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

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. 2 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 22 American 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 Si Newhouse. It is an incredible story. We're 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 and 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. Sanyo House was born May 24th, 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 9 years old at the time. It's interesting to see this, like Cy Neuhaus'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 Just Go Grind, this newsletter I used to write. And 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'd do anything to lift that burden. And as you'll see in the story, Cy Neuhaus did everything possible to lift the burden of poverty. His mother, who was a peddler, 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 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 this summer kind of curriculum that they guarantee he'll get a job afterwards. And to pay his way back and forth, he took his really 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 Sy went through this schooling, this program to essentially get him a job, a prospective employer With whom his father was kind of helping him with at the time. The moment Cy 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 Sy clearly was the type of person that this was going to make him, and he was gonna find a way to make this work. But the person who ended up giving him a shot was Hyman Lazarus, and he's this lawyer in Bayonne. And at first he actually says like, no, 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, Sy work a month for free, and if he's useful, you know, pay him what you think he's worth, and if not, it won't cost you anything at all. So Sy, 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 Sy, 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 accountant 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, and 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. I'm, 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 Favre 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 Newhouse, 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, there's 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 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 Cy. I mean, given where he came from, a 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. He's like, hey, go help out. And 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 Bayonne 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 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 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 Sy 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 Sai 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 time. And after 12 months of Sy's 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 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 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 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. He doesn't give— 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 3 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 4 years. It's around June 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 Bayonne 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 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 8 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 'cause 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, he's an entrepreneur who started Maxim Magazine and a bunch of other companies. He died being worth hundreds of millions of dollars, if 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 gotta think about this. Cy Newhouse is making, I think it says like $75 a week even before. So he asked for the $21, he asked for that raise. But at 17 years old, he's already making like $75 a week, which is roughly like a 6-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 Sy. 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 capitalist, how different a father and son can be. And also around this time, Sy 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. But he ends up choosing the newsletter, the newspaper, I should say. And it's one of those things where like, can you blame Sy 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'd accomplished, gone. Like, who knows what he would have done? And maybe he still would have had a good career, but he just got lucky that 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 clear of that early on. And it just Balloons from there. And it's funny because even 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, 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 Sy 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 siblings jobs at the 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 parallel. Sam puts in long hours. He is waking up most mornings at 5. He says he works at the paper till dinnertime. He studies until 10. But once he could afford it, so this is maybe a decade into him working full-time, he buys a 2-seater Ford Roadster and he He still makes time to enjoy life, which I think is an important point to note that even though this guy builds a like multi-billion dollar empire, family 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 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 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 be part of fun. But still, I love the quote. I think it's important. I think Cy 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 9 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 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 on 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 much so, 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 he obviously ends up buying more newspapers. The first one is is 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, 'cause 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 for his half. And then the Times companies, 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 gonna also learn a very, very important lesson from this first one. And just remember this because we're gonna go through a couple more acquisitions and It's just, it's just insane how he learned from this experience. But here's the 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 regardless of all 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 a competitor, close it, charge more to advertisers in your newsletter— newspaper. And I'm gonna keep saying that. I'm in newsletters all the time, so 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 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 $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 8-page kind of flatbed duplex, especially the equipment that they had. Newhouse was going to use that at the other paper. So in the end, everyone 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 gonna 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 gonna stop. And he learned about this mergers and 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 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 where you're gonna be able to apply this to something in your work as well. And it also reminds me again of Felix Dennis, 'cause I just read that book relatively recently, but that'll be an episode of the show at some point. Felix Dennis is 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, 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, which was kind of funny. So around 26 years old, he's doing all this work to make the Bayonne Times prosper. 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. Yeah. So he simply started giving himself a larger share of the profits, up to half of the net revenues because the judge was inattentive and he just never caught on. And with that, Sai 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 it reminds me again of this, like the whole thing, this whole idea of like you have to own equity, a piece of the business to get rich. Like that's how you build wealth, owning things, not just getting a salary. And Neuhaus 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 Sid 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 Tsai had been growing this paper. There wasn't enough advertising, there wasn't enough circulation, and there was inefficient production. So guess what Tsai does? He learns from all of 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 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 on 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 frequent Since many ads ran in the Bayonne 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 2 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 you think, like, how can you, if you have 2 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 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. Wanna be associated with good brands, and you'll probably see that very soon on the show, very quickly, 'cause I think that association is helpful. And Sai 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 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 100 years ago. And so without Staten Island Advance growing quickly, he 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 assigning 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 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 8 years younger than Sy Newhouse, but like Sy, he was the oldest of 8 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 of that he admired. And Sy 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 Ferry 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 Newhouse gave him this discount, this interest-free loan, I should say. And that actually would pay dividends for like many, many, many years, which is, it's so crazy to look back on how that was so important. That relationship actually pays dividends for like decades, which is another note of just finding young hustlers, enabling them is so important, 'cause then it just helps your business long-term, even if you're not sure exactly of of how. So in 1924 though, Cy 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 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 newspaper. And thankfully for Newhouse, he accepts. So on May 7th, 1924, Newhouse registers the corporation where he has 60% to himself and then 20% each to 2 partners from the Bayonne Times who were an editor and an ad man, an ad manager, whom he recruited by making them partners rather than paying them more. So these 2 partners, Could have stayed at the Bayonne Times. They could have made more money there. But Newhouse, which is again a lesson in incentives, is 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 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 any and all means whatsoever. Clearly the ambition was there. And unfortunately, not long after, November 14th, 1924, Judge Lazarus dies, complications from poison ivy. He's only 52 years old. And then essentially full ownership of the Advance by within 3 years. Uh, Sy 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 advance itself. He also brings in Phil Hochstein from the Bayonne Times as his kind of chief editorial advisor, 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 in hiring from 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 it is truly, if you find a good place to work at, you can work with those people for a 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, Neuhaus goes against someone he has some like court battle and he hires a lawyer from the other side that essentially was going against him. 'Cause this is just like his fiercest competitor 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's going against Tara Mason. They have this like battle, finance battle. And then eventually he Bobby Axelrod, he hires Tara Mason and kind of people are kind of surprised by that. And just because he's like, yeah, you're my fiercest competitor. Of course I want you on my team. Like you're, you, he loved his, her tactics and strategies, their tactics and strategies. And he's like, why aren't they on our team? Which is so like true. That's what you want. And during those first years, so obviously now Newhouse is working for the Advance, working on the Advance, doesn't, doesn't have the Bayonne Times anymore. He practically lived at the Advance. 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 'cause 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, 'cause 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 outta poverty. He could build this empire he eventually wanted to do. And the tactics and strategies that this man uses repeatedly, it's 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 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 Kane was counting on. So Kane is going daily with this newspaper. He's thinking, oh, I'm gonna have all these advertisers. Newhouse just like relaxes 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 trap he set for them. Just like, yep, can't work, can't advertise with them. I'm gonna basically shut this trap closed, 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 6 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 him, and something that I think you should remember, he, uh, Newhouse 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 Neuhaus 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, Syak, uh, eventually finds a wife named Mitzi. They have their first child November 8th, 1927, which is Sam I. Newhouse Jr. Less than 2 years later, Donald is born. And Mitzi was great for him. I'll just make that as a, as 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 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 newspaperman at the time was low status and Mitzi's parents come from like the fashion world. So they saw Sy as 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. Which is just kind of crazy how that all plays out. But one of the things that is focused as Sy was, as he's like building this empire, and 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 so lesson 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 real about understanding the 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 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 note of 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 November 1932, Newhouse is 37 years old. And he takes advantage of this, this group. So the, the Ritter brothers, they essentially expanded their, their holdings of newspapers too quickly. They had too much debt and they ended up having to sell. So Newhouse is 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 I'm currently 35. So like he basically had one newspaper about my age and then 2 years later buys a second. And it's interesting to see his progression of his wealth and everything around him is, it definitely seems almost 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 you bought, the circulation was increasing, so more people are obviously paying for it. But you want to know, and this is really important of understanding the business side of it, like how sticky is the audience? Because just because you have circulation growing, are people going to stick around? And 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. It's like because they're not really prepared for the next phase. And so they have to make these changes, which is unfortunate, of course, because people lose their jobs, but good for the business itself. And it's funny because Neuhaus 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, when Newhouse was thinking about preparing his people and all that, Hoffman was this, was the publisher at the time. And so at first it looked like Hoffman was right. Circulation dropped off. 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 paid subscriptions were up by more than 2,000. So essentially he was right. He did, 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 gonna go through like 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 4 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 says crazy things, but like, His methods are like, he has a network of spies at the newspapers at times. He kind of uses like this selective intimidation, misdirection, smokescreens, 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, you know, his, 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 on all this with this 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 Sai came from. At 13, he's working full-time to support his large family, a family of like 8 brothers and sisters. He doesn't play nice to people taking that away. No one's gonna come after the things he's worked for. He's been his entire life, he's been bullied, underestimated, and had to deal with racist, like antisemitic 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 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 2 newspapers, 2 newspapers, the Advance and the Press. And they're about to become 2 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 $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 $1 million in today's dollars. It's like $40,000. So he's doing really, really well. And that sudden wealth only makes him hungrier for more, which, which you often see 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 wanna learn from people who are great. You wanna learn from people who have succeeded before us. And as humans, we just need examples to follow. I mean, from as the, our youngest ages, we're always looking to people, other humans for examples. And it's just, 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 3rd acquisition of Sy Newhouse is in May of 1935. He's 40 years old and essentially the Newark Ledger is 3rd in a 3-paper, 3-newspaper town. So he paid $310,000 for 51% stock and his daily schedule is like rigorous. Get up at 6, spend hours at the Advance, drive to Jamaica by mid-morning, then show up to Newark. That's 62 miles a day of driving. And despite the rigorous schedule, Newhouse seemed to draw energy out of the fact that 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 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 counterpositioning against going out to a different market against your competitors and applying what you know in one area? So Newhouse obviously had newspapers in 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 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 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 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 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 worth of their business, he persisted. It's all he knew, of course, and it made his family prosperous and they were 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 he 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 costs repeatedly. He trusts his knowledge and he doubles down on newspapers even as radio is growing. And eventually, like I said, buys 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 of empire, because Newhouse had victory over the newspaper guild. Word spread about that. And Hearst is in San Simeon, so the 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 the 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 Sy 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 doesn't even ask for a salary. Sy Newhouse just wants to share profits of the paper because they'd 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've ended up joining the empire of Hearst. So Paul Block hears about the potential offer, and then he immediately hooks his private railcar to a train for California and rode directly to San Simeon, where he dissuaded Hearst 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 Neuhaus because if you want to build wealth and an empire, it's not going to happen with a job. Some of Neuhaus's biggest growth came after this, which is just crazy. So in 1939, Neuhaus is 44 years old. And there's 3 newspapers in Syracuse and they have a circulation of about like, I don't know, like 100, 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 2 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 Newhouse 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, particularly from New York. So he paid the owners of the Herald $1 million 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. It was like, real G's move in silence 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 used repeatedly. So, Cy Newhouse implements 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 cuts 7 lines, 7 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 2 newspapers, instead of raising prices to advertisers, he actually offers merchants a 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 $1 million 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 3 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, years back basically. And Newhouse is vindictive, as I told you. So Jerome Barnum's Post-Standard, who was so mean to Newhouse, they're eventually in so much trouble that they offer to sell to Newhouse for $1.3 million, which was actually far less than the cost of a new plant they just, they had just created. So they just create a new plant to produce the paper and they sell Newhouse for less than that even. So Newhouse takes complete control on January 14th, 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 means there was less for his competition. And he ends up buying his Competitor at a reduced cost. It is just—he's masterful at 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 when you compound this year after year acquisition after acquisition, it turns into something. Incredible. And he's also a man of just like, it says he's very disciplined. And here's one, uh, 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 3 pillows, try to get a few hours of sleep before daybreak. The train would pull in around 3 AM. 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 impressive. At the time, I think he has like millions of pages being printed. He's always asking like, what does it 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. See, it's a nitty-gritty of details because even if the costs changed like 1,000th 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, 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 getting into like empire building. At the time, Newhouse is in his 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 Bloch's Newark Star Eagle, merged it with the Ledger, formed 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 Sy Newhouse his entire career. He's always playing the long game and he actually acquires one of his partner's stakes, 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 we 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 Sy around mercilessly when he was a teenager selling ads in Bayonne for 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 was 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, so 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 3 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 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 and 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 like fronts and indirection he uses to buy newspapers, which ends up happening. He buys one, essentially he uses a front with his old ally Edwin Russell because the seller of this Patriot Company in Harrisburg, Andy McCormick, wants someone of like a good family and high social standing. And didn't want out-of-towners or chain 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, fifty thousand dollars 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. He's a master. He learned from Hearst because Hearst did 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 upfront is because it was a long-term relationship that Newhouse had for a very long time, many years. And that's what ended up letting him buy this newspaper. He merges this with another one. He orders all the competing papers' presses and machines broken down and carted 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 good talent, which is something we see again and again. And so in Harrisburg, 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 a Sunday edition in Harrisburg as well. And at first he sold ads at a big discount, did contests. 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 5 years, $150,000 in circulation in a town with only 22,000 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 that 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 A.J. Liebling had called Newhouse a journalist chiffonneur, the French word for ragman or ragpicker, 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 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, 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 $2.5 million by that standard. McNaughton, who's the 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 Neuhaus 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 of valuing a business or industry standard is just classic Newhouse. So just find a way. He'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 Newhouse buying it made him a national figure overnight. It kind of changed the game for people to understand like, who is Si 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've been. Like, he, it's pretty insane. But also one thing I 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 cuz 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 never interfered with editorial affairs. And that was actually something that 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 didn't 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're thinking after this, like, he's unstoppable, making acquisition after acquisition, and he's like, you know, can't be touched. That's not exactly right. He makes one of the biggest mistakes. You call it a mistake, you could call it a a learning lesson, whatever, but he tries to buy the Denver Post and he has a part of it. 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 2 sisters, Helen and May Bonfils, the daughters of the paper's founder, Frederick Bonfils. And the sisters hate each other. May wants out, so she actually sells like a 15% stake. Uh, directly to Newhouse. 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 Bonfils. He underestimated both her and her lawyer. And it's one of these lessons you learn from a book like this and 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, 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 willing to take risks like this, even if he spends 13 years trying to take over this Denver newspaper, the Denver Post, and he ends up losing. But he learns to be more careful, more selective, and he kind of starts thinking of himself as more of a collector rather than 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 very soon after this, because around this time, I should say, because in 1959, he purchases Condé Nast. And so he didn't have magazines before this. He wanted publications that could match Hearst's trio of Cosmopolitan, Good Housekeeping, and Harper's Bazaar. And so Condé Nast had 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 magazines carried vast amounts of advertising and had tremendous room for growth. And there's another news, there's another magazine chain for sale, which is Street& Smith. So he merged Condé Nast with Street& Smith, which is the oldest magazine firm in America. And he essentially uses the same playbook with newspapers. As of 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 by this time, which is just a crazy scenario here, by the time Garfinkel's company, which remember he made those interest-free 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 9 months of Newhouse taking over Condé Nast, they go from losing $500,000 to having profits of $1.627 million. And it's clear for Newhouse that building an 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, 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 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 it's crazy. Like, it's a funny story where it's like, for advice, he relied mostly on his accountant, his lawyer, and like his 2 brothers at the time, frequently calling the last of these 3 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 of who Newhouse is, 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 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 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 they 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 2 examples of that were like, one, he wouldn't hire a man who he saw be rude to waiters. And 2 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, asked the maître d' 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 $5 tip paid off. And here's one of like the final This is the final deal actually of Newhouse's career. And after he acquired the Cleveland Plain Dealer in another deal, 'cause he acquired so many, I can't discuss all of them. He basically made like no major newspaper purchases in 8 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, they— the deal was not taken seriously at all. But then he finds this Booth chain of 8 Michigan newspapers. They were operating as monopolies in their cities, and on 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 gotta learn in life that nothing worth getting ever comes to you without having to fight for it. So November 8th, 1976, after more than 6 decades in the newspaper business, Newhouse concluded his final transaction for a total of $305 million, the 8 Booth newspapers and Parade magazine, likely to remain the biggest American newspaper deal of 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 Advance. 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 one of the things the book says is like, the life of Cy Newhouse must be regarded as one of the great success stories of our time. Despite handicaps that would have discouraged even Horatio Alger, 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 this 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 Sy Neuhaus 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 donate to the university, which he ends up donating a lot of money, they ask him about trying to get him 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 the life of Cy Newhouse. Thanks for listening. Catch you in the next episode.