Entrepreneurial Leadership - Billionaire Dr John Malone

This article is based on a personal interview withembrace the challenges of the new job and run
Dr. John Malone at his Liberty Media Corp. offices"the entire business as the new President and
in Englewood, Colorado. Dr. Malone was one ofCEO." Malone's shared that his "first crisis at TCI
sixteen prominent successful leaders andwas a dangerous cash flow problem." Over the
entrepreneurs included: Dr. Anthony Bonanzino,next thirty years, Dr. Malone fought many battles
Jack Canfield, William Draper III, Mark Victorwith other operators, suppliers, local politicians,
Hansen, U.S. Senator Orrin Hatch (R-UT), Monzerstate and federal cable regulators, and the U.S.
Hourani, U.S. Senator Daniel Inouye (D-HI), J.Congress. Dr. Malone credits Robert Magness as
Terrence Lanni, Dr. John Malone, Angelo Mozilo,one of two key mentors in his life. Malone and
Laurence Pino, Dr. Nido Qubein, U.S. Army MajorMagness, battled their foes together to build there
General Sid Shachnow (Ret.), Dr. John Sperling, Dr.company TeleCommications Inc. (TCI) into the
Blenda Wilson, and Zig Ziglar.world's largest cable television company.
This groundbreaking Leadership andJohn Malone faced a number of major obstacles
Entrepreneurship Research was peer debriefed byboth personally and professionally, after the death
five internationally known and well respectedof his mentor and partner, Robert Magness, the
leadership scholars, who all offered their reviewsmajority shareholder of TCI. Robert Magness's
and positive comments on this groundbreakingwidow (his second and much younger wife) and
leadership and entrepreneurship research andBob's two adult sons waged a major battled with
findings including: Dr. Kenneth Blanchard, Dr. JohnBob's hand-picked trustees, who were all trusted
Kotter, Professor Jim Kouzes, Dr. Paul Stoltz, andTCI senior executives. Dr. Malone was not a
Dr. Meg Wheatley.Trustee and not involved with the sale of
Dr. John Malone, the founder and currentMagness's TCI stock. Dr. Malone, knowing that
Chairman, Chief Executive Officer, and Director ofRobert Magness's heirs shares were the controlling
the Liberty Media Corp. shared his views on bothinterest in TCI, John sought financial support from
entrepreneurship and leadership. John Malone buildWilliam Gates III (Microsoft) and Brian Roberts
up his prior successful entrepreneurial venture(Comcast Corporation).
(with his partner Robert Magness). Robert wasMagness's trustees sold all of Robert Magness's
Chairman, and Dr. Malone was President and CEOTCI stock, over his heirs objections. Magness'e
of TeleCommunications Inc.widow and his sons filed a lawsuit and the
John Malone grew up in modest circumstances.trustee's sale of all of Magness's TCI stock was
John was born in 1941 into a modest middle-classoverturned in the Colorado courts. This Colorado
family in Connecticut. John described his father asState court action put the TCI stock and the
"a junior scientist and inventor," and acontrolling interest in TCI "back into play." Then to
stereotypical 1950's Dad, who was the soleDr. Malone surprise, in 1997, "Bill Gates stunned
breadwinner in the house. John said his "motherthe cable industry by investing $1 billion in cash in
was a supportive wife and mother." John Malone'sComcast." John quickly recognized that he would
father was gone nearly all the time and "Johnnot have Gates and Roberts as allies.
rarely saw his father."Dr. Malone acted promptly to protect TCI, his
John was a bright student and qualified for apersonal interests, and his control of the firm in
work-scholarship to a nearby, well-respectedearly 1998. John successfully negotiated with
preparatory school. Malone said, at prep school,Magness's heirs (his widow and Bob's two adult
John "met the love of his life, Leslie Ann Evans,"sons) magnificent stratagem which would assure
when he was 17 and she was 15. Afterthat the control of TCI would not be taken away
completing his work at a local prep school (onfrom him. TCI control was preserved by Dr.
scholarship), John attended Yale University in NewMalone "agreeing to pay them [the three heirs]
Haven, Connecticut and he was able to qualify$200 million for the right to vote Magness's stock
academically for a work-scholarship.which they still owned." This creative and strategic
In 1963, Dr. Malone experience three major lifemove gave Malone the control he needed to
milestones, which included: (a) graduating Phi Betathwart the takeover bid of Roberts and Gates, or
Kappa from Yale with a Bachelor's degree inany other corporate raider. Now, with the control
Electrical Engineering; (b) marrying his prep schoolof TCI secured, John then moved to spin off as a
girlfriend, Leslie Ann Evans; and (c) accepting a jobseparate affiliated company everything except
as a systems engineer at Bell Labs. During ourthe cable business. Malone personally controlled a
over 2 hour one-on-one interview at his Libertylarge number the "super shares" of this separate
Media Corp. offices, in Englewood, Colorado, Dr.TCI affiliate was Liberty Media Corp.. Liberty Media
Malone told me that he "took the job at Bellwas the TCI subsidiary which controlled most of
because they would pay completely for mythe programming and all the non-cable interests of
education all the way through my doctorate inTCI. John was preparing to sell TCI's cable
operations management [at John Hopkinsoperations in the very near future.
University] and pay me [a salary] to boot."John then sold all the cable interest of TCI to
Malone completed his doctorate (Ph.D.) inAT&T for $58 billion. Dr. Malone had successful
Operation Research at John Hopkins University,build his personal worth to over $3 billion. Based on
and then continued to work for AT&T's Bell Labs.his now significant AT&T stockownership from
Soon after graduating and going to work full time,the sale of TCI, Malone now sat on AT&T's
Malone presented to the AT&T Board ofBoard of Directors. Unfortunately, Malone had to
Directors a massive and complicated mathematicsuffer and now he "had to watch as the AT&T
model of his own design, "proving that AT&TBoard made a series of painfully poor and costly
should make a radical change in its balance sheetdecisions." In spite of Dr. Malone's well thought out
and shift its debt-to-equity ratio into more debt."suggestions and many objections, "AT&T
Notwithstanding the brilliance of the idea, after therepeatedly made decisions which materially
presentation to the Board the Chairman of AT&Tdevalued my AT&T stock." AT& T Board's
told Malone in essence that the AT&T Boardactions had now cost Dr. Malone, nearly half of his
would never accept his radical idea. Dr. Malonepersonal $3 billion net worth.
was so disillusioned, that he decided to quitDr. Malone was so feed up with the Board's
working for AT&T.mistakes, he resigned from AT&T's Board of
John Malone left AT& T to accept a consultingDirectors. As part of his resignation from the
position with the major international managementAT&T Board, Malone "successfully negotiated to
consulting firm of McKinsey & Co. Dr. Malonebe able to resume the full-time management of
worked for McKinsey & Co., for just two years.Liberty Media, as Chairman and CEO."
Then one of his consulting clients, GeneralDr. John Malone and I met for our interview for
Instruments, hired him to run their troubledwell over two hours, in his Liberty Media Corp's
acquisition of Jerrold Electronics. Malone joinedHQ, in Englewood, Colorado. Dr. John Malone, as
General Instruments, as the President of JerroldChairman and CEO will continue to make history
Electronics, when John was just 29 years old.as an entrepreneur in the cable and programming
Immediately Malone faced the challenge of dealingarena with his ever expanding and successful firm,
with a very disgruntled competitor, who wasLiberty Media Corp.
losing sales to Jerrold. This upset competitorFor full disclosure, this article author, Dr Howard
petitioned the Federal Trade Commission. TheEdward Haller, had the honor and the privilege to
petitioner was "alleging that Jerrold was trying towork for Dr. John Malone (when he was President
build a monopoly by selling below their cost." John,and CEO of TCI), as Senior Vice President of
as the brand new Jerrold President, immediatelyTCI's, United Artist subsidiary. Haller served under
jumped in and addressed this major problem. HeDr. Malone for three years as Senior Vice
promptly compiled all the information and provedPresident of United Artists, running $4 Billion
to the FTC that the charges were untrue. Thisdivisions (in both LA & NYC), after Dr. Malone's
was a great start to his career with JerrodTeleCommunication Inc. (TCI) bought all of United
(General Instruments).Artists Entertainment.
John came to quickly realize that even hisDr. Haller's groundbreaking leadership and
hard-won respect within General Instruments andentrepreneurship research was been recently
Jerrold that he "would never be enough topublished by the major German publisher, VDM
overcome the ongoing internal political battles." Dr.Verlag Dr Müller AG & CoKG. Dr. Howard
Malone said he then knew that he "would neverEdward Haller's book is entitled: "Leadership and
be in line for promotion to Chief Executive OfficerAdversity: The Shaping of Prominent Leaders." [on
of General Instruments." Then, at age 30, JohnAmazon]
received and accepted a major offer from oneDr. Haller's upcoming intrapreneurship book and
of his Jerrold Electronics clients, Bob Magness,"real world" case study, which is entitled
who was the founder and chairman of"Intrapreneurship Success: A PRIME Example,"
TeleCommunications, Inc. (TCI).which is due out in late 2009.
Dr. Malone took what he called a "significant cut inCopyright 2006-2010 © Howard Edward Haller,
pay" when he joined TCI. John was eager toPh.D.