Craig McCaw

"He urged his McCaw employees to welcome their new partners from LIN and learn from them: We must be very careful not to raise ourselves up by putting other people down. The more successful you become, the more humble you must be, for people don't like those they perceive to be both successful and arrogant. . . . We stay ahead by keeping our eyes open and our minds flexible to new ideas. The spirit within us must burn with intensity, knowing that the further we come, the tougher it is to avoid losing our way."

"McCaw's empire building had begun, though no one at Stanford had any inkling of this side of his life. McCaw quietly ran his business by long-distance telephone, calling managers in Centralia and checking with Marion on estate litigation and creditor negotiations. His penchant for secrecy would ultimately become a tremendous business asset. "He put a helluva mask on," says Fred Morck. Jeff Ruhe was a close friend at Stanford but always knew that McCaw maintained a private zone. "He's a great listener," says Ruhe, who later became an executive with the ESPN sports network and is still a friend of McCaw's. "He doesn't give away much, but he takes in a lot.""

"To further sweeten the picture, Lumry and Hooper did everything they could to shift costs from daily expenses to capital accounts, where spending would not count against cash flow (that is, revenue left after operating expenses). Nearly everyone in the organization focused on CFAM, cash flow after marketing. Was that dollar spent on just main- taining something—an operating expense—or on extending its useful life—a capital expense? If a plausible case could be made for the latter, then that's where the money would be slotted. For example: Didn't Cal Cannon spend a lot of his time overseeing construction of that new plant? Sure. So 30 percent of his salary became a capital expense, and CFAM looked rosier. How about Cal's staff and their expenses? Same thing. Independent auditors accepted the shifts. "We got to know the accounting rules very well. We really stretched the definition of 'expanding the useful life of an asset,' " Hooper says with a laugh. Moreover, as the McCaw organization did more borrowing, Wayne Perry, Rufus Lumry, Steve Hooper, and others carefully worked over the loan agreements to give the company wiggle room. The McCaw team fogged definitions of debt or capital expenses, built "back doors," and otherwise structured agreements to follow Craig McCaw's oft-repeated dictum, "Flexibility is heaven.""

"Years later, Hull came to recognize McCaw's central motivation: to find people whose skills matched the jobs to be done. Throughout his career, McCaw showed a remarkable ability to pick people suited for the tasks ahead. "He recognizes people's strengths and weaknesses," Hull says."

"The McCaw strategy involved sending several different messages: to convince LIN shareholders that the better deal was with McCaw; to persuade others in the cellular industry that McCaw was the better steward of LIN's critical licenses; and to build pressure on BellSouth through political means and by convincing them they were in a fight with a ruthless opponent. Normally eager to avoid reporters, McCaw started sending signals through the news media that he wanted LIN at practically any price. McCaw compared his company to anti-imperial Scottish warriors, the Islamic Jihad, and the anti-Soviet Afghan rebels. "We want them to think we're maniacs," he told Forbes magazine. He sent John Stanton, Rufus Lumry, and other McCaw executives on a worldwide trip to raise money from bankers who were privately assured that McCaw would make no crazy offers. The group raised $5.5 billion—proof that Craig McCaw was not dependent on Michael Milken, who was about to have serious trouble with the law. Meanwhile, on Wall Street, the McCaw team tried to raise doubts about BellSouth's offer by pointing out the Material Adverse Change (MAC) clause in the Baby Bell's offer. Routinely used by many compa- nies in buyout offers, the MAC clause allowed the cautious BellSouth an out if problems erupted. The McCaw company had similar outs in its offer, but the team stressed how long Bells usually took to close deals compared to McCaw's history of rapid closures. A slow-as-molasses Baby Bell deal, they implied, stood a good chance of triggering the MAC clause and killing the whole arrangement. Other McCaw aides tried to make political trouble for BellSouth, telling state regulators that the LIN deal would drive up local charges or violate agreements. Two U.S. senators from Washington State agreed to introduce a bill to block BellSouth. Then came McCaw's flanking maneuver, what Perry calls "the beginning of the end" for BellSouth."

""I want to grow," McCaw said. The nutty idea happened to be a scheme for using one cable system as leverage to finance the purchase of another. Perry saw it had nerve: a combination of tax write-offs and losses for years. It was a brilliant scheme, says Perry, because it kept the two systems under separate corporate structures but washed the gains of the first against the losses of the second. It was like using the equity from an old home to buy a new one, saving real estate taxes in the middle."

"Craig never severed his business relations with his brothers; the family always owned things together. In a sense, business became another bond between the brothers and with their mother. The four sometimes squabbled, but there was a clannishness to them, perhaps because they had grown up in a rural setting, sometimes with only one another for company. One business associate likens the McCaws to the Japanese, presenting a single face to outsiders and rarely revealing their disagreements."

"and propose something even more exciting, built around something bigger than the parts of his disparate enterprises. But how could he possibly top Teledesic's celestial ambitions?"

"A company joke had it that McCaw grew his company to justify ever bigger airplanes. In truth, McCaw needed to grow—or the house of debt would collapse."

"Never go through the front door unless you've got a back door, and the hardest thing to get people to do is to not commit themselves to one course of action ... [to think] about what you're going to do next. Playing chess with my father, I give him credit for that. I mean, if you haven't thought three moves ahead and what if he does this, and what if that happens, and what if that happens, in today's world you can't predict what's going to happen. . . . You can take chances, but you never, ever play the game without an out. Maybe that's from being a history major, [studying] everybody in history who has failed to have a back door, whether it's Hitler, Napoleon, and down the list. If you take a chance, always have a back door. That's the fun of it."

"For openers, McCaw always hunted for new technology. Years later, some people would assume that the Craig McCaw vision was to lock on to one technology and ride it. Not true. MdCawalways attended presentations of new gadgetry. You could always find him playing with some new kind of phone or betting a few dollars on promising techno- logical 7dea<T that~might flop. Most did flop, or didn't succeed soon enough. McCawIiked~~ATcK:T's EO Personal Communicator, a small device that read handwriting, and Steve Jobs's black-cube NeXT computer, which featured an operating system to rival Microsoft's Windows. Both failed. But McCaw kept watching changes in technol- ogy, measuring each innovation against his sense of the future."

"McCaw would often gather his managers and force them to sort through every possible future scenario, from the most obvious to the most bizarre. He would throw out provocative possibilities to be analyzed: Could we take the money for cable system X and spend it instead on cable system Y? Or not on any cable system, but on some other kind of business altogether? Maybe we don't want to do that today, but who knows about tomorrow? McCaw's moral: Don't let the bank make our decisions. In the next loan agreement, let's define "authorized spending" as anything for a "communications business" as opposed to a "cable company," thereby creating options, openings, possibilities ... in other words, back doors."

"e^nTalicryou see an opportunity—a gap between what is anct\ what should be. If one thinks in anthropological terms, if you go \ towards what should be, then eventually things will get there and you/ just have to work out the timing," McCaw says: With cellular telephony, in particular, we saw an enormous gap between what was and what should be. I mean, [the fixed phone system] makes absolutely no sense. It is machines dominating human beings. The idea that people went to a small cubicle, a six- by-ten office, and sat there all day at the end of a six-foot cord was anathema to me. If one thing is obvious, people will pay, will contribute something for control of their lives, the right to choose. And I think if we saw anything in cellular telephone, it was that people were being subjugated needlessly to 1890s technology."

"It's your job [as a businessperson] to think almost anthropologi- cally about humanity and say, "What would be in their best inter- est?" And then try to get there first, and know that eventually they'll learn what you have is worth their while. If I ever got a vision in business it was that, the Field of Dreams mentality, and that's how I've really operated in my career. I've never worried whether somebody else thought it was the right thing. If I believed it was the right thing, then I was prepared to build it and hoped that "they would come" based upon [the fact that] if I were that person and I were in their circumstances, that I would appreciate"

"McCaw, whom he regarded as pleasant, brilliant, unique. Lindemann once joked that the only reason he owned a company was to have an excuse to lunch with people such as McCaw. "Whenever you had lunch with Craig McCaw, you'd come away with a new concept or an idea," says Lindemann. To those who thought McCaw was often impractical, Lindemann would scoff, "So we're all dreamers. So what? If we weren't dreamers, we wouldn't be in this business.""

"McCaw also knew that playtime moves minds. To build relation- ships with lenders, McCaw would invite them on river-rafting trips in Oregon. Chief Financial Officer Rufus Lumry helped with the planning for these outings, fussing over each participant's preferences. If someone preferred Evian to Perrier, Evian it was. The spectacular Rogue River provided the entertainment. After a few hours, friendly splashes turned into roaring water fights under the sun, and men with loan portfolios felt like boys again. Word got around about the ultimate squirt gun fight that was settled when McCaw's team called in a helicopter—equipped with a water cannon. The days would end with hamburgers around the campfire and a little business talk."

"So McCaw clearly had a social side. At the same time, he cultivated a sense of himself as apart from the crowd, apart even from many of the people who worked for him. Above all, he did not want to become captive of other people's thinking or of their judgment of him."

""The telephone doesn't know who it's calling, or if it's a right number, or if you want to talk, or if you want to talk about what the caller wants to talk about," McCaw once told Red Herring magazine: But all these issues can be handled with hierarchy software itera- tions between devices. ... We believe that in the future, people will be willing to pay something to buy back their freedom. So we think that there's a great market for wireless, if only in the interest of achieving efficiency and forgetting the other human benefits. We're not many years from making wireless work well. If you're going to compete in a global environment, if you're going to work across time zones, deal with international issues, translate languages, you need this kind of device."

"Such a deal faced likely resistance from other phone companies, but the first obstacle loomed within McCaw's own boardroom. London-based British Telecommunications PLC held three seats on the McCaw board of directors and owned 17 percent of the company. BT believed it held veto rights over any sellout deal. But Perry had a "gotcha" ready if BT ever posed a problem. Deep within the volumi- nous agreement between McCaw and BT was a brief, obscure clause that gave McCaw tremendous power. In it, BT promised not to oper- ate any business that competed in the United States with McCaw. Since the provision was not limited to cellular, McCaw had the right to enter any business it chose—integrated data networks, for example—and force BT to abandon it. "I just don't think they understood," Perry said later. "It's not unusual to have incredibly complicated documents that have provisions that come back to bite people if they don't pay attention.""

"Despite his frivolous reputation, McCaw itched to get on with his life, to get going in business. He hated the parasitic idea of living off the family-owned company. He wanted to expand Twin City, to start making acquisitions, to be creative—like his father. So even before his graduation from Stanford, McCaw contacted Bill Daniels, a communi- cations broker who had worked with Elroy, and said he wanted to buy another cable company—something small and affordable that he could seize upon, make his own, and begin growing."

"As McCaw had learned from cellular, the sluggish Bells couldn't possibly hold 100 percent of the market. If both conditions were met, a niche business would explode in size. "McCaw could see that bandwidth would be more valuable," Jarvis says. "He could see the traffic was coming. He saw the CLEC industry before there was a CLEC industry." McCaw formed a company called FiberLink, infused it with $55 million of his own money plus cash from loans, and told his tiny staff at Eagle River to get into the fiber business. He didn't tell them how that was a detail for them to figure out. He suggested they consider buying some big players to catch up quickly, but he wasn't locked into that idea. He did want action—fast. As with cellular, he wanted his people to get established in as many markets as quickly as possible. Speed was so important that overpaying was forgivable, to a point. But unlike cellular, where McCaw had gained markets by buying small, established players, his team decided that it made more sense in this case to build markets from scratch."

"McCaw did, but there was never enough cash to buy all that he wanted. He was always wooing lenders or others with deep pockets. McCaw often had to start by imparting his vision of cellular: it was not a toy but a revolution. He would take people away from New York, where cellular service was awful because of inadequate systems, to another city, where it worked. McCaw would invite bankers to briefings on cellular long before approaching them for a loan. He wanted to work "the puppy effect": put a cellular phone in their hands and watch them call home from a car. They'll fall in love, like kids in the pet shop."

"McCaw told the Journal, the device needed a bold approach: "If you look at any of these things you say, 'Have the courage to be different and provide something that helps people, rather than the security of imitating what you know works.' If it works, someone else is already doing it." The simple sales tip seemed to sum up much of McCaw's"

"I was enthusiastic from the outset because [McCaw] has a very special talent, insight, and ability to see the future. Plus he's bold. Look at his track record. It's like getting the world's most astute consultant. You can never buy McCaw's interest and talent. The only way you can get him is to have an arrangement where he bene- fits from his involvement."

"This represented a pivotal time for Craig McCaw both as a person and as a businessman. The sale of his company had triggered a profound self-reassessment. Without McCaw Cellular commanding his attention, he was now forced to see what remained in his life. The man who built back doors into every business deal had formed no strategy for life after McCaw Cellular. So now, thinking it over, he decided to reinvent himself. A tycoon who already spent a considerable amount of time away from his busi- nesses decided he wanted—more freedom. McCaw decided to recast himself. He would shed some old habits even his black-caterpillar mustache of many years would get the razor and inject himself only where his presence was truly critical. He would skip board meetings of his own companies and monitor his deputies"

"McCaw runs his companies in a style that reflects his personality. "I want to be the Wizard of Oz," he once said, leaving others to interpret his words. Here's one reading: Dorothy's Wizard empowered those who sought his help, granting them courage (the Cowardly Lion), wisdom (the Scarecrow), compassion (the Tin Man)—clearly a role McCaw seeks to play with those who work for him."

"found more productive uses tor his rime. He- created an organic thai functioned, as Wayne Ptarr) described it, like an efficient pred ry, n kept moving, kept buying. Ptn option of the future M Uulai operation tit the cable businet cdy: "Wt oiistantU in search oi money. There were so main opportunities and we were so acquisitive. We were like a shark—eat or die"

"analyze how people succeed or fail. (Napoleon and Hitler launched majoxcampaigns without adequate con!ingeTicypiaTmTn|^ likesto point out. McCaw has never been one~To~start Plan A unless Plan B isih readiness.)"

"talented businessman. Where Elroy disregarded or overlooked risk, his son would focus on it as a problem to be analyzed and managed—and transformed, ultimately, into a road to success. Potential disaster would often shadow Craig McCaw, and many predicted he would go the way of Elroy. Yet if people misunderstood what he was doing, that was fine with Craig. It even became a part of his strategy: Let the other guy think I'm nuts. A shrewd manager of his own image, he would turn a seem- ing weakness—his quirky personality—into a strategic asset, with results no one could question."

"Behind his back, some of McCaw's deputies grumble about his taking frequent yachting trips while they toil without vacations. They say he's the nomad, pondering the desires of average folk, while they remain at their desks, keeping a furious pace set by his companies. Iron- ically, McCaw is the first to say he could never survive in a typical busi- ness environment. He avoids meetings, dislikes paperwork, speaks in parables, and sometimes gives orders he never expects to be followed. If he worked at IBM, "they'd throw me out," he admits."

""He was much more refined than I, much more mannered, very calm," says Hull. "You'd go in to talk to him and sometimes he wouldn't say anything for a while, and you'd have to say something because it was too uncomfortable. I don't know if that was a trick or something, but he was just a really mellow guy.""

"Curious about how he had lost, McCaw called and discovered that Rock was doing exactly what McCaw wanted to do. Rock had negoti- ated a deal that worked out to $300 a subscriber, a low sales price, as well as generous terms: Rock hadn't put up a nickel but had borrowed the entire amount. Moreover, Rock had structured the deal so he hadn't bought the company but only its assets, an approach with tremendous tax benefits. Under current tax rules, a buyer could record the assets at a low value, so the seller avoided a big capital gains tax. The savings to both meant the sale could go for a lower price."

"The word went out: Anyone in the Northwest and Alaska with a cable system to sell should call the McCaws. Soon a predictable pattern emerged. The company would find a system, figure out how to boost cash flow, and buy it under the cheapest terms possible. Sometimes the seller agreed to finance the sale. Other times the company managed to borrow more than the sale price by persuading a lender that the"

"McCaw set about putting his stamp on the company. He told employees to treat each customer as the only one they had. He held morning staff meetings at which he rallied employees to a vision of growth and shared rewards. Work with me and everyone will make more money, he said. Despite his mother's aversion to spending money"

"McCaw didn't want only one exit if a deal went sour, for example. He wanted multiple exits tied to different scenarios. Since the McCaw holdings were an intricate web of corporate entities and debt, if prob- lems erupted in one end of the company, McCaw wanted mechanisms "to blow up a deal," Perry says. Ordinarily aloof from particulars, these were the granular details that McCaw examined and discussed speck by speck."

"Even Patti Cannon, Cannon's wife at the time, got a call from McCaw. It was ostensibly a mere courtesy call, but Patti suspected that the purpose of McCaw's questions was to determine whether anything in Cannon's home life might create problems for the company. Patti Cannon took no offense; she saw it as smart. "Craig cared about your family, your whole life, because it influenced how you could produce at work," she says. "That's how he succeeds. He thinks about the entire package.""

"At each field office, NKa aw essentially made two points: Keep customers, and hit the targets tor revenue growth. "This svstem's yours," Mc( aw told manager I arr\ Manthe\. who operated in What- com (, ounty, near the Canadian border. "You run it. This is what I d out of it. It you hit the targets. Ill By you and your wife to Iahoe." Manthev made the goals, and Mc( aw w as as good as his word; Manthev and his wife found champagne, flowers, and other gifts wait- i them at the hotel."

"time wasters. He once caused a flutter of talk when he issued a memo to employees—including members of his own family—insisting that there be a purpose and an agenda for every meeting with him. Pawley,"

"nobody is keeping track of the operation, nobody has good accounting, nobody has good management information systems. [But at McCaw] it's just the opposite. McCaw had a very aggres- sive growth strategy. But we had a very sound system of managing the business, keeping track of the organization and certainly paying attention to our contractual sides. That was a big part of [the growth strategy]. It wasn't just me as general counsel. McCaw was a stickler for making sure we had things protected, had thought things through."

"Drafts of McCaw lending agreements were written and rewritten, studied and lengthened, a tedious process usually done without McCaw's direct involvement. The agreements became very compli- cated—which is exactly how the McCaw teams wanted them. They wanted long, intricate, crushingly ornate loan documents. "The more complicated it was, the more I enjoyed it," says Hooper, who had to do the required reporting on the agreements. "I thrived on the chaos. We loved complexity, because in it we found flexibility.""

"Occasionally, the owner would see the first signs of the growing prof- itability of the system he was selling. In one deal, McCaw took control of a system sold at $21 million and negotiated a loan for $10 million more than the sale price because of the increased cash flow. The extra $10 million went toward—what else?—the next purchase."

"McCaw took extreme care in filling senior positions, often subjecting an applicant to an exhaustive meeting vvm^rehe would spencThours asking about personal history. He wouTd~pb^elJuTsTions" abouthow an appli- cant hacHTandled problems or how he would manage a hypothetical situation. He might ask: Have you ever hired anyone smarter than you? Have you ever taken a complex process and made it more simple? By the time an applicant had survived this process, he would have truly earned any job offer."

"Fourth, the fundamental structure of McCaw's business empire served the vision. His emphasis on control, flexibility, and focus on essentials rather than details kept him poised to exploit opportunities."

"The McCaw motto was "Sign 'em quick, close 'em slow": Get effective control of the franchise fast, but delay the moment when you have to pay precious cash to complete the sale. The delay before closing could serve an important purpose; sometimes the company lacked money to pay for the purchase and had to scramble for cash."

"Pawley says. McCaw refused to be drawn into battles over small matters. "I don't need to know that," he'd say. "I'm the big-picture guy. You take care of it." He would usually leave the office around 6:30 P.M.,"

"McCaw understands that his style sometimes puts a strain on employees: I'm not the perfect employee of the company. I'm impatient at times . . . and [I'm] certain people have trouble understanding what I'm saying. The more literally they listen to me, the more trouble they have understanding. I'm a conceptual thinker. I speak in conceptual rather than literal terms. Figuratively rather than literally, if you'll take that. Therefore, a very literal person has a"

"The greatest ideas you will ever have are the ones that other people don't understand. And if you're in that position, and you care too much what they think, you will not do the right thing. And there- fore, I purposefully have long ago decided that if I live by the moral code that I want to live by, then what people think of me is not so important, because I'm doing what I believe is right and I'm not trying to hurt other people. So long as my success, such as it is, does not come at the expense of other people, then I'm happy, and I don't mind if they don't agree with me. In fact, it's a lot of fun when they don't, because life is a long time, and the more they crit- icize you, the more they compliment you later if you're right. And sometimes, by the way, you're wrong, and you have to be prepared for that."

"McCaw is scrupulous about those he selects for his senior manage- ment group. He subjects potential hires to a series of interviews with top managers, plus a meandering, soul-searching, character-exploring encounter with him. While McCaw was traveling once, he asked a candidate for a high-level finance position to meet him at the Denver airport for what was supposed to be a one-hour meeting. McCaw swooped down from the clouds in his private plane and left his wife and others to wait as he probed the candidate's childhood, life experiences, ideas, and values. The session expanded to fill six hours. Finally,"

"The admired strategist generally comes to his office with few activ- ities planned in advance. "You wait for life to give you a clue as to where to go that day. I hate the orchestration of life. Most executives die frustrated [because] they have been orchestrated into boxes." An aide once walked in to find the chief executive resting his chin on his hands as he stared at Lake Washington. The aide got the feeling McCaw had been staring for a long time—perhaps working through a strategy."

"have a million in the bank. I said, "Fine. Let's go find the money." That's the kind of company we were. You knew who to trust. In all the people we had, there were only a couple who made dumb mistakes."

"Hire Great People: If you don't surround yourself with great people, you're a turkey. If you follow the above, you'll have fun and enjoy more spare time. Craig McCaw"

"McCaw attended almost none of these meetings, a tactic that preserved flexibility. He could always kill a deal he hadn't negotiated, sending Perry back to reexamine a point in the light of an objection raised by the "mad scientist" at headquarters."

"At one company meeting, McCaw told the gathering that he wanted to hire "invigorating, dangerous, and interesting people who are not all the same and who cause trouble, because that's how you get things done." He said he believed in "the principle that one person makes a"

""You're in a war, McCaw," Subotnick said. "They have more money. You're not going to win a war over money. You've got to do something unusual. You've got to do something they will never expect and cause them to rethink their commitment.""

"Hooper later rose to significant operating positions in the cable and cellular divisions, but at that point one of his main jobs was tightly controlling spending so the company could service its debt. In the world of Craig McCaw, no dime was spent before its time. Hooper used to joke that McCaw dollars stayed locked away so long that they blinked in the sunlight when they finally came out."

"their corporate future. "Keep ahead of them. Don't worry about what they're telling you they want," McCaw insisted. "Just do what's right for them and figure it out before they do. Don't worry about what they tell you, because it's just the fingers of the bureaucracy. It's not connected to the brain. They're connected to the elbow.""

"through global communications systems, checking in from Alaska or South Africa or wherever his interests happened to carry him. What did it matter whether the phone he used was in Seattle or Turkey? His spirit could be felt without his physical presence. Like ancient humans, McCaw would be the nomad, a living illus- tration of his vision of work in the information age. Writing a new page for the Harvard Business School casebook, he would become what some termed the virtual executive."

"style. At Eagle River, he would focus on a business opportunity, tell his staff to check it out, and sometimes lose interest even before they had completed the research. "Craig can get enamored with things," says Scot Jarvis. "[And then] the ardor can fade. It's hard to tell when he's [just] enamored and when he really wants you to move. You're supposed to predict, but there aren't many people who are good at predicting which ones he's really interested in and which ones are a passing fancy.""

"McCaw liked Daggatt's approach for several reasons. McCaw saw a future in which humans would return to a more nomadic lifestyle,"

"Once the basic goal was set, McCaw spent very little time with Fiber- Link. He held the title of chairman and chief executive, but never came to a board meeting. Instead, he made himself felt in casual ways, includ- ing unannounced visits to Jarvis's office. "What did you buy today?" he would ask. Jarvis knew what that meant. McCaw didn't want to hear about a deal already done or one about to be done. He wanted an ever faster pace. That was his way of saying "Go," Jarvis says."

"McCaw also offered various business scenarios and asked Daggatt to analyze the "value equation" in each. How does a business bring value to the customer? If Daggatt started talking about profit margins, McCaw stopped him. No, not profits, McCaw would insist—customer value. From such exchanges, Daggatt grasped an important point about McCaw's philosophy of business: "McCaw's approach to making money is indirect," he says. "It's how you create and build value. If you do that, there are lots of ways to make money. You're not going to make money very long if you're not creating value.""

"My mother was an interesting role model. She gave us a lot of bene- fit of that precise thinking that came from accounting. My father, on the other hand, was an extremely creative, almost wild-eyed visionary, and we saw the balance of the two. If anything came of that, it was that my mother added the anchor to my father's creativity. I learned fairly young that if you didn't do the precision part, the creative part would evaporate. You had to have the foun- dation under the creativity."

"McCaw's actions are often difficult to explain. In this instance, there was a point to his behavior. He didn't want his company getting too comfortable. In that sense, it was the same ethic that Bill Gates brought to Microsoft: Be adaptive. Run scared. Never assume a franchise is permanent."

"The increasingly nasty dispute went to arbitration, and the aquar- ium ultimately discovered an old lesson about dealing with Craig McCaw: Always read the fine print. The contract between the aquarium and the foundation gave the latter sole power to decide when and where to move Keiko."

"What lies ahead for Craig McCaw? Expect the unexpected. He could spend years staying on course, expanding his companies, and enjoying the result. But just as his face begins to appear again on the covers of magazines that celebrate his triumphs, look for a change. He hates routine. He gets restless when a venture begins to succeed and his presence is less essential. Having built and sold two national companies, McCaw could wake up one morning and decide to sell one or all of his present companies. One possible scenario would be a sale of Nextel to a bigger company that needs a wireless presence, or a sale of Teledesic to a huge global player such as AT&T. There could be important strategic reasons for such a sale, but he wouldn't sell his empire merely for strategy or money, but to move on to new challenges. Or he would find a way to make his routine more interesting. He could pull in new partners, raise his bets,"

"largely disappeared from press coverage. More amazingly, McCaw largely disappeared from Nextel itself. Hardly anyone inside Nextel ever saw him. Tim Donahue, Nextel's number two, said, "I talk to him rarely." When they did talk, McCaw's advice was simple—the same message he had delivered at McCaw Cellular—move fast, but don't skimp on quality. Beyond that, he refused to talk about details. "Report- ing to him is like reporting to the wall," Donahue said. "You tell him you want to do something and he says, 'Well, okay.' " A little weird? Yes—and it worked."

"McCaw saw a future where we "define how and where we will work." He promised diligence and few flashy mailings to shareholders or expensive events for the news media. "We intend to be a relatively quiet company focused on the growth and value of our assets," he wrote."

"With Twin City on a sound footing by 1975, McCaw hunted for opportunities, believing that he could run several cable systems with a common staff. He saw two ways to grow: He could buy an existing cable system or bid against others for an open franchise. He searched ads in trade publications, told cable brokers to look around, and asked employees to let him know what they heard about systems on the block. One day, he spotted an ad for a 700-customer system in Burney, Cali- fornia, near Shasta Lake not far from the Oregon border. The seller wanted $400 per subscriber, which McCaw thought was too high—but he still wanted to buy."

"sense. Those who watched Craig McCaw detected another personal factor: that McCaw would get bored with any business once it settled into a predictable routine. To get his juices going, he wanted to face risk and uncertainty. He liked picking a path where others saw chaos."

"and failed—to block the deal in the courts. PacTel's victory brought a fundamental change in the cellular indus- try's strategic landscape. But that victory wasn't complete. It faced a shotgun held by Craig McCaw. When the San Francisco cellular partnership was formed, McCaw had insisted on the right to force his partners to set a sale price for their half of the license. The trick was that, if they set too high a price,"

"To Craig McCaw, going public in 1987 did not mean he had to go public. The plan was to raise $2.3 billion from a stock offering, plus another $400 million from bonds sold to investors—giant gulps of gas to help the McCaw organization move faster, pay off some debt, and grab still more cellular territories. It would have helped for McCaw to wave the company flag in public at such a crucial time. But he chose not to make the traditional appearances before analysts and other Wall Street groups, claiming he wasn't good at orchestrated events. Instead, Wayne Perry led the McCaw team on the road show to London, Boston, New York, and elsewhere. What might have seemed a liability—a chief executive seemingly missing in action—ultimately proved an advantage. McCaw in person was certainly a business vision- ary. But McCaw as the mysterious figure whose absence embodied his unusual style, whose thinking was so lofty that doing a road show would be a needless distraction . . . now, that was a real visionary."

"Stanton had worked hard, even by his legendary standards. While many executives had to consult with the home office on deals, Stanton, typical for a Craig McCaw manager, operated with almost total auton- omy. McCaw had no desire to be there. "Why would I want to do that? To me, those are the kinds of places where you make too many mistakes," he says. "You're too close to it. I never want to do stuff like that. I never want to lose." In other words, McCaw feared wanting a deal so much that he would pay too high a price—the risk of being emotionally involved."

"When providing good service required buying some costly equip- ment, McCaw hated to hear the fact stated as if it were a negative. As Donahue puts it, "He would get upset with us. He'd say, 'If you built it the right way, and you're taking care of customers, we'll make it back tenfold. Don't worry about capital. I'll worry about that.' " There was McCaw's faith again, denying uncertainty. The message was always the same: Build it right; keep customers happy; quality wins. That mantra was a crucial element of McCaw's success, though far from the whole story."

"Craig would call me up nearly on a daily basis and propose some questions. There were days [when], if I understood the question and answered correctly, I was in good shape. There were days [when], if I didn't understand and didn't answer correctly, I was not in good shape. One of the challenges for all of us was understand- ing where he was going, what he was saying, and what he wanted. It was very, very difficult."

"the high stakes, but he stayed home. "I wasn't that worried," McCaw now says. "There's so much ebb and flow of things." He characterizes the meeting as an example of "the technical things" that didn't require his presence. He figured Stanton could try to win some concessions for the McCaw forces, but if he lost, they could fight the battle on a differ- ent front."

""Craig will come up with ten ideas," says Perry, and a few of them, no one in the world would have thought of them. They will make you unbelievably successful if you follow them. Two of the ideas are average or okay. A bunch of the ideas, you don't have a clue what he's talking about. [And] a bunch of the ideas will make you so broke so fast. The trick with Craig is to differentiate out of that set."

"The McCaw offer put LIN into play, because management did not own enough of the company to unilaterally reject a buyout. Now anyone could top the McCaw offer. But the McCaw team had planned its moves carefully, having studied LIN's finances, its management, and its strategic position, as well as other potential bidders, such as South- western Bell, US West, and even the big-daddy long shot, AT&T. Perry called it "reverse engineering" any potential opposition, and it wasn't that hard to do. Because of McCaw's many partnerships and the avail- ability of public documents filed with the FCC, positions were relatively easy to assess. "That was all in the mental database," says Perry. "If you have to hire people to come in and do that, it would have taken forever." As a result, "we knew more about LIN Broadcasting, the people who could buy LIN, the regulatory issues, the taxes, the [legal"

"and the individual ... at least his sort of person. "Autonomy is really a central part of my life," McCaw says: I believe that it drives the kind of behavior in individuals that we want. And it really made a major impact on my life and how I"

"I had no fear whatsoever. First of all, I trusted him. And he had a wonderful command of details. He was interfacing with Wayne and Ed and me, and I felt perfectly fine about it. But then I'm the kind of person where Wayne will go out and make a [cellular acquisition] deal like he did in Miami [and then tell me], "By the way, I did a deal today: fifty-six million." [At the time] we didn't"

"McCaw, however, felt less worried about the uncertainties. Having dealt with cities and counties over cable TV franchises, he felt he could anticipate what regulators would most want for cellular: community service. Perhaps the trade-offs would not be as specific as requiring a cable company to plant trees in a local park, as Sacramento had. But McCaw knew that engineering studies and financing only contributed to the important point: that an applicant promise service to the broad- est audience possible. That meant his application should envision many cell sites covering a broad area. "I knew from cable you had to promise big dreams," McCaw says. "Take care of people. That's what [regula- tors] want to see.""

"McCaw gave Hopper extraordinary freedom to design and close the deal. Hopper loved the independence, but sometimes when he wanted to confer with McCaw, he couldn't find him: McCaw would be kayak- ing or flying somewhere or busy with the cable division. The idea that this might inconvenience his executives would have astonished McCaw, who felt he was giving them a gift by not being around. "If somebody's got the ball, it is theirs to run," says McCaw. "If I hang around and act important and give orders, I'm going to wreck the whole thing." So he kept his hands off the AT&T negotiations. "I don't think McCaw met an AT&T executive until years after," Hopper says."

"At times, McCaw's absences annoyed his partners, but his represen- tatives made it clear that McCaw intended to go on protecting his time. "Nobody had a lot of contact with McCaw," says Charlie Desmond. Yet they knew "McCaw would think bigger than the rest of us." That made it worthwhile to put up with his eccentricities."

"McCaw's goal, as always, was to preserve his independence, flexi- bility, and control. Although he had qualified for the MCI deal on the basis of Affiliated's balance sheet, McCaw ultimately decided to go with a different form of financing, perhaps to show a measure of indepen- dence from his Boston associates. He went with junk bonds, a relatively new form of corporate IOUs at high interest rates, recently popularized by an already legendary trader at Drexel Burnham Lambert named Michael Milken."

"had nothing to do with biology.) And McCaw's ultradelegated manage- ment approach wasn't always successful or entirely pleasant. Underlings might flourish or fail with their independence and often felt that their boss knew nothing about their hard work and the myriad activities that brought success or failure. Some resented McCaw's seeming detachment; these people would soon depart. Others simply accepted that they worked for an unusual boss. McCaw is "a very smart, visionary individual," says Doug Hauff. "For us normal human beings, he is very difficult to understand. He has a tendency to talk in riddles.""

"improved cash projections were reasonable. Credibility was key. Once McCaw said it would expand revenue, it had to make good on its projections or lose the confidence of lenders and risk future deals."

"McCaw, who would regret being swayed by his emotions in a later New York deal, has always tried to make a business virtue out of his inherent detachment from groups. "More than that, I'm not a negotia- tor. I want to tell people exactly what I want the outcome to be; I don't want to worry about how to get there. Other people are much better negotiators than me," he says."

"Now McCaw told Milken that McCaw Communications wanted help to buy more cellular licenses. But Milken saw a new threat to Craig McCaw. "You're exposed," Milken said. McCaw was trying to grow two capital-intensive businesses at once while facing deeper-pocketed competitors on both fronts. He couldn't grow in both cable and cellular for long. Milken warned McCaw that his company was too deeply in debt. There was an irony—the foremost apostle of debt telling Craig McCaw that his financial strategy was too risky. According to Perry, McCaw didn't show much reaction. He just took it in thoughtfully and said merely, "Hmm. Okay." But Milken was right. The Southwestern buyout of Metromedia's cellular business showed how the bigger boys were prepared to snatch licenses that McCaw needed. Previously, McCaw had been annoyed by industry talk that his company was spread thin. To his face, the chair- man of PacTel had called his company a "house of cards." "I was tired of hearing about how much leverage we should take," McCaw says. Hearing the same message from Milken gave it a new urgency; it "hit McCaw right between the eyes," Stanton said later. McCaw had to focus his company on one business or the other."

"ings," congratulated employees on their marriages and births. "We are earnestly striving to remain a closely knit, friendly company that makes itself a great place to work," the young McCaw wrote. "When we fail at this, I ask your forgiveness with the hope that we can correct the errors of our ways.""

"Well-financed companies such as Atlanta-based Cox Communica- tions were buying cable systems, but few in the Northwest could match McCaw's pace. He was gutsy about buying, but also smart about creat-"

"Suddenly, McCaw knew he could grow as fast as he could hustle. The revelation was as powerful as hearing "there was life after death," McCaw said later. If bankers were offering life after death, McCaw became an apostle of that religion. He started a simple process: buy a system at its undervalued price; bring in professional management to improve service; raise rates and find more customers to goose cash flow; then get a new loan and use that new money to buy another system."

"While Elroy had been seemingly indifferent to or unaware of the risks of his highly leveraged transactions, Craig thought through every awful consequence. If he borrowed big, the lenders would require strict adherence to financial performance. He would have to reach so much profit, have so many customers, use the dollars to build so many assets. If the economy turned down, if a manager failed, if a town council proved stubborn about rates, he could get in trouble. Because his system would be built on the promise of ever larger cash flow, he worried about combinations of bad events wrecking his plans. McCaw mulled over every possible turn for the worse and consid- ered his options—his future chess moves. Competitors and business associates marveled at his guts, but it was never simple daring. McCaw saw fear of failure as another motivation to plan well and think hard. "There are the times when you really have to become good because you're scared to death and you know what can happen," McCaw says. "It's like walking on a tightrope. In the good times, you can only fall six inches. In the bad times, you can fall a hundred feet. So you know that, at those times, you can't fail.""

"Tom Hull remembered one dinner hejiad with Craig McCaw__that featureH~~tong and, for Hull, painful silences. Hull wondered what Mctlawwas thinking during those ^peljs^Why didn 't he fill the tlmeT with chitchat likej3ther people? How ahouLthatfpotball game?_Or even th^weather? Anything^hut the ckttejL_o£foxks_on plates. ^^Jithink Craig does that as a techmqul^J^ull says. "It gives him the upper hand to find out abouT'yoTITTioT'you about him. Through that "silence, he~pu^Tpressure on youto~tatk, and~1ielTgoingto learn some- thing about you.""

"against the big, the pretentious, the powerful. He wrote complex agree- ments containing understated language which gave his clients latent powers or maneuvering room—what he called "back doors"—the kind of language that gave McCaw Communications an escape or jujitsu leverage over other parties if problems developed."

"Since banks loaned at a multiple of cash flow, every new dollar of cash flow expanded a cable company's borrowing power. At first the multiple was 4.5, so a bank would lend $450,000 on cash flow of $100,000 a year. The multiples grew, eventually reaching eight times cash flow. An operator could increase his cash flow, and thus his borrowing ability, by consolidating costs such as billing offices and maintenance crews and obtaining volume discounts from HBO, CNN, and other providers. A company with 500,000 customers paid CNN 7 c" a household per month, while a company with 2 million paid 5#, for example. In other words, the bigger you got, the bigger you could get. At McCaw, "we understood we had to grow or leave the business," says Perry."

"Their criticism came from a deeply human need for praise from someone who really knew and appreciated what they had done. Many of McCaw's employees felt he didn't want to know about the difficul- ties of working in his world. At the same time, they felt a little guilty about their complaints. After all, McCaw had given them exciting careers and—no small thing—the opportunity to achieve great wealth."

"Affiliated's investment eventually reached $85 million, and the payoff it yielded staggered the Jordan and Taylor families. Within seven years, the investment's value hit $2 billion—more than the value of the Globe itself. The investment illustrated another recurring theme of the McCaw saga: Big players that do business with McCaw habitually underestimate—often drastically—his cleverness and ambition. "At the time, they thought they were just making a peekaboo investment to buy part of the company and buy the rest later," McCaw later said. "[But] our intentions were to buy them." As it happens, he never did—but not because he couldn't afford it."

"Those following McCaw's career were amazed at his skillful use of debt, his shrewd sense of timing, and his willingness to take huge risks. "They were having fun. I don't think they had fear of failure. So they were willing to push things to the max," says Gordon Rock, McCaw's friend in the cable business. Maybe that's how it looked to outsiders. But Craig McCaw felt otherwise. He had talked his brothers into pledging everything they owned to finance purchases by the company. They had agreed to receive few or no dividends so that company cash could be used to fuel rapid growth. Any one of them could have pulled out at any time, which would have broken the company. Wayne Perry, the rare outsider to attend family meetings, swears there was no family strife. The brothers trusted McCaw totally, he says; McCaw was their leader. But they recognized the downside. The disas- trous end of Elroy's deal-making career had taught them what happens when mistakes are made. Craig McCaw knew the truth. "We were always scared to death," he says."

"McCaw uses a different term. "I'm much more of a highly interested consultant now than the guy involved in doing things," McCaw says. "I think that's probably a good role for me, in that I'm great at conceptu- alizing and I'm not as good at actually putting things in place." More than ever, he would delegate huge tasks and decisions to trusted lieu- tenants."

"McCaw was in a hurry to grow, at a pace some rivals regarded as rushed, even reckless. But to go where he wanted, he needed people who could find ways around obstacles, who enjoyed defying conventional wisdom. He wanted people who would toil relentlessly in pursuit of a goal, without regard for public recognition or approval. His favorite models came from the classic caper movie Butch Cassidy and the Sundance Kid. No—not the handsome bank robbers, played by Robert Redford and Paul Newman, but their relentless pursuers, who toiled on, night and day, never giving up, never seeking approval. McCaw wanted frustrated rivals to marvel at the trail marks left by his people—to wonder, "Who are those guys?""

"Through the prism of his self-confidence, McCaw saw the opposite. "I'm the master of the obvious," he once said. "So whenever I have an idea that I think is obvious, I pursue it." A new chase had begun."

"O'Brien had borrowed from Craig McCaw's playbook, but he had apparently missed some pages. In simple terms, O'Brien had run out of flexibility. Lenders and vendors now controlled his fate. McCaw had always been careful not to let his need for cash restrict his strategic choices. He never became too dependent on the maker of a switching system, especially if that compromised quality. O'Brien now saw his choices reduced to a few painful trade-offs."

"He reminded them of the McCaw philosophy: . . . the principle that one person makes a huge difference. That if you empower people and give them a lot of responsibility, then you get a benefit from it, a disproportionate benefit, even though you may make mistakes. That you hire invigorating, dangerous, and interesting people who are not all the same, and who cause trou- ble, because that's how you get things done. If we all keep embody- ing that spirit, we don't have to be worrying about being swallowed by them or anyone else. . . . The way we manage is the [style] of the future, even though at times it frightens the outside world, and even us."

"Anyone who had watched McCaw carefully, however, might have known that he always had planned moves and countermoves. The master of the strategic "back door" had found another path to spec-"

"The two men met for over four hours, during which McCaw subjected Daggatt to a series of soul-searching questions. One question probed Daggatt's grasp of strategic issues: What business was Federal Express in? Daggatt answered that FedEx sold not package delivery but peace of mind—the certainty of getting that crucial parcel delivered on time, "absolutely, positively," as FedEx's ads had it. That was the correct answer."