like building this empire. This is the early days of it. Early in 1929, he tries to meddle in politics with the newspapers, and he gets all these threats to his house police, all these issues. But Newhouse loses, and it's like a profound humiliation. And then from then on, with basically one exception, only years later, he would concentrate his efforts solely on the business side of newspapering. He would stay focused because politics were just a massive distraction for him that he didn't need. And lastly, for us, as well as we're building our companies, there's so many other things that are not actually building the business that we just don't need. And like, just get rid of those. Don't, don't use those. And around 34, 35 years old, his vision is so clear. So one of his top ad men went to go to Wall street and Newhouse told him, quote, you're making a mistake. I'm going to own a lot of newspapers. I take broken down papers and make them pay. If you stick with me, you'll be a lot better off, end quote. The man left anyway. So Newhouse also advised his brothers and sisters at the time to not put money in stocks. He was very, uh, real about understanding markets. Just as far as, like, profits had to come from somewhere. It has to come from something tangible. Like this market is absurd. This is all obviously before the Great Depression. This market is absurd and this, these aren't real. So he kind of was very clear about that. He's also clear about he was going to own a lot of newspapers. And he trusts his own belief. He trusts everything he's doing. And the crazy part is like, at the time, this is he only has one newspaper, which it's pretty wild. But even on the, know, the Depression, you know, by mid-1932, which is kind of deep into the Depression, even amid America's economic nightmare, the advance had roughly $400,000 in its bank account, which at the time is just absurd amount of money. It just shows how well Newhouse was able to run this business. And so then by the November 1932, Newhouse is 37 years old and he takes advantage of this group. So the Ritter brothers, they essentially expanded their holdings of newspapers too quickly. They had too much debt and they ended up having to sell. So Newhouse was able to buy I think a controlling stake for like $600,000. And so there's a gap though, if you realize that there's a gap between his first newspaper and his second one, there's many, many years in between. So he's 37 years old by the time he has his second newspaper. So, um, I'm currently 35. So like he basically had one newspaper about my age and then two years later he buys a second. And it's interesting, interesting to see his, his progression of his wealth and everything around him is, it definitely seems almost ex exponential because he keeps kind of piling them on over time. So one of the things that, as he's buying one of these things, one of these newspapers is a note in looking beyond the numbers. So circulation increase is great. So that when papers he's bought, the circulation is increasing. So more people are obviously paying for it. But you want to know, and this is the important of understanding the business side of it, like how sticky is the audience? Because just because you have circulation growing, you know, are people, are people gonna stick around? And are your, is your team capable of what's needed for the next phase? And if not, you have to clean house because talent rules everything. And we're seeing this like today with AI companies in 2026 where like we're seeing these mass layoffs just like, because they're not really prepared for the next phase and so they have to make these changes, which is unfortunate. Uh, of course because people lose their jobs, but good for the business itself. And it's funny because Newhouse is just like constantly improving everything. He always looks at how he can make things better and he has this long term thinking that drives his decisions. Which reminds me a lot about, reminds me a lot of Jeff Bezos. I wrote a deep dive on him and read a couple of his books before and he'll definitely be a podcast episode and just had this long term thinking constantly. It's just pretty insane. And so from the book, with Newhouse thinking about preparing his people and all that, Hoffman was, this was the publisher at the time. And so at first looked like Hoffman was right. Circulation dropped off. But at Newhouse, however, was not alarmed. In his mind, there's no choice about what to do in order for the paper to prosper in the long run. And the paper had to take the medicine he prescribed it. By the end of the year, his program was vindicated. Total pay subscriptions were up by more than 2,000. So essentially he Was right. Like he understood the paper was not putting out what it needed to. He made some changes and it ends up growing, which is super important. Next though, we're going to go through a big issue that kind of pops up repeatedly in this story is labor wars. So the American Newspaper Guild was the first national union of editorial workers. They began challenging publishers across the country. And between 1934 and 1938, Newhouse put down four major uprisings. And he was the first newspaper publisher in America to be picketed by editorial workers. And then he was also the first to be struck. And to combat this, he just does crazy things. But like, his methods are like he has a, uh, network of spies at the newspapers. At, at times he kind of uses like the selective intimidation, misdirection, smoke screens, settlements with the guild that weren't really settlements. Guild members were often given late night shifts, bad story assignments, and made to understand that promotion would not come to them. And Newhouse wasn't concerned about the guild overall. Newhouse was just concerned about his papers. He's very focused. No matter what else happened elsewhere, Newhouse is just worried about papers. And it's crazy because like, even when he was being boycotted, boycotted, like it's one of those things where even when he loses, he wins. So he's being boycotted by m. His staff. But he sells more newspapers during that time because people want to know what's happening. It's kind of crazy how this continually comes up. And my note, uh, on all this with his labor stuff, labor disputes and obviously it's like a lot of it's bad. You wish people get paid more and all that, but you have to remember where Psy came from. At 13, he's working full time, support his large family, a family of like eight, uh, brothers and sisters. He doesn't play nice to people. Taking that away. No one's gonna come after him. The things he's worked for, he's been his entire life, he's been bullied, underestimated, and know had to deal with racist, like anti Semitic remarks. So you can understand why he doesn't take well to anyone going against him. He's just not built that way. Like, imagine growing up. Just imagine growing up that way. And every, every day you're made fun of and you're like underestimated. How would you feel like when you finally made some money and then you finally have your own property, your own newspapers, and then people are trying to like boycott you and everything. It's just like, I can, I understand his perspective and why he would act the way he did. And then by this time. So at 39 years old, he's been working full time for 26 years. He has two newspapers. Two newspapers, the advance and the Press. And they're about to become two of the most profitable newspapers in the country. They have a combined circulation of almost 80,000. And by the end of 1934, they netted $250,000, more than 2, more than $3 per subscriber, which is roughly $6.2 million in today's dollars. So by 39 years old, essentially, he has a business that's netting $6.2 million. And his salary is a million dollars. In today's hours, it's like $40,000. So he's doing really, really well. And that sudden wealth only makes him hungrier for more, which, uh, he's often seen from these people, like, they're never satisfied. Like, Cy Newhouse was always looking at William Randolph Hearst in publishing. You know, Steve Jobs had Edwin Land before him, Kobe had Jordan before him. We noticed that the greats emulate the greats, which is probably one of the reasons why you're listening to this podcast. You want to learn from people who are great. You want to learn from people who have succeeded before us. And as humans, we just need examples to follow. I mean, from our youngest ages, we're always looking for people, other humans, for example. And it's no different when you're building a company. So from that, though, we looked to these examples, but then we had to create our own vision, our own version of these things, our own takes on everything. And so the third acquisition of Sign Newhouse is in May of 1935. He's 40 years old, and essentially the Newark Ledger is third in a three paper, three newspaper town. So he paid $310,000 for 51% stock. And his daily schedule is like, rigorous. It's getting up at 6, spent hours at the advance, got to Jamaica, um, by mid morning, then shut out to newark, does, uh, 62 miles a day of driving. And despite the regular schedule, Newhouse seemed to draw energy out, uh, of the fact the Ledger suffered from every practical newspaper problem imaginable. So he gets energy from problems. He just wants to solve problems, and he sees those as opportunities. And so a large group of potential new readers has been created in this market because essentially the other ones, he's finding a way to stand out in the market. The News and Star Eagle, which is his other competition, they made little effort to reach the housewives and kind of suburban town. So Newhouse, with his experience, and he has so much of it by this point in time, he understands suburban readers, he understands rural readers on Staten island and Long island. And he knew that those were some of the most prized customers of, uh, the big downtown merchants. Which, if you think about this, it all comes down to, like, who is making the buying decision for your product and how can you use counter positioning against going out to a different market, against your competitors and applying what you know in one area. So Newhouse had obviously, ah, had newspapers and other areas and apply that to a new area, then just rinse and repeat. And that's what Newhouse seems to do his entire career. He's going from one spot to the next, applying the same formula. And it showcases how the benefits of studying your industry keep paying off again and again and again. And in even finding that he could work with this, this demographic, the housewives, it was a market survey that helped him figure out the actual content. So they told him basically in the surveys that they were desperate for, for relief from the monotony of their days at home. Puzzles, romantic stories, movie gossip, comics, almost anything would do. So Newhouse implements this. He has what people would describe as like a fluffy newspaper, but he doesn't care, because between 1935 and 1938, the per the paper circulation jumped from less than 40,000 to more than 60,000 and advertising increased at even a faster rate. And Newhouse is understanding his business with an accountant that's producing weekly statements for him, kind of summarize, summarizing performance of each department. So he could see kind of at any point in time how they're doing. And he could see it just like, just how far he could push improvements to the limit. So, you know, doubling administrative costs, raising salaries, attracting better people, instituting the carrier system, spending money on structural improvements. He could know exactly how much he could spend on improvements because he knew just how much he could spend before he'd end up losing money, which is super, super useful to understand how to grow this thing and build it for the long term, which is all he was focused on. And he also just never lost faith. While other newspaper publishers, they're coming to doubt the, uh, worth of their business, he persisted. That's all he knew, of course. And it made his family prosperous, and they were his, his route to wealth and security. While others were worried about eventually radio comes up and other things come up, Newhouse still kept to his papers and eventually expanded. But it was very important and a way that he could understand the way he could grow all this thing was he just watched his cost repeatedly. He trusts his knowledge and he doubles down on newspapers even as radio is growing. And eventually, like I said, buy some, some radio, but some radio stations. But he's a phenomenal operator. He knows his costs, he watches his costs, and he understands from that, then every dollar he saves goes into profit for his company. And then he can buy more newspapers, which is what he wanted. He wanted this empire. And speaking, uh, of empire, because New Newhouse had victory over the Newspaper Guild, word spread about that. And Hearst is in San Simeon, so the, uh, west coast in California. And essentially Hearst hears about it, he has his talent scout invite Newhouse to lunch, and essentially they ask him, like, would he want to be publisher of a New York Journal, which was Hearst's favorite newspaper? And crazy thing is, like, even though he had this vision of the empire he wanted to build, essentially this is like his, his idol. William Randolph Hearst was the man for side Newhouse, and the Journal was his favorite newspaper. So of course he was interested. And he even, because he's so smart, he wants the upside always. He hasn't even asked for a salary sa New House just wants to share profits of the paper, uh, because they be a result of his efforts. And so without the intervention of Paul Block, who owned the Star Eagle in Newark and was one of Newhouse's kind of toughest competitors, Newhouse might have ended up joining the empire of Hearst. So Paul Block hears about the potential offer, and then he immediately hooks his private rail car to a, uh, train for California and rode directly to San Simeon, where he dissuaded Hurst from offering Newhouse the job. And it's one, there's a couple things here. One, negotiating for upside tied to effort is so incredibly smart to show up in person because Paul Block did that. It's one of those things where it's like, get on the plane, get on the train, whatever. Paul Block was able to block this because he moved immediately and he showed up in person. But actually, it's a godsend for Newhouse because if you want to build wealth in an empire, it's not going to happen with the job. Someone. Newhouse's biggest growth came after this, which is just crazy. So in 1939, Newhouse is 44 years old and there's three newspapers in Syracuse and they have a circulation of about like, I don't know, like a hundred, uh, a couple hundred thousand, like 176,000 copies a day in a city of 250,000. And then 269,000 on Sunday. Not important details necessarily, but just to show you how big they are. But the resources are spread too thin in this city. So Newhouse had already dealt with this on a smaller scale. And the lucky thing for him is Hearst was selling his unprofitable newspapers. And so he discovered that Hearst is selling a paper that's essentially owed 600,000 in dividends to preferred shareholders. Knowing that information, Newhouse is able to, for $1.9 million, acquire actually two newspapers at once. And he did this with pattern recognition. He sees potential where others don't. And that's the thing you'll see repeatedly from this story. He's always finding opportunities and potential where others don't see it constantly. So Neuhaus ends up having to kind of keep his presence in town secret, which is another lesson you'll learn. People generally kind of mistrusted downstaters, uh, particularly from New York. So he paid the owners of the Herald a million dollars on the condition that they would stay on to run the combined publication and give the appearance of being owners. And so then Newhouse gets to essentially buy both newspapers for $1.9 million. And it's this whole thing of like, uh, it's funny, the Lil Wayne line comes into mind here was like real G is moving signs like lasagna. Newhouse was a real G. He always moved in silence whenever he could. There's no advantage to being public about the information. And it also reminds me of Rockefeller. Like if you look at anything Rockefeller has done, it's like people don't know which businesses he owns, which only works to his advantage, which Newhouse use repeatedly. So if Cy Newhouse implements, uh, a strategy he would do again and again and again here, where the first issue of the Journal hits the streets and he quickly lays off 428 Journal employees who are no longer needed, he essentially combines the newspapers. And so by combining the operations, Newhouse cut seven lines, seven cents a line off the cost of publishing ads. And that gives him a lever. So instead of raising prices, even though he combined these two newspapers, instead of raising prices to advertisers, he actually offers merchants a, uh, 35% discount and they end up spending like 30% more over time. So he was already saving more than $500,000 in salaries because he's, he cut all these workers. But now he could pick up a million dollars in new revenue and most of it was basically pure profit. And at that rate, he would essentially recoup his entire investment in less than three Years. And the only competitor left in Syracuse because he bought the Herald and he bought the Journal was the Post Standard and Jerome Barnum. He was actually someone who was incredibly rude to Newhouse years, years, years and years back, basically. And Newhouse is vindictive, as I told you so. Jerome Barnes, Post Standard, who's was so mean to Newhouse. They're eventually in so much trouble that they offer to sell a newhouse for $1.3 million, which was actually far less than the cost of a new plant they just had just created. They just create a new plant to produce the paper, and they sell a new house for less than that even. So Newhouse takes complete control in January, January 14, 1942. And that all happened because Newhouse knew he had leverage because he lowered the advertising rates, got more of the advertisers in his papers, which was, which means there was less for his competition. And he ends up buying, buying his competitor at a reduced cost. It is just. He's masterful understanding monopolies, understanding different levers he can pull, understanding what happens if he does different moves. Like, he's just such a tactician. It's just incredibly impressive. And you see this again and again with him. And you can see why over time, when you com, when you compound this year after year, acquisition after acquisition, it turns into something incredible. And he's also a man of just like, say, he's very disciplined. And here's one, um, one story from him. So starting in summer of 1942, almost every Tuesday evening at Grand Central Station, he'd board the overnight train for Syracuse in a sleeping car. He'd prop his head on three pillows, try to get a few hours of sleep before daybreak. The train would pull in around 3am he'd emerge at 6, overnight bag in one hand, small briefcase in the other, breakfast at the Syracuse Hotel, then walk into the Herald Journal, same routine year after year until 1977, when he was 82 years old. He has like the same routine for 35 years. This man is a machine. It's pretty, um, impressive at the time. I think he has like millions of pages being printed. He's always asking, like, what is the cost per page to produce the paper in the past week, how many pages the paper had actually printed, how much of that had been advertising, and what were the circulation figures? He asked all of this to get to nitty gritty of details because even if the costs change like 1000th of a of a cent, it would mean thousands and thousands of dollars that could, would either Cost them more or save them more money. It's just like Rockefeller again, where he's asking about, like, how many drops of solder. I think, uh, in one of these stories you hear about him, and he's like. Goes from, like, 40 to 38. It's too much. Goes to 39. Saves a drop on everyone. And, like, those savings add up when he has so many of them. Because with Newhouse, he's printing millions of pages a week across his empire. So it matters so much. And now we're against, like, empire buildings at the time. New House is in the late 40s, and by the early 1940s, you have Staten Island, Long Island, Jamaica, Port Richmond, Newark, Syracuse. Newhouse has newspapers in each of those. And so he did the same playbook with Paul Blocks work Star Eagle, merged it with the Ledger form the star ledger, let 300 employees go, saves money, consolidates. It's the same playbook again and again. Which, yeah, it's crazy, but every time he buys a newspaper, the money is piling up, and he puts it into another newspaper. And it's crazy. These people who treat him wrong, again and again. He's like Michael Jordan, where it's like, I took it personally. That is S. Newhouse. His entire career, he's always playing the long game. And he actually acquires one of his partner's stakes, uh, 17% stake in the company, who, at 60 years old, his partner Hoffman, wanted to fulfill a dream of owning a baseball team. And Newhouse gets his stake for, like, $2 million. So he just wants to own everything. And you see this kind of again and again. And, oh, the other thing is just seeing, like, how vindictive he is. He meets Walter Dear, the publisher of the Jersey Journal in Jersey City. And the Journal had pushed Cy around mercilessly when he was a teenager selling ads in Bayonne for, uh, the Bayonne Times. And these indignities stay with him. He ends up buying the Jersey journal for, like, $450,000, all cash at the time. His father, who's in the hospital, like, on his deathbed, who ends up dying in 1945, he asked, like, what do you need it for? And he just never gets a good response. But in this, because they had treated him so bad, said the Jersey Journal, when he was little, he made basically no personnel changes except for one. Here's a quote from the book. The woman who had given him such a tough time picking up ad proofs three decades before was still working for the Journal when Newhouse took over. She found herself out of a job that is like next level pettiness and vindictiveness. That's just like, it's crazy. But one of the things that you see with Newhouse over time, because he's buying all these newspapers and uh, we'll go into a little bit more of what he does afterwards with it, but he becomes the preferred buyer for newspapers. So people are now, by this point, they're coming to him and so they, he becomes kind of like the buyer of choice. It reminds me a lot of Charlie Munger, Warren Buffett from Berkshire Hathaway, like how they become the preferred buyers of companies. And you see some of these other holding companies and that they're becoming the preferred buyers. And it happens over time when you build a reputation, which is exactly what Newhouse did. And so by 1947 he's around 52 years old. He deals with, there's so much uh, like fronts and indirection he uses to buy newspapers, which ends up happening. He buys one essentially he has, uses a front with his old ally, Edwin Russell, because the seller of this patriot company in Harrisburg, Andy McCormick, wants someone of a good family and high social standing and didn't want out um, of towners or train operators to, to buy it. So Newhouse's buddy Edwin Russell, he married into the Churchill family. Basically he used him as a front for the buyer and ends up buying this newspaper. But even to disguise it, Newhouse actually submits a separate bid $50,000 higher than Russell's. So he would appear like a loser in the selection process and people would just be like, be less suspicious that he was a buyer. Uh, he's a master. He learned from Hearst because Hurst the same thing. He used indirection at times to buy what he wanted to as far as properties, newspaper properties. And there's a value in being secretive with these things. And it also reminds me of just like Edwin Russell, the reason why he worked with Newhouse on this and was willing to be a front is because it was a long term relationship that Newhouse had for a very long time, many years. And that's what ended um, up letting him buy this newspaper where he merges this with another one. He orders all the competing paper, the competing papers, presses and machines broken down and card out essentially so no competitors could come in. So again, understanding monopolies, understanding the dynamics, he's basically just eliminating the opportunity for someone to come in and create a competing paper. Which reminds me a lot actually of uh, maybe this is a few years back, but a lot of tech companies would just Be hiring at massive, massive salaries. I mean even today, I guess in AI just to keep the talent in house and at their company. Like it's just how you do it. It's like almost anti competitive where not only are they helping your company, but because they're at your company, they're not at someone else's company if they're a good talent, which is something we see again and again. And so in Harrysburg, actually one of the things he does was super smart. So you knew that Sunday was like the best advertising day of the week. And he knew also that papers that were like 105 miles away in Philadelphia on Sundays were selling briskly in Harrisburg. So he tested that. He basically tested Sunday, Sunday edition in Harrisburg as well. And at first he sold ads, uh, a big discount did contest. He did a big dinner with like 300 to 400 business owners at a hotel, showed them dummy papers and that ended up doing 60,000 in circulation the first year. And in five years 150,000 in circulation in a town with only 22 to 24,000 homes. Which is a big lesson in, you know, what is already selling somewhere else, what's already working somewhere else. Do that where you are like if you see something working in another market, can you apply it to your market? If you see something working in another industry, how can you apply it to your industry? It's just something that is super smart. And at the time, I'll just read it from the book. But up until this point, a journalist named AJ Liebling had called Newhouse a journalist, chiffoner, the French word for ragman or rag picker, spending his time digging in the garbage can of American papers. That's how Newhouse was regarded by this time, and this is late 1950. Newhouse is 55 years old. He's very wealthy, uh, by this point for sure, but not very distinguished in terms of the properties he has. But the Portland Oregonian, which is widely regarded as basically the finest paper like west of the Rockies, north of San Francisco, um, great reporters, phenomenal. Their owners made a mistake of constructing a headquarters they couldn't afford and so they end up having to sell. And of course because of his reputation, he's able to buy the newspaper. They basically come to him. And the crazy part is at this time the idea of buying a newspaper on the other side of the country just hadn't really occurred to him because he's staying in this like little area that he can visit all of this. But it changed everything for him. And he used A smart valuation method, too. Like, at the time, newspapers were generally valued at 10 times their net earnings. So the Oregonian was worth roughly two and a half million dollars by that standard. McNaughton, who's a guy selling this for the family, wanted $5.6 million, which is crazy. Like, you're thinking it's twice as much as it should be worth already. Doesn't make sense. But Newhouse has a different framework. He wants to know what could he realistically earn from a property over the next decade? Again, thinking long term here. That's what the property is worth to him. And he figured he could earn at least $8 million for the Oregonian by 1960. So he accepts immediately. And him going against, quote, generally accepted ways, uh, of valuing a business or industry standard is just classic Newhouse. So just find a way. It's almost like Elon in some ways, like, first principles. What are things worth? How do you value things? And the sale of the Oregonian, so New House, buying it made him a national figure overnight. It kind of changed the game for people to understand, like, who is signed Newhouse. And so he's a national figure by, like, 55 years old, 42 years after working full time, 39 years after he starts working for the bayonne times, at 16 years old, 39 years, he makes his biggest purchase. It's decades after his first purchase. Imagine how he stopped, where he would have been. Like, he. It's pretty insane. But also one thing to understand from this. This purchase is like, and this is a recurring theme in the book, second order effects. Understanding second order effects of anything. And the second order effect of paying so much for the Oregonian is it drove up the price of other newspapers. Yes, it opened doors because Newhouse was now the preferred buyer, even more so because he was willing to pay so much. But it also increased the price. So it's kind of like catch 22 almost. And the key ingredient for all this and why he ends up being, like, the preferred buyer. Not only the price, but this idea of local autonomy. So Newhouse rarely read any of his papers. He preferred the New York Times. And he didn't care much for what was printed as long as advertising and circulation continued to climb. He's never. He never interfered with editorial affairs. And that was actually something that the many of the families and people who were selling these newspapers cared about. They didn't want people to meddle with the newsletter, the newspaper itself. They want anyone to get in the way of that. And so that was an important piece of it called local autonomy. Let them do what they want to do, basically. And, you know, you're thinking after this, like, he's unstoppable, making acquisition, actor after acquisition, and he's like, you know, can't be touched. That's not exactly right. He makes one of the biggest mistakes. M. You call it a mistake, you call it a, a learning lesson, whatever. But he tries to buy the Denver Post and he has a part of it. Um, but essentially for 13 years, he fights to own the Denver Post and loses. It starts in 1960. It's basically one of, like, the crown jewels of American newspapers. And it's controlled by two sisters, Helen and May Bonfields, the daughters of the paper's founder, Frederick Bonfields. And the sisters hate each other. May wants out, so she actually sells like a 15% stake, uh, directed a new house. He thought it was like a foothold into the business, but it turns out to be like a terrible thing that takes up so much of his time because Helen will just never sell to an outsider, let alone a Jewish one from New York. She lawyered up immediately, brought in a very high powered lawyer from New York, and she was not going to sell this newspaper, the rest of the newspaper, at least to Newhouse. And the thing from this is like Newhouse had like, more stock at one point. Like, everything about this goes wrong for, for Newhouse. And part of it is because he was too cocky. And he makes a mistake in underestimating Helen Bonfields. He underestimated both her and her lawyer. And it's one of these lessons you learn from a book like this. In a story like this, it's like, it doesn't pay to underestimate opponents. It's just not worth it. Like, why would you, why would you do that? It just doesn't make sense to me. So it's crazy. But it is one of those things where this, you know, trying to land the Denver Post. He's. Newhouse is willing to do what others are not. He's willing to take risk. He's willing to make choices that others probably would not do. He, uh, I mean, he's willing to deal with disgruntled families again and again. There's actually a few examples that don't work out. But he's willing to play that game because he knows what he wants. He has a clear vision. He wants to own more newspapers than anyone else in the country. He eventually does it because he's, he's willing to take risks like this, even if he spends 13 years trying to take over this Denver newspaper, uh, the Denver Post. And he ends up losing. But he learns to be more careful, more selective. And he kind of starts thinking himself as more of a collector rather than, um, a conqueror. He wants kind of like gems to add to his crown. It's kind of a funny way of looking at it. But he does get a gem, uh, very soon after this because around this time I should say, because in 1959 he purchases Conde Nast. And so he didn't have magazines before this. He wanted publications that could match Hearst's trio of Cosmopolitan, Good Housekeeping, Harper's Bazaar. And so Conde Nast has some, some troubles, but it owns the Time like Vogue, Glamour, House and Garden, young brides and. But the problem is on gross revenues of $30 million, it's losing $500,000 a year. But Newhouse saw potential. It's a women's, ah, magazines carried vast amounts of advertising and had tremendous room for growth. And there's another news, uh, there's another magazine chain for sale which is street and Smith. So he merged kind of Nast with Street and Smith, which is the oldest magazine firm in America. And he essentially uses the same playbook with newspapers as a magazines. He gets the same sort of savings he managed with newspapers in Long Island City and Syracuse and Newark and Harrisburg. And he also gets the benefit of the Henry Garfinkel relationship where it pays off because, uh, by this time, which is just a crazy scenario here, by the time Garfinkel's company, which remember he made those interest fee loans for him like decades before, his company owns 50% of all newsstand magazine sales in America, which is just freaking wild. And within, within nine months of New House taking over Cond, they go from losing $500,000 to having profits of $1.627 million. And it's clear for Newhouse that billion empire by this time is his like singular focus. And so he uses the same concepts and applies them to different domains. If there's nothing you take, uh, nothing else you take away from him, it's like, do that again and again. He understands fundamentals, he understands how to operationally run these companies and just applies it to different ones. And so by the late, by the late 1960s, he has 22 newspapers in 16 cities producing more than 3.2 million papers daily, grossing half a billion dollars a, ah, year in the 1960s. And yet he's running this vast empire with all the finesse of the proprietor of a family store. There's no central headquarters, there's no Org chart. There's no management strategies, no centralized mechanisms for planning and budgeting. And the reason I think this is all about speed. Newhouse moves so quickly. He is just all about speed. He's in a hurry to build an empire. And, um, it's crazy, it's a funny story where it's like for advice, he relied mostly on his account, his lawyer, and like his two brothers at the time, frequently calling the last of these three in the middle of the night. So he called his brothers, after all, he would tell Norman and Ted, if I can't sleep, why should you? Which is just so indicative who Newhouse is, uh, which is kind of crazy. And it's funny because they mentioned the book like this is basically running this as like a management consultant's nightmare. But it was a, a model of efficiency and it was turning out profits at least twice that of its nearest competitors, which is just, I don't know, it's just crazy how efficient this guy is and how he's able to do this over time. And here's a little bit more about, like, who he is as a person. So, like, very few people could enjoy his company. Essentially, like, he, nothing to him was more wasteful than idle conversation. And so whenever someone would enter his office, he stood up immediately to greet the visitor and remained standing throughout the meeting just so he would get the get to the point, basically. And. But he was also unfailingly polite to strangers, elevator operators, clerks, and people who worked for him. He was very aware that a good personal reputation could never hurt him in his business dealings. And two examples of that were, like, one, he wouldn't hire a man who he saw be rude to waiters. And two was, there's this judge assigned to a case in Syracuse, happened to be having breakfast at a place that Newhouse frequented. And the judge asked the man, um, must have made ord basically, if he knew Newhouse and what he thought of him. And the man said, there was no finer man that had been in this dining room. The case went in Newhouse's favor after that. And this is funny, like Newhouse says, like, that was the one time that the five dollar tip paid off. And here's one of like the final, this is the final deal actually of, uh, Newhouse's career. And after he acquired the Cleveland Plain Dealer in another deal, because he acquires so many, I can't discuss all of them, he basically made like, no major newspaper purchases in eight years. And his attitude had changed. You know, he's now thinking of himself as A collector. And the goal is to find these gems, right? So at the time, this is like 1976, Newhouse offered $100 million to the Washington Post. Katherine Graham turned him down. He also offered more for the New York Times, but they basically laughed at him, like the deal was not taken seriously at all. But then he finds this Booth chain of eight Michigan newspapers. They were operating as monopolies in their cities and on, um, revenue of $200 million in 1975, the company netted $16 million after taxes. They had modern equipment, and they also had a 16% interest in Parade magazine, which had a circulation of 20 million. So Newhouse is 80 years old at this time. 80. And he's still able to spot these, like, golden opportunities others can't. And he tells his boys something that you should, like, listen to and keep close to you. He tells his boys, you've got to learn in life that nothing worth getting ever comes to you without having to fight for it. So, November 8, 1976, after more than six decades in the newspaper business, Newhouse concluded his final transaction for a total of $305 million. The eight Booth newspapers and Parade magazine likely to remain the biggest American newspaper deal of, uh, the 20th century. And in wrapping this up and thinking about Newhouse, it's crazy how good at his job he was, and he obviously enjoyed it immensely. That's what he wanted to do. He wanted to build this newspaper empire. It got his family out of poverty. It gave him meaning. Like, there's so much to it. He accomplished his goal. By 1962, he actually accomplished his goal of owning more newspapers than any publisher in America. He owned 19 at that point in time, which is crazy when you think about, he bought the Staten island, advanced in 1922. He was 27 years old. And 40 years later, he would own more newspapers than any man in the country. It's. It's crazy. And, um, one of the things the book says is like, the life of Sy Newhouse must be regarded as one of the great success stories of our time. Despite handicaps that would have discouraged even Horatio Algier, he put together the greatest newspaper publishing empire in American history. Moreover, he did it himself with a passion for hard work, true genius, and a tremendous sense of optimism about his business, which I think is incredible. And his singular focus on these business of newspapers, the business of newspapers, not the newspapers himself, but the business of newspapers is what helped him. Final thought is, you need to be honest about what you want in life and who you are and go after it. With single minded focus. That is definitely what S. Newhouse did, which is incredibly impressive. And it's crazy. Just he starts at 13. Think about this for a second. He starts at 13 years old, he's working full time. By 55, he becomes a national figure. By 80, he makes his final deal and it's his largest to date. And then at 84 years old, when someone from Syracuse is asking him essentially for more money to, to donate to the university, which he ends up donating a lot of money, they ask him about trying to get him to, to spend more money here. And his wife is like trying to change the subject because he's not being very receptive and his wife is talking about this home in Florida and Newhouse is like, I'd rather buy another newspaper than a house in Florida at 84 years old. And he dies a few weeks later. A life spent doing what you want, building what you want. I think it's a damn good life. That's life aside, Newhouse, thanks for listening. Catch you in the next episode.