The New York Times Company

[0] All right.

[1] Hi, energy.

[2] Yeah, need some energy to get through 170 years.

[3] Ooh, it's literally 170 years.

[4] It's crazy.

[5] Welcome to Season 8, Episode 2 of Acquired, the podcast about great technology companies and the stories and playbooks behind them.

[6] I'm Ben Gilbert, and I'm the co -founder of Pioneer Square Labs, a startup studio and venture capital firm in Seattle.

[7] And I'm David Rosenthal, and I am an angel investment.

[8] based in San Francisco.

[9] And we are your hosts.

[10] For over 100 years, you would have been hard -pressed to find a better business in the world than an American newspaper.

[11] Each one had a local monopoly, an incredibly profitable advertising business, and it was one of the earliest examples of a reasonably low -marginal cost business.

[12] It's dirt cheap to just print another copy of the paper.

[13] The newspaper business was, for a long time, Warren Buffett's canonical example, example of a franchise, like the best type of business you can possibly own.

[14] Indeed.

[15] And this, today, listeners, is the story of the paper that loomed large over all the others, the New York Times.

[16] Today we peer into what I think is the oldest company we've ever done on this show, founded over 170 years ago before the Civil War.

[17] The Times has seen the majority of American history, and for the majority of its life, it's been controlled by a single family.

[18] And for many of you, a family you've probably never heard of.

[19] This is a family whose paper shaped the American perception of current events through World War I, World War II, Vietnam.

[20] I mean, really, their newspapers shaped your perception of America itself, and your parents' perception, and your grandparents' perception.

[21] You get it.

[22] It is probably safe to say that the five generations of the Ox Solzberger family has been the closest thing that America has ever seen to a dynasty.

[23] After a century of near continuous prosperity, the New York Times has seen an incredibly dramatic fall and then rise just in the last 20 years.

[24] The Internet and social media on top of it brought ruin to the entire traditional journalism industry.

[25] In the late 2000s, the New York Times got to such a low point that they even sold their office building to free up some cash while they rented it back from the buyer.

[26] Indeed.

[27] I can't wait to talk about that part of the history.

[28] And yet, somehow today, they've been accused of being a monopoly in the journalism industry, and they have more digital subscribers than they ever did in print, and they employ the former editors -in -chief of BuzzFeed, Recode, and Vox as columnists.

[29] So how do they turn it around?

[30] Who is this mysterious family?

[31] And what does the future hold for the New York Times?

[32] Today, we dig in.

[33] If you love Acquired and you want to be a deeper part of what David and I do here, you should become an Acquired Limited Partner.

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[35] So if you are not already an LP, you can click the link in the show notes or go to Acquired .fm slash LP.

[36] and we can't wait to see you there.

[37] And if you want to talk all things Acquired, the goings -on of the tech world, and find just a genuinely smart community to talk about all this stuff, you should join the Slack at Acquired .fm slash Slack.

[38] Okay, listeners, now is a great time to thank one of our big partners here at Acquired, ServiceNow.

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[43] I was at NVIDIA's GTC earlier this year, and Jensen brought up ServiceNow and their partnership many times throughout the keynote.

[44] So why is ServiceNow so important to both NVIDIA and Microsoft?

[45] companies we've explored deeply in the last year on the show.

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[53] And when you get in touch, just tell them Ben and David sent you.

[54] Thanks, Service Now.

[55] Well, David, it's time to take us in.

[56] And listeners, as always, this show is not investment advice.

[57] David and I may have investments in the companies we discuss.

[58] This show is for educational.

[59] And I sure hope entertainment.

[60] purposes only.

[61] Oh boy.

[62] Was this ever an entertaining one to research?

[63] A hundred and seventy years.

[64] This is crazy.

[65] We're going to start with the founding of the company, and it's going to be the farthest back in history other than Bitcoin when we were talking about the banking system.

[66] I think this is going to be the second farthest back in history we've ever started.

[67] And I'm not even going back before the company.

[68] You started with like something older than this, I think with Uber, right?

[69] Oh, actually, no, because I think that was like 1890s.

[70] Wow.

[71] Yeah.

[72] There were no cars when the New York Times was started.

[73] Crazy.

[74] Crazy.

[75] Okay.

[76] We go back to 1851 and the founding of the well -known, world -renowned New -Hifon York Daily Times, which, of course, doesn't quite have the ring.

[77] It doesn't quite have the same ring.

[78] No new new hyphen york daily times new york daily times okay so what was going on in 1851 it was a media boom time in the u .s there was a growing population in the country increasing literacy rates vastly increasing literacy rates urbanization and of course war on the somewhat near term horizon in the coming civil war u .s civil war and And then as now, bad news sells newspapers.

[79] And so there was hugely, hugely growing demand for news.

[80] New newspapers were sprouting up all over the country.

[81] In the year 1800, there were 200 newspapers in the U .S. And in the year 1860, there were 3 ,000 newspapers in the U .S. Isn't that crazy?

[82] So did printing presses get way cheaper too?

[83] Yes.

[84] Huh.

[85] Yeah.

[86] So it got a lot cheaper to.

[87] print newspapers must have been various forms of machinery rudimentary automation.

[88] And just the demand, like the growing population, the demand for news, literacy.

[89] It was like it was like the substacks of 1851.

[90] Everybody was starting a newspaper.

[91] And also because of the advances in production technology, not only could you make more newspapers and people could start them, but you could sell them cheaper.

[92] So before this time, newspapers were selling, I think, around like five, six cents a copy.

[93] But starting in the 1850s, newspapers, and in particular, new newspapers, dropped in price to one cent per copy.

[94] This is going to come back later.

[95] So you could reach a whole new mass market.

[96] So here we are in September of that year of 1851, the well -known New York journalist and politician, Henry Jarvis Raymond and his friend and former banker and merchant George Jones embark on a new venture, new newspaper venture, in this brave new landscape.

[97] And they publish the first edition on September 18th, 1851 of the new hyphen York, New York Daily Times.

[98] All right, Rosenthal, you've made your point.

[99] It was a hyphen.

[100] Enough with the hyphens.

[101] So who were these guys?

[102] So Jones, as we said, was a former banker.

[103] He had also, though, worked as a business manager at Horace Greeley's New York Tribune, which was then the sort of premier paper in New York.

[104] And that was where he had met Raymond.

[105] Jones had family money and lots of connections about town from his wife's family.

[106] Do you know his wife's father's name?

[107] Ben, you're not going to get this, but I had to put it in here.

[108] his wife's father's no i have no idea benjamin gilbert the well -known new york socially really really i saw that i was like we got it we got to include this here oh i got to do some research and see if we're related so he puts up 25 000 of his own family money to finance this new venture they want to get to a hundred thousand dollars so he goes out and he raises the other 75000 This is a lot of money in 1851 from just, you know, some, like, casual family connections he has, like, you know, several members of the Morgan family end up financing this.

[109] Like, like J. P. P. or P. Morgan?

[110] Yeah, exactly.

[111] Wow.

[112] As you do.

[113] This guy shows up in like all these old stories.

[114] Like, I feel like everyone somehow was getting financed by J .P. Morgan in these days.

[115] Totally.

[116] So that's Jones.

[117] He's sort of the business guy.

[118] He brings, he brings the cap.

[119] but all.

[120] But it's really Raymond, who's the real force behind this.

[121] So who is, who was Henry Raymond?

[122] He was quite the interesting character.

[123] As we mentioned, he had worked at the Tribune with Jones, which is where they met.

[124] And that was the premier sort of respectable penny paper out there, as they were known for the one cent papers.

[125] He had also though been very involved in politics.

[126] And when I say very involved, I mean very, very involved.

[127] Ben, do you know what other organization, Henry Raymond, is well known for co -founding besides what would become The New York Times?

[128] Ooh, I feel like I should remember this from APS history, but I do not.

[129] A little organization called the Republican Party, of which he was a founder, one of five founding members.

[130] Kind of incredible.

[131] Like, this just blew my mind doing the research.

[132] literally, he's known as the godfather of the Republican Party, is also the founder of the New York Times.

[133] And all of this was happening concurrently.

[134] So was it like a mouthpiece for the Republican party in the early days?

[135] Well, not quite.

[136] Okay.

[137] So before he and Jones decided to start the Times, Raymond had actually left the newspaper business and he was a politician.

[138] He was a member of the New York State Legislature, where he was a member of the Whig Party at the time, sort of the pre -curricular.

[139] to the Republican Party.

[140] But he had stepped down and then he decides to start with Jones to start the Times, which they do.

[141] But then shortly after, and so, you know, Raymond is running the times.

[142] He is the managing editor.

[143] He's the publisher.

[144] Like Jones is the money, but Raymond is really running it.

[145] While he's still running it, he goes back into politics leading up to Abraham Lincoln's presidential campaign.

[146] And that's when he, along with Lincoln, and also along with Horace Greeley from the Tribune, they and a couple other people start the Republican Party.

[147] And the platform, of course, is abolitionism and the abolition of slavery in the United States.

[148] That was the origin and the platform of the party.

[149] So Raymond, while this is going on, he becomes the second chair of the Republican National Committee.

[150] So he's like the chair of the RNC while also publishing the New York Times.

[151] he helps push Lincoln into the presidency and then actually after the civil war he goes to Congress and he becomes a congressman he's a member of the House of Representatives all still while publishing the Times and serving as the managing editor like writing all the editorials that is so insane I mean it's funny I in the one hand I was like wow today this would not fly and then I'm thinking in myself today this is what's happening not not at the times but yeah yeah it's it's crazy.

[152] So this thread is going to come back so often throughout this history.

[153] So that said, you know, certainly the Times is quite literally the party mouthpiece of the Republican Party.

[154] But Raymond is also a real journalist.

[155] Like he, you know, he worked at the Tribune.

[156] He highly values journalism.

[157] He doesn't want the Times to be sensational.

[158] And in fact, in the very first edition, that comes out that September in 1851, he writes famously, we shall, we being the times, shall be conservative in all cases where we think conservatism essential to the public good, and we shall be radical in everything which may seem to us to require radical treatment and radical reform.

[159] We do not believe that everything in society is either exactly right or exactly wrong.

[160] What is good we desire to preserve and improve, and what is evil we want to exterminate, or reform.

[161] Of course, he's talking about slavery there.

[162] I love this piece so much.

[163] Like, I think it is just, not only is it a beautiful little piece of writing, but it is pithy.

[164] Like, it captures so much of what their intent is in creating this, this, what would become an enduring institution and sort of how they view it in such a pragmatic way.

[165] I mean, I'm excited listeners.

[166] We will link in the sources to sort of where we found this.

[167] Or if you're listening to this more than a week after it comes out.

[168] You can check it out in the transcript.

[169] But it's just like, I want to have it framed and put on my wall.

[170] It's a sort of wonderful.

[171] It really is a beautiful statement, I think.

[172] So it's probably worth pausing here for a minute before we go too much farther in the story and explaining what exactly is it that happens at a newspaper?

[173] Like, what are the various sort of departments here?

[174] There's really kind of two and a half pieces of any news media organization newspapers included cable news television networks, which we will talk about as we go along here and, of course, internet media news networks as well.

[175] There's the content side of the house, sometimes called editorial, which includes both news and opinion.

[176] And then there's the publishing side of the house, which is the business side of the house, the advertising, the circulation, the managing of the organization and the company.

[177] So where does the publisher fit into this?

[178] Right.

[179] So then the publisher.

[180] So now back in Raymond's day, Raymond is both sort of executive editor.

[181] He's managing all this and publisher.

[182] So the publisher is the running of the business, managing subscription, circulation, advertising, the cost side.

[183] And in the case of the New York Times today, it's actually pretty easy to separate this out because there's the media property, the New York Times.

[184] And then there's the company, which is the New York Times company that publishes.

[185] the New York Times.

[186] And so an easy shorthand for this for people who are familiar with tech companies would be you have someone running product and someone, you know, a CRO, someone running revenue.

[187] Exactly.

[188] Exactly.

[189] So sometimes throughout the history of the New York Times, there has been just a publisher that is essentially like CEO and CRO.

[190] Sometimes there's also a CEO who usually reports to the publisher, as is the case now.

[191] So today, A .G. Salzberger is the fifth generation, Ock Salzberger, who is the publisher of the New York Times and chairman of the board, and Meredith Koppett Levion is the recently appointed CEO who reports to him and the board.

[192] So they sort of even further bifurcate the duties where the publisher has a little bit more of sort of like a figurehead and a sort of consistency throughout history voice, and the CEO is like actually running the business.

[193] But again, neither of them are actually involved in overseeing the editorial product and overseeing the newsroom, that has always been traditionally kept at arm's length.

[194] Yes, yes.

[195] And most of the CEOs in the New York Times company history have been C -O's before becoming CEO.

[196] So Meredith was C -O until recently when she became CEO.

[197] So we're going to cover today sort of the history of New York Times from the business and publisher side.

[198] Of course, we'll talk about the newsroom as we go.

[199] But as a always, this is a corporate history perspective that we're going to cover the New York Times from.

[200] All right.

[201] So, David, I teased the Ox Solzberger family in the intro, and I heard you just mention that A .G. Salzberger is the fifth generation publisher.

[202] These two people we're talking about here, not Ox or Sulzberger.

[203] Exactly.

[204] This has previous ownership, like founding ownership.

[205] So what happened here?

[206] Okay.

[207] So back to Raymond.

[208] He's wearing all these hats.

[209] things go well for the first you know 20 plus years of the new york daily times within two weeks of starting they hit 10 ,000 copies in circulation which is pretty great 26 ,000 in the first year then in September of 1857 so six years after they start they drop the daily and shorten the name to just the New York times still with the hyphen it would be ox who would remove the hyphen later but things are going well.

[210] By 1858, circulation's up to 40 ,000.

[211] And then by the time the Civil War starts with the attack on Fort Sumter in 1861, circulation is at 75 ,000.

[212] That's pretty good.

[213] Like, that's, I don't know what the population of New York was at that time.

[214] I think it was maybe about a million or so, maybe a little less.

[215] So they're 10 % plus of the city is taking the times at this point.

[216] Totally.

[217] And at this point, too, the New York Times was a little bit high, It was a newspaper for people who were tuned into business and politics, and particularly more sort of politics.

[218] So it wasn't necessarily for the every person.

[219] Yeah.

[220] And in particular in the North, the abolitionists and what would become the Republican Party.

[221] So, okay, this moment, this is like maybe the craziest founder story that we've had on this show in our five years of doing this.

[222] So on July 13th, 18th, The Civil War's been going on for two years since Fort Sumter, but there wasn't a draft for the Army yet.

[223] And in July, the union, the government declares a draft, and there are actually draft riots in New York City about this.

[224] People are, you know, really upset.

[225] Lots of people have family in the South.

[226] They may be sympathizers with the South.

[227] This is hugely, hugely controversial.

[228] And the mobs target the newspapers.

[229] that are sort of the mouthpieces of Lincoln and the Republican Party through the war.

[230] So a mob descends on the New York Times headquarters building.

[231] And Raymond, because he's buddies with Lincoln, he gets the War Department to ship a bunch of rifles and two Gatling guns to the Times because they know this is going to happen.

[232] And he like leads a defense of the building and the company.

[233] he hands out rifles to the whole staff.

[234] He's manning one of the Gatling guns himself, and he gives the order that if any of the mom tries to break into the building, you're to fire at will on these people.

[235] It's crazy.

[236] Nobody is, no shots are actually fired, but they do successfully defend the building.

[237] The mob instead ends up attacking the Tribune and storming the Tribune's building.

[238] Totally, totally crazy.

[239] Next time we hear about like a tech CEO.

[240] doing something that seems bold.

[241] Think of Henry Raymond back in the day.

[242] And for anyone who's seen Gangs of New York, I think this is sort of that scene toward the end of the movie, where that is the scene you can kind of picture where there's the freaking publisher of the New York Times, strapping a gatling gun to the front steps and protecting the paper.

[243] Yeah, protecting this house.

[244] Completely nuts.

[245] After the Civil War ends, Raymond passes away not long after an 18th, his partner George Jones then takes over as publisher and, you know, continues running it in a fine fashion.

[246] I wouldn't say it grows hugely, but he's a good story to the business.

[247] However, when he dies in 1891, there's a succession crisis, like what's going to happen to this company?

[248] So a group of staff, a group of reporters, end up putting together a buyout and raise about a million dollars to buy the times from the estates of Jones and and Raymond.

[249] And they start operating the company, but they're not, they're all like editors.

[250] They're all from the news side.

[251] They're not business people.

[252] So they don't really know how to manage the publishing or the business of the newspaper.

[253] And in 1893, there's a financial crisis and kind of much like 2008, which we'll get to later in the story, this is really bad for newspapers, for advertising, for circulation, and the paper ends up going bankrupt.

[254] Circulation had fallen all the way down below 9 ,000.

[255] It was up at, you know, 100 ,000 plus during the Raymond and Jones days.

[256] So like, basically the New York Times is going to disappear unless somebody comes in and saves them.

[257] I mean, even just think about all the machinery that they had and all the delivery trucks that they had in order to deliver the times and need it.

[258] And how do you downsize that fixed cost infrastructure from shipping out 100 ,000 papers a day to 9 ,000?

[259] It's very easy to understand how this business ends up upside down quickly.

[260] Totally.

[261] I mean, there's the rent on the space.

[262] There's the raw materials that you need to print the paper, the ink, the pulp, the paper.

[263] There's the people, the laborers you need to employ highly skilled laborers on the printing side.

[264] And then the delivering infrastructure.

[265] You're not just scaling down your AWS usage.

[266] Yeah, totally.

[267] If only Jeff Bezos were around back then.

[268] So this is when Adolf Ox enters the story and rescues the New York Times.

[269] And this is really a second founding of the business.

[270] And it's just an amazing American story.

[271] Like I, likewise, I knew that the Salzberger family, you know, controlled the Times.

[272] I probably most I obviously only knew that because I used to be an investment media investment banker and worked at the Wall Street Journal.

[273] But I didn't know anything about this history.

[274] And I only knew about it, frankly, because when we saw all these tech CEOs starting to do this crazy dual class structure stuff, famously Zuckerberg, and I think the Google founders did it and obviously Snapchat and freaking everyone's sense.

[275] Like the New York Times is the one who - The triple -class structure.

[276] That's right.

[277] I forgot about that.

[278] Where if you own shares on the market, you get zero votes.

[279] It's hardcore.

[280] But yeah, the Times pioneered this when they went public in, what?

[281] 1969.

[282] Yeah.

[283] I mean, it sort of laid dormant there, undiscovered, until tech CEOs decided to do it with all their companies.

[284] Yeah.

[285] So, okay, so Adolf, Ox, was born in Cincinnati, Ohio, in 1858, so seven years after the founding of the New York Times, to Jewish immigrants from, Germany and like pretty poor.

[286] Like he was not a Rockefeller or a Morgan.

[287] And after the Civil War, the family moved to Tennessee where he has to, you know, work as a boy to help, you to support the family.

[288] So he gets a paper route in Knoxville, Tennessee.

[289] And he gets a paper route for the Knoxville Chronicle.

[290] And he ends up just falling in love as a young child with the newspaper business, at the age of 11, he gets taken off the streets, so to speak, and he goes to work in the office as an assistant to the editor of The Chronicle, William Rule, who kind of becomes a mentor for him.

[291] And then when he's a little older, his family sends him away to Rhode Island to go work in his uncle's grocery store up there.

[292] They thought he would make more money doing so.

[293] But he hates it.

[294] And at age, he's a newspaper man. He's a newspaper man that's in his blood.

[295] So at age 14 in 1872, he drops out of school in Rhode Island, comes back to Tennessee, restarts working at the Chronicle, this time in the printing operations, as what's called a printer's devil helping out around the factory.

[296] And then a bit over five years later, at age 20, he decides to move to Chattanooga, which is becoming an iron mining boom town in Tennessee.

[297] This is all so crazy.

[298] Imagine how far away we are from New York City and the New York Times here.

[299] And here's this kid of Jewish immigrants who started as a newspaper boy, moves to Chattanooga, Tennessee.

[300] And in Chattanooga, he knows that there's an existing newspaper called the Chattanooga Times, but it's not very well managed.

[301] And he's got a hunch that he might be able, even as a 20 -year -old kid with no money, to be able to take this thing over.

[302] He's so freaking enterprising because, like, he's, keep in mind, he's a dropout.

[303] He's trying to make money for his family to support them.

[304] And he's not doing the, like, traditional thing that you would, like, go earn a wage.

[305] He's trying to say, well, like, I want to go and revive this, you know, newspaper business because I know a thing or two about papers.

[306] And he's doing it in a place, Chattanooga, that is having a moment.

[307] And it's interesting.

[308] I was sort of trying to figure out why it's not sort of like the dominant city in Tennessee today because in this post -bellum era, we're here in the late 1870s, the country has started to sort of heal and rearrange itself.

[309] And Chattanooga is in this interesting middle between a northern territory and a southern territory.

[310] And I think it's in this great book called The Trust, which chronicles the history of the times that I was reading to prepare.

[311] They call it a distinctly American city, neither northern nor southern.

[312] And it's really this, you know, not only economically because of the iron mining, but culturally becoming a boomtown.

[313] Yep.

[314] So young Adolf, man, this kid is like so enterprising.

[315] So he negotiates with the guys who own the Times in Chattanooga to buy the paper for a down payment of $250.

[316] And then effectively for those in, you know, like small cap private equity, they'll know this term, a seller's note of $5 ,500.

[317] So he gets them to agree for this tiny down payment that he'll take over the business and he thinks he can turn it around to make it profitable enough that over, you know, the next set of years, he can generate enough profits to pay the original owners $5 ,500 out of the profits that the incremental profits he'll generate.

[318] Wait, so this business is in dire condition and these guys are saying, we'll take 250 and believe you that you're going to generate 5 ,500 worth of profits in the ensuing years to pay us.

[319] I mean, whether they believed it or not, they were willing to do the deal.

[320] They were willing to part with 250 and the 5500 was house money if they could get it.

[321] Yeah, exactly.

[322] And I mean, I'd say it was a good deal.

[323] They should have just like kept equity in the paper instead of debt because they get the money because he does it.

[324] Within 10 years, he's completely turned around the paper.

[325] It's the premier newspaper in, Chattanooga.

[326] Chattanooga has been growing.

[327] And he's pulling in, he ox is pulling in $25 ,000 in annual profit cash flow for himself and his family out of this paper.

[328] Just amazing.

[329] Whoa.

[330] I didn't realize he was pulling that in personally.

[331] Yep.

[332] He's moved his entire family to Chattanooga.

[333] He's got him all working in the business.

[334] His father, his uncle, his siblings, his wife, his wife's family.

[335] They're all working in the business.

[336] But fatefully, he's so long on Chattanooga and he loves the city.

[337] He loves Tennessee.

[338] He decides to buy up a lot of land around Chattanooga.

[339] I couldn't tell if it was for sort of housing speculation or for the mines, but he ends up losing $100 ,000 on this real estate.

[340] Yeah, this was, I think it was called like the over the river company or something like that because it was land that was like over the river from everything else it was wildly speculative yep wildly speculative and so famously he kind of like he learns his lesson from this he's like i am a newspaper man this is in my blood this is all i will ever do i will never do anything else and i could imagine him like praying one night being like i'm sorry god you know like for going into real estate i need i will be the greatest newspaper man ever if I can bail out my debts.

[341] Not to mention, it worked well when he bought stuff sort of with other people's money and with leverage, and it really didn't go well when he decided to buy a bunch of land with his own personal capital.

[342] So he sort of gets this seed planted of, huh, I should use other people's money to buy stuff from now on.

[343] Exactly.

[344] So, okay, he's pulling in $25 ,000 of cash flow from the Chattanooga Times, but he needs 100K, like, faster than four years.

[345] That's not going to cut it.

[346] He does know he can turn around newspapers, though.

[347] So he starts putting out some feelers and traveling around the country looking for another newspaper that he could buy and take over just like he did with the Chattanooga Times.

[348] And we should say a key component to the success of him turning around the Chattanooga Times comes from the fact that Chattanooga was this sort of melting pot of North and South.

[349] And Adolf really believed in that.

[350] And he really believed in the Chattanooga Times as unbiased paper of the people representing a balanced view of the world.

[351] and Chattanooga was sort of the perfect place to pull that idea from.

[352] Totally.

[353] Very, very, very much his ethos.

[354] So that's when he hears, he gets wind of the bankruptcy proceedings going on in New York for the New York Times.

[355] And at first he's like, supposedly he's like, that's too big.

[356] Like, I can't go.

[357] You know, I'm Adolf Ox from Chattanooga, Tennessee.

[358] I can't go like take over the New York Times.

[359] And at that point, even though it was in dire trouble, the brand, of the New York Times, it was the best newspaper brand in the country.

[360] Still, it was definitely thought of as like the paper.

[361] But some mentors convince him that he can do this.

[362] So in 1896, he packs up his bags, hops on the train, goes up to New York.

[363] He leaves his family behind running the Chattanooga Times.

[364] And he scrapes together.

[365] So the Times is in bankruptcy proceedings.

[366] He scrapes together a plan to the creditors and to the receivers in bankruptcy to take the paper out of bankruptcy and take it over.

[367] This is incredible.

[368] So he's like this, this, you know, I think he was late 30s at the time from Tennessee, shows up in New York, kind of walks into the bankruptcy court and is like, believe me, I can do this.

[369] And to convince.

[370] Do you know the thing about the interbank transfer?

[371] Ooh, no, I don't.

[372] He convinced a Chattanooga Bank to wire money to a New York bank so that if in New York people check to see, like, are you wealthy?

[373] He had a bank with money in his name.

[374] And to the Chattanooga Bank, who he knew well, he wrote them a personal check and said, look, I'm good for it.

[375] I promise.

[376] Just wire the money.

[377] I don't, I don't intend to use it.

[378] That's amazing.

[379] It's like there's some incredible huckster stuff going on that he sort of pull strings to...

[380] He's got the entrepreneurial hustle.

[381] So did you find, did you read about the other thing he did to convince the creditors of his legitimacy.

[382] Ooh, I don't know.

[383] This is amazing.

[384] So President Grover Cleveland at the time, like United States president, had come through Chattanooga, I think, while he was campaigning.

[385] And as the leading, you know, newspaper been publisher of the Chattanooga Times, Ox was on the welcoming committee.

[386] So he got to meet Grover Cleveland, like, while he was campaigning.

[387] And, you know, he kept his address.

[388] 1 ,600 Pennsylvania Avenue.

[389] He knew where to find him.

[390] So he writes to the president while he's going up to New York and he says, he writes to Cleveland.

[391] He says, I am negotiating for a controlling interest in the New York Times and have fair prospects of success.

[392] I write to respectfully ask that you address by return mail a letter to Mr. Spencer Trask, chairman of the New York Times publishing company, giving your opinion of my qualifications as a newspaper publisher, general personal character, my views on public questions judged by, of course, the Chattanooga Times.

[393] In other words, say what you can of me as an honest, industrious, and capable newspaper publisher.

[394] This is incredible.

[395] And he needed that support because at the time until this, apparently I did find this, the Trask and the rest of the committee that was dealing with the bankruptcy of the Times was in favor of a different plan to merge it, like to basically unload the asset, merge it in with a different paper, wipe their hands clean, and say, look, we got something for it.

[396] And instead, Adolf's walking in here with, like, a whole different plan of, like, I am going to figure out how to revive this thing and make it great.

[397] And of course, there is some wicked financial engineering that he promises and that he really has to make the case of, like, you don't just, it's not a cash buy here.

[398] Like, you're going to have to believe in me and my plan in order to make this work.

[399] Yep.

[400] So Cleveland writes them back with like a, a lot of letter of endorsement.

[401] And he walks in there with a letter of endorsement from the President of the United States.

[402] Incredible.

[403] So the bankruptcy, you know, committee accepts his plan.

[404] He pays $75 ,000 up front to the creditors, which he also had scraped together with borrowed money.

[405] Because remember, he owes $100 ,000.

[406] Right.

[407] This is the craziest thing.

[408] This guy buys the New York Times.

[409] He will eventually have a controlling interest in it.

[410] And as it says in the trust, this is my favorite passage.

[411] the yokel from Tennessee had accomplished the impossible.

[412] He had bought the New York Times using none of his own money.

[413] Amazing.

[414] This is like the minnow swallows whale from when Cap Cities bought ABC.

[415] 100%.

[416] So how does it work exactly?

[417] There's like 75K that he in quotes puts up, but actually he goes and like gets people in Tennessee to put it up, right?

[418] Yeah, he like rounded up the money from some people in New York, some people in Tennessee.

[419] I think he waved around the letter from Grover Cleveland to a bunch of people.

[420] So that was a small part of the consideration.

[421] The other part is he uses, you know, sellers notes, again, of $600 ,000 in debt to owed back to the creditors that they will pay off over, you know, some number of the coming years from, you know, profits he'll generate by running this paper that has 9 ,000 subscribers and is bleeding, I think, on the order of about half a million dollars a year at this point in losses.

[422] You can see why if you're Trask or the existing bankruptcy committee, you're like, I think we'll take the merger.

[423] This doesn't sound like any kind of guarantee.

[424] This guy that no one's ever heard of.

[425] He's coming in from Tennessee.

[426] Like, you got to sympathize with the original plan.

[427] Yeah, totally.

[428] But somehow he gets it done.

[429] So he emerges with the New York Times.

[430] and he has just like one problem, which is, okay, how are you going to, how are you going to turn this thing around?

[431] Okay, so what's the grand plan?

[432] What's the plan?

[433] What's the plan?

[434] Well, so the plan is basically to be really boring and really cheap.

[435] So at the time, people may be familiar with, you know, William Randolph Hearst and I think it was Joseph Pulitzer.

[436] Hurst, of course, ran the journal in New York, among many papers all over the country.

[437] and Pulitzer ran the world.

[438] Those were the two heavy hitter publications in New York at the time.

[439] They each had about half a million circulation.

[440] But what they were were what was called, I remember studying about in school, yellow journalism.

[441] So they were super sensationalist.

[442] This was right at the time of the Spanish -American War.

[443] Like, these guys were like the, I don't know if they were like the National Enquirer, but like they were fast and loose with the facts and basically try and to, like, sell copies with any sensationalism that they could come up with.

[444] Do you know why it is called yellow journalism?

[445] Ooh, I feel like I did, but I don't remember.

[446] So both of these papers published a comic called The Yellow Kid, and this cartoon was, like, you know, trashy.

[447] Like, it was like a low -brow cartoon, and coupled with it, both of them were obviously doing tons of sensational headlines.

[448] It was the sort of original clickbait.

[449] And so you sort of couldn't trust what was in the newspaper because it was always sort of trumpeted up.

[450] And, you know, famously around the Spanish -American War, they were sort of making up headlines to make the war sound even more interesting than it is.

[451] And I always, like, knew that yellow journalism was sort of tied in with these papers, tied in with the original clickbait, with sort of untrustworthy headlines.

[452] But I did not know until doing this research that it is because they shared the Yellow Kid comic.

[453] Oh, interesting.

[454] If I did note that, I had totally forgotten him.

[455] But yeah, these guys are like the, I don't know, maybe BuzzFeed is probably doing a disservice to BuzzFeed, but they're like the, I don't know, like Gawker of the.

[456] BuzzFeed and Gawker, both of whose editors in chief now work at the New York Times as columnists.

[457] I know.

[458] Amazing.

[459] Amazing.

[460] So Ox lays out his plan for positioning for the New York Times, which is that they're going to provide journalistic integrity and something that is, quote, not going to soil the breakfast linen.

[461] Sounds really exciting.

[462] Because it means his plan, like the thing he knows how to do from Chattanooga, like that's kind of the playbook that needs to be run again, just on a much bigger scale.

[463] Yep.

[464] So he decides he needs to come up with a motto to like express this new positioning to the New York public.

[465] And he comes up with the phrase, all the news that's fit to print.

[466] And he's not too sure about it, though.

[467] I mean, this is how the story goes.

[468] I think probably he's maybe more like Pulitzer and Hearst than he lets on.

[469] and he wanted to run a marketing stunt.

[470] So he runs a prize competition for anybody in New York who can come up with a better slogan, offering a $100 prize for the winner.

[471] And they run it, they get lots of entries, they end up, the winner is chosen, and the official motto of the New York Times is going to be all the world's news, but not a school for scandal.

[472] really rolls off the tongue, doesn't it?

[473] Funny, I like oxes a lot better.

[474] Yeah, he did too.

[475] So he's like, that's nice.

[476] I'll pay you $100, but I'm keeping my motto.

[477] So all the news that's fit to print.

[478] Still shows up in the upper corner of the New York Times print edition today, right?

[479] And on the website, which we will get to later.

[480] So he also comes up with sort of an informal credo for the company and for the newsroom, which is to give the news impartially without fee.

[481] or favor.

[482] And this is going to come up later when we get to the trust.

[483] But that really is the credo of the organization in a very fundamental way.

[484] Yeah.

[485] And it follows with, so it is to give the news impartially without fear or favor, regardless of any party, sect or interest involved.

[486] And that was a deliberate callout, particularly around party for the highly, highly politically leaning papers of the time.

[487] Interesting.

[488] Interesting.

[489] That, uh, I didn't see that because the, well, where I got the quote from is going to come back in a sec. That must have gotten dropped at some point.

[490] Yeah, he specifically did that because the Times, which is hilarious at a 180 at this point, was considered an organ of the Democratic Party.

[491] So funny.

[492] So it's like a little bit of like a, hey, I'm going to run this a different way, but I'm going to say it kind of softly here.

[493] And I'm not going to piss anybody off too much because it's going to sound reasonable the way that I'm putting it here.

[494] Yeah.

[495] Okay.

[496] So he's got the positioning down.

[497] We're going to report the news impartially without fear, without favor, with no preference for party.

[498] What about the price, though?

[499] So remember, there were the penny papers back in the day that the new printing technology had enabled, and that was what the New York Daily Times sold for.

[500] By this time, probably because of the financial difficulties, they jacked the price of the paper up 300x to 3 cents and the world.

[501] And there's inflation going on because, you know, this is what, already 50 years has gone by.

[502] Yeah, exactly.

[503] The world and the journal were also selling it three cents.

[504] And this is before the antitrust regulation.

[505] Pulitzer and Hearst were colluding.

[506] They wanted to raise the price to five cents.

[507] And so they're like doing the sensationalism with the yellow journalism.

[508] It's only helping themselves, helping each other.

[509] They're like, yeah, we're going to raise the price.

[510] This is going to be great.

[511] And do you know why Ox was so financially motivated to sell more copies?

[512] Well, I assume I was going to talk in a sec about the business model of newspaper as you sell more, as your circulation goes up, not only do you get the circulation revenue, the subscription revenues, you also get to sell a lot more advertising, too.

[513] Yeah, there is definitely the classic business model dynamic going on.

[514] There's one term in particular that was a part of the newspaper purchase that he cares deeply about personally.

[515] Oh, I didn't find this.

[516] This was if the newspaper is profitable for.

[517] a certain number of years.

[518] Don't quote me on this, but I think it was three years.

[519] And he runs it profitably for three years.

[520] Then he is able to unlock a new piece of ownership.

[521] It is shares that are held in escrow that are then transferred to him.

[522] And he becomes the controlling owner.

[523] Right now he's just a minority owner.

[524] He gets to run the business, but he doesn't have control.

[525] And so he desperately is trying to figure out a way, how can I make this thing profitable and keep it for 36 months straight, which there was actually a funny misunderstanding where the previous owners of the times were trying to insist that it was three calendar years.

[526] Ox was able to get it profitable for a 36 -month straight stint, and I think they ended up actually bringing in lawyers to arbitrate this.

[527] But yes, this is an attempt by Ox to say, I need to pull some crazy lever, and I'm going to drop the price in order to try and get circulation to the point where I can actually get this thing profitable enough to control it.

[528] I love it.

[529] To pull forward a playbook theme here.

[530] I mean, like, this is such an entrepreneurial story.

[531] Like, when you're back is against the wall and, like, you have to make something work and you have no resources and you're running out of money, like, that's when genius happens, you know, and you're forced into these constraints.

[532] So, you know, probably even more than the positioning of the news, this is what really makes the times.

[533] He cuts the price from three cents.

[534] down to Wunson, which would seem crazy like you're trying to make more money.

[535] Why would you cut the price?

[536] This is huge.

[537] Circulation goes, subscriptions go through the roof.

[538] Because remember, the journal and the world, they're now three cents.

[539] They're trying to go to five cents.

[540] Like, this is getting out of reach for your average person in New York every day.

[541] And there was some interesting criticism going on at the time of sort of that it wouldn't work.

[542] That, you know, these, there were papers that sold for one cent, but they were tabloids.

[543] You know, they were kind of trashy.

[544] And people were saying, Ox, you know, you're trying to, this crazy move you're doing, the people who are reading those tabloids, the one cent things, they're not interested in your content.

[545] They barely know how to read.

[546] Yeah.

[547] And so what Ox did was he basically made the bet that I can steal share from my competitors.

[548] There's plenty of people that want to read three cent news, but they will totally go to whoever's offering the three cent news at the one cent price.

[549] and he was right.

[550] And he stole a bunch of share and the growth exploded when he dropped the price.

[551] Totally.

[552] So grows 3X in his first year back up to 30 ,000 circulation.

[553] By 1899, it's at 76 ,000.

[554] So back above the 75 ,000 that it had been.

[555] Crosses 100 ,000 in 1901, 200 ,000 in 1912.

[556] And by the 1920s, after World War I, he's up at over three quarters of a million circulation and is how has become the dominant, not just paper in New York, but like the probably most prestigious, most respected, most widely known American journalistic organization out there that, you know, when we think of the New York Times, this was it.

[557] And it was all ox.

[558] This is the birth of the modern times.

[559] Totally.

[560] So we alluded to the business model a little bit and why circulation is so important.

[561] You know, there's this dual revenue.

[562] stream nature of newspapers and the media business is just beautiful.

[563] It's like all the incentives are for you to make great content that gets more readers because obviously they pay for the newspaper being delivered to them, which is a nice business.

[564] You know, it's like relatively lower margin compared to other media business parts of the business because you got to print it and you got to deliver it.

[565] Right.

[566] It's not all margin dollars the way that advertising.

[567] is.

[568] Right.

[569] But advertising, you know, you can have an ad sales department.

[570] And as your circulation goes up, and in particularly, as your circulation goes up amongst attractive demographics for advertisers, you might say like a growing, expanding middle class with lots of new disposable income, you're going to do very, very well with no marginal costs on the advertising side.

[571] Yep.

[572] The other crazy thing about the physical paper business is today we kind of think about like, well, you can be a free website that has ads or you can be a paid website that has no ads.

[573] And obviously it's oversimplifying and there's lots of ways to do both.

[574] But there's nobody that's reading the paper for free.

[575] Everyone is either buying it on a newsstand or paying to have it delivered to their home or business.

[576] So it is an era of having your cake and eating it too where you both have every single person who's reading paying, shy of maybe some people who were reading it in a restaurant or something, and you're able to sell ads in every single one.

[577] And on top of that, here's sort of the like magic thing that Ox figured out that would later be sort of taken by the Wall Street Journal was it became the business newspaper of record.

[578] Ox made a really big bet on we should be producing more business content and people will be willing to pay more for it because it is either actually a business expense or it inspires them that they could sort of do more with their business.

[579] And so they were the first big American newspaper to target businessmen, you know, at the time of business people now as the demographic, which is just fascinating, sort of reading that and being like, wait, that's the journal strategy.

[580] Totally.

[581] I mean, when I was working at the journal, this was before the Times implemented their now very, very successful paywall.

[582] But we were the only, you know, of scale newspaper and news organization in the U .S. that had a paywall digital content.

[583] And it was all because most of the paid subscriptions were on expense accounts.

[584] yeah so this was a super cool gem that i got from the research so it's actually you know the the famous john wantemaker quote about 50 % of the money i spend on advertising is wasted i just don't know which 50 % yeah that was actually stolen from ox no way so yeah wantemaker i don't know if they were friends or something but um it was originally an ox quote in uh in 1916 ox said i have firm that more than 50 % so more than 50 % of money spent on advertising is squandered and is a sheer waste of printers ink.

[585] Wanamaker got a hold of that.

[586] He was an advertiser.

[587] He was a retailer in Philadelphia.

[588] And he turned it around to, you know, I know half the money I spent on advertising is wasted.

[589] I just can never find out which half.

[590] So super cool.

[591] But yeah, Ox becomes the premier newspaper man in New York, if not America and if not the world.

[592] Before we pull too far forward from this time, there's one interesting sort of fun anecdote that...

[593] Are you going to talk about the headquarters?

[594] Yes.

[595] Yes.

[596] Go for it.

[597] So this is the beginning.

[598] You have more details on this than I do, I'm sure, but this is the beginning of the New York Times' company's obsession with real estate, of sort of obsession of, I want a really fancy headquarters.

[599] I want it in a really interesting place.

[600] I mean, they've got these big printers.

[601] So, like, a big part of their business is actually a physical thing with distribution, which at some point they would move to other parts of New York and start to sort of have a separate newsroom from there, but that's not the way it started.

[602] And in 1904, the newspaper moved its headquarters to a building called the Times Tower at 1475 Broadway in what was then called Longacre Square, later renamed Times Square, after New York Times.

[603] After the New York Times.

[604] So awesome.

[605] What do you know the other part of the story?

[606] No, keep it going.

[607] Okay.

[608] So when Ox moved the building to Long Acre Square in this new building.

[609] He, of course, wanted to make a show of this.

[610] You know, it never wasted a marketing opportunity ever the entrepreneur.

[611] So he had pyrotechnists illuminate the new building with a fireworks show right around the holidays when he moved there.

[612] Oh, is this the ball dropping?

[613] Yeah.

[614] And so that kind of becomes the thing.

[615] He does it for a couple years.

[616] And then New Year's from 1907 to 1908, he has a big electric ball installed on top of the building.

[617] Oh, it's amazing.

[618] Boom.

[619] Dropping the ball.

[620] It's the New York Times.

[621] Time Square, New York Times dropping the ball on New Year's Eve.

[622] It's all Adolf Fox.

[623] Wow.

[624] Wow.

[625] That's such an interesting, I didn't really realize.

[626] Like, I should have known Times Square, like, duh, but I, maybe I knew that at some way in my past, but I completely forgotten.

[627] It's like, it's like, it's like air.

[628] You're like, Oh, yeah, I don't know.

[629] It's called Times Square because it's called Time Square.

[630] The stock tickers, too, were originally the New York Times that implemented that on the outside of their building before, I want to say Dow Jones took it over.

[631] Yeah.

[632] Just an incredible, you know, entrepreneurial story.

[633] We're going to move on to the next chapters here.

[634] Okay.

[635] So two years after that press release, Ox does pass away in 1935.

[636] But there's a problem, though, which is OX.

[637] only had one child, and his child, which he viewed as a problem for succession, was a daughter.

[638] Yeah, I mean, this is some hardcore sexism.

[639] Hard, hardcore.

[640] So Iphageen, his daughter, was an incredible woman, and if she had been born probably 30 years later, which is when Catherine Graham was born, she would have been Catherine Graham at the Washington Post.

[641] before Catherine Graham.

[642] But there was just kind of no countenancing by Adolf or anyone else involved in the company that she should take it over.

[643] Well, Adolf also basically just shirked responsibility on this and didn't want to be the person to explicitly say, I do not give it to my daughter.

[644] So he just like, this is a New York Magazine quote from a great article on the family, it says ultimately Ox punted on the decision.

[645] When he died in 1935, his will essentially left it to, and I'm sure you'll explain these people, Arthur, Julius, and Iphagene to work it out amongst themselves.

[646] Yep.

[647] Yeah, they each had a vote on who would become the next publisher.

[648] So Arthur, Salzberger, was Iphagin's husband, who would become the next publisher.

[649] And Julius was, I believe, Ox's nephew, who was also working in the business.

[650] That's sort of a legitimate claim to the throne, so to speak.

[651] And I believe the story is that Ox set it up this way, that each of the three of them had a vote because he wanted Ifijian, he wanted to essentially make sure that Arthur was a good husband to her because she had the deciding vote between him and her cousin to be the publisher, which is both like really weird and sex.

[652] and kind of strange, but also, like, super crafty, you know, and for all this, like, building up of ox we've done, this is not the only time throughout history, but it will be the first sort of part of the New York Times is history where you sort of have to look at it with a squinty eye and go, ooh, that's a little bit of a black mark.

[653] Yeah.

[654] So if you'd, like, so she went to Barnard and was college educated.

[655] She double majored in economics and history.

[656] She was super, super smart, as you would expect of, like, the only child of Adolf Ox.

[657] And, it's hard to tell exactly what she wanted.

[658] But some accounts say she did want to take over the times and become the publisher.

[659] Unfortunately, that wasn't in the cards, but she remained on the board of the company for pretty much her whole life.

[660] She lived to be 98 years old.

[661] She didn't die until 1990.

[662] And there's some debate on this.

[663] You know, people might know, our audience might know the sort of nickname of the Times is the gray lady.

[664] And there's multiple sort of origin stories of the gray lady nickname.

[665] Did it later become the good gray lady or where does good come in?

[666] Maybe that's part of it.

[667] So I think the origin is the Bank of England was called the Good Lady or something like that.

[668] And so it was sort of borrowed from that.

[669] Some people say the gray came from like looking at the paper.

[670] It's a bunch of gray deuce print.

[671] It's a gray paper.

[672] And so it became the gray lady.

[673] alternatively though if you jean is the gray lady uh she was a presence on the board and sort of the um you know the link to ox and the uh moral fiber if you will of the company for you know 90 years until 1990 it's crazy and this is really introducing the very first of many not necessarily outwardly contentious but inwardly contentious succession decisions that happen The New York Magazine, quote, continues from earlier, Iphigen being the deciding vote, supported her husband, thus cleaving a fault line in the family that was never repaired.

[674] And that, you can imagine generations go by, this thing really starts to compound because there starts to be, you know, massive numbers of cousins who are, you know, the same way related to Adolf that the people who end up sort of succeeding Adolf and, you know, five.

[675] generations later, they're sort of by blood the same amount related, but theirs was not sort of the chosen bloodline to pass down the paper through.

[676] Yeah.

[677] And it has always been a male heir that has become the publisher now through five generations, even though there are plenty of daughters in the family.

[678] So, you know, ox crafty like he is, he's sort of his, so Gatelees, a great writer from the 50s, 60s, 70s, who actually worked as a reporter at the New York Times for a while.

[679] He wrote sort of the definitive book about the New York Times in, I think he came out in 1969 called The Kingdom and the Power.

[680] Which I don't think the family loved.

[681] Like this one I was reading the trust from about right around year 2000 refers to the kingdom of the power.

[682] And I think he was always, after we released that, kept it a little bit of an arm's length.

[683] Yeah.

[684] So he writes about this.

[685] he says how long the times would survive would depend largely on how well ox's heirs got along in the decades ahead he knows this nothing would crumble his foundation faster than family squabbles selfish ambition or short -sighted goals his successors would have to make money but not be enticed by it would have to keep up with the trends but not be carried away by them would have to hire talented people but not people so talented or egocentric that they could become too special as writers or indispensable as editors or or else they'll go start a substack Yeah, exactly.

[686] Thank God, Substack didn't exist in those days.

[687] What would Adolf have done?

[688] The times would go on indefinitely, he hoped, towering over all individuals and groups in its employee, and his family would work together, repressing any personal animosity for the greater good, and if possible, choose mates in marriage who would also be wed to the times.

[689] So how does he set this up?

[690] He creates this trust that goes to, Iphi Gene and Arthur and their descendants.

[691] So we don't have the details of the legal documents of the original trust, but it was recast a few times as generational transfers happen.

[692] And I was able to get a hold of from the proxy statement, I think from the 1990, maybe 10K of the New York Times, the proxy statement.

[693] Some of the language in the 1986 trusts, there were then several trusts amongst branches the family, but they were all linked together.

[694] This is what it says in the organizing documents of the trust.

[695] The trustees of each 1986 trust, subject to limited exceptions described below, are directed to retain the Class B common stock held in the trust and not to sell, distribute or convert such shares into Class A common stock, and to vote such Class B common stock against any merger sale of assets or other transaction pursuant to which control of the New York Times passes from the trustees unless they unanimously determine that the primary objective of the trust, which is to maintain the editorial independence and integrity of the New York Times and to continue it as an independent newspaper entirely, here it is, entirely fearless, free of ulterior influence, and unselfishly devoted to the public welfare can be better achieved by a sale, distribution, blah, blah, blah, blah, blah.

[696] Wait, so it's primary purpose.

[697] The primary purpose of the family trust is to ensure...

[698] Yes.