GTA6を支える男——ストラウス・ゼルニック

Can you run through the the how you wound up buying and taking of the deal to get Take-Two Interactive? You know, interestingly, it's not a story that we've told. And part of the reason is stories like this tend to be sort of self-serving because it worked out well. And uh not everything works out well. In fact, most deals don't happen, and deals that do happen don't always work out. But this one did. It's kind of a a set of one of one cuz the way we did this deal uh has never happened before, and I'm pretty certain it will never happen again because we we essentially did a hostile takeover with no money. The reason we did that is we had no money. So, it was really our only choice. But I had a background in the video game business. I'd started ZMC with partners, and the goal of ZMC was to buy, in certain instances turn around, and all instances build up and create value in companies that stood at the intersection of media and technology. And the idea, in '01 when we started the business, uh was that technology would supercharge media uh and create lots of value and destroy value. And And of course, that's a story now that's more resonant than ever. I thought in '01 it was pretty obvious, but it was not obvious to the entertainment business. I guess we should give some some context. By that time you would already spent two decades in the entertainment business, longer?

Amazingly. Yeah. So at big companies like Columbia Pictures, which made their money in film and television production and distribution, and were really old-line companies who were just beginning to modernize, I was one of a small cadre of business school grads who'd been recruited into the business, which was atypical for the industry uh until the early '80s. So they realized like we need a new media guy. Like the way today everyone needs an AI guy. AI you know, army. Uh and so they looked around and they're like, "Who is the least valuable executive at this company that we can put in charge of new media?" And that was me. So in addition to my day job, I became responsible for new media, which was the best thing that ever happened to me. Because I'd always been a futurist. My thesis in grad school was a history of the electronic entertainment business from its inception in 1895 until when I graduated in '83, and I tried to stay current since then. So the notion of looking ahead sort of came naturally to me, but now I had to do it for my job. Oh, and I had to deliver revenue in that job as well. So that was my initial exposure to new media. And actually, if you look at my career, it has been the combination of traditional businesses and new businesses driven by technology, which is why this is such an exciting time with all things AI. I want to interrupt you one second. Did you say So you were you were a futurist by looking back, though? Did I just hear you were studying

So, wait. You started back in 1895. What was happening in 1895? What were you studying in addition?

Which was a tiny market at that time that drastically expanded.

And you were an early believer in that? Well, so much so that I left Columbia Pictures to go to the largest independent home entertainment company, Vestron. Okay, so tell me about that. Well, I've been very fortunate at Columbia Pictures. I figured out how to double the division's revenue in 6 months, which was good for my bosses' career, and therefore, good for mine. So, I became the youngest vice president of Columbia Pictures, and then I was recruited I got sort of reputation for like, "Oh, this guy figures stuff out." And I was recruited to a company called Vestron, uh which was then the largest home entertainment company that had ambitions to become a diversified entertainment company, which was also my ambition. You know, just refreshing conversation from earlier, I wanted to run a movie studio. Vestron wanted to start a movie studio. So, I left to go to Vestron, where within, I think, about Pardon me, about 9 months of arriving, I became president. So, I was now president of a public entertainment company, and I was 29, 3 years out of school. Uh it was not my expectation. And then, I had this, you know, ability to take on the the new movie division that hadn't actually made any pictures yet. So, it was very early. I didn't start it though. I got there and the team was already there, but I gained responsibility for it. And uh we started making movies. Go to the new media part though. So, the biggest part of Vestron's business was home entertainment distribution, which was video cassette distribution. They would create movies and put them on video cassettes, which you would rent in video stores, you may recall. And they would also ultimately make movies and put them through the entire distribution system.

I've been a subscriber subscriber, never turned from Netflix and when they were just mailing me DVDs. So, that's I don't know, 20 years or however long.

a CEO of Fox.

So, it's sort of a long complicated story, so I'll try to compress it.

so in those days imagine like the independent business is over here, siloed, and the major business is here. And never the twain shall meet. So, Joe Roth was an independent producer. And he had never worked in a major studio. And um he made movies for Vestron. That's how I knew him. He made Young Guns and Young Guns II for Vestron, which were hits for us. And he and I became friendly in the way that I am Well, first of all, a friendly person, if you don't know that. And secondly, like when I work with people, I want to develop relationships with them. And he was a highly creative person, a good guy. So, we became friendly, not intimate friends, but but friendly. Um so, I'm now I'm at Vestron for a couple years. I'm getting very worried about Vestron's business model for an array of reasons. And Vestron's senior leadership, the person I reported to

I'm very familiar with that breakfast.

Yeah, he he's a great listener. And in those days, he was learning the film business. And remember, I was only going to be responsible for film production and then worldwide film and television home entertainment distribution.

in and I have can visualize it like it was yesterday and we have and Barry asks me these really tough questions and I leave the office and the head of HR walks toward me and says, "Um, okay. We're Would you like to do this?" And I said, "Sure." And I walked into his office and signed the contract. And that was how it worked. But did Barry say you're hired? Or they just It was

[laughter]

Yeah, it's good.

Mhm. With maybe the most successful Please, maybe the most successful person in media of all time? He was extraordinary. What I learned from him really was in a different moment, which is um he over-leveraged the company during my tenure there uh by buying um Star, and the company had a real trouble with its debt facility. And my recollection is they had a diversified debt facility with like 150 banks and a whole cross-default mechanism. And um which is great when things are going well because they kept the interest costs low and horrible if things are going badly because the cost of funds suddenly things go badly. And he was at risk of losing the whole thing. I went on the roadshow with a bank roadshow with him for a couple of the um a couple of the visits. And what I found remarkable was he was cool the whole time. He was wasn't overconfident. He just wasn't ruffled. I mean, he was at risk of losing his whole business, which had been his family's business. And just didn't faze him. He just kept going. And he had he was a laser focused on the conclusion, and he reached the conclusion just by being focused and calm. That's really what I learned from him. It's incredible. Okay, so you're 32, you're doing this turnaround. What are the insights that you are deriving at Fox that you're going to wind up using later on when you do Take-Two? So the the biggest insight, well, we can get into how I work with creative people cuz that's probably the most important long-term thing. But the I think going back to your question about video games, so what's now mid-80s cuz I've been there for a couple years, and I now really understand the economics of the movie business. So I maybe I'm slow to pick it up, but I I got it. And they're terrible. They're terrible underlying economics. And they were bad and and they've been bad since 1955, since the consent decree that basically disaggregated um distribution from production and and turned the motion picture business from a studio system into a boutique system. And a rubric for good versus bad entertainment businesses, a boutique system is generally good or can be good. The studio system was long gone. And studio system means your creative talent, all your talent is on the payroll. Boutique system is they're not on your payroll, they can auction their services. And obviously talented people are auctioning their services for every project, it's going to be much more expensive than if they're on your payroll in success. Um so you have a structure in the motion picture business since '55 essentially. It wasn't didn't happen overnight '55. But by the by the late '60s, early '70s, mid-'70s, where it's heads I win, tails you lose. If the project does well, the boutique extracts a lot of the value because the deal they were able to negotiate so they didn't go across the street. And if the if it's a flop, you as a studio bear the entire cost of the flop, obviously. Whereas in the in a studio system, recorded music before its most recent changes was essentially a studio system. Video games to this day is a studio system. In success, you obviously pay your creative people and we are incredibly generous in the way that we compensate our creative people for success. But the company also has an opportunity to create a return. I was aware that the economics of the film business were really lousy and that you can't fight that. There was a Buffett aphorism which I'm going to get wrong, but the aphorism was to the effect of if you take a management team with a reputation for Brilliance. for brilliance and a and a business with a reputation for being bad, it is the business's reputation that will stay intact.

your point about being a student of the business. Okay, so then you have that insight.

Why why did he say no? Because Rupert doesn't have partners in his businesses except his public shareholders. Okay. And it's just his, you know, there's nothing like this There's nothing wrong with that. It was just his approach. And he didn't pause but it wasn't like he paused, "Oh, let me think about it." He was like, "No." So, I was like, "Okay, I guess I have to think about, you know, am I serious about this thing?" And then coincidentally I get a call from a recruiter saying there's this startup pre-revenue video game business in Silicon Valley that is doing the most advanced video games. They're really going to be the next generation of video games. Are you interested? And I left. I took a 95% pay cut and moved my family from our beautiful house in West LA to Atherton, to a rental house that was going to be torn down. Um so, it was maybe a little dated inside. It was about to be torn down for a golf course. Cuz you wanted equity. You wanted ownership in the

No, no. Oh, that's smart. No. So, we um we put aside a small amount of capital for BMG, because in those days BMG's revenue was I don't know, 5 billion a year, and it was very profitable, and I think we devoted around 40 million dollars to investing in this basket of games and building up the distribution system and hiring a team. Can I pause you there?

Correct. So the the economics of the video game is very similar to recorded music. It's you're buying

you couldn't predict what was going to happen after discs. No. Okay. No. So go back to where we are in the story. Sorry. So anyhow, we we um I'm by the way I'm running the record company. That's my day job cuz it's a big business. The Jay is building up the video game company with my oversight. But it's a you know, it's a skunk works project. It's tiny little project.

So the name of the public company was Take-Two Interactive and the first release was Grand Theft Auto. We're going to pause right here though. Grand Theft Auto is the most successful media property of all time. Is that right?

Yeah. Okay. [clears throat]

Okay. So then what happens next? I realized it's time to go. And now I'm ready to be an entrepreneur. Because I have a vision for what I want to build and I have a few bucks in the bank so my family's not going to starve. Um cuz I saved well and I made a lot of money, you know, as a professional executive. Uh so um I decided to start ZMC. Explain what ZMC is though.

cuz it's 2001. Yeah, and and no, so I and it was cyclical and you know, the console generation would, you know, cause the business sort of come and go and I No, I wasn't anxious to get back into that business. What's the first thing you're doing with ZMC? We started Buying Take-Two stock?

Yeah. So, I had to find this lightning in a bottle, where there'd be an opportunity to buy a company with third-party capital. And thankfully, one came along. It was called Columbia Music Entertainment. It was a deeply troubled Japanese record company. Uh, and I had recording music experience. The short story is, amazingly enough, we turned it around. And it was

Yes. Yeah, I didn't want to be in the record business. I was like, "Been there, done that." Um I had no interest and it was a really horrible company. So it came about because one of the capital providers that we spoke to was a company called Ripplewood. And um there's a partner there named Jeff Hendren and Columbia Music had been part of a a sort of a two-part company and essentially Ripplewood wanted to own the good part. And they wanted to find some person like me to run the bad part. I didn't know that entirely, but okay. I didn't I wasn't smart enough to figure that out until it was too late. And so Jeff, who was um I'd had a couple of meetings with him, you know, let's buy a company together, called me up and said, "Here's a perfect deal for you for your first deal." It's recorded music, which you know. Sure, it's in Japan and they have 0.5% market share and altogether too much debt and probably there are criminals lurking around. But nonetheless." And so I said, "Well, I know the business cuz I was in the record music business. I said, "It's a horrible company. It's a disaster. Like don't don't do this deal. And I'm not doing this deal. Sorry." He said, "Okay." A week later he calls me and he said, "You know, we're still looking at this business. We really think you ought to look at it seriously with us cuz you'd be perfect for it and your first deal." And I said uh "Okay, listen. It's a public company. So I'll I'll pull all the public docs and I'll look at them over the weekend." And my partner at the time, Ben Feder, and I spent the weekend pouring through the documents. On Monday I called Jeff and I said, "It's even worse than I thought. Just run in the other direction. Don't do this deal. It's a disaster." And he said, "Okay, thank you." Called me a week later. I promise all this exactly like there's no hyperbole. I sometimes can be accused of hyperbole. This is not one of those moments. I remember I'm I'm in my dining room and there's like a wall phone like long time ago. This is '01. And um he calls and I I pick up and he says, "Um look, we're going to do this deal." And we really want your firm to take it on and be responsible for building and managing and you know, obviously going we got to upside in the deal. And they would put up the capital. And I said, "Jeff, look, I told you it was really bad. Then I spent a week in looking at it. It's even worse than I thought. Like we're passing. You should pass." He said, "Can I ask you a question?" I said, "Sure." He said, "Just how busy are you?"

I laughed and I was like, "You make a very good point." He said, "I think you should do this deal." So we did. It was the hardest deal I've ever done in my life. It was terrible. Terrible. I could tell we could tell literally take 5 hours and I could tell you every horrible problem this company had. But I remembered my experience with Rupert. And I became laser-focused on just turning it around and getting to the finish line, no matter what it took. Because I realized correctly that if someone gave me $300 million to take over a company and I failed, that would be my last deal. And that's true. That's not dramatic. That's true. No one's giving you more money after that. So we turned it around remarkably enough and got about a 22% IRR in the record music business in the early 2000s unheard. That's insane. And this is the first deal of That was the first ZMC deal. That's incredible. And that's how we began to generate income to build up a team that I reinvested and reinvested and build an enterprise and buy more companies. So take me to Take-Two. All right. So it's '07. Um we we started raising our own capital in '07 and '08. So it's the very end of our being was at that time called a fundless sponsor. Now today they're called an independent sponsor because it sounds much nicer than fundless, but I promise you we were fundless. So, even though we'd done six deals at that point, we had very little capital. We had a very tiny balance sheet. I'd become quote friendly with Carl Icahn. I put it in quotes because he is the man who said, "On Wall Street, if you want a friend, buy a dog." But, um in any case, I had a relationship with Carl. And the relationship took the form of, and I did this intentionally, was I'd go over and visit with him. He's a lot of fun to spend time with. And I'd bring him ideas. And I brought him an idea initially for something that we couldn't act on, but he could cuz he would do public markets investing. And he said, "Listen, I just want you to know I'm happy to listen to your ideas, but I'm not paying you for them." And I said, "Yeah, I know." Um and, you know, I thought to have a relationship with Carl Icahn, you never know where it could go. So, I'd bring him ideas and they were good ideas. And uh the first one I brought him was actually Reader's Digest. I had a feeling something would happen there. It was underpriced. He bought, I don't know, for him nothing. He bought like $50 million of stock. Uh it immediately went up. I go over to his office like 3 months later and I said, "Sell your stock." And he made whatever. For to for him, nothing, but nonetheless, he likes making money. He made like 50 million bucks. Um Incidentally, at the end of it he said, "You know, I really I need to thank you." He said, "I told you I wasn't to pay you." I said, "Yes, you did." He said, "But you know what I'd like to do? I'd like to take you and your wife out for dinner."

Anyway, uh Carl then started calling us cuz I had a team and he would ask us to research ideas that he had. So we would research ideas and I remember my partner Karl Slatoff, who's still to this day the president of Take-Two, got really annoyed at Carl who speaks his mind because I was asking them to do like research for Carl Icahn and he's like, "He is the richest guy on Wall Street and we're doing spec research for him. Oh, and incidentally, he has informed us we will never get paid. Like what are we doing here?" I said, "You know, I just don't know, but I feel good about this." So one day Carl calls up and he says, "Are you you familiar with this video game company called Take-Two Interactive?" And I said, "I'm really familiar with it, obviously. It's a really messy company at this point."

[laughter]

Yes, they did.

Yeah, IRS, SEC, New York DA's office, and uh FTC. They have how much in revenue? Uh about 700 in revenue and losing loads of money and no debt, thankfully, and about 50 in cash. And we looked at the numbers and we're like, "They're going to be bankrupt in 6 months. That's what's going to happen here." And you're like, "Great." No, I'm not great. I said, "This is a disaster and so we wrote a whole memo and we said stay away from it. No, I I wish I could send so forward thinking. So I sent over the memo saying this is a disaster stay away from it. By the way, like I've done video games. I like no interest. And we were doing other stuff that was more tech driven that we were doing really well with really well with. So he calls up like

About 700. So it went up 7x from when you had to sell cuz it was 100 million when you had 20% okay. Okay. So you know, it's not great frankly and a good growth business and they had increased the revenue material. They built a business. It was a business all all be a very bad one. So he calls a month later and he says, "Listen, I have a friend who's looking at buying a big stake and take two. Can you refresh your memo and and do this for the friend?" This point Carl Icahn like loses his mind. His head explodes. He said, "All right, so this is it was bad before when we were doing free work for Carl Icahn. Now he's pimping us out through his Wall Street buddies for free? Like this is outlandish." And I said, "Just you just never know where this can go. Like you never know." So we do the memo which essentially says once again it's a mess stay away. Again, not being so forward thinking. I don't know how much time goes by. Carl calls me and he says, "Listen, this thing Take-Two, you ever look at this?" I was like, "Yes, I looked into it for you and then I looked into it for your buddy and I said don't do it." He said, "Yeah, yeah, yeah, that thing Take-Two, it's really interesting." He said, "Have you read the bylaws?" I said, "No, Carl. Not read the bylaws." He said, "Well, you know what you ought to do? Read the bylaws." And he hung up. So Ben read the bylaws and he comes in the next day says, "Holy this company has a plain vanilla unamended Delaware charter and in this charter uh the right exists um that if you have 50.1% of the shares vote to fire the board you can take over the company. And because the company was so troubled the stock had collapsed into about 20 hedge funds' hands. So, this was actually mathematically possible. The problem is you can't go run around and solicit people to vote their stock without creating a group, most likely. And this is arcane stuff, but um and we didn't have any money, so we couldn't buy stock. For the like of we could go in the market. And we didn't have the money even to mount a proxy fight, which would be the standard way of going about it. In those days, a proxy fight would cost $3 million. We didn't have that. Particularly cuz it was total totally spread. But, under SEC rules, you could solicit up to 10 shareholders. And about 70% of the stock was in the hands of 10 shareholders. I mean, without triggering any kind of filing requirement. So, we put together a deck of what we would do to fix the company. And we go meet the 10 shareholders, who are happy to meet with us cuz you're talking about an position they have in a troubled company. And we start getting commitments of who's going to, you know, sign the unanimous not the sign the written consent that would give us the company. It's all you had to do, sign a consent. So, we go through this whole process. We've now gotten all 10 that we can get to. We can't go to number 11 through 20 legally. Or you can't publicize it, either. You can't market this at all. So, it's all done quite quietly. And Ben comes in and he actually said, "We got 48%." I was like, "Okay, it's game over. We're done." And he said, "Well, let me just think about it." And Ben's a very smart guy. He goes home the next day, comes in. Turns out there's another provision in the agreement in the uh bylaws. If you show up at the annual meeting and you you don't have to put a item on the agenda in advance, which is unheard of. You can just um raise your hand at the meeting and say, "I want to vote." Uh and if a majority of the shareholders vote in favor of your slate, you can take over the company at the meeting. Which is unheard of. Just unheard of. It doesn't exist, but it did exist here. But, it's not 51% of the people who show at the meeting. It's 51% of the votes in the meeting, but you have to be there physically. You cannot vote by proxy cuz remember, we didn't file a proxy. And we can't solicit anyone. But what we did do was go back to those 10 people and say, "Look, do you want to form a group with us now so we can actually talk and reach an agreement, show up at the annual meeting, vote for us?" And we think we can win that way. Uh even though we only had 48% because we we knew not 100% of the shares would show at the meeting. So, that's what we plan to do. And we um get a lot of support, we think. We think. Until it's very close to the the had scheduled the meeting. Um we form a group. We now announce that we indicate to the company that we're doing this weeks before the meeting. The company, not a professionally managed company to say the least, not a good board to say the least, they really didn't even know what to make of this. They They'd never seen it before. They didn't understand it. They had bad counsel. They They just no idea what to do. So, we're we're like we have 48%. We think that's pretty good. If you you know, 75% of the shares are at the meeting, we're probably good. Until we find out that these hedge funds had uh loaned out their stock to short sellers, as one does. And if you do that, you can't vote the shares. And we can't solicit anyone, remember. We've solicited our 10. So, I said to Ben, "So, what what percent do we have?" He said, "You're not going to like this. 22%." And I was like, "Hmm." So, we have to disclose that. We had prior disclosure about the group, which was at 48%. And we go to the meeting, physically go to the meeting. And this point, there's been a journal article cuz this no one's seen this before, and there's like television cameras out front. And we're at the meeting, walking into the meeting in a hotel. And we'd hired the two top proxy solicitors just to protect us. And we'd been smart about the people we hired. And we spent a lot of money for us on fees because we had to We go to the meeting and before it starts, uh a guy waves across the room. And I go over and say super friendly. He said, "Hey, I haven't seen you since law school. It's great." I went to law school. He said, "It's great to see you. This is so interesting. How are you doing? How's your family?" And we talked for like 5 minutes. I go back and I said to my proxy solicitors, "Who was that guy?" And they said, um he's Fidelity. Now, Fidelity was a larger shareholder, but they had declined to participate in our group. So, we had no idea where they would vote. And Fidelity doesn't typically support anything hostile. They typically support management. So, I looked at my solicitors and I said, "We just won." So, they the company had the new general counsel. We had a room in the hotel. The company had a room in the hotel. Oh, incidentally, the CEO of the company declined to attend the meeting. That gives you a sense of what the what we were dealing with here. This is a Thursday, by the way. And the general counsel comes into the meeting room that we're in and he says, "Well, we don't have the final vote, but we have a provisional vote. Um you have 88%." He said, "So, will you accept that or do you want us to keep counting?" I said, "We'll accept that."

And the next morning, Friday morning, I walked into the company and walked into the corner office and became chairman of the company. That was what year? That was '07. And you're still running it? I'm chairman now, I'm CEO. Ben was the CEO from '07 to '11, then he decided to leave and I became the CEO.

Yeah. Deel is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade, and one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, Eleven Labs, Uber, and DoorDash all use Deel. Many of the top founders I know have personally invested in Deel after using their product. And what they discovered is that Deel is the best company in the world at building infrastructure for global hiring. Deel will help your business hire, pay, and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers. The founder of 11 Labs has a great description of the value Deel can give your company. He said, "We built 11 Labs to break down language and communication barriers. With Deel enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world." Deel is trusted by over 40,000 companies and growing fast. Learn how they can help your business by going to deel.com/centra. That is deel.com/centra. So, now you come in. You went from writing this memo to Carl Icahn like stay away from this to we just took over the company. What was your plan? The plan was there was only one good property which was GTA which was in development and was soon to be released we thought. Ended up getting delayed. And everything else was total mess except the NBA franchise which was really tiny. It was making a tiny amount of money. Everything else was losing money. So, our plan was meaningfully to cut costs, run a rational company, be friendly to creative talent, diversify the product pipeline, and build an entertainment company. Did I hear correctly that you cut something like 40 to 50 million Yeah, we cut about 40 million.

No, I meant you. Was I thinking that?

Yeah, like you were applying this idea. There was No, but I mean, I don't I'm not sure that that idea informed what we did day-to-day. And there were some great executives who built great companies at EA and Activision, among others. And certainly, uh I don't feel like I had any kind of monopoly on figuring this out. And it took us a long time to turn the company around. And we had some meaningful missteps. Uh and and we have not created more that, you know, more value than anyone else in the business. I would argue that I mean, for pure play, probably Bobby Kotick has with Activision. So, what was the these missteps? Oh, I mean, there's they're daily. I mean, I'm I'm I'm probably making one right now, for

You you a much more precarious position back then than

Yeah, you can replace people like me. Yeah, you can't replace the hit makers. So, but what's fascinating to me is your pitch them is just like I'm just going to run a rational organization. I want you you've used the word rational organization I think at least once in this conversation. I've heard you say it before, too. So, it's like but the pitch is we're just not going to do any crazy Yeah. Over a long period of time that is an edge. Can you talk about that?

Not in the least. How do you deal with these very disagreeable, like, you know, talented geniuses? I love them.

I'm serious. Okay, then well, you got to say more about that. I mean, you you have to sincerely care about other people to be an effective leader. I sincerely care about care about my colleagues, genuinely. And I don't love every attribute of every one of them, and I don't love every conversation we have. But they don't love every attribute of me. I just did a 360. I found that out. Not that it came as a surprise. Um but we care about one another, and I want the best for them and for the organization, and um I treat everyone with respect, and I demand that everyone do the same thing. There's no yelling at the company. There's no bad behavior. If If you engage in bad behavior, you got to leave. So, one of our competitors at one point had 500 sexual harassment claims at their company. From one guy? No, no. Unfortunately, it was broadly distributed. You know, and we don't we don't have You know, we've had, obviously, a few things here and there, but we don't have claims like that. Um we are we treat people with respect. People can come as they are. We don't care about your ethnic background, your religious background, your orientation, your lifestyle, the color of your hair. Just do great work, seek excellence, and be kind to others. And by the way, I've had plenty of hard conversations, like, super hard conversations. And um you know, you said it earlier, like, and we I think I learned this with Barry Diller. I still take it personally. It's not personal. Like, we have a business I never say the word that executives use to me, like, we're a big family here. We're not a big family here. This is an enterprise. Like, my family's at home. Um so, we don't have all the angst around being a family. However, we are an enterprise that treats people with respect. And if someone is offsides with me and they misbehave, like, I don't see myself as so important that you can't do that. I don't feel the need to like teach everyone all the time. I had to learn the hard way, like, the delete key is there for a reason. I had one um creative person who isn't with us any longer because it just it did get to be too much and then the value delivered wasn't worth it, to say the least. But, he used to send the most outlandish and unpleasant emails. And I remember saying to someone, I don't know, maybe a board member or something, like, "This is really tough because the lack of decorum is is so outlandish that at some point he's going to do or say something where I just have no choice but to fire him." And then I realized, "Wait a second, I always have a choice." You know what the choice is? Delete. Right now, I just started deleting his emails. I hadn't seen the first Oh, I thought you meant delete him as a person.

I got I but I got dinner with Carla I got And then he like goes, you got to you got to dinner and then you found out he didn't even know your name. And then he puts you to work.

And that was a non-obvious decision. And I can I'm pretty much going to assure you, no one else in the business would have done it. Why? Cuz it was insane. They would have said the game is done. Put out the game. Move on to the next thing. I'm not spending 50 million bucks to remake the god damn thing in another art style and I have no evidence that it wouldn't work either. So, you just trusted the the intuition of the talent? I had to. That's what I'm That's the story. Be the most creative, be the most innovative, be the most efficient. I hired the most creative people. I said, "You have to pursue your passions, we will support you." They came and said, "This is our assessment. This is our passion. Are you going to support us?" And I said, "Yes." The timeline's slipping because you're sitting on the most valuable media property in the world. And everybody online is just like, "When's GTA 6 coming out?"

Like, how do you deal with this? How do you deal with the timelines? It's just like, the answer to that question is, "I don't know." Right?

[laughter]

[laughter]

Sure. I mean, I think having not done as much research as you, but having read a billion biographies, I was very focused going up on success, to traditional success. But also political success. And I tried to sort of drill it down to like what is the factor that is most common among highly successful people? And the only thing I could come up with was they knew what they wanted. And it's not because you know what you want, and Napoleon Hill, you know, write it on your mirror like I want a million dollars on Thursday. It's because I wanted to build a diversified collection of media communications and entertainment assets supercharged by technology starting in '01 and I've been laser-focused on it ever since which means I make choices that are in service of that. So here's magical thinking is I want to do that but you know what? It's a very nice day out there. I'm going to the beach today, tomorrow and the next day. You just told me like you're reasonably successful guy. I think. You just told me you work 7 days a week. I have, you know, three jobs. I work really hard. Why? Because I have a set of goals and I'm focused on achieving those goals. Now there's still no guarantee. There's still no guarantee. But by knowing what you want and working in service of what you want, you are much more likely to get what you want than if you don't know what you want or work in service of that thing. That's the truth. And I when I started ZMC, I thought I want to build, I don't know, a $20 billion company that looks like this. And it was out of the blue and I can't It wasn't like I ran around and was talking to people as I was endlessly and vainly trying to raise capital or find companies that they were saying this is awesome. You're doing great. Like you are Who's better than you? People are like this is a crazy idea. This is crazy. But I looked at it and said I don't think it's so crazy. I think it's possible and even if I fall short, I'll probably get closer than if I don't try. And I was okay with that. And I've said this and I've said it publicly like it took us I think after 10 years I was speaking at MIT. Remember I wanted to build a $20 billion company and one of the students said uh how big's your company now? And I said well if you take everything together, I don't know. It's about a billion dollar company. And he said are you deeply disappointed?

And I said well I was I really appreciated the question. I said look, it isn't what I set out to do yet but you know what? We're it's directionally correct and I'm not stopping. And if this is as good as it gets, at least I tried and you know, we we made a little progress. We did okay. Well, today our company taken as a whole and comes in our market cap called a $40 billion company. We kind of exceeded our goals and we're not done yet, but we wouldn't have done that if we didn't know what we were trying to achieve. So today Take-Two has this and I advocate this for every enterprise. The mission of Take-Two is to be the number one entertainment company on Earth. That's a pretty bold idea, but everyone understands it. The strategy to get there is be the most creative, be the most innovative, be the most efficient. Remember I said that earlier. And the culture in which we work is one of seeking excellence, working together as a team, and being kind. Remember that from before. There are 14,000 people at Take-Two. There's not one person who can't tell you that. It's simple, it's straightforward, it has the added benefit of being true. This is why I asked you before we started recording like if you mind if I do an episode on your book for my other podcast. I I again I want to read this cuz I think it's really important and you know, people have asked me before it's like what's the most important thing you've learned from this this crazy like decade-long study of history because it's centuries you've done. I was like if I had to put it in one word it'd be focus. It's like they're just unbelievably almost like a different species in the term of in in terms of how they can focus. I want to read that part I just read. It says I'm pretty sure it works because the method requires one to concentrate hard, exclusively, and frequently on what one wants. And then you end this chapter with another great sentence. The most important thing you can do to achieve the success you desire is [snorts] to discover your ambition, narrow its scope with a great with as great a degree of specificity as possible, and blazon it on your consciousness, and revisit it daily. And that is visualization. It's just not like magical visualization. I was on the phone with them a Zoom call with one of my colleagues cuz I'm I'm reachable by everyone, everyone. Um if if people email me or text me or Slack me, I respond. And I'd been doing a town hall in our office in Austin, and this woman Slack me afterwards, brand new um colleague, and said, "Can I have a chat with you about my career?" And um I said, "Sure." And we were chatting, and she was really impressive. I was quite taken with her. And at the end of the call, she said, "What should I do to succeed around here?" I said, "Well, you need to know what you want. And then you need to show up on Monday and think about how you're going to create more value than you cost. And then on Friday, think about, "Did I create more value than I cost?" Because if you're here for a year and you get paid $100 plus $25 in benefits, and you generated $10 in value for this enterprise, one of two things will happen. Either you're going to lose your job, or this company will fail. If you want to succeed and you want the company to succeed, you got to create more value than what you cost. And I said, "So, think about that." Cuz she'd already decided what she wanted. This was not about She knew what she wanted. She wants to be CEO, which is great. Um terrific. Um and then I said, "And so, you know, and then come to work, don't have political exchanges, put a smile on your face, say yes, you know, you're going to be fine." Are you surprised so first of all, I've heard you say this, and you're like this with me cuz when we were like at lunch, and I was like, "Hey, do you have like a team I need to go through to like schedule the podcast?" You're like, "You No, we're going to do it together. Like, just text me." And like, you respond. Are you surprised how few people take you up on this? The fact that you will respond to emails or to messages? No. Um here's what surprises me, and this part I don't get. So, I spend like 20 to 25% of my time mentoring coaching people, Which I want to talk about, yeah. using the the tools in the book. And as you saw in the book, like some of them are exercises. Like, you have to do the work to get the benefit. And so, someone will reach out to me, and while I'm easy to get to, like, you still have to do some homework. And I don't schedule. Maybe I schedule I like having an assistant who schedules me. So, there's a bit of a process to have a meeting with me. It's not like, "Hey, come on in tomorrow at 9:00." And I am amazed like people will come in with a specific ask for something that would affect their life. And we spend time on it, we talk about it, and maybe I assign them one of the exercises in the book. I usually do. And I would say about half the time, they never follow up. And that to me is kind of astonishing, and I don't think it's because I'm a horrible person or I'm scary or something. Um I think there are people who believe if I can just get into a room with that really successful person, they can just wave a magic wand, and I will have success. Sort of my point earlier, someone's going to listen to the podcast, and I'm going to win the lottery. And it doesn't work that way. One of the things I understood about starting ZMC, look, I've been around the block. I I don't think I have an enemy in the business. I mean, I And you probably know this from your homework. Like, I know everyone, and I like everyone, and as well, most people like me, and I think candidly, I have a very good reputation. Nonetheless, uh I think people confuse, you know, that with somehow like having a shortcut. So, I had the attributes I just described. Lots of people wanted to help me when I started ZMC. You know the conclusion I arrived at was, no one can. They would love to. I had all kinds of goodwill. What can they do for me? I had to run out, I had to find the deals, I had to go see Carl Icahn, I had to hire a team, I had to pay the team out of my pocket. I had to, you know, manage the team, you know, Think of the story you told earlier when you were recruited to 20th Century Fox. I have a maxim that that appears in these biographies of his just gets explained as like, opportunity handled well leads to more opportunity. Right. You had to handle the opportunity at Verstra, how do I say the company name? Verstra. Verstra first for this guy to be like, "Hey, I need some help now." And the whole thing is like that's why he's like, "Whatever This is um again from from and Munger." They say they believe in like Carlisle's prescription, which is like do the best possible job on the opportunity you have in front of you. Yeah. And that will then you don't have to worry about the opportunity that it will unlock future opportunities.

It is just like Yeah. So many people told me about that book. I didn't read it cuz I was like the title is terrible. But you almost saved me the need I already read the book, but you almost saved me the need to to read how to win friends and influence people and your whole thing is just like take a sincere interest with an emphasis on the word sincere in other people.

That is really a book on sales and leadership.

or it's apocryphal, not clear. Whether you think you can or you can't, you're right. Yeah, he's a That's attributed to him. It's not clear it was him, but We used that line at DMC for the first couple of years because it was so hard to do what we did. It's in your book.

I'm going to write the book in a while. Well, I read it this this past week. Uh but no, I to the degree that we do have any kind of influences, like uh you know, I'm son of a Cuban immigrant. I grew up meeting people that literally risked their lives to flee communism. I knew from time I was probably 9 years old something's weird about this country I've been born into. Something special here. And so, what we're trying to do is like there's also like the you know corruption and crony capitalism which is like we're trying to celebrate people that like they build products that make other people's lives better. They build wealth for their themselves, their family, their employees. They create jobs. We had John Mackey on this podcast, founder of Whole Foods. One of the stories he told was one of my favorite stories. It's just like because of the the fact that we went public early and and there were stock options for so for our employees like these are grocers. These are normal just they they just want to live a normal life and they're able to send their kid to college because of the stock. They're able to buy a home because of the stock. Like why wouldn't that John started that with an idea with his girlfriend, two other co-founders. Like these people should be celebrated and I think the reason I thought that came to mind when we're talking right now is just like but not celebrated cuz you want to do it for yourself. It's in service of other people. Oh, I mean I listen, I'm not saying and I definitely my own personal ambitions including material ambitions.

the book for a while. I did. I saw it like you. I was like "Ugh." Um

and I I mean I think I I was the guy who I was I was insecure and my approach to a situation was how am I coming across? How do I look? What do people think about me? What do you think? Let's talk about me. Like and I I could mask it behind sort of a um sort of a humble exterior but frankly you can't you just can't fake humility. And I was anxious all the time as a result. And I nearly failed at Fox as a result of this and it was a book that changed my life. I turned it upside down. Like immediately turned my life upside down. What was the different position you were taking when you were in your early 30s at Fox? It was like basically I'm trying to work through you to accomplish what my ambitions were as opposed to actually figuring out I have

I'm the smartest guy in the room. I got the sharp suit on. I can speak grammatically. I got a couple of Harvard degrees. We're just going to do it my way. I mean, I wasn't like that cuz I wasn't a But But that was the subtext.

going to miss a meal for several lifetimes.

And let's be clear.

Yeah. You don't think in those terms, though, right?

The and business, yeah. Okay, what's the difference between the media business and the entertainment business? Well, media is just a broader rubric that can include any could include advertising, for example, would be media business. Why not describe it like what's the difference between entertainment and video games then? Video games just sounds a bit narrow and we provide an entertainment experience expressed through video games. And maybe that's a difference it doesn't make a difference, but I think it does. Okay, so explain like how you think about this. You could think of a video game as like a mobile video game you spend 7 minutes on or you could think of it as Grand Theft Auto 6 that you spend hundreds of hours on. Um, they're very different experiences. They're both entertainment experiences. I think to call them both video game experiences maybe understates the diversity of experience. Do you think all the different forms of entertainment are kind of like they compete with one another, but they kind of like they're all kind of collapsing. Do you look at it like that or no? Like the distinction between a video game and watching something else or listening to a podcast or interacting with AI to me is just all entertainment and information.

just is.

of my career. It's just that when, you know, our stock goes down by 50 points because people are like, "Anyone can make a video game." That was the thesis. "Any with AI, anyone can make a video game." It's like, "Anyone can make a video game last week." Like, anyone can make a video game 5 years ago. The technology is readily available. It's commoditized. You know how many mobile games get put out a year? Thousands. You know how many hits are made in a year? Zero to five. You know who makes them? Thank you very much, we do.

This is just true. And that's not I mean, that's just true. It's like, we don't you don't need this new technology to create assets that are competitive. That already exists. It will be quicker to do it, but speed isn't the issue. If I told you, "David, with this technology, you can create something that looks exactly like GTA, and it's going to take 3 years, not 30 seconds." You'd be like, "I'll spend 3 years on it. It's worth it." But, and that exists. You can In 3 years, technology exists prior to AI to clone But, it won't be GTA. It'll be a clone of GTA. Clones don't sell. All hits are by their very nature unexpected. That's the most important thing to take away. Things that are data-driven in their entirety can't be unexpected. But, that doesn't mean AI isn't super helpful. Perfect place to end. Charles, thanks for the time. This was awesome. Really appreciate it man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast, Founders. For almost a decade, I have obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.