John Resnick: Steve, at what age did you first realize that you had an interest in joining the Forbes family business?
Steve Forbes: I think it was something that came into mind at a fairly young age. I would put out news sheets when I was in grade school, worked on the paper when I was in high school, and helped start a magazine with two others aimed at students talking about business when I was in college. So I guess the publishing gene or the media gene, whatever you want to call it, was there. So the possibility that it might happen was always in my mind.
JR: And when you were growing up, did your father, Malcolm, try to draft you into the family business?
SF: He was too smart to do that. He realized that, especially when growing up, when you push you are likely to get a push back. And so he played it fairly low-key. He, I think, wanted to see how we shaped out, and since I always had an interest in media, an interest in the magazine, an interest in business, he kind of let the thing move along. So in college when graduation came nigh, he suggested that maybe we could work together. And thankfully he had worked for his grandfather so this was—he knew some of the perils of the thing. And one of the things that did happen was that I did not work for my father for several years. I reported to the editor of Forbes, Jim Michaels, who didn’t care who you were. If your copy was good, he liked you. If the copy wasn’t good, you were in his doghouse.
JR: So the Forbes name didn’t help you when you first got in? Or, tacitly, did it?
SF: I think that people wanted to see if you treated the business seriously. That is what people are interested in, whether you are just going to ride on a name, take presumptions that were not yours to take because of your background. And as soon as they realized that I was serious about it, well, then, I think the angst level went down. The potential resentment level went down. And things worked out.
JR: How was Malcolm as a mentor for you, Steve?
SF: Well, he was as good as they go. First, he had a wonderful sense of entrepreneurship, and so you knew that his insights were well worth listening to. He also realized that people do things their own way, do things differently, so he never tried to say, “This is the way that something has to be done” in terms of process. He said, “I have my own way of doing things; you will develop yours.” And he came through on that. So he was good with advice. Good in talking about situations that rose up in business…. When he disagreed with something, he always tried to do it, usually, in a gentle way. Because he knew that he could order something, but that wasn’t the same as making you see why something should be done. So having you see the situation the way that he saw it was the way he tried to move you along and tried to persuade you.
JR: Were there any dynamic challenges as father and son?
SF: Well, I think we would have some disagreements from time to time. Either on public issues or some specific matters in the business. And even though he was a very forceful individual, he never … you could always change his mind. If you weren’t intimidated by him, you could change his mind. And people sometimes were intimidated. After all, the boss is the boss who has a strongly held opinion. But I found it amazing that if somebody had a point of view and was willing to argue with him and marshaled their arguments well, he could change his mind. Didn’t mind changing his mind.
JR: So growing up, then, or working with him in your earlier years, did you feel the pressure of working under this powerful icon? I know that he is your father, but he was also one of the most powerful publishing icons in America when he ran that business.
SF: Well, maybe growing up with somebody you both are less in awe, and also more in awe. I realized at a young age that he was not like other fathers … in terms of how he saw the world and acted in the world. And at the same time he changed as we grew up. When we were young he was a very strong disciplinarian. And as we got older he seemed to know how to let go, let us make mistakes, let us spread our wings and discover our own strengths [and] weaknesses, learn life’s experiences. And so he never tried to micromanage as we got older, which was kind of a surprise, given the very firm sense of discipline we had growing up.
JR: Now you have five daughters. How would you describe your own mentoring style as a parent?
SF: Well, especially with five daughters, in the teen years particularly, you tread very carefully! One of the things that you learn is that there are countless numbers of emotional minefields out there that you step on. And I think the mother gets it worse than the father during those tumultuous years. As Abraham Lincoln said, you have to keep in mind with kids that this, too, shall pass…. My father liked to say, “You know you are a successful parent when you become an embarrassment to your children.” It is inevitable. When we were growing up … one of the things that he wanted to do in addition to the parental obligations of making sure you know what you can and cannot do (and as a kid it always seems the “cannot” more than the “can”), he wanted us to see what the business was like. That this was an organism, that this was a live thing. That this was something you couldn’t count on in terms of being perpetual; that you had to work at it on a day-to-day basis. So at a young age my siblings and I would be trotted out to various business functions. We were expected to know who was there and why. And we were expected to help out. So that even if we didn’t go into the business, we knew that this was something that wasn’t just manna falling from heaven. This was something that you had to work hard at every day.And so when we were raising our five daughters we would have them come to functions and they were expected to help out. So that they saw that this was not some alien thing but very much of a day-to-day thing.
JR: And when you look at the Forbes family enterprises, we are talking in the third and fourth generations, now—correct, Steve?
SF: Yes, that is right. My siblings and I are the third generation, and we call ourselves G3. And we have several members of G4 coming of age. Three of them are in the business now: two of my daughters and the son of one of my brothers. And it is quite something to see them develop their own ways of doing things. One of my daughters works on our lifestyle section, which is growing very rapidly. And she is also publisher of our new magazine aimed at women executives, called ForbesLife Executive Woman. And she is a very good salesperson, very good at selling advertising. And I’d like to say that it is good to have at least one member of the family bringing in the money instead of spending it!
JR: I have a feeling with your stewardship they don’t spend lavishly anyway! Speaking of spending, did you and Sabina, as the kids were growing up, have a model for teaching your five daughters about stewardship, wealth and philanthropy?
SF: We certainly wanted them to realize that things just don’t come to you. You have to earn them. And so we had a system of allowances as they grew up, which expanded as they were given the wherewithal to do more buying of their own things and keeping track of their own checking accounts and discussing Wall Street and the like. Some have an aptitude for numbers, some don’t. But none of them are going to be intimidated, either, by their own spouses or by somebody else about money. If they don’t know something about it, they know enough to know where to go to get an answer.
JR: Is that a difficult pressure, to live being so high profile and just trying to be accepted as, you know, an everyday person?
SF: It is, very much so. Especially with my father…. He was very much in the public eye and [my kids] would get some of the blowback in class when they were growing up. And when I went into politics, one of the frustrations was if somebody did something I could hit back but [my kids] couldn’t. And yes, that is a frustration. But I think it is something that you learn to live with, and I think, fortunately, they knew that this is something you can’t turn your back on or get angry about. It is just one of the things, the conditions of their own particular circumstance.
JR: What is the secret to working together with siblings and family members? There must be conflicts; there must be, from time to time, territorial challenges. Is there some wisdom that you can share on the secrets of working with family members in the business?
SF: Well, I think the key is communications. And even if someone is not involved in the business, they have to be kept informed so they can’t say, “Well, we didn’t know that, and what is this all about?” So if people are constantly informed then they are not going to be too surprised at either things going well or having a challenging period. And I think that helps with tension. So one of the things that my siblings and I have done for a number of years is that we meet once a month. Even though we have very busy calendars, there is once a month when we get together. If we have to travel then we phone in on the thing. And we discuss a variety of things about what is happening in the company, issues pertaining to the family, things of that sort. This is how we developed a shareholders’ agreement so we deal with questions—if somebody wanted to buy or sell shares, what is the criteria for who he could deal with, how you do it, the process. And these are things that you work out, and these are things you have to do on a constant basis. And we are starting to do periodic meetings with some members of the fourth generation who are not part of the business so that they begin to get a sense of what the thing is about. But there is no, ah, obviously, there is no science to it. The key is constant communication, getting together. That is the way, I think, you try to reduce or minimize potentially family-busting disagreements. Now we do have, ah, we are strong-willed, each of us. We do sometimes see things differently but you hash them out, and there is a forum there to hash them out instead of letting this fester and then people feeling, well, there is not a way to get these things resolved.
JR: What is your specific formula for resolving conflict? You must have a formula or a step that you follow so it doesn’t continue to fester, as you say.
SF: Well, the important thing is that at these meetings, for instance, key issues are put on the agenda. And then members can bring up topics. So you have ample opportunity to put something on the table, if you think it is not being dealt with in proper depth.
JR: And so your goal is to resolve conflict quickly and sufficiently?
SF: And even if something can’t be resolved quickly, at least it is constantly being chewed on, discussed, so that people don’t feel it is being shunted to the background.
JR: Steve, as the Forbes enterprises continue to grow and diversify, is it becoming a greater challenge to keep a family business type of a culture within the business?
SF: You have a number of challenges. One is that that family proliferates. That is a challenge. Another one is, as you get into more areas, in terms of management structures, those become more complex. Your constituencies grow, whether it is partners, whether it is acquisitions and new businesses. You have to have more and more people on the team.
JR: And the more it grows the more you ascend into the bigger picture overall, steering the business, I assume? And the more you have to delegate. Are you a good delegator?
SF: There is the ultimate art: knowing how to have a sense of direction and trying to determine a sense of direction in this environment. A fast technological change —where advertising is changing, where ways of disseminating information are changing, where people go to the web rather than to the newspaper in the morning. The future is not always so clear. And so you have to do a lot of things just to be sure that you don’t inadvertently miss something. That in and of itself, what the direction is, becomes a real challenge. And then in terms of the team itself, you have to avoid the two perils of micromanaging—over-managing, and being too hands-off, because everyone has their certain strengths and shortcomings. And you have to monitor that constantly. So that, yes, you don’t want to be bird-dogging somebody if they don’t need bird-dogging. But at the same time, they’ve got to have a firm understanding of where you want to go.
JR: Overall, Steve, what do you think the future is for closely held, privately held family businesses in the publishing industry? Do you see any kind of threats there?
SF: Well, I think the challenges that the web is posing are enormous. And you saw that most dramatically with what happened to Dow Jones. Who would have thought two years ago that the family that controlled the voting stock would be forced to sell to an unsolicited outside bid? But it happened because many of the family members sensed that if they didn’t do something the enterprise itself was in peril. So it happens to be that a lot of media companies are family-held, and it happens to be that media is one of the areas most profoundly hit by the web. So even if they weren’t family-held they would be facing very real difficulties.One good example is look at what has happened to publicly held newspaper chains. Knight-Ridder had a break-up. They felt that they needed to do that. You see, say, the McClatchy chain—I guess it was, what, ten years ago that they bought the Minneapolis [Star-]Tribune for a billion, two hundred million dollars. Sold it a little over one year ago for five hundred million.
JR: So what are you doing differently? What is the Forbes family business doing differently to survive?
SF: Well, one [thing] is having a brand that stands for something. We stand for entrepreneurial capitalism; we believe profoundly it is a way of enabling people to improve their lots in life, and as a source of innovation and a higher standard of living. We see that unfolding all around the world. Our late editor, Jim Michaels, once said, “Forbes is a drama critic.” And I thought that was a good description. A critic who loves the theater … loves it when the production is done right and hates it when it is botched. And so we are very upset when capital is misused, companies are misrun, misdeeds are done. I think that is what gives a sharp edge to Forbes itself. We do come to conclusions—and the same thing on the web. The key thing is that we stand for something and people see us as a reliable filter, a place to go to to get value-added information…. We are now in the webcasting business. And there are enormous ramifications, possibly, there. So at a time when there is just so much out there, you are looking for places where you can go to get what you need and get it quickly…. So you have to do a lot of things. Because the world ain’t always going to go the way you think it is going.
JR: Final question: Any pearls of wisdom for family business owners, family members in a business, on surviving from one generation to the next?
SF: The key is to sit down, realistically look at what kind of a family situation do you have, who might be interested, how do you put it into place, processes—so that if someone is interested nobody is feeling that somebody is getting something before somebody else…. The other thing is communications. It is very hard, often with all the baggage from growing up, the tension from spouses and everything else, to sit down and have real conversations. You just can’t do one conversation. It has to be an ongoing process, and that just lets the steam out, takes the angst off. And there are professionals who can help in the process. So you don’t end up saying something that somebody else misinterprets, which threatens to blow the whole thing up. You have professionals who know how to handle these things. So you get into a group in a way in which it becomes normal to have thorough conversations on where things are and where they are going, instead of a shrug of the shoulder or, “I’ll tell you about it later, I am too busy.” That doesn’t work if you want to pass this thing on.
JR: Yes, sir. And so you are recommending: embrace communication. It may be uncomfortable, but it will be far more uncomfortable if you ignore it.
SF: Exactly. And it is like preparing for succession. No matter what kind of a business you have: private, public, family, non-family. If you don’t have plans for succession, you jeopardize the business. And so you have to see communications as something like that. It is one of the things you have to do if you want to preserve a business. You know, you want to have insurance against flood and fire and things like that. Well you also want to have insurance against family emotions destroying what some of you worked so hard to create.
John Resnick is the creator and host of the radio program “Legends of Success,” which is syndicated on more than 80 affiliates and 58 digital cable television systems (audio channels) nationwide (www.legendsofsuccess.com). He is also a business succession and estate planner with Resnick Associates, a second-generation firm with offices in Harrisburg, Pa., and Overland Park, Kan.