Yale Bulletin and Calendar

October 18-25, 1999Volume 28, Number 9













Communications mogul John Malone offers
advice to students: 'Be willing to take risks'

John Malone '63 is certain that he never would have become one of the most successful entrepreneurs in the communications industry if he had let conventional wisdom be his guide.

He credits a daring to be different, which he recalls having since early childhood, as one of the main keys to his success in the highly competitive, "rough and tumble" industry, he told the audience for his Sheffield Fellowship address on Oct. 7.

In his talk, titled "Surviving the Communications Revolution," the Yale alumnus offered words of wisdom and passed along career advice to the students in his audience in Sheffield-Sterling-Strathcona Hall, where he had once listened to lectures as an undergraduate majoring in electrical engineering and economics.

"If you accept conventional wisdom, you are accepting, at best, average results," Malone told his audience. "If you want superior results, you have to push boundaries. You've got to bang against the wall, challenge the common perception ... and be willing to take risks as you're doing it."

It was only by taking some risks and trying the untried that Malone was able to transform a nearly bankrupt cable company into one of the giants in the industry, he said.

When Malone started working in the early 1970s for Tele-Communications Inc. (TCI), the company had revenues of $12 million and debts of $132 million, he noted. During his third day on the job as TCI's president and chief executive officer, he recalled, someone from a bank that had loaned money to the company called to ask how TCI was going to pay back what it had borrowed. Malone responded, "I haven't found anything in the files that tells me how we are going to pay you back, but maybe you have something in your files."

He drew loud laughter from his audience when he followed that quip with, "I'm now on the board of that bank [the Bank of New York], so things have a way of working out."

In its early days, TCI struggled to stay in the cable television business and managed not to be bought out by such large competitors as Westinghouse, General Electric and Warner Communications, among others, said Malone, who worked for the company for over two decades. Through a combination of "dumb luck" and innovative investing, TCI eventually grew to the point where Malone no longer feared it would be bought out; instead, the company was investing in such major cable operators as HBO, Turner, CNN, the SuperStation and others.

"Little by little we were able to grow the company through investments and acquisitions," said Malone. He added, however, that even as late as 1986, the company's success could not be measured in terms of its earnings, and sometimes, explaining his unconventional philosophy about investing was a challenge. Malone recalled that if a shareholder asked the question "What are your earnings going to be next quarter?" the Yale alumnus would have to reply, "You're in the wrong meeting. We don't have earnings, we don't intend to have earnings, we may never have earnings. Why don't you ask me how much we're going to be worth next quarter?"

The alumnus credits his Yale education in engineering with contributing to the company's eventual success, since it gave him the technical background and analytical skills to know which directions to take the company in and which ones to avoid.

"We were at what was then the early intersection between media and communications," Malone said. "We were able, over time, to build ourselves a whole series of technologies and disciplines that took us in directions that normally you wouldn't think to go in."

Malone said that one of the best pieces of advice he ever received came early in his career from the chair of General Instrument Corporation (GI), where the alumnus worked prior to joining TCI. "He told me to always ask the question 'If not?' In other words, always evaluate whether maybe your assumptions are wrong," said Malone, who also worked earlier in his career for Bell Telephone Laboratories/AT&T and McKinsey & Company.

Malone was chair and chief executive officer of TCI when the company was bought by AT&T for more than $59 billion earlier this year. Since 1990, he has been chair of Liberty Media Corporation, which has stakes in numerous major cable, telecommunications and media companies, including Sprint PCS, TV Guide, Time-Warner, AT&T and Motorola, to name just a few.

Equally known for his investment and technological savvy, Malone, a native of Milford, Connecticut, has been honored many times throughout his career, winning such accolades as the National Cable Television Association's Vanguard Award, the industry's highest honor. He's also a four-time winner of the Wall Street Transcript's Gold Award for the cable industry's best CEO.

Following his Sheffield Address, Malone answered questions from the audience on subjects ranging from privacy issues in today's electronic age to regulation of the Internet.

Such issues, he noted, are an indication of the vast changes that technology has brought to the world. "Every day you wake up, the world changes," he told the audience. "Think about anything you learn in school -- if it's a fact, it will probably change in three to five years. Change is the only stable thing."

Malone added that he is optimistic about how recent and forthcoming technological advances will affect the nation's future.

"This can be the Golden Age," he said. "Our standard of living and productivity can be so good as a result. I think things will get so good that wealth distribution may not be an issue in another 10 years."

-- By Susan Gonzalez


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