WEBVTT 00:00:00.000 --> 00:00:02.839 Welcome, everyone. We are we are so glad you're 00:00:02.839 --> 00:00:05.639 joining us for today's deep dive. We have a massive 00:00:05.639 --> 00:00:08.640 and frankly, completely fascinating topic lined 00:00:08.640 --> 00:00:10.640 up for you today. Yeah, it's a big one. It really 00:00:10.640 --> 00:00:13.060 is. We are looking at a comprehensive Wikipedia 00:00:13.060 --> 00:00:16.679 article detailing the life. the career, and the 00:00:16.679 --> 00:00:19.699 incredibly complex legacy of the late Jack Welch. 00:00:19.719 --> 00:00:22.359 The former CEO of General Electric. Exactly. 00:00:22.800 --> 00:00:25.160 It's a subject that really forces you to look 00:00:25.160 --> 00:00:28.039 at the entire landscape of modern business in 00:00:28.039 --> 00:00:30.000 a completely different light. Yeah. I mean, the 00:00:30.000 --> 00:00:32.420 ripples of his leadership, both the immense wealth 00:00:32.420 --> 00:00:34.320 he generated and the systemic vulnerabilities 00:00:34.320 --> 00:00:37.679 he created, they're still defining how we work 00:00:37.679 --> 00:00:40.219 today. And here is the central paradox we are 00:00:40.219 --> 00:00:42.740 going to be exploring. How did a guy who started 00:00:42.740 --> 00:00:45.439 out as a junior chemical engineer in the 1960s 00:00:45.439 --> 00:00:48.700 become the manager of the century? How did he 00:00:48.700 --> 00:00:53.299 build a staggering $600 billion empire and simultaneously 00:00:53.299 --> 00:00:56.119 become the godfather of the cutthroat, hyper 00:00:56.119 --> 00:00:58.119 -competitive corporate culture that so many of 00:00:58.119 --> 00:01:01.380 you navigate today? To help synthesize the massive 00:01:01.380 --> 00:01:04.319 scale of Welch's legacy, I am thrilled to have 00:01:04.319 --> 00:01:06.680 our resident expert here with us. Glad to be 00:01:06.680 --> 00:01:09.230 here. There's a lot to cover with Jack Welch. 00:01:09.310 --> 00:01:12.609 His story isn't just, you know, a standard biography 00:01:12.609 --> 00:01:15.790 of a successful executive. It really functions 00:01:15.790 --> 00:01:18.269 as the origin story for modern American capitalism. 00:01:18.530 --> 00:01:20.989 Wow. OK. Yeah. If you want to understand why 00:01:20.989 --> 00:01:24.430 corporations behave the way they do today, you 00:01:24.430 --> 00:01:26.650 have to understand him. OK, let's unpack this, 00:01:26.750 --> 00:01:28.930 because you really cannot understand the CEO 00:01:28.930 --> 00:01:31.489 without understanding the environment that forged 00:01:31.489 --> 00:01:34.480 him. Definitely not. John Francis Welsh Jr. was 00:01:34.480 --> 00:01:37.959 born in 1935 in Peabody, Massachusetts. He grew 00:01:37.959 --> 00:01:40.019 up in a working class Irish Catholic family. 00:01:40.239 --> 00:01:42.959 His father was a railroad conductor for the Boston 00:01:42.959 --> 00:01:45.859 and Maine Railroad, and his mother was a homemaker. 00:01:46.040 --> 00:01:47.980 Right. So he was entirely removed from the country 00:01:47.980 --> 00:01:50.900 club Ivy League pipeline that typically produced 00:01:50.900 --> 00:01:54.120 Fortune 500 CEOs at the time. Yeah. Totally different 00:01:54.120 --> 00:01:56.540 world. He developed an intense blue collar grit. 00:01:56.920 --> 00:01:59.900 Very early on, he was working incredibly tough 00:01:59.900 --> 00:02:02.500 summer jobs throughout his youth. He was a golf 00:02:02.500 --> 00:02:06.060 caddy, a newspaper delivery boy, a shoe salesman. 00:02:06.120 --> 00:02:07.799 I think he even worked as a drill press operator, 00:02:08.000 --> 00:02:10.860 right? He did, yeah. And he also had this fierce 00:02:10.860 --> 00:02:13.780 competitive streak honed through athletics. He 00:02:13.780 --> 00:02:15.400 was a captain of his high school hockey team. 00:02:15.840 --> 00:02:19.090 That raw drive to win at all costs. That was 00:02:19.090 --> 00:02:21.490 installed at a very foundational level. And that 00:02:21.490 --> 00:02:23.669 drive takes him to the University of Massachusetts 00:02:23.669 --> 00:02:26.449 Amherst for chemical engineering and eventually 00:02:26.449 --> 00:02:28.909 the University of Illinois for his master's and 00:02:28.909 --> 00:02:33.189 his Ph .D. Right. So in 1960, Dr. Jack Welch 00:02:33.189 --> 00:02:36.490 joins GE. He takes a job as a junior chemical 00:02:36.490 --> 00:02:39.490 engineer in Pittsfield, Massachusetts. He's making 00:02:39.490 --> 00:02:43.650 about $10 ,500 a year. Which is roughly $112 00:02:43.650 --> 00:02:46.659 ,000 in today's money. A solid starting salary. 00:02:46.919 --> 00:02:48.680 Yeah, not bad at all. But he almost walked away 00:02:48.680 --> 00:02:50.719 from the entire company just a year later in 00:02:50.719 --> 00:02:53.500 1961. Yeah. And not just over the money, though 00:02:53.500 --> 00:02:56.000 he was unhappy with a meager raise he was offered, 00:02:56.139 --> 00:02:58.180 but because he felt completely suffocated by 00:02:58.180 --> 00:03:00.819 GE's bureaucracy. That near exit is a defining 00:03:00.819 --> 00:03:03.639 moment. He was ultimately convinced to stay by 00:03:03.639 --> 00:03:06.620 an executive named Ruben Getoff. Getoff basically 00:03:06.620 --> 00:03:09.340 promised Welch he would clear the red tape and 00:03:09.340 --> 00:03:12.039 create a small company atmosphere just for him. 00:03:12.139 --> 00:03:15.319 Just for one junior engineer? Exactly. It's fascinating 00:03:15.319 --> 00:03:17.979 to think about the butterfly effect there. If 00:03:17.979 --> 00:03:20.960 Guthoff hadn't made that specific promise, the 00:03:20.960 --> 00:03:23.379 entire trajectory of global corporate culture 00:03:23.379 --> 00:03:26.240 might look radically different today. It's wild 00:03:26.240 --> 00:03:28.259 to think about, though the factory workers in 00:03:28.259 --> 00:03:32.319 1963 might have preferred he left. Oh, the explosion. 00:03:32.620 --> 00:03:35.539 Yes, because just two years after that promise, 00:03:35.740 --> 00:03:38.979 Welch literally blew the roof off a GE factory 00:03:38.979 --> 00:03:41.629 he was managing. An actual... physical explosion 00:03:41.629 --> 00:03:44.250 at the plant he was nearly fired over it it's 00:03:44.250 --> 00:03:46.330 an incredible piece of irony that the man who 00:03:46.330 --> 00:03:48.189 would later be crowned the manager of the century 00:03:48.189 --> 00:03:51.150 almost ended his career in his 20s by blowing 00:03:51.150 --> 00:03:53.750 up his own workspace it sounds like a movie scene 00:03:53.750 --> 00:03:55.770 but if we connect this to the bigger picture 00:03:56.169 --> 00:03:59.169 That explosion and his deep -seated hatred of 00:03:59.169 --> 00:04:02.349 corporate red tape directly fueled his executive 00:04:02.349 --> 00:04:04.969 philosophy later on. His disdain for bureaucracy 00:04:04.969 --> 00:04:07.509 wasn't just a personal annoyance. It became the 00:04:07.509 --> 00:04:10.210 central thesis of his leadership. When he finally 00:04:10.210 --> 00:04:12.949 gained executive power, he waged an absolute 00:04:12.949 --> 00:04:15.590 war on inefficiency because he fundamentally 00:04:15.590 --> 00:04:18.230 remembered how much the system tried to stifle 00:04:18.230 --> 00:04:20.430 him when he was just a junior engineer trying 00:04:20.430 --> 00:04:23.009 to move fast. He certainly made sure he was never 00:04:23.009 --> 00:04:26.089 stifled again. By 1981, he takes the reins as 00:04:26.089 --> 00:04:29.449 GE's youngest chairman and CEO. Yeah. And he 00:04:29.449 --> 00:04:32.129 doesn't just tweak the company. He institutes 00:04:32.129 --> 00:04:35.670 a radical new operational directive. He declared 00:04:35.670 --> 00:04:38.250 that GE had to be either number one or number 00:04:38.250 --> 00:04:40.769 two in every single industry it participated 00:04:40.769 --> 00:04:43.850 in. Period. Exactly. If a division wasn't dominating 00:04:43.850 --> 00:04:46.569 its market, GE was going to fix it, sell it, 00:04:46.589 --> 00:04:49.139 or close it. What's fascinating here is the sheer 00:04:49.139 --> 00:04:52.180 unapologetic scale of how he executed that vision. 00:04:52.339 --> 00:04:55.860 Throughout the 1980s, his aggressive restructuring 00:04:55.860 --> 00:04:58.939 earned him the infamous nickname Neutron Jack. 00:04:59.529 --> 00:05:01.910 Like the bomb. Right, like the neutron bomb. 00:05:02.209 --> 00:05:04.550 The joke going around Wall Street was that Jack 00:05:04.550 --> 00:05:06.790 Welch would eliminate all the human beings while 00:05:06.790 --> 00:05:08.810 leaving the buildings perfectly intact. During 00:05:08.810 --> 00:05:12.310 his first five years as CEO, GE's workforce plummeted 00:05:12.310 --> 00:05:16.449 from 411 ,000 employees down to 299 ,000. Over 00:05:16.449 --> 00:05:19.509 100 ,000 people remained from the peril in half 00:05:19.509 --> 00:05:21.889 a decade. It's massive. Some of that was from 00:05:21.889 --> 00:05:24.870 selling off underperforming businesses, but a 00:05:24.870 --> 00:05:28.610 staggering 81 ,000 of those jobs were eliminated 00:05:28.610 --> 00:05:32.230 directly from continuing operations just to streamline 00:05:32.230 --> 00:05:34.970 the company. It's a level of downsizing that 00:05:34.970 --> 00:05:37.550 is hard to even comprehend. And it wasn't just 00:05:37.550 --> 00:05:40.310 the layoffs. He completely rewired the psychological 00:05:40.310 --> 00:05:43.589 environment for the people who stayed. He instituted 00:05:43.589 --> 00:05:45.889 a management system that became known as Rank 00:05:45.889 --> 00:05:48.970 and Yank. Can you explain the mechanics of how 00:05:48.970 --> 00:05:51.350 that actually worked inside the building? Absolutely. 00:05:51.470 --> 00:05:54.470 The formal term was the vitality curve. Welch 00:05:54.470 --> 00:05:56.709 believed that you could graph employee performance 00:05:56.709 --> 00:06:01.050 on a strict bill curve. Every single year, managers 00:06:01.050 --> 00:06:02.970 were forced to divide their teams into three 00:06:02.970 --> 00:06:05.910 categories. Okay. You had the top 20%, the vital 00:06:05.910 --> 00:06:09.189 70 % in the middle, and the bottom 10%. The top 00:06:09.189 --> 00:06:11.670 tier was heavily rewarded with bonuses and stock 00:06:11.670 --> 00:06:13.850 options. And bottom. If you fell into that bottom 00:06:13.850 --> 00:06:27.089 10%, you were fired. Period. Wow. It essentially 00:06:27.089 --> 00:06:30.129 turned the workplace into a zero -sum game. You 00:06:30.129 --> 00:06:31.949 weren't just competing against rival companies. 00:06:32.009 --> 00:06:34.470 You were actively competing for survival against 00:06:34.470 --> 00:06:36.949 the person sitting at the desk next to you. Exactly. 00:06:37.069 --> 00:06:39.490 It was a massive paradigm shift in American business. 00:06:39.709 --> 00:06:42.790 He was explicitly trading the traditional post 00:06:42.790 --> 00:06:46.529 -war concept of corporate job security for cutthroat 00:06:46.529 --> 00:06:49.250 performance and aggressive market capitalization. 00:06:49.449 --> 00:06:51.629 And we know this model didn't stay contained 00:06:51.629 --> 00:06:55.490 within GE. You can see the DNA of the vitality 00:06:55.490 --> 00:06:58.689 curve in massive modern corporations today. The 00:06:58.689 --> 00:07:00.550 source material specifically highlights companies 00:07:00.550 --> 00:07:03.750 like Amazon and Uline as having adopted variations 00:07:03.750 --> 00:07:06.470 of this model to continuously cull their ranks. 00:07:06.649 --> 00:07:09.920 It became a template. Alongside that, he completely 00:07:09.920 --> 00:07:12.699 dismantled GE's traditional corporate structure. 00:07:12.920 --> 00:07:15.379 He abolished the nine layer management hierarchy. 00:07:15.759 --> 00:07:18.199 He wanted a flatter organization where he could 00:07:18.199 --> 00:07:20.620 exert direct pressure. Yeah, he hated layers. 00:07:20.920 --> 00:07:23.060 He would make unannounced, unexpected visits 00:07:23.060 --> 00:07:25.519 to GE plants and offices all over the country 00:07:25.519 --> 00:07:27.680 just to keep middle management in a state of 00:07:27.680 --> 00:07:30.740 constant high alert. You read about these tactics 00:07:30.740 --> 00:07:33.240 and it is a massive aha moment. It really is. 00:07:33.439 --> 00:07:35.980 You suddenly realize where so much of the high 00:07:35.980 --> 00:07:42.019 pressure constant. There's a brand new playbook. 00:07:42.279 --> 00:07:44.579 And the reason it became the gold standard for 00:07:44.579 --> 00:07:47.420 other CEOs is because for a very long time, Wall 00:07:47.420 --> 00:07:49.970 Street absolutely rewarded it. The financial 00:07:49.970 --> 00:07:52.350 metrics from his peak years are almost difficult 00:07:52.350 --> 00:07:55.990 to process. Under Welch's leadership, GE's market 00:07:55.990 --> 00:07:59.730 value swelled from roughly $14 billion when he 00:07:59.730 --> 00:08:04.430 took over to an unbelievable $600 billion. Revenues 00:08:04.430 --> 00:08:08.149 climbed from $26 .8 billion to almost $130 billion. 00:08:08.449 --> 00:08:12.529 He was voracious, overseeing 600 different acquisitions. 00:08:12.709 --> 00:08:16.250 The most famous one was in 1986, when GE bought 00:08:16.250 --> 00:08:19.769 the RCA Corporation for over $6 billion. At the 00:08:19.769 --> 00:08:22.050 time, that was the largest non -oil merger in 00:08:22.050 --> 00:08:24.750 business history. But what was the underlying 00:08:24.750 --> 00:08:27.430 strategy there? Why does a company famous for 00:08:27.430 --> 00:08:30.269 industrial manufacturing buy RCA? Primarily, 00:08:30.269 --> 00:08:33.250 he wanted their media crown jewel. Yes, the NBC 00:08:33.250 --> 00:08:36.350 television network. He essentially bought RCA. 00:08:36.809 --> 00:08:38.950 kept the broadcast network because of its massive 00:08:38.950 --> 00:08:41.789 cultural influence and cash generation, and quickly 00:08:41.789 --> 00:08:44.990 liquidated or sold off almost all of RCA's other 00:08:44.990 --> 00:08:47.789 historical divisions. It was a clear signal that 00:08:47.789 --> 00:08:50.389 GE was no longer just about making physical goods. 00:08:50.629 --> 00:08:53.429 And that leads perfectly into the biggest transformation 00:08:53.429 --> 00:08:57.149 of his entire tenure. The shift to finance. This 00:08:57.149 --> 00:08:59.330 is perhaps the most critical concept to Graft 00:08:59.330 --> 00:09:02.129 about Jack Welch's legacy. He recognized that 00:09:02.129 --> 00:09:04.590 manufacturing light bulbs, jet engines and washing 00:09:04.590 --> 00:09:07.470 machines was capital intensive and slow. Right. 00:09:07.590 --> 00:09:11.320 But moving money around. That was fast. He spearheaded 00:09:11.320 --> 00:09:13.700 a strategy called financialization, shifting 00:09:13.700 --> 00:09:15.740 the core focus of the company away from industrial 00:09:15.740 --> 00:09:18.000 manufacturing and toward financial services. 00:09:18.240 --> 00:09:21.240 He built up GE Capital into an absolute juggernaut. 00:09:21.279 --> 00:09:22.720 They were doing everything. Oh, yeah. They got 00:09:22.720 --> 00:09:24.580 into subprime lending, commercial real estate, 00:09:24.759 --> 00:09:27.419 issuing credit cards and leasing airplanes. By 00:09:27.419 --> 00:09:30.120 the end of his time as CEO, this finance division, 00:09:30.320 --> 00:09:32.779 GE Capital, accounted for 40 percent of GE's 00:09:32.779 --> 00:09:35.200 total revenue and a staggering 50 percent of 00:09:35.200 --> 00:09:38.139 its overall profit. The majority of the money 00:09:38.139 --> 00:09:40.059 coming into General Electric wasn't from the 00:09:40.059 --> 00:09:42.519 electric part at all. It was from banking. Exactly. 00:09:42.519 --> 00:09:44.960 They effectively turned an industrial pioneer 00:09:44.960 --> 00:09:49.519 into a massive unregulated hedge fund that happened 00:09:49.519 --> 00:09:52.740 to also make appliances on the side. And for 00:09:52.740 --> 00:09:56.480 a while, it worked brilliantly. By 1999, Fortune 00:09:56.480 --> 00:09:58.980 magazine named him the manager of the century. 00:09:59.500 --> 00:10:02.220 He was the undisputed king of capitalism. He 00:10:02.220 --> 00:10:04.759 was. But this is where you have to look past 00:10:04.759 --> 00:10:07.820 the immediate stock price. While that pivot to 00:10:07.820 --> 00:10:11.200 financialization created unprecedented, explosive 00:10:11.200 --> 00:10:14.039 short -term wealth, it completely altered the 00:10:14.039 --> 00:10:16.159 DNA of the company. It really did. It hollowed 00:10:16.159 --> 00:10:18.220 out their industrial core and replaced it with 00:10:18.220 --> 00:10:20.460 high -risk financial instruments, laying the 00:10:20.460 --> 00:10:23.200 exact groundwork for a structural collapse. Here's 00:10:23.200 --> 00:10:25.139 where it gets really interesting, because the 00:10:25.139 --> 00:10:27.299 legacy of the manager of the century looks very 00:10:27.299 --> 00:10:29.259 different in the rearview mirror. Let's look 00:10:29.259 --> 00:10:31.480 at the aftermath. 20 years after Welch stepped 00:10:31.480 --> 00:10:34.279 down, GE's market cap had plummeted by about 00:10:34.279 --> 00:10:37.139 55%. Just a free fall. To put that in perspective, 00:10:37.460 --> 00:10:40.620 if you had invested $100 ,000 in GE shares in 00:10:40.620 --> 00:10:42.500 the year 2000, near the end of his legendary 00:10:42.500 --> 00:10:45.059 run, that investment would have lost about 80 00:10:45.059 --> 00:10:49.000 % of its value by 2021. And by late 2021, the 00:10:49.000 --> 00:10:51.559 damage was so profound that GE announced plans 00:10:51.559 --> 00:10:54.360 to fracture into three separate independent companies, 00:10:54.799 --> 00:10:59.059 aviation, healthcare, and energy. The great conglomerate 00:10:59.059 --> 00:11:01.840 that Welch built effectively ceased to exist. 00:11:02.200 --> 00:11:05.000 And that profit engine he built. GE Capital, 00:11:05.299 --> 00:11:08.200 it became an existential liability. Because it 00:11:08.200 --> 00:11:10.220 was operating like a bank but wasn't regulated 00:11:10.220 --> 00:11:13.100 like one, it was highly vulnerable. During the 00:11:13.100 --> 00:11:15.919 2008 financial crisis, GE Capital was deemed 00:11:15.919 --> 00:11:18.539 too big to fail and had to be heavily regulated 00:11:18.539 --> 00:11:20.919 by the Federal Reserve to prevent it from dragging 00:11:20.919 --> 00:11:23.220 down the broader economy. It became exactly what 00:11:23.220 --> 00:11:24.980 he originally hated, a bureaucratic nightmare. 00:11:25.139 --> 00:11:27.330 Exactly. Furthermore, the aggressive tactics 00:11:27.330 --> 00:11:29.409 embedded in the culture caught up with them legally. 00:11:29.570 --> 00:11:33.590 In 2014, GE Capital agreed to pay a record $225 00:11:33.590 --> 00:11:36.970 million settlement over deceptive and discriminatory 00:11:36.970 --> 00:11:39.690 credit card practices. The consequences extended 00:11:39.690 --> 00:11:42.570 far beyond the balance sheet, too. There was 00:11:42.570 --> 00:11:45.289 a significant environmental toll during his tenure. 00:11:45.799 --> 00:11:49.700 Under Welch, GE fought a bitter 20 -year battle 00:11:49.700 --> 00:11:52.559 against the EPA and the state of New York over 00:11:52.559 --> 00:11:55.720 polychlorinated biphenyls, better known as PCBs. 00:11:55.779 --> 00:11:57.340 Which the company had dumped into the Hudson 00:11:57.340 --> 00:11:59.759 River. Right. The scale of the pollution was 00:11:59.759 --> 00:12:02.500 immense. The water in the aquifer beneath their 00:12:02.500 --> 00:12:05.460 plant became entirely unusable for human consumption 00:12:05.460 --> 00:12:07.759 without heavy treatment, and local residents 00:12:07.759 --> 00:12:09.960 were officially advised not to eat fish from 00:12:09.960 --> 00:12:12.120 the river. The way he handled that environmental 00:12:12.120 --> 00:12:14.639 crisis is very telling of his broader philosophy. 00:12:15.399 --> 00:12:18.179 Welch aggressively fought the EPA's cleanup mandates. 00:12:18.480 --> 00:12:21.259 He publicly denied the scientific consensus that 00:12:21.259 --> 00:12:24.399 PCBs were forever chemicals, insisting the accusations 00:12:24.399 --> 00:12:27.179 were vastly overstated. He really dug his heels 00:12:27.179 --> 00:12:29.740 in. He did. Years later, he even went on the 00:12:29.740 --> 00:12:32.120 record calling the Obama administration's focus 00:12:32.120 --> 00:12:35.200 on addressing global climate change radical behavior. 00:12:35.539 --> 00:12:37.879 He viewed environmental regulations strictly 00:12:37.879 --> 00:12:40.120 through the lens of how it impeded shareholder 00:12:40.120 --> 00:12:43.279 value, regardless of the societal externalities. 00:12:43.639 --> 00:12:46.440 And while he was aggressively cutting costs and 00:12:46.440 --> 00:12:48.799 fighting regulators to protect GE's bottom line, 00:12:48.960 --> 00:12:51.740 his own personal compensation reached unprecedented 00:12:51.740 --> 00:12:55.740 heights. When he retired in 2001, he walked away 00:12:55.740 --> 00:12:59.000 with a severance package valued at $417 million. 00:12:59.480 --> 00:13:02.200 A staggering number. At the time, that was the 00:13:02.200 --> 00:13:04.519 largest severance payment in the history of business. 00:13:04.840 --> 00:13:07.899 But the real scrutiny didn't hit until his messy 00:13:07.899 --> 00:13:10.639 divorce from his second wife, Jane, in 2001. 00:13:11.080 --> 00:13:13.370 Yeah, that divorce proceeding. inadvertently 00:13:13.370 --> 00:13:15.690 pulled back the curtain on the executive lifestyle. 00:13:16.490 --> 00:13:19.070 Court filings exposed that Welch had negotiated 00:13:19.070 --> 00:13:23.350 incredibly lavish lifetime perks from GE as part 00:13:23.350 --> 00:13:24.990 of his retirement. What kind of perks are we 00:13:24.990 --> 00:13:26.789 talking about? We're talking about a luxury company 00:13:26.789 --> 00:13:29.190 -owned apartment in New York City, premium baseball 00:13:29.190 --> 00:13:31.789 tickets, unrestricted use of a corporate private 00:13:31.789 --> 00:13:35.710 jet, a chauffeured car, wine, laundry services, 00:13:35.990 --> 00:13:38.370 all footed by GE shareholders for the rest of 00:13:38.370 --> 00:13:41.879 his life. The public outcry was massive. It shattered 00:13:41.879 --> 00:13:44.100 the image of the blue -collar kid from Massachusetts 00:13:44.100 --> 00:13:46.860 and painted a picture of unchecked executive 00:13:46.860 --> 00:13:49.840 greed. It even triggered an investigation by 00:13:49.840 --> 00:13:51.799 the Securities and Exchange Commission, the SEC, 00:13:52.159 --> 00:13:54.980 into whether GE had properly disclosed these 00:13:54.980 --> 00:13:58.659 perks to their investors. Welch ultimately renounced 00:13:58.659 --> 00:14:00.799 the perks to stop the bleeding, but the damage 00:14:00.799 --> 00:14:03.299 to his public image was permanent. It perfectly 00:14:03.299 --> 00:14:06.500 encapsulates the tension of his era. The normalization 00:14:06.500 --> 00:14:10.000 of unimaginable executive wealth while simultaneously 00:14:10.000 --> 00:14:12.980 implementing rank and yank policies for the everyday 00:14:12.980 --> 00:14:15.840 workforce. It forces you to critically evaluate 00:14:15.840 --> 00:14:19.919 how we measure success. If a CEO drives the stock 00:14:19.919 --> 00:14:22.740 price to the moon for two decades, but the strategies 00:14:22.740 --> 00:14:25.700 used, like unchecked financialization, eventually 00:14:25.700 --> 00:14:27.840 destroy the company from the inside out after 00:14:27.840 --> 00:14:29.740 they leave, is that actually successful leadership? 00:14:30.059 --> 00:14:31.779 That is the ultimate question of his legacy. 00:14:31.940 --> 00:14:34.059 Now, looking at this next chapter objectively, 00:14:34.259 --> 00:14:51.980 without... That's right. Welch was a very staunch, 00:14:52.059 --> 00:14:54.899 very public Republican. As we mentioned regarding 00:14:54.899 --> 00:14:57.360 the EPA, he was deeply critical of environmental 00:14:57.360 --> 00:15:00.759 regulations. He famously stated that global warming 00:15:00.759 --> 00:15:06.610 is, and I quote, couldn't bring. He also referred 00:15:06.610 --> 00:15:09.629 to climate anxiety as a form of mass neurosis. 00:15:10.110 --> 00:15:13.129 Yet, showcasing his ultimate loyalty to market 00:15:13.129 --> 00:15:16.809 forces, he paradoxically advised businesses that 00:15:16.809 --> 00:15:19.090 they still needed to invest in and manufacture 00:15:19.090 --> 00:15:22.269 green products. Why? If you didn't believe in 00:15:22.269 --> 00:15:25.039 it. simply because, quote, the world wants these 00:15:25.039 --> 00:15:27.860 products. It was a highly pragmatic, entirely 00:15:27.860 --> 00:15:30.740 market -driven contradiction. His confrontational 00:15:30.740 --> 00:15:32.960 style also spilled over into national politics 00:15:32.960 --> 00:15:36.240 in a major way in 2012. It was shortly before 00:15:36.240 --> 00:15:38.240 the presidential election, and the Bureau of 00:15:38.240 --> 00:15:40.480 Labor Statistics released a September jobs report. 00:15:41.039 --> 00:15:43.299 The data showed that the U .S. unemployment rate 00:15:43.299 --> 00:15:45.899 had surprisingly dropped from 8 .1 percent to 00:15:45.899 --> 00:15:49.220 7 .8 percent. Welch immediately took to Twitter 00:15:49.220 --> 00:15:52.120 and alleged a massive federal conspiracy, tweeting, 00:15:52.299 --> 00:15:55.200 unbelievable jobs numbers. These Chicago guys 00:15:55.200 --> 00:15:58.120 will do anything. Can't debate, so change numbers. 00:15:58.399 --> 00:16:00.860 He was directly accusing the Obama administration 00:16:00.860 --> 00:16:04.080 of manipulating national economic data for political 00:16:04.080 --> 00:16:07.179 gain. That claim of systemic manipulation was 00:16:07.179 --> 00:16:09.820 widely debunked by economists across the spectrum. 00:16:10.159 --> 00:16:12.419 The Census Bureau released a formal statement 00:16:12.419 --> 00:16:15.360 categorically denying any data tampering, and 00:16:15.360 --> 00:16:17.620 no proof of political interference was ever brought 00:16:17.620 --> 00:16:20.720 forward. But he stuck to his guns. Yes. Welch 00:16:20.720 --> 00:16:23.799 refused to back down. He wrote an op -ed in the 00:16:23.799 --> 00:16:25.500 Wall Street Journal arguing that his tweet at 00:16:25.500 --> 00:16:27.419 least forced people to look at government data 00:16:27.419 --> 00:16:29.429 more skeptically. There was some professional 00:16:29.429 --> 00:16:31.830 fallout for that, though. Significant fallout. 00:16:31.909 --> 00:16:34.830 He actually quit his biweekly columns for Fortune 00:16:34.830 --> 00:16:37.590 and Reuters after Fortune published a piece sharply 00:16:37.590 --> 00:16:40.090 criticizing his tweet and pointedly reminding 00:16:40.090 --> 00:16:43.009 readers of the 100 ,000 jobs GE lost during his 00:16:43.009 --> 00:16:45.230 own tenure. But the most stunning contradiction 00:16:45.230 --> 00:16:48.169 of his entire public life wasn't about politics 00:16:48.169 --> 00:16:50.769 or environmental science. It was about the very 00:16:50.769 --> 00:16:54.340 core of his economic philosophy. Remember. Back 00:16:54.340 --> 00:16:57.600 in 1981, Welsh gave a landmark speech at the 00:16:57.600 --> 00:17:00.220 Pierre Hotel in New York City. That speech is 00:17:00.220 --> 00:17:02.360 widely acknowledged by economists as the dawn 00:17:02.360 --> 00:17:05.430 of the shareholders' value movement. The governing 00:17:05.430 --> 00:17:08.150 corporate philosophy that a company's only true 00:17:08.150 --> 00:17:11.309 obligation above its workers, above its community, 00:17:11.450 --> 00:17:14.529 is to maximize the stock price for its investors. 00:17:14.890 --> 00:17:17.450 He literally wrote the modern playbook for this. 00:17:17.589 --> 00:17:20.589 But in 2008, as the global economy was collapsing 00:17:20.589 --> 00:17:23.289 under the weight of the exact kind of financialization 00:17:23.289 --> 00:17:26.710 he helped pioneer, he did a complete 180. This 00:17:26.710 --> 00:17:28.589 raises an important question about how he viewed 00:17:28.589 --> 00:17:31.470 his own legacy in hindsight. In 2008, he gave 00:17:31.470 --> 00:17:33.589 an interview to the Financial Times. where he 00:17:33.589 --> 00:17:36.369 said, and I quote, on the face of it, shareholder 00:17:36.369 --> 00:17:39.269 value is the dumbest idea in the world. Incredible. 00:17:39.470 --> 00:17:41.630 He went on to say, shareholder value is a result, 00:17:41.710 --> 00:17:44.029 not a strategy. Your main constituencies are 00:17:44.029 --> 00:17:45.950 your employees, your customers, and your products. 00:17:46.210 --> 00:17:48.990 It is genuinely hard to process that quote coming 00:17:48.990 --> 00:17:51.920 from him. The man who spent 20 years aggressively 00:17:51.920 --> 00:17:55.039 firing the bottom 10 % of his workforce, who 00:17:55.039 --> 00:17:57.259 hollowed out American manufacturing to build 00:17:57.259 --> 00:18:00.099 an unregulated bank to boost GE's stock price, 00:18:00.299 --> 00:18:02.839 suddenly declares that employees and products 00:18:02.839 --> 00:18:05.759 are the main constituency and that shareholder 00:18:05.759 --> 00:18:08.740 value is the dumbest idea in the world. It is 00:18:08.740 --> 00:18:12.119 a jaw -dropping reversal. It's a profound moment 00:18:12.119 --> 00:18:14.690 of cognitive dissonance. Whether it was a moment 00:18:14.690 --> 00:18:17.549 of deep self -reflection or a defensive pivot 00:18:17.549 --> 00:18:20.329 upon seeing the devastating consequences of financialization 00:18:20.329 --> 00:18:24.130 ravaging the global economy in 2008, he fundamentally 00:18:24.130 --> 00:18:26.660 disavowed the system he engineered. And that 00:18:26.660 --> 00:18:28.940 later stage of his life actually reveals another 00:18:28.940 --> 00:18:31.680 entirely different, deeply surprising side of 00:18:31.680 --> 00:18:34.680 him. After GE, the final chapter of Jack Welch 00:18:34.680 --> 00:18:36.640 wasn't just about playing golf or sitting on 00:18:36.640 --> 00:18:39.019 corporate boards. He became an educator. He founded 00:18:39.019 --> 00:18:41.160 the Jack Welch Management Institute, which is 00:18:41.160 --> 00:18:43.799 an online MBA program. And what's interesting 00:18:43.799 --> 00:18:45.740 is that he wasn't just a celebrity figurehead 00:18:45.740 --> 00:18:48.480 licensing his name to a university. The records 00:18:48.480 --> 00:18:50.819 show he was deeply, methodically invested in 00:18:50.819 --> 00:18:53.400 the actual operations of the school. He hosted 00:18:53.400 --> 00:18:56.079 quarterly video conferences directly with the 00:18:56.079 --> 00:18:59.420 students. He recorded personalized video responses 00:18:59.420 --> 00:19:02.880 to student message boards. He personally answered 00:19:02.880 --> 00:19:05.440 their emails. He really leaned into it. He did. 00:19:05.680 --> 00:19:08.220 He applied his corporate obsession with metrics 00:19:08.220 --> 00:19:11.039 to education, constantly administering student 00:19:11.039 --> 00:19:14.019 satisfaction surveys and obsessing over the school's 00:19:14.019 --> 00:19:17.339 net promoter score, which is a metric used to 00:19:17.339 --> 00:19:19.440 measure how likely a student is to recommend 00:19:19.440 --> 00:19:21.940 the program to others. Right. He was immense. 00:19:22.160 --> 00:19:24.259 proud of the fact that the persistence rate, 00:19:24.359 --> 00:19:26.500 the number of students successfully continuing 00:19:26.500 --> 00:19:28.759 from their first to their second year, had grown 00:19:28.759 --> 00:19:33.039 to 95%. He also taught specialized seminars at 00:19:33.039 --> 00:19:35.859 MIT's Sloan School of Management and mentored 00:19:35.859 --> 00:19:38.519 top CEOs all over the globe. Though it is worth 00:19:38.519 --> 00:19:40.480 noting that the source material points out the 00:19:40.480 --> 00:19:42.920 limitations of his teachings. Some of his top 00:19:42.920 --> 00:19:46.079 hand -picked GE protégés went on to have very 00:19:46.079 --> 00:19:48.500 highly publicized unsuccessful stints trying 00:19:48.500 --> 00:19:51.319 to run other major companies. Like who? specifically 00:19:51.319 --> 00:19:53.460 mentioning severe struggles at Home Depot and 00:19:53.460 --> 00:19:56.299 Boeing. When his deputies tried to copy and paste 00:19:56.299 --> 00:19:58.500 the GE playbook into other corporate cultures, 00:19:58.700 --> 00:20:01.339 the model often fractured. Which makes perfect 00:20:01.339 --> 00:20:04.000 sense, especially if the architect himself eventually 00:20:04.000 --> 00:20:07.039 realized the underlying model was flawed. But 00:20:07.039 --> 00:20:09.420 you really have to marvel at the contrast. The 00:20:09.420 --> 00:20:12.539 ruthless neutron jack, the executive who fired 00:20:12.539 --> 00:20:15.220 the bottom 10 % of his workforce every single 00:20:15.220 --> 00:20:18.309 year without blinking, evolved into a deeply 00:20:18.309 --> 00:20:20.750 committed teacher who genuinely cared about his 00:20:20.750 --> 00:20:23.609 students persisting and succeeding. Human beings 00:20:23.609 --> 00:20:26.910 are incredibly complex. He clearly believed that 00:20:26.910 --> 00:20:28.930 leadership was a science that could be taught. 00:20:29.150 --> 00:20:32.369 And he spent his final years desperately trying 00:20:32.369 --> 00:20:35.109 to pass on his accumulated knowledge, for better 00:20:35.109 --> 00:20:38.410 or worse. So what does this all mean? We've covered 00:20:38.410 --> 00:20:40.529 a staggering amount of ground today, from a young 00:20:40.529 --> 00:20:42.890 engineer blowing the roof off a factory in 1963 00:20:42.890 --> 00:20:46.650 to the creation of a $600 billion financial behemoth. 00:20:46.990 --> 00:20:48.609 We've looked at the environmental battles over 00:20:48.609 --> 00:20:50.750 the Hudson River, the unprecedented executive 00:20:50.750 --> 00:20:53.950 wealth, and the ultimate fracturing unwinding 00:20:53.950 --> 00:20:55.970 of the GE conglomerate. It's a lot to take in. 00:20:56.279 --> 00:20:58.480 It really is. I want you to take a second and 00:20:58.480 --> 00:21:01.059 reflect on your own workplace today. Think about 00:21:01.059 --> 00:21:03.720 your company's annual performance reviews. Think 00:21:03.720 --> 00:21:06.539 about the emphasis on stock options over pensions. 00:21:06.539 --> 00:21:08.460 Think about the constant underlying pressure 00:21:08.460 --> 00:21:11.880 to maximize quarterly profit above all else. 00:21:12.220 --> 00:21:14.539 How much of your daily corporate culture was 00:21:14.539 --> 00:21:17.119 secretly designed by Jack Welch in a boardroom 00:21:17.119 --> 00:21:21.220 in the 1980s? It is a profound and slightly unsettling 00:21:21.220 --> 00:21:23.440 legacy to consider. And I want to leave you with 00:21:23.440 --> 00:21:26.190 a final thought to mull over on your own. Jack 00:21:26.190 --> 00:21:28.589 Welch completely reshaped modern capitalism. 00:21:28.789 --> 00:21:31.450 He built an entire global ecosystem that worships 00:21:31.450 --> 00:21:34.329 shareholder value above loyalty, above stability, 00:21:34.430 --> 00:21:36.930 and often above the community. Yet at the very 00:21:36.930 --> 00:21:39.470 end of his life, watching the financial systems 00:21:39.470 --> 00:21:42.089 buckle, the architect himself looked at his creation 00:21:42.089 --> 00:21:44.450 and called shareholder value the dumbest idea 00:21:44.450 --> 00:21:46.650 in the world. If the man who wrote the playbook 00:21:46.650 --> 00:21:48.509 eventually realized it was broken, why is the 00:21:48.509 --> 00:21:50.269 rest of corporate America still blindly running 00:21:50.269 --> 00:21:53.430 his plays today? That is a brilliant and provocative 00:21:53.430 --> 00:21:56.250 question to end on. It has been an absolute pleasure 00:21:56.250 --> 00:21:59.430 exploring this incredible, complex story with 00:21:59.430 --> 00:22:01.750 you. Keep questioning the systems around you. 00:22:01.769 --> 00:22:03.970 Keep looking for those aha moments. And we will 00:22:03.970 --> 00:22:05.210 catch you on the next deep dive.