Elroy

"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."

"years before he died, Elroy had reorganized the cable company in Centralia. In this deal, Elroy created two classes of stock, a preferred class for himself and another that he "sold" to his sons. The dividends went to Elroy, but the sons got the company and could buy out the preferred stock. Elroy also set up a $50,000 trust fund for each son. He never bothered to tell Marion or the boys."

"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."

"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."

"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.""