Preston Pysh  6:42  

The personality that I read about in the book. I could tell that he would just absolutely devour your personality just like, “well then go ahead, man, because this is the way I’m gonna do it”. Like I can tell he probably ate that up.

Mark Stevens  6:57  

He was really serious. He’s gonna stop this book and he says, all of a sudden this guy’s just writing his book. And I keep reminding him, imposes *inaudible* smartest person I’ve ever met. We can get to that later. But, you know, I kept telling him there is a First Amendment. It actually applies to you too. And he just missed that. So, then he called me one night. And he said, “okay, look, I have an idea. We’ll do it together. I’ll tell you everything. We’ll have a contract and we’ll share the earnings”. And here’s a guy $1.2 billion. And he wants to do a contract. So I said, “you know what, you tell me everything, and I can be a fly in the wall then, fine”. So he had his lawyers are literally like a 50 page legal agreement. I was going to do it. I went home. I read it. And I said, it’s not because of the terms. I just know Carl, and I knew that once I gave him some control over me, book will never come out. I went back to him and I said, “Carl, I’m not signing anything”, and he went crazy. It will cost me $50,000 with this contract and he went crazy. Then I said, “look Carl, I’m walking out of here, so either accept the fact that I’m doing a book without you”. The interesting thing that happened is that he accepted it. He opened up to everything. And he gave me his mother. He gave me his uncle, Elliott who gave him the money to buy us a seat on the stock exchange. He opened up the doors to everybody and told me everything. And I also interviewed all those other people. It was a hobby for me because I was running one of my businesses. So I’ve written a lot of books. This was a hobby. To me, writing these books is how I learn. You learn fascinating stuff. But really, that’s how it evolved. 

Preston Pysh  8:50  

Here’s the other thing, Mark. I don’t think that you necessarily portrayed him in a manner that was all that favorable. That’s probably not the right word because he comes across as extremely intelligent. And I think most of that is just because of the detail of the deals that were constructed in the thought process. But the way that he went about working the deals, and the way that you described him in the book, I thoroughly enjoyed it because I really appreciate it. A great negotiator. But for some people, they might take his personality in a very negative connotation. So I think that he, although he gave you keys to the castle, if you will, he also allowed you to really kind of write a very authentic biography that captures his personality so well.

Stig Brodersen  9:39  

Oh, yeah, Preston, and it’s so much fun that you’re saying that because we’re big Warren Buffett fans. And just knowing how he is going about his business and the way that he treats other people and how he negotiates is just very, very different from what Carl Icahn is doing. Yeah, you might be saying that he’s not even running his own business because there is no business.

Mark Stevens  10:01  

He has no company. So Bill Gates, who I spent a day with at Microsoft campus in 1990, he just crossed the billion dollar mark. He asked me to come out here and spend a day with him, talking about various things Microsoft at that time. So Bill created an oil well company like a lot of the billionaires. Warren has a bunch of little wells. They just put up the money. Carl didn’t really have a company. He jumps on the necks of CEOs and he bleeds him to death. And he says, it’s that way. The tiffanies *inaudible* that he has about who to go after, and the fact that he can outsmart anybody, which is in fact interesting. I did for Bloomberg TV, it’s in the can now last summer. Carl Icahn’s Oobit, one hour show, me talking about Carl, and I talked about him in the past tense. They asked me what his legacy is. I said he has no legacy. If you think about it Carl created nothing. He built nothing. He changed nothing. He just got really rich. The really unusual thing is you think about the other billionaires they made as Steve Jobs, used to say, some kind of dent in the universe. Well, they knew that *inaudible*.

Stig Brodersen  11:07  

It really seems like his goal is always to outsmart other people. So could you comment on that, but also perhaps tell our audience why you mentioned before that he’s probably the most intelligent person that you ever encountered?

Mark Stevens  11:22  

Well, Carl was a chess player at Princeton, and a Philosophy major. So he looks at the world through the eyes of a chess master. He wasn’t a global chess master, but he looks at the eyes of a chess master, and he was a very good chess player. And as a philosopher, so when we’re talking about anyone whose deals, he and I talking, he talked about it in terms of so what would Machiavelli do? What would have Aristotle do? What would Nietzsche do? He would quote them and that’s how he sees the world. And so I always say that the average CEO, these are the guys who Carl has gone after. Carl doesn’t go after one of them. Smart. So he goes after CEOs. He always said, “CEOs are all in positions through reverse Darwinism”. The CEOs, Domini picks a person dumber than him until you have a moron at the top. He felt all these guys are morons. That 500 degrees, then whatever, they were making $30 million a year, and $100,000 of stock options, but to Carl they’re idiots. And so if these CEOs thought three or four, most people think one move ahead, they’re lucky. Mostly CEOs think three or four moves ahead, Carl thinks eleven. That’s why he beats them. But the interesting thing is, it isn’t hard for him because it’s not hard for Usain Bolt to win either. If you have the gift. Usain toys with people in a dash, in a sprint. He totally has time to toy with people. Carl does that. You can’t really try to be as good as Carl.

Preston Pysh  12:51  

Wow. So I want to throw this out to the audience. There’s a book called, “The Art of Learning”. I don’t know if you’ve ever seen this, Mark. But it’s about a guy who he beat a grand chess master at the age of 14. The movie, “Chasing Bobby Fischer” is after the gentleman who wrote this book, “The Art of Learning”. And one of the things that he talks about in this book is how the guys that are really great at outthinking their opponent. They really capture that middle game. Like, you got these guys that are really good at their opening move, and maybe they’re closing move. But the guys who are brilliant, the ones who do the best are the ones who can handle the situations that have never been thrown at them before. And they can literally think through 11 or 15 steps in advance in the middle game of a chess match. And so what you were just describing there with Carl, I think that totally relates to the fact that, a) he’s a chess player and, b) when you look at these deals and the way he was doing them, and we’re going to get into that a little bit later. So if people are listening to that, we’re going to get to that next. When he get into these deals, they were so complex, had so many variables. And I think for him, that is such an appetite for him to fulfill that desire of being in that complex environment, and then outsmarting and beating the other person. I can totally see how much of his life is oriented around this idea of chess, and how all these acquisitions, these mergers and acquisitions and buyouts, and all the other things that he was doing, were motivated in a very similar context. And when I was reading your book that theme really comes out. That Carl, if he ever got in a position, where it was an end game or, somebody basically, you had to put your cards up and see who won. Carl always had the winning hand because he had stacked that in advance, and he knew that he wasn’t going to go toe-to-toe with somebody unless he had that final hand to win.

Peter Lazaroff  14:40  

He wouldn’t be there. You’d be his zephyr. I would know that he stacked the deck. He was able to. He would never put himself. You would just realize that you just position yourself as somebody that Carl would kill because you went in with a sense of bravado, and a little nugget of dime store of wisdom. But Carl’s not going there because that’s a gamble. So he’s not doing that.

Preston Pysh  15:09  

He had a guy standing behind me that told him the two cards I was holding.

Stig Brodersen  15:12  

So Mark, the next thing I would like to add to this interview is the whole discussion and the concept about activism. His activism that’s really kind of Icahn’s bread and butter. Could you explain in plain English what activism is and perhaps also come up with a story of how he’s used this concept in a given business transaction?

Mark Stevens  15:34  

So what an activist is, is somebody who all this sounds easy to do, so you have to remember to go back to what I was talking about a moment ago. But an activist buys some shares of stock in a publicly held company and then, put simply, starts making demands on management of a publicly held company, saying, I want you to take some of the money off the balance sheet and distribute them to the shareholders which I am one of now. Management says, pushy at the beginning of Carl’s career, “go straight to hell”. So he says, “okay, I have 4% of your stock. Tomorrow, I’m going to make it 11%. And I’m going to ask you again because 11%”. Still not playing small ball. They say still, that path to hell is what you want to take. So then he buys more. 

So in other words, what happens is, now particularly, Carl goes in, you can go to any company he wants except an Apple or something, he has enough money, enough resources to buy enough stock, to buy enough of position, and then influence other shareholders that we want the money that’s on the balance sheet to be distributed to the shareholders using one example. Now activists want change. They always position wanting change for the good of the shareholders. Carl always wants change for the benefit of the shareholder being Carl. Some of the other shareholders benefit along the way when he does his things successfully.

Stig Brodersen  16:56  

Yeah, and one key element of activism and especially activisism that it used to be activism today. I wouldn’t say it’s impossible, but it’s definitely harder in some ways, compared to the ’80s where Carl Icahn really hit his stride. And the reason why I think it has changed is because activism became so popular that basically the government has to regulate it differently. But Mark, you tell the story at the very beginning of the book, where he’s [Carl] actually using the concept of greenmail the first time. So let’s actually briefly talk about that, because I think that’s a super interesting concept. 

So greenmail, that’s basically money to go away. So let me give you an example. He was trying to take over a company and as you said, Mark, the management really didn’t want him to take over the company because they might lose their job or whatever could happen. So they were actually telling him that they were to smear his name, that they were going to print out more stocks, basically, or see printing out stocks because they want to dilute his shares. But they also knew that he was a threat. So they actually told him that he can get $10 million just to go away. And they even gave him a list of 10 other companies that might be a good target for activism. 

And at the end of the story, Carl took that money and actually used that to threaten another company. I just think that the whole entire concept of greenmail, it might sound super counterintuitive because the management is basically using other shareholders’ money to fight up another investor. And you might be thinking, why can that even be possible in the first place? Well, sometimes if the shareholder has bad intention, at least that’s the intuition buying greenmail, then it might be beneficial for other shareholders to have their management actually pay that guy off so that he would just go away. And this is not necessarily to say that activism is a good or bad thing. It is done to unlock shareholder value which was really the pure and the good intention behind the activism – because it is the shareholders that owns the company.

Preston Pysh  19:01  

And I think a key point to this, Mark is, when he’s [Carl] looking for these companies that would be a hit, if you will, is he’s looking across the array of different stocks out there that are publicly traded. He’s really looking for something that the market is currently pricing at a parody or lower than the book value and has some type of something that he could quickly liquidate in the balance sheet or it’s already liquid that he can then turn into a dividend payment or something that can be extracted out of that balance sheet. Is that a correct statement?

Mark Stevens  19:33  

A company can be trading at a premium. But if there’s too much money on the balance sheet, for example, it’s not being distributed to shareholders.

Preston Pysh  19:40  

Management has no plan.

Mark Stevens  19:42  

There’s no plan. Or they have dumb plans. And they start using the shareholders’ money, which is what is on the balance sheet, making ridiculous acquisitions. Carl can then come in, take a big chunk of the company’s equity and then gather you and I or other shareholders and hundreds of others and say, “let’s put pressure on them”. If they don’t, we’ll buy more stock and we’ll replace the board, and we’ll take control. So the CEOs of these big companies, think if you’re most, if not, the owner *inaudible* of the company. Say politicians, if you rose is losing their job. 

Preston Pysh  20:15  

So Mark, you mentioned the point where Perot is concerned about Carl. And then you have the shareholders (plural), and how sometimes they kind of benefit, but most of the time, that’s really not a consideration, even though he would use that reading your book, he would use that as a lot of leverage to get support from the other shareholders in order to help enforce his position against the management. 

Talk about that idea just a little bit more so our audience understands what you’re referencing and how this is really kind of a short duration play for Carl to basically extract the money out and then leave the scene, smoking, and no war chest left with the company.

Mark Stevens  20:55  

Carl is looking at other things, including, why are they paying a dividend? Why is the dividend this low? And he suddenly starts making noise. And now, when Carl speaks, everybody listens. So the other shareholders say, “hey, what’s Carl talking about? Oh, this company, ABC company, we know he’s right”. Why are they paying a dividend at 1.2%, when they can clearly double or triple or quadruple that? So then use us to, “hey, yeah, like, you’re right”. And then he’ll gather the other shareholders around to join him with the weight of their holdings in the company, the petition for a greater dividend. At the same time Carl is calling the CEO and saying, “hey, buddy, I know you’re reversed *inaudible* at the top. I’m going to take your job. So I’m playing nice here. But I’m going to take your job, you’re going to be without a job, you’re not going to have a company”.

Stig Brodersen  21:51  

Yeah, and one of the concepts that I really like to throw out there is the concept of a proxy fight because as you’re saying, Mark, he’s basically taking all the management in the company and how that works is through a proxy fight. So he will have the shareholders vote about the new board. And the way that he’s doing that and really to convince the other shareholders to vote for him. Actually they were saying, I’m going to do this for free. Because like you, I’m a shareholder, I just want what’s best for the shareholders. If you compare that to management navigating juicy bonuses and perhaps haven’t performed that well in the past, then Icahn has been successful in that proxified approach several times in his career.

Preston Pysh  22:35  

It’s totally amazing that you would think that management wants to basically dig in on their position, so much so that they would go to a shareholder that owns 10% of the company, and say, “hey, we’re going to take money out of our retained earnings sitting there in cash, and we’re going to pay this to you to go away”. That’s totally nuts. 

Mark Stevens  22:55  

Then I disagree with you. Because of your view of the world was my power and role as CEO of this company is something I value most. And I’ve got this belief in me approve that, why would I pay? So, actually, their view of the world was I want to keep my job as CEO, I want my suite, I want my jet, I want my money, I want everything at my power. If I pay this guy with somebody else’s money, which is shareholders’ money. $50 million to go away. Golden.

Preston Pysh  23:23  

And Carl was perfectly fine with the fact that that was really all the other shareholders. Let’s say he has a 5% stake. The 95% of other people that own that company, that have owned that company (past tense), and he comes in takes a quick position. And you talked about this in the book, I mean, two months on some of these deals that he was an equity holder. And he walks away with millions from the other shareholders from the other part. 

Stig Brodersen  23:50  

It’s funny, Preston because as investors clearly we know about Carl Icahn, and we talked about him several times in the podcast, but this is just very different, reading Mark’s book and how detailed it is. And definitely there are a lot of interesting takeaways in terms of investing lessons, but I think that the funny stories and the anecdotes about how Carl Icahn’s personality is, I think that’s something that’s really hilarious. So Mark, again, I ask you, could you tell a funny story, just something that you experienced in person or something you know about Carl Icahn that you would like to share with the audience.

Mark Stevens  24:28  

There’s so many, but I’ll pick this one. He asked me to go with him one day to meet pilots of TWA. He wanted concessions from. So these guys were in a hotel in Manhattan. I think it was at Waldorf. I forget. It was 500 of these. However, World War II vets, right? Guys who flew the whole war, fighter pilots. And they’re spending the latter part of their careers flying around TWA jets. But they still have the fighter pilot in them. And they hate this guy. A lot of them have never met him. So Carl dressed. He had a “Columbo”, the old detective series. He had that sort of bumbling personae put on. He’s never really dressed nicely. He was like, wrong-tied dollar shirt, a little disheveled. And he got up on the stage and they said, “man, this is the guy that we’re concerned about? We’re gonna win this one easily”. And Carl doesn’t say anything. He just stares at them for about 10 minutes. I mean, I’m literally talking 10 minutes. So these fighter pilots are there. Pissed as hell about this guy who owns TWA, who wants to reduce their wages. They serve their country and they serve in his TWA. And he was like, cut their wages. And he doesn’t say anything, which is silence can sometimes be a great weapon. I don’t know what he’s gonna do. He has asked me to come but I didn’t know what he was at. 

Preston Pysh  25:43  

He reaches into his suit pocket, and he pulls out an egg. And he holds the egg in one hand with if you can imagine an egg in the guy’s palm. He extends it out. First thing he says is, “guys”, he points to the egg, “this egg is you. This is not cooked egg. This is a raw egg I’ve been carrying around my pocket. So this egg is you. These five fingers is me. If you don’t agree to the concessions, me squeezes you and breaks the egg. I really don’t mind ruining this suit. So as we start this negotiation, let me tell you where it’s gonna end. You agree, or I squash the egg?”. That was his opening. But again because he doesn’t bluff. I’m gonna say that the pauses really disturbed them, but I’m gonna go through with it. If I have to replace them, no matter what I have to do. This is not going to be a bluff.

So here’s an interesting thing that I’m thinking about, Mark. So he he doesn’t really care if the entire world hates him either.

Mark Stevens  26:47  

No. There is no world. He used to tell me, “Mark, think of the word, fair. There’s no such thing as fair. Artificially manufactured word”. He says, “when two people sit down to negotiate”. This is a very instrumental part to your listeners, his negotiating style and how you go into negotiation. Two guys sit down in a business deal. There’s $100 on the table. If everybody else who sits at the table says we’re going to find some way to divvy up this hundred dollars, right? I’m gonna get some and the other guys will get. It’s just a matter what percentage one gets and the other gets. Carl always isn’t, “I want every one of those dollars *inaudible*. I don’t want to be fair. I don’t want you to get anything. There’s no reason to be fair. There’s no reward for fairness. You do fair with your kids. Business in wars, if they’re in war, there really is no fair. And people will think I’m just some hard ass, but I’m not. I have kids that I adore. I’ve been married 41 years to one of a woman. I want to be very fair to my employees. Always done that. But I understand what he’s saying. 

Preston Pysh  28:00  

I look at the world as being very reciprocal. So if I have a deal with somebody that I’m never gonna see again in my entire life, then I guess you could take that approach. But I guess, I see the world through a completely different lens, in that every single action that I put out into this universe is going to come back to me in some way, shape or form, maybe not the form that I expect. So I look at a guy like Carl, yeah, he has material wealth beyond anyone’s comprehension. But at the end of the day, it doesn’t seem like he really has too many friends. And then the question is, so what’s it all about? And I think that your quote that you were saying for the one hour documentary with Bloomberg, that is like, what’s his legacy? Well, he has no legacy. He hasn’t really created anything here.

Mark Stevens  28:48  

On the friends thing, I saw all the time that when we went to Palm Beach with his girlfriend, and my wife, like, he was always counting, you know. Who paid for breakfast, who paid for lunch. He’s fair, right? I didn’t want anything with Carl. I didn’t want anything from him at all except his company, which was exhilarating.

Preston Pysh  29:07  

But he was a billionaire at this point.

Mark Stevens  29:08  

Yeah. $1.2 billion. He says, “because my money is my army. And I need my army around”. That’s one of the great quotes about how Carl views the world. Without the money, if he brashes you on *inaudible*, but you can’t threaten CEOs if you can’t go buy their stock.

Preston Pysh  29:27  

So this is a question I got to ask because I know everyone in the audience is is wondering about this. Do you still talk to Carl? Do you still have a relationship with him after the book and everything else?

Mark Stevens  29:37  

We had a relationship after the book for quite a while. When he got divorced from Liba. He was married to her when I was at most of the early part of my relationship with him. She was a beautiful Czech ballerina. They didn’t get along. After the divorce, he gave her the Bedford state part of the settlement. He left Bedford. And we saw each other after he left Bedford, but then we never had an argument at all, it just dissipated.

Preston Pysh  30:06  

He kind of moved to a different geographical location, and you’re not really…

Mark Stevens  30:10  

Yeah.

Preston Pysh  30:12  

And was he a good tennis player? 

Mark Stevens  30:15  

So he never won. He always wanted to play for money. And I knew that I, with anybody else, I’d be just walking on with extra $5,000. But I knew it costs money, and he’s gonna find some way

Preston Pysh  30:29  

To pull it off. Oh, my gosh.

All right, Mark. Well, this interview was just so enlightening to capture really his personality and who he is. I mean, you see him on TV. You see him saying different things about the market now, which I know he’s an enormous bear. He has these videos saying he’s a bear on the market when you pull into his publicly traded company, which is IEP (Icahn Enterprises), and you look at his positioning, he’s short. He’s over 100% short in the market. So for me when I look at that, and he’s saying things vocally, I know that vocal part, what would you hear him saying on the news, you really can’t really trust or realize that that’s legitimate. But I think when you look at his positions that he’s filing on his 10Q’s, and his 10K’s, that’s truly his position. So let me hear your take on that.

Mark Stevens  31:14  

He’s not going to say to anybody, “this is what I’m going to do” until it benefits him for you to know and you act like a puppet. No other direction. I wouldn’t be surprised if he’s a million long position. Because I always find out what Carl says publicly is diametrically opposite what he’s doing. And it’s not evil. It’s just his *inaudible*. And he doesn’t even almost realize this. It’s like, it’s so baked into him. You got trained as a pilot. You knew what to do when you saw lightning. You were trained, right? He was trained by his DNA to act in a certain way, his DNA being primary. So he just instinctively, I’ll end with this and say one more thing, instinctively fools everybody most of the time.

Stig Brodersen  32:04  

Wow, that’s really interesting and something that we probably need to look out for in financial media and in general. Okay, let me just shift gears here before we wrap up this episode. 

Mark, one of the questions that we always like to ask our guests is if they have a great book that they could recommend. This might be a book about entrepreneurship because we know that you have your own business, or it might be finance or investing in general, more activism kind of literature. Do you have anything that has really influenced your way of thinking?

Mark Stevens  32:36  

Actually, I’m reading a book right now. That’s the best book I’ve ever read about how someone starts an entrepreneurial way. A very, very, very, very successful service business and becomes very wealthy doing it, which is cool. I’m reading it now, “Powerhouse”. It’s a story of CAA, Creative Artists Agency and Michael Ovitz. It’s just recently out. It’s the best book I’ve ever read about how does somebody grow a service business and become worth over $500 million, maybe a billion. And build a really amazing company. It’s just fascinating. 

Preston Pysh  33:11  

That sounds awesome.

So Mark, I want to give the opportunity to you now to give our audience a handoff to the books. I know you’ve written multiple books. Please name those books. We’re gonna then have a link to those in our show notes. So for anybody that’s listening to this, if they want to go to any of these and they can’t remember the titles or whatever, they can just click on those links that we’re gonna have in the show notes. But I want to give you the opportunity to talk about some of the products and things that you’ve put out there so that everyone knows how they can learn more about you.

Mark Stevens  33:38  

So I think the best thing to do is really to go to yourmarketingsucks.com, and/or go to Amazon and just log in books by Mark Stevens, and you’ll see all my books. There’s a number of Mark Stevens, but I usually come up number one. You see the books there, but the books I’m proudest of is “King Icahn” and “Your Marketing Sucks”.

Preston Pysh  33:57  

Awesome. Mark, thank you so much for your time. I know our audience is going to get a real kick out of some of this discussion. This was amazing. We really appreciate you coming on the show.

Mark Stevens  34:07  

Thanks so much. I enjoyed it a lot.

Stig Brodersen  34:08  

Okay, guys, that was all we had for this week’s episode. We’ll see each other again next week.

Outro  36:07  

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