Original link: The New Yorker
ANNALS OF COMMUNICATIONS
The New Yorker - July 26, 1999
WHAT I DID AT SUMMER CAMP
A reporter gets inside Herb Allen’s C.E.O. retreat.
BY KEN AULETTA
Summer camp is a chance for a kid to play, to forge friendships, to escape his parents. For a media mogul, the five-day Sun Valley, Idaho, camp conducted for the past seventeen years by the investment firm Allen & Company offers similar advantages. There is a head counselor and there are activity directors; each day has a morning activity period, canteen, then playtime and evening programs. The session culminates in an awards ceremony. This year, for the first time, an outsider, a reporter, was permitted to attend. This is my diary.
Tuesday, July 6
There was no sweaty, noisy bus ride. Most of the three hundred or so adult guests and the hundred and thirty children accompanying them have come by private jet. By the end of the day, the fleet of Gulfstreams and Falcons parked on the tarmac is bigger than the air force of most of the Benelux countries. Waiting on the tarmac for each guest is a guide wearing shorts and an Allen & Co. shirt. The guides greet us by name (they memorized our faces from pictures we sent), fetch luggage, and direct us to our rented cars. My guide is Bob Dean, the vice-president of the risk-arbitrage department at Allen & Co.
To read the guest list is to savor the class list in “Lolita” but then to recognize the cast in the pages of Forbes. Among the C.E.O.-ish men and women arriving are Paul G. Allen, a co-founder of Microsoft, and now of Vulcan Ventures; C. Michael Armstrong, of A.T. & T.; Jeffrey Berg, of International Creative Management; Jeffrey P. Bezos, of Amazon.com; Michael R. Bloomberg, of Bloomberg L.P.; Warren E. Buffett, of Berkshire Hathaway; Stephen M. Case, of America Online; Michael Dell, of Dell Computer Corporation; Barry Diller, of USA Networks; William T. Esrey, of Sprint; William H. Gates III, of Microsoft; Donald and Katharine Graham, of the Washington Post Company; Andrew S. Grove, of Intel; Christie Hefner, of Playboy Enterprises; John S. Hendricks, of Discovery Communications; Nobuyuki Idei, of Sony; Steven P. Jobs, of Pixar Animation Studios and Apple Computer; Robert L. Johnson, of BET Holdings; Mel Karmazin, of CBS; Jeffrey Katzenberg, one of three DreamWorks SKG partners; Geraldine B. Laybourne, of Oxygen Media; John C. Malone, of the Liberty Media Group; Thomas Middelhoff, of Bertelsmann AG; Jorma J. Ollila, of Nokia; Sumner M. Redstone, of Viacom; Oprah Winfrey, of the Harpo Entertainment Group; Robert Wright, of NBC; and Jerry Yang, of Yahoo!
The camp is referred to, without irony, as “a family gathering,” but the family has got quite big. Robert Strauss, the former Democratic National Chairman, has been a friend of Herbert Allen, the patriarch of the investment bank that bears his name, for thirty-five years. “I’ve been to every one of these,” he tells me. “The first one was the best: thirty-five people and one speaker—me!” Strauss, who is eighty, loves coming here, and not just because his Washington law firm can garner clients here. “There’s a bunch of people here I know are not the nicest people in the world,” he says. “But here they’re nice.” Here is the Sun Valley Lodge, which is just outside the town of Ketchum, six thousand feet above sea level. The lodge was built in the thirties by Averell Harriman and his Union Pacific Railroad’s millions. One begins to imagine this sort of gathering at the turn of the last century. Did Rockefeller go rafting with Carnegie?
When guests arrive, a small Allen & Co. army is waiting to
pamper them. For the children, ninety of whom are twelve or younger, there are
seventy-five babysitters and twenty activity directors, plus twenty nannies
brought by the guests themselves.
Also awaiting each guest are two thick folders. In one are the daily schedules, for adults and for children. From Tuesday through Saturday, guests will be offered tennis, golf, fly-fishing, white-water rafting, skeet shooting, massages, mountain biking. The kids may have an even better schedule: an ice-skating party, a wagon ride, a horse show, tennis clinics, a Wild West show, kickball, fishing, relay races, a raft trip, pizza and ice cream. Media moguls say that their sons and daughters have made lifelong friends here, engaging in junior networking.
Dress is casual. Except for Steve Jobs and Lachlan Murdoch, who often wear Bermuda shorts, jeans are the uniform of choice. Peter Barton, who once ran Liberty Media and stopped by this year to say hello to friends, points out that you can spot the regulars because they “move with calculated indifference” as they enter the lobby of the lodge; first-time guests enter and glance about like startled rabbits, clearly “titillated,” he says. Regulars also bring sweaters, for the mountain air is chilly at night; first-timers like me catch colds. Photographers for Allen & Co. circulate at tonight’s outdoor barbecue, taking pictures of the guests.
Wednesday, July 7
Each morning’s activity period consists of two or three
presentations in the large conference center. These are preceded by a 6:45 a.m.
buffet breakfast, which is eaten at round tables seating ten. The photographs
taken the previous night fill two walls of the auditorium; everyone seems to
Today, the first corporate presentation is by Charles B. Wang, the chairman and C.E.O. of Computer Associates International, a five-billion-dollar enterprise. Sony makes the second presentation. Howard Stringer, the C.E.O. of Sony America, says that Sony will ship seventeen million PlayStation game consoles this year; the new PlayStation II has enough microprocessing power to rival Microsoft’s operating system and Intel’s chip. When Stringer’s boss, Nobuyuki Idei, speaks, he hastens to say that “Sony is basically a hardware company.” Not that Idei was fooling Intel or Microsoft; it’s just that a kind of Kabuki civility reigns at camp.
As does loot. Stringer has gifts for everyone: a digital Sony AM/FM stereo-cassette Walkman; a Discman; or a digital tape recorder. Last year, Microsoft gave away copies of their expensive WebTV. Millionaires stampede to snatch one—sometimes two—of Sony’s elegant white shopping bags. They are motivated by what appears to be lust, and perhaps because it’s almost playtime.
Twenty-five rafts wait at an embankment of the SalmonRiver, each
manned by a professional guide and equipped with life jackets and oars. Herb
Allen demands an additional accessory—three empty water buckets; he is
determined to start a water fight. Water fights are a tradition. The former
Sony America president Mickey Schulhof stopped in Ketchum to buy aluminum water
cannons that squirt water great distances, and he hid them in his clothes. Who’d
Everyone is laughing as we drift or bounce down the river, and notice Allen &Co. photographers perched on rocks. Ambulances quietly follow our progress. They were almost needed several years ago, when Rupert Murdoch fell in and quickly floated downstream and out of sight. He managed on his own to get to shore, but he’d had to scramble over the rocks and his legs were bloodied. This incident did not retard his enthusiasm for water sports and competition; indeed, when hikes were organized Murdoch is said to have hustled to the fore and stayed there, leaving his wife and others chugging after him. (This year, only a new wife and a honeymoon kept Murdoch away from camp.)
Thursday, July 8
There are other leadership retreats: the Bilderberg conference;
the World Economic Forum, in Davos; Bohemian Grove; investor conferences. Allen
& Co.’s retreat, though, is longer than most. It is also confined
mainly to a single industry—communications. And, most distinct of all,
it includes families. There’s one other difference, as Sumner Redstone
points out: “This conference has a host in Herbert Allen”—a
single figure who dominates, even as he shies away from the stage.
Many C.E.O.s have been attending the camp for most of its seventeen years, and, in addition, Allen has a large extended family. He has sons and nieces and nephews of his own and sons and daughters of close friends who work for Allen & Co. There are people he always invites because they’re old friends: Bob Strauss and his law partner, Vernon Jordan, of Akin, Gump; former Vice-President Walter Mondale; former Senator Bill Bradley, who is running for President; Meredith and Tom Brokaw; Diane Sawyer; the producer Ray Stark, who first introduced Allen to Sun Valley; the actress Candice Bergen; the director Sydney Pollack. Then, he has people who always came when they headed powerful organizations, and he makes sure they keep coming, even though they’re no longer in charge, such as James Robinson, the former C.E.O. of American Express, and Frank Biondi, the former C.E.O. of both Viacom and Universal. Allen gets upset at those who misbehave. A couple of years ago, Ronald Perelman both brought his own security detail and hired locals to protect him. No other C.E.O. comes with an aide, not to mention a security army, and Allen was mightily offended.
Allen, fifty-nine, is an unusual head counsellor. Unlike most investment bankers, he is a billionaire, yet in a business of salesmen he acts like a buyer. Day and night, he wears a cap pulled down to his ears. During the morning presentations, he sits off to the side near the front of the stage; he invites junior bankers to introduce all the speakers. One of the morning’s presenters is an unshaven, black-turtlenecked Steve Jobs. Jobs talks about the importance of stories, of marrying technology and storytelling skills. Most computer geeks, he says, don’t get it. “Silicon Valley thinks ‘creative’ is a bunch of guys sitting in a condo thinking up dirty jokes.”But Hollywood, he says, doesn’t get it, either: “Hollywood thinks technology is something you buy.”
After the break, and more gifts, the first of two socially relevant panels is scheduled. Entitled “Unparalleled Prosperity and a Troubled Society,” the panel is moderated by the charming Donald Keough, who joined Allen & Co. after serving as president of Coca-Cola. Little new ground is broken here, to say the least. Keough contrasts America’s vibrant economy, where the “creation of wealth is incredible,” with what he calls the “dark side to our society.” Does the media, he asks, bear some responsibility for the violence?
The first speaker, Geraldine Laybourne, says, “There aren’t enough fingers in this room to point at all the causes.” Then she does what every panellist but Steve Case, of A.O.L., would do: change the subject. She says she wants to mention another problem: the “digital divide,” or the gap between rich and poor in access to the Internet.
CBS’s Mel Karmazin talks about going to high school in Hell’s Kitchen. “There are more things we can do,” he says, but the major culprit is guns, not the media. (The gun people have their own camp—and blame the media.) Barry Diller says, somewhat enigmatically, that although his job “is to entertain people,” he also has “editorial responsibility.” Steve Case adopts the bleakest view: “Obviously, things are getting worse, not better.” Eighty per cent of teen-agers who are on A.O.L. say that what happened at Columbine could happen in their school. The media, he says, has to stop hiding behind the First Amendment. The central issue, he says, is this: Do we sacrifice profits to downplay violence? No one picks up this challenge.
Keough asks Barry Diller about the “Jerry Springer Show,” which Diller’s network owns. “We had said, ‘Let’s shut the show down,’” Diller says. But his network couldn’t, because, internally, various executives had made mistakes. So he tightened the rules—no violence, period. The issue for him, Diller says, is that executives have to “be vigilant.”
“You don’t get credit for it,” Karmazin says, congratulating Diller—and himself. CBS’s radio stations, Karmazin continues, don’t play gangsta rap. “We’re expressing our First Amendment right not to play it.” The Allen sessions are polite, so no one mentions that Karmazin’s CBS distributes and airs the famously profane Howard Stern radio and television programs.
Laybourne laments media violence, then changes the subject again, boasting that Oprah Winfrey is planning to do a show for Oxygen, “so that we can help lead women in a positive direction.” Redstone introduces a note of unhappy reality: “One of our responsibilities is to make fiscally sound decisions.” Translation: The shareholders come first. And Keough, at the end, inexplicably assures everyone, “No one here ducks his responsibility.”
In years past, Allen & Co. banned the press. Lately, it has allowed reporters on the grounds of the campus but keeps them away from all meetings, breaks, recreation, and evening activities. For many years, I’d asked Allen to allow me to cover the camp, and this year he relented, asking only that I display discretion by not poking a tape recorder into the faces of campers, for example. I was on the guest list both as an author and as a writer for this magazine.
Shyness with the press does not include the fourth annual photograph of media movers, to be taken on Friday by the photographer Annie Leibovitz for Vanity Fair. Allen takes care to tell guests who inquire that he has nothing to do with who is selected. Allen & Co. simply gives the magazine the guest list, and editors choose their own media élite. Thirty-two will make the Media All-Star team and appear for tomorrow’s session; as hard as Allen tries to shake the perception that he influences the list, various campers intensely lobby him to be included in the picture. (After this year’s photograph is taken, Allen will turn to Leibovitz and say, “Vanity Fair has been great to us . . . this is my last picture.” “Never say never,” Leibovitz will tell him, gently. “I’ll say it,” Allen will reply.)
When I get back to the lodge after tennis this afternoon, the elevator door opens and Sumner Redstone, whom colleagues often describe as self-absorbed, appears. He does not say hello or pause but announces, “You can see me on CNN. I’m on now!”
Friday, July 9
Why do they come to camp? Clearly, campers have fun. But there are other reasons: “Insecurity is one motivation,” Peter Barton answers. “It says you’re a player. The inviter here is the kingmaker. If you’re here, it says to everyone else that you’re in the game.” That’s only one motivation, he continues. “The presentations are brain food. You’re socializing with people you dream to have a social opportunity with. And at the same time you know that your wife and kids, who are with you, are separately having a wonderful time.”
They come, said Howard Stringer, of Sony, because of the peculiar nature of the communications industry. “Everything changes so fast. No one can keep up with innovation or transactional options. This is the only place where all the information-technology leaders converge.” Major business deals have been orchestrated, or provoked, at this retreat. It was here, over golf in 1995, that Michael Eisner made his first pitch to buy Cap Cities/ABC, culminating three weeks later in a nineteen-billion-dollar acquisition. It was here, after negotiations had collapsed earlier, that Rupert Murdoch reached an agreement in 1996 to purchase Ron Perelman’s television stations. It was here, in 1997, that Murdoch and Gerald Levin of Time Warner ended the feud between their companies.
A number of C.E.O.s get in touch with the people they want to see before arriving and pack their schedule tight with appointments. Sony’s Idei, who was here for only two days, had a plan that kept him mostly indoors. Thomas Middelhoff, of Bertelsmann, flew to Sun Valley from Germany, a trip that took eighteen hours. He was able to schedule meetings in Sun Valley that spared him from taking many separate trips.
On Friday morning, Michael Armstrong, of A.T. & T., makes the first presentation. He looks like a picture-perfect C.E.O. Dressed in a beige crew-neck sweater over a blue oxford shirt and tan slacks, Armstrong is a commanding presence, his left hand in his pocket, his right resting on the podium, his voice deep. He offers startling facts, including this one: Since he was hired by A.T. & T., less than two years ago, he has spent a hundred and forty billion dollars to acquire companies and to relieve A.T. & T. of its dependence on long-distance telephone service, which is a slow-growth business.
After a break, there is a panel entitled “The Internet and Our Lives,” which is moderated by Tom Brokaw and consists of Jeff Bezos, of Amazon.com, Jerry Yang, of Yahoo!, Jay Walker, of Priceline.com, and Michael Dell, of Dell Computer. Is the Internet another tulip craze? (No.) Will retail shopping survive? (Yes.) Do brand names matter in this strange new world? (Maybe.)
Friday evening is usually when the camp’s awards ceremony takes place. This is the occasion for Jack Schneider, one of Allen’s partners, to get up and roast the various campers, giving out mock awards, such as a Team Viagra T-shirt. This year, Allen cancelled the roast. Schneider thinks that it’s because there were reporters who might learn what he said, and it might be embarrassing; Allen says that it’s because the group is so big that the remarks would lose their intimacy, and, besides, he’s tired of the same jokes.
Something else has changed the mood: the center of gravity at SunValley has shifted from old media to new. Jokes about Michael Ovitz are passé. So this year’s buffet dinner on the lawn beside the pool is less raucous. There are no speeches. At one table, Melinda and Bill Gates dine with Gates’s rival Steve Case and his wife, Jean, and are joined by the president of Walt Disney International, Robert A. Iger, and his wife, Willow Bay, and by Susan and Michael Dell. Michael Ovitz, who has not been very visible and who has been here for only two days, sits beside Katharine Graham.
Saturday, July 10
At 7:30 a.m., Herb Allen speaks for the first time, introducing his friend of three decades, Bill Bradley. “Why Bill Bradley? The only answer I have is to invoke personal privilege.” Bradley is relaxed, comfortable, and focussed as he speaks about children and family structure to a crowd of potential campaign donors that could finance a government, not to mention a candidate. At 8:30 a.m., Warren Buffett speaks. A shambly man, in a beige V-necked sweater over a red flannel shirt and wrinkled tan slacks, the legendarily shrewd investor gives a talk, with slides, centered on overvalued stocks. The stock market is no god, he suggests. In the short run, the market “is a voting machine,” he says. “In the long run, it’s a weighing machine,” and what carries the most weight is a stock’s value, not its hype. He believes that the stock market today is inflated, and unlikely to continue its meteoric rise. He flashes on the screen a chart of the Fortune 500 companies that constitute seventy-five per cent of America’s corporate wealth. In 1998, corporate profits totalled $334.3 billion, yet the market value of these companies was ten trillion dollars. No way, he cautions, will this market value continue to rise as it has. Then he clicks to a slide marked “U.S. Horse Population.” In 1900, there were seventeen million horses; in 1998, only five million. The lesson: Don’t forget the losers.
Buffett tells the story of the oil prospector who died and went
to Heaven. He asked St. Peter for a place, but St. Peter said there was no more
room in the pen set aside for oil prospectors because there were too many of
them in Heaven.
“Do you mind if I say four words?” the oil prospector asked.
O.K., St. Peter said.
“Oil discovered in Hell!” the oil prospector cried.
With that, the prospectors all fled, and St. Peter said, “The pen’s all yours.”
“No, I think I’ll go along with the rest of the boys. There may be some truth to that rumor.”
Buffett says, “That’s how I feel about the stock market.”
The camp farewell takes place at dinner at the River Run Lodge, which is tucked into the side of a ski mountain. It’s a sit-down dinner, and Herbert Allen chooses to sit with his old friends: Ray Stark, Candice Bergen, Sydney Pollack, and Allen’s son Herbert, among others. Wearing jeans and a purple shirt, Allen, who is rail-thin, steps to the microphone and begins thanking people, starting with Stark, who is now eighty-three, all the speakers, and members of the Allen &Co. “family.” It is a heartfelt note on which to end. No summer camp, however, concludes without a talent show, and after dinner Susie Buffett, with her husband, Warren, bouncing along to the rhythms of the Big Band sound, belts out four songs. Then it’s back to the lodge for an ice-skating show, followed by a fireworks display. Something Buffett has said sticks in my mind: “If it weren’t for Herbert, my family wouldn’t get a summer vacation.”