Entrepreneur Focus – David Geffen

Every week at Innovatrs, we’re going to be doing a focus on a notable entrepreneur – someone that showed flair, business nous and those elusive qualities that propel some business people to the very top…this week it’s David Geffen. Former CBS Head, Walter Yetnikoff, once said David Geffen was capable of making hundreds of phone calls a day. One things for certain – Geffen wasn’t making personal calls. With David Geffen it is all about business. In his younger years, Geffen once claimed to have had 17 jobs between high school and the time that he was hired as an usher at the CBSTV studios in New York - he hated them all. That changed a bit when he got the job at CBS, where he watched TV rehearsals with the likes of Judy Garland and Red Skelton. Showbiz obviously agreed with David and even back then he had the mindset of a boss. Unfortunately he still had the naivety of a novice - he was hired and then fired as a receptionist for a new CBS TV series after he made some suggestions to the shows producer. After his sacking he approached the shows casting director and asked her whether there were any roles he could fill. When she asked him what he was good at, he reportedly replied, “Nothing.” The casting director jokingly suggested he might want to consider becoming an agent. Of course, Geffen took her advice on board and rose the ranks from the mail room of The William Morris Agency to becoming an artist manager. He took on board his first act, Laura Nyro, who had been receiving disappointing reviews. Clearly Geffen developed a strong musical savvy, as he promoted and managed her career so well she would soon sell out the Carnegie Hall – twice. Not only that, Geffen landed her a better contract at a different record label – CBS owned Columbia – sweet revenge for his earlier sacking. With Nyro’s songs doing good numbers, Geffen renegotiated her contract with Columbia and in the process made himself a millionaire – all at the impressive age of 27. David Geffen isn’t the type to stop at a million or two, he wanted more. Being a hotshot manager, Geffen managed to get several top acts signed to top labels. But after Atlantic refused to sign Jackson Browne, he decided to form his own label with business partner Elliot Roberts – Asylum Records. According to Geffen’s biographer, Tom King, Geffen wanted the ethos of the label to be “known as a sanctuary for artists, a place where they could make their music and be free from any kind of corporate interference.” Following the huge success of one his acts, The Eagles, Geffen was approached by Warner about selling his label. He duly obliged and earned a tidy $7 million. In actual fact, Geffen made a huge error selling Asylum for that kind of money – Warner made their money back just through The Eagle’s sales. He should have held out for more, but this would be a rare blotting of his copy book. In fact, his next label, the modestly named Geffen Records, would later net him an incredible $530 million in buying company MCA’s stock – and only 2 years before they were sold to Matsushita, making Geffen a billionaire. The huge money Geffen made should be proof enough of his business smarts. But the fact that his self titled record label was funded fully by Warner and given outright to Geffen for a mere 5 years distribution rights shows Geffen is a clever negotiator and understands the first rule of setting up an entertainment company – don’t spend your own money. The label also struggled for years before it really took off, which shows Geffen has another essential quality – he believed in his business and held it all together when the going got tough. Just as management wasn’t enough, Geffen hooked up with Steven Spielberg, Mo Ostin, and Jeffrey Katzenberg to form a company you might have heard of…Dream Works. Each partner contributed $33 million in start-up capital, which by 1995 had attracted more than $2 billion that they would use to release films, television shows, interactive games, animated films, and music. Suffice to say, David Geffen has become one of the most powerful and richest entertainment moguls in the world. He can count a who’s who of A lister’s as associates and friends, including a certain Barack Obama. Geffen has an estimated fortune of $5 billion…All a far cry from the young man that was sacked for speaking out of turn to a TV producer…