Autumn of the Moguls: My Misadventures with the Titans, Poseurs, and Money Guys who Mastered and Messed Up Big Media

New York magazine, started in 1968, was a vast success. Rolling Stone moved to New York from San Francisco in 1977. New Times, a biweekly alternative newsmagazine, where I went to work, was started by former Time Inc.-ers. Mort Zuckerman bought the Atlantic with great fanfare. Harper’s was not that far removed from the era of Willie Morris (the great editor of his generation). Even Condé Nast, then just a rag-trade publisher, wanted in on the game, and launched a revival of Vanity Fair. Manhattan, inc., and Spy would shortly come onto the scene.

And yet, if you had a truly special sensitivity you might have recognized that there were roiling waters. You could have read these magazines themselves—so many of them doomed—and learned everything you had to know: The rise of Hollywood and the value of celebrities and the rise of a business culture full of its own Zeitgeisty cowboy personalities, which, every day, was setting a new baseline of what represented real and attainable wealth, was changing everything.

I was trying to make my writerly way when I heard that Steve Rattner was leaving the Times to go into investment banking.

How did he know, I have spent a lot of time wondering since then, that everything was about to change?

In hindsight, the business explanation is clear: One result of the late-seventies fiscal crisis in New York was that the financial industry and the power of finance, public and private, expanded vastly. Then too, there was the Reagan era of deregulation, an end to inflation, massive deficit spending, and the bulge of baby boomers in their prime earning years.

But this still does not explain the scale of the transformation, neither the economic nor the cultural transformation: Virtually everything became a reflection of how it was financed.

6 (#ulink_eab42f3b-d8be-5d8b-ac7c-4d4bd9100ac4)

MY THEORY (#ulink_eab42f3b-d8be-5d8b-ac7c-4d4bd9100ac4)

Corporate America, heretofore, was a white-bread, repressed, deeply uncool place to be—but then, all of a sudden, corporate man became a sexy thing.

My own favorite theory for what caused business to become such a compelling sport and transforming experience was the advent of the spreadsheet. This came in ’82 or ’83, shortly after the introduction and widespread adoption of the IBM PC: first VisiCalc, then Lotus 1-2-3, and then, of course, Excel. If you could work a spreadsheet, money suddenly became a highly fluid concept—the buck never stopped anywhere (oddly, during the eighties, bottom line became a metaphor for something absolute and irreducible when, in fact, the bottom line was becoming ever more elusive).

Financial strategy became like a war game. If you played it one way, you risked the end of the world, but if you changed a variable, you were safe and secure. Business reality became wonderfully plastic (running numbers has about the same relationship to actual business as sex fantasies do to sex—indeed, running numbers gets to be a sort of fetish).

Financial engineering (the term of art for the business that grew up around working a spreadsheet) becomes as complex as any activity becomes when you increase the variables exponentially. “Can he keep track of the moving pieces?” was what got asked about prospective managers of high-flying companies. The question was not, “Can he work hard and focus on the many details of the business?” Rather it was, “Can he appreciate that business has become a Rube Goldberg system of effects and countereffects, of balancing one representation against its counterrepresentation (what the Street is told versus what the media is told versus what the employees are told), of keeping not two sets of books but as many sets as can be imagined (the spreadsheet accommodates all fantasies)?”

In short order, business became way too complex for mere businessmen—the pallid, gray dad types of the past. Business suddenly demanded a different caliber of brainpower and temperament.

Everybody was catching the spirit. There was a revolutionary quality to what was going on—the old order was being swept away (indeed, almost everybody from the prior business generation was exiled).

Every day it was happening: Absolute nobodies, with only heart and imagination—and strange new ideas about how to analyze and manipulate numbers—took over heretofore unassailable, invulnerable, and oppressively dreary great American corporations. It was a class overthrow: outsiders against insiders, smarties against dopes, risk takers against old farts.

Business, which used to be a specialized, opaque, conservative activity—something like the military—became the national pastime. If you weren’t taking over companies, you were getting into the stock market, watching the miracle of those mutuals and 401(k)’s going up and up. If you weren’t an entrepreneur working spreadsheets to start your own dreamy enterprise, you were an option holder in someone else’s dream.

Everybody was in business. Everything became business—technology, entertainment, news, even academia. And if it was already business, it could always be made more businessy—Enron was a Texas oil company that transformed itself into a global financial enterprise. Financing something, or refinancing something—the moment when reality always suffered its greatest adjustments—became the nation’s central economic activity.

The culture at large may have been dumbed down, but business culture was smart, competitive, obsessive, relentless in its pursuit of the next best idea. Business became the ultimate abstraction. A new, near-philosophical language was invented to deal with the many-hued nature of reality and nonreality that the world of business was defining (it was as Utopian as the language of revolution). Business became the focus of how people related to one another, of how communities were created, of how human progress was made. Business, as a system of logic that would allow you to accomplish any goal, at potential great benefit to everyone (and with a little extra to the person running the spreadsheet), was the metaphor of the age: The rich would get richer, and so would everybody else.

And the rich would get richer to a degree that had no precedent in history.

If he had not left the New York Times, Rattner would have earned, in twenty years, assuming a stellar career, an aggregate of $3 million to $5 million dollars (he would have been making about $50,000 in 1982 and something more than $300,000 in 2002). In twenty years as an investment banker (he was already making $1 million a year two years into his new job) with a stellar career he would have earned $300 million to $500 million.

The point is not just the hundredfold difference. It is that in the former scenario, he and his family would have lived a middle-class life in Manhattan or the suburbs, with minimal net worth to show for it, while in the latter he would have both supported his family in maximum style, while his net worth appreciated vastly, supplying his family with almost unlimited wealth for generations to come.

In other words, the difference here is not just between a reporter who makes less than a banker and lives a different sort of lifestyle (say between the Upper West Side and Larchmont—as it might have been in the fifties, sixties, and seventies), but between a reporter without assets and one of the richest men in the world, between a functionary in the information business and one of its key leaders.

Even if Steve Rattner had become the executive editor of the New York Times—that could hardly compare with the personal influence and freedom he had achieved.

He had gone to Lehman Bros, then to Morgan Stanley, and then to Lazard Frères, where he was the number two.

Lazard, for a long time, remained a rarefied Wall Street place. It was not so much a player as the firm that played the players. It sold pure knowingness, synthesis, metathinking. It made its money not through the amassing of so many less-dignified commissions, or through the creation and retailing of financial instruments, but through the discipline and mystique of the mandarin.

These were the behind-the-curtain players.

In some sense, Rattner finds the true value here of the New York Times. The $50,000-a-year job he had in 1982 is converted into a $20-or $30- or $40-million-a-year job.

This is almost a pure business-model point. You can retail your expertise the way a newspaper does, or you can do it the way an exclusive investment banking firm does. The point is about packaging and distribution.

There’s a personal point too, of course. Few New York Times reporters, even the best business-desk people, could show up downtown and be seen to have great value to anyone. They are sloppy, and literal, and indiscreet—all flat affect.

The value, however, is in the package—in talking the talk and walking the walk.

Rattner is, too, by temperament, a social climber. This is a rarer attribute than you might think in this celebrity age; most people, in and out of business, have a natural and ingrained reticence. They’re shy. Insecure. Afraid. Ashamed.

Social climbing requires complex emotional breadth and stamina—and often a novelist’s, or courtesan’s, understanding of individual value and distinction and of the myriad underlying relationships in any given room, or professional or social circumstance.

You have to be both arrogant and obsequious.

You have to be able to both know your place and to be able to cleverly advance it.

You have to be shameless.

Indeed, the premium on social climbing and starfucking, and people who have the shamelessness to engage in it, is so great that it has meant that a great number of vulgar, tawdry, unrefined people have been accepted into and elevated up the social and business ranks.

Rattner had the great advantage then of being an active and willing social climber but not being sleazy. He was very smooth.

He has a certain degree of Wasp aestheticism—or Wasp envy. Formality. Reserve. Efficiency. Soft-spokenness. (He was a kind of perfect museum board member.)

As it happens, none of these are particular virtues of media moguls. But Rattner’s qualities turned out to be good banker qualities, especially for the Lazard kind of banker. He seemed like a wise man and a careful man, and a man who kept confidences and secrets.

There were suddenly, however, much easier ways to make much more money than the way Lazard was making it—and Lazard was making a lot of money.

For the three or four or five years of the big boom (depending when you got with the boom), what you wanted to be doing was owning pieces of these vastly inflating enterprises. You didn’t want to be just in the advisory and fee-generating business—which Lazard was in. You wanted to be buying into, at a ground floor price, some of the most outrageous wealth-creation schemes (i.e., stock speculations) that have ever been created.

You wanted to be a promoter rather than an advisor.

Now, there were reasons that you wouldn’t want to be this. To be an advisor was not only fiscally more prudent, but it was not sleazy. Indeed, that is what you were selling: I’m not sleazy.

But the sheer breathtaking, beyond-imagination amounts of money that could easily be made destablized these trade-offs and underlying value propositions. There was no kind of respectability that could compete with the respectability that came from billions. And the more people who made these billions, the less respectable you seemed without you yourself having billions.

So Lazard, in the last years of the boom, clinging to respectability looked dowdy, out-of-it, failing.

Now, Rattner was fabulously rich anyway. He didn’t need Lazard anymore. Rather, he seemed to have already designed his segue. He had risen through the ranks of Clinton administration favorites, contributing money, raising money, playing personal host to the homeless first family. He had even now successfully transferred this affinity to Gore and his prospective administration.

He was about to be that historically important figure, the Wall Street guy who goes to Washington.

The upside here was really fabulous. He had made hundreds of millions, and now he was going to have historical stature added to the résumé (and be able to someday go back and make, potentially, hundreds of millions more). He was going to be Bob Rubin, or even Clark Clifford.

But it didn’t turn out that way. The Democrats died.

Hence, Quadrangle.