Know which rules to break

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TOM FRESTON: This guy said, “Well, we’re looking for people who have absolutely no experience in television.” Which I was like, “Wow.” I said, “They didn’t even have television where I’ve been living. I mean, I’m walking around in flip-flops and pajamas for eight years.” It was hard to believe now, but MTV was really revolutionary at the time. It was a sign of some kind of future that might be coming.

JEFF BERMAN: This is Masters of Scale.

[THEME MUSIC]

I’m Jeff Berman, your host. This week on the show, the word legend gets thrown around a lot. In this case, we have a legend who is actually legendary: Tom Freston. Tom is a co-founder of MTV, former CEO of Viacom, and his new memoir, Unplugged, is full of wild stories and deeply meaningful lessons from his life as an unconventional CEO.

This is going to be a fun one. Tom, welcome to Masters of Scale.

FRESTON: Nice to be here.

BERMAN: Great to have you here. I was in an airport with a book that I wasn’t really loving, so I popped into the airport bookstore. I saw your book and figured I’d grab that and start it on the plane. Fortunately, there was no Wi-Fi on the plane. By the time I landed from a cross-country flight, I’d nearly finished it. It is a rollicking read, and one of the things that stood out for me was the extent to which the early part of your career was shaped by breaking rules and making new rules. As we look at what’s happening in the world today, I’m curious what your take is on the line between acceptable rule-breaking and rule-breaking that is really reckless and dangerous.

FRESTON: First of all, I’m excited to hear that they were selling my book in a bookstore at the airport, and I’m glad you liked it. In terms of breaking rules, you don’t want to break rules that are against the law. Generally, a lot of the rules that we broke, say, with MTV, were more in the cultural realm, and we broke rules on a business basis. At one point, we couldn’t get the cable operators, who in the early ’80s were local monopolists. This seems like ancient history, but after a couple of years, and we only had a couple million subscribers, we decided we would just go over their heads. It was like, screw them, and we cranked up the I Want My MTV campaign to pull demand right through these distributors, who were largely Elvis fans, who didn’t like MTV and didn’t like the idea of paying us 10 cents a month. We were just somebody cutting into their profit margins. So that was a rule broken. It was not a polite thing to do in the cable business back then.

Copy LinkSmuggling products into the U.S

BERMAN: Beyond that, let’s go back to Hindu Kush, which I think most people don’t know you for. Most people know you for MTV, such an iconic stretch of your career. But you started by building an apparel brand out of India and Afghanistan, right?

FRESTON: Yeah. There were not a lot of rules. I wanted to live there. I had been traveling, and I had developed this fascination with that part of the world. I figured, how can I afford to live here? I need to start a business because I couldn’t get a job. So I started this business in the garment business, knowing nothing, never wanting to be in the garment business, but it took off like a rocket, and it was highly enjoyable for a bunch of years. Then at the end, there was an embargo that Jimmy Carter put down that ultimately put my company out of business.

No more imports from India, and I sent three tons of clothes to Montreal, and we smuggled them over the Saint Lawrence Seaway, which was insane. I don’t know what I was thinking, but I was kind of just looking for a little justice.

BERMAN: You had a business that was growing. You were living the entrepreneur’s dream, and the stories are so colorful and so vivid. Then all of a sudden you’ve got a change in geopolitics. You’ve got a rise in tariffs. This sounds very familiar. Then we pay attention to the news today.

FRESTON: Yes. I really feel for all these young importers these days who are screwed.

BERMAN: What did you learn from then that would be useful for those entrepreneurs today who are dealing with similar turmoil?

FRESTON: I learned humility.

Living in that part of the world, you learn humility, and you also build up a great confidence in yourself and your ability to do things. As I always say, it was like a sort of bebop business lifestyle. You would improvise. You would take chances. You would take risks. You would bet on unusual people. You would learn how to tolerate unusual people. All of this kind of came into place, and it made a perfect résumé for someone who was going to lead what became a cutting-edge, eccentric media company.

BERMAN: I feel like there are so many ambitious 20-somethings who are terrified of stepping off the well-worn path. They’re kind of going through a machine of, well, it’s the right college, and maybe it’s the right grad school or the job at the right company. There’s real fear about following something that’s more of a passion, or that they feel in their body might be something worth trying, and being a little more beboppy about their career. When you’re talking with young people who are in that mindset, how are you helping them understand that there’s another path?

FRESTON: It’s a tougher time for kids in their 20s these days who want to start a career, and the office culture thing has sort of collapsed, and a lot of things that maybe we knew when we were that age are sort of gone. But step off the conveyor belt and embrace some uncertainty. No one’s going to miss you if you’re gone for a while. You can’t maybe travel all around the world like I did, but I would say that travel, making that part of your post-college experience, is like the world’s greatest classroom.

You learn a lot about empathy. You learn a lot about your country. You learn a lot about yourself. And when you come back, you’re probably going to be more attractive to a recruiter than someone who just went on the conveyor belt the whole time. Relax, for God’s sake.

Copy LinkLanding at MTV with no prior experience

BERMAN: When you came back, you ultimately answered an ad that wanted people to work at a fledgling TV network who had no TV experience.

FRESTON: I had come back. I had built this business. It was a multimillion-dollar business. It was a big success, which I never expected, and I loved it. It crashed and burned. I’m deep in debt. I’m back in New York. I’m now 33. All my friends have gone out, gotten married, and have careers. And I said, “What the hell am I going to do?” I bought this book, What Color Is Your Parachute? The only self-help book I’ve ever bought. I’ve recommended it to so many people. It said that you have transferable skills, you can do a lot of different things, and, by the way, you should do something that you love. And what do you love? So they had all these little exercises where you could evaluate your skills, look at what you like, and I came up with music. I was a music nut.

So I saw this article in Billboard magazine by this guy, John Lack. He was interviewed, and he was talking about the start of cable TV. They had started the Movie Channel and Nickelodeon, and they had plans to start a video music channel. I said, “Oh God, that’s a great idea. How do I get to meet this guy?” So my brother, who was in the record business, knew a guy who had just gone to work there. I got an interview. And when I went in, this guy said, “Well, we’re looking for people who have absolutely no experience in television.” Which I was like, “Wow.” I said, “They didn’t even have television where I’ve been living.” I mean, I’m walking around in flip-flops and pajamas for eight years.

So everyone they hired had no experience. A lot of people came out of radio, came out of the music business. At Nickelodeon, they were schoolteachers. And that turned out to be the brightest move because we had to think of totally new ways to do things, and there’s nothing like having no money to force people to innovate. And if you’re working with a group of people who are on a crusade like you are, really passionate about something, you’ll figure some good things out. It’s hard to believe now, but MTV was really revolutionary at the time. It was a sign of some kind of future that might be coming, this TV revolution.

Copy LinkHow outsiders built MTV by thinking like fans first

BERMAN: Well, it’s such an interesting challenge, Tom, because you’re launching a television network in a world where there are rules and norms, right? How did MTV thread the needle of taking the experience and expertise of people who knew how the system worked, while also keeping the insurgent challenger mindset of the outsiders who came in with the real passion for music and for the artists, and the screw-the-rules, let’s not do illegal stuff necessarily, but let’s do things really differently mentality? It feels like that’s a bit of a clash between mindset and culture. How did you guys navigate that?

FRESTON: Well, we had to learn what the business was. And ultimately, the business of cable programming wasn’t that complicated. You had to create 168 hours of programming a week. You were going to bounce it off a satellite that’s 25,000 miles up in the sky, which seemed to me like, “Wow, this is outer-space stuff. This is the future.” It gave you the ultimate scale: You put together this thing, and then it has a footprint all over the United States. We hired people who knew how to do video, and we would reach out to, say, NASA. We would grab a lot of footage that was available in the public domain and utilize that, like the rocket ship launches. And we got this product from the… The program staple at the beginning was these music videos, which had already been produced. So we were sort of like a radio station. Everybody was in their 20s but me. I was the oldest guy at 33. My boss, Bob Pittman, who’s an incredible character, was 26. He never went to college, and he was a very successful guy. I learned a lot from him. He was like a mentor to me.

BERMAN: What’s a great lesson you learned from Bob?

FRESTON: The key to the business is the consumer. You have to deal with a lot of different groups: advertisers, in our case cable operators, artists, record companies, this and that. But if you can make a connection with the consumer and know what’s going on inside that consumer’s head, and maybe build up a research enterprise that gives you a lot of insight into what’s going on, and get that bond and build up some loyalty, that will allow the other things that have to happen in your business — getting distribution, getting advertisers, convincing people to do things — to fall into place. So it’s consumer first, second and third.

BERMAN: Outside of a couple of years at the NFL, I have spent the entirety of my career working for effectively challenger brands, insurgent brands, or building them.

FRESTON: You were in my space for a while.

Copy LinkHow to scale a rebel culture without losing its edge

BERMAN: I was, and I’m very keen to talk to you about that. One of the challenges when you’re scaling an organization that is a challenger brand and has that insurgent mindset is how you keep that culture while you grow. It’s really not hard when you’re five or 10 or even 20 or 30 people. You get to 100, 200, 300, and you start to have things literally called divisions, right? You’re separating the company. How were you all able to maintain the culture at MTV through that scaling journey?

FRESTON: Yeah, that was a huge challenge, particularly because we wanted to stay on this cutting edge. So I always thought that having a creative, innovative corporate culture — I almost hate to use the word corporate — would be a big competitive advantage. We needed to be diverse, which was not something that happened right out of the box.

I mean, we started as a lot of white guys. Diversity actually came our way, and it was more challenging than I thought it would be, but we were able to pull that off. And you want a place where people think their opinions get heard, that politics aren’t really important, an organization that’s sort of flat. I would always go out and speak to them and try to reinforce the company values: We’re a creative organization. It’s OK to take risks. We encourage you to take risks. We tolerate that. We want people to be collegial, and I wanted to have a fun vibe.

So we always had parties and get-togethers. A lot of these things don’t happen anymore. I’ve watched the disappearance of office culture in general. It’s not that great after the pandemic. People lose opportunities to bump into each other, learn things via osmosis. Mentorship has kind of disappeared in a way. So I think it’s sort of coming back, but I don’t know if it’s ever going to be like it was, with people working remotely in their underwear from some distant location.

BERMAN: No, they should be working in the office in their underwear.

FRESTON: Right.

BERMAN: That was the MTV way.

FRESTON: We had the worst-dressed group of people. We probably did have people in their underwear. We didn’t have a dress code. Our only rule was no frontal nudity, and at that point in time, everybody had a dress code. But I said, “Yeah, screw that. We’re going to be an untraditional company,” and I wanted the people in the company to look like the people I had just seen in a subway car.

The other thing is, we wouldn’t tolerate bad actors. If someone hires somebody who’s substandard and they don’t work out, that person is likely to hire other people who are along the same lines. So you’re gradually eroding your company’s vibe from the inside.

BERMAN: Yeah, B players hire C players, and A players hire A players.

FRESTON: That’s right.

BERMAN: And it’s a pretty firm rule.

FRESTON: By the way, I never really focused on money. When I would address the company at large, I would always talk about our creative risks and so forth and leave the money stuff aside.

BERMAN: Well, that was one thing when you were leading and helping lead MTV. It’s another thing when you’re leading and helping lead Viacom itself. What was different for you going from overseeing one brand to a family of brands that have wildly different cultures?

FRESTON: Well, we had a family of brands in the sense that we became a big cable-networking operation. We had Nickelodeon. We had Comedy Central. We had VH1. We had Noggin. We had Nick Jr. We had TV Land. There was Country Music Television. So when I ascended to be the CEO, I became the president of Viacom, along with Les Moonves. We were like a big entertainment conglomerate, and I became co-president with Les. We got along well. He had his fiefdom. I had my fiefdom. But then the digital revolution began to hit and break up this ecosystem. We survived on the fact that we had a central operation. We were like editors. We could manage because of scarcity. We didn’t have to put out a lot of things, and now all of a sudden, we’ve got the internet.

BERMAN: Still ahead, Tom Freston on what it takes to break through today’s fragmented media landscape.

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Copy LinkWhy big companies struggle when the next platform arrives

Viacom did not really make that digital leap.

FRESTON: Right.

BERMAN: It struggled to. So given that talent that was there, what stopped you from getting there on the digital side?

FRESTON: Yeah. Well, it’s back to the innovator’s dilemma.

I’ll just take it in the case of MTV. It wasn’t like we didn’t see what was coming. You’d have to be an idiot not to see that, and we were the canary in the coal mine because it was kids, teens, young adults — they were the first people to really dive into the internet and begin moving some of their viewing time and attention over there. Now people can upload stuff, share stuff, comment on stuff. Everybody’s almost their own little broadcaster. How do we get in on this business? We don’t really have the DNA to do it. So all of a sudden, now we’re probably going to have to buy something.

We’re going to have to buy something and try to integrate that into our business. We bought a bunch of small websites that were of no great consequence, but then met with Mark Zuckerberg. I’ll never forget that. Someone called me up and said, “We want you to meet this guy, Mark Zuckerberg. He’s 20 years old. He started this thing called Facebook. Their revenue’s $9 million.” So Mark Zuckerberg came in, and we had seen Friendster. We’d been watching MySpace. We thought social media was interesting. He came in in flip-flops and a hoodie in February in Times Square. I remember that. Those were our offices. And they were debating whether to add high school students to the platform. We offered to buy Facebook for a billion and a half dollars, which was a lot for us.

BERMAN: Well, especially with $9 million in revenue.

FRESTON: Yeah. It was a lot for us, and half of that would be an earn-out. Mark Zuckerberg wanted nothing to do with it. He did not want his MTV. He’s done all right for himself, that young fella. Then we looked at YouTube. YouTube was really like a wow. We were the king of short-form video, and here they are doing this, but it was a whole different model where anybody could upload video. Anybody could comment on it and share it, and we said, “This is fantastic.” The problem was, because we were a big public company, we were liable. People were uploading episodes of our shows or Saturday Night Live, whatever. There’d be a lot of copyright stuff, and the board at Viacom viewed it sort of as a copyright infringement machine. They ultimately, after I left, famously sued YouTube, trying to fight the future, and no one ever could have imagined the ecosystem that YouTube was ultimately able to put together. I think it’s worth almost $600 billion today, and it’s a monster. We also cast our eyes on you and MySpace, to see what’s going on over there in Santa Monica.

Copy LinkWhere new media opportunities emerge in a fragmented landscape

BERMAN: There’s an alternate universe where you would’ve been my boss. Tom, you open the book with the MySpace story and it being the catalyst for leaving Viacom. Not long after you left, Oprah reached out and asked you to help her build her company. What’s a lesson you learned from working with Oprah that you haven’t shared with the world before?

FRESTON: She’s the easiest person in the world to talk to and to be with, and she just radiates goodwill and goodness, and we all know that. We all know Oprah. So working with her was a pleasure. Oprah had a cadre of largely women who had surrounded her and worked on her syndicated show, which was this huge business. They knew Oprah, and they knew what they wanted. They came as outsiders to Hollywood. I helped mostly on the business side. Can we get a deal with Comcast for distribution? How do we set up some of these departments? I would work on that kind of level. So I did that for a couple of years.

BERMAN: Does what’s happening with the consolidation in media, and ironically also the fragmentation in media, create lanes for innovation that are exciting?

FRESTON: Like I said, I’m always attracted to stuff around the edges, sort of out of the mainstream. So I look at the movie business and television business, but then I look at A24.

They’re independent. They’re not owned by one of these public companies, and they’ve opened up a live venue space. They sell merchandise. They have great instincts and great taste, and they continually seem to pick projects that are low-cost and do really well at the box office. They’re doing television, and they’re experimenting with shorter-form programming that could go on the internet. I said, “Well, they’re putting together a whole new model.” I thought one of the most interesting things was the idea that they have a live entertainment venue where they can also test and sort of pilot things, existing outside of the mainstream with credibility now.

So I think some of these little folks are the people to keep your eye on, some of these people that might jump off YouTube. The YouTube economy is remarkable. One of the most remarkable things about YouTube is YouTube TV as an app. That’s like everything we ever wanted.

BERMAN: Some of this is, if you’re trying to build something like this, whether it’s media or in other categories, what I’m taking from what you’re saying is: have a point of view.

FRESTON: Have a point of view, and also build relationships with key creative actors and talent. At the center of all this change, everything is talent. And there’s a lot of people today in the YouTube universe and the TikTok universe that you might be able to tap into who have been able to establish pretty amazing businesses.

Copy LinkHow trust and conviction help creative talent do its best work

BERMAN: Speaking of relationships with talent, you’ve built some pretty incredible ones. What’s the secret to building and maintaining relationships with creative talent?

FRESTON: Well, you have to be honest. You have to be someone they respect, and they need to think that you know what you’re doing.

Jon Stewart is a perfect example. We had this guy Craig Kilborn on The Daily Show. He was sort of a middle-of-the-road, fraternity house guy. Nice guy. But we gave Jon Stewart the shot, and he said, “I wanna do political satire.” We thought something more in the pop culture vein, but we let Jon do it, and he invented fake news. It turned into this steamroller full of Emmys, and he’s hosting the Oscars, and he hires Samantha Bee, and he hires John Oliver, and this whole galaxy of people.

BERMAN: You said that it was harder to diversify MTV than you thought it would be. Why was it harder, and what ultimately worked for you?

FRESTON: It was harder because, at one point, MTV had received a lot of criticism for not airing Black acts, which was fair enough in many ways. We came around, and we kind of made up for that in a way. We were the first people to give hip-hop a place in the living rooms of America. BET or even radio wasn’t playing hip-hop. But we were uncomfortably white. We were uncomfortably male, and we tried to change that. There’s a great business case for diversity.

I’m really offended with this DEI thing that’s going on now with the Trump administration, like we don’t want DEI. That’s just nuts. There was a business case for why DEI is a healthy thing. If you’re programming, for example, to a diverse audience, why wouldn’t you want to represent them? Plus, it’s just healthier. Why do we want to just be a bunch of white guys? It doesn’t make any sense to me. We did end up at about 50 percent women managers, but particularly with African Americans and Hispanics, we could hire them and have them come on staff, and then we could say, “Hey, we kind of look like that subway car that I always had in my mind we wanted to look like.” But if they didn’t feel comfortable there, then they’d end up leaving. So they’d show me these numbers of who we had hired, and I’d go, “Oh, this is really good. We’re making improvement here.” I would actually make this a goal on people’s bonus plans.

So after a couple of false starts, we got better at it. We got better at trying to make the place comfortable for everybody, and by the end of it, when I had left the company, we had achieved that. That was in 2005, 2006. I’d get in the elevators, and I’d look around, and I’d go, “Yeah, we did it.”

BERMAN: I think it’s a truism that homogeneous teams tend to stay homogeneous, and teams that start diverse stay diverse. And then the corollary is, you get what you measure, and you get what you incentivize. I very much share your concern about the attacks. DEI has become this bad acronym, and it’s not clear to me, I don’t mean to be obtuse, but why? To your point, if we’re serving diverse and representative populations, shouldn’t we have teams that reflect those populations? If for no other reason, and I think there are a lot of other reasons to do this, than to build the best business possible. What am I missing?

FRESTON: Nothing.

BERMAN: Okay. So is this racism and sexism, or is it something else?

FRESTON: Yes, it’s racism without the dog whistle. There’s implicit racism all over the place in this.

Copy LinkWhy leadership still matters

BERMAN: As you look ahead, as we’re dealing with these challenges in our country, what gives you hope?

FRESTON: Well, I believe in the American people. I believe this is really a dark time in many ways. I don’t detect a sense of optimism anymore.

And I can’t believe that’s not going to come back. Despite everything that’s going on in the world, many bad things, we still probably have the best system, and we do have checks and balances that haven’t been demolished. It’s really demoralizing to see the level of grift and graft, and how spineless certain politicians are in acceding to this happening.

BERMAN: Well, it’s not just politicians, and this is something that I can’t get my head around. As someone who spends time with CEOs at not just high-flying private companies but public companies, we depend on the rule of law. The rule of law is what allows business to thrive in America. When we make a contract, we know that contract is going to be enforced, and we can go to a court and get a neutral ruling. The government isn’t going to come after one person or one company because they support the opposition party or opposition candidates, right? Or because they haven’t kowtowed to the current president. Yet that’s under attack right now. So when you’re talking with business leaders, are they even thinking about this? Do they dismiss it? Do they think the threat is real?

FRESTON: They would say the threat is real, but a lot of people are afraid to raise their hand.

BERMAN: It’s a collective action problem. If you go out alone, you’re going to get your head chopped off.

FRESTON: Yeah.

BERMAN: So how do we solve for that?

FRESTON: They’re afraid to stand up. They’ve seen what has happened. When you have Tim Cook coming into the Oval Office with a gold gift for Trump, this reminds me of the time I spent in third world countries, a lot of time in Africa, which I detail in the book. Obviously, this kind of cronyism and favoritism is appalling. But people think this is what you have to do to get things done in this administration, and this is what my shareholders are going to need, so they do it. They don’t want to be singled out and have their head chopped off by Trump.

BERMAN: This era of shareholder supremacy in running companies, this Milton Friedman concept that’s not even 60 years old at this point, really minimizes stakeholders, whether that’s customers and clients, team members, or society and our nation at large. Do you see a path to elevating stakeholder interests in how companies are led? Is there a way back to a world where corporations have responsibilities that are coequal with shareholder responsibilities?

FRESTON: You’re right. We have really pretty much boiled it down to shareholder interests. And it wasn’t that long ago when companies would do these purposeful things, and now they all get derided as, “Oh, this is woke stuff.” I always encouraged these network presidents to come up with causes like Save the Music, building music libraries and instructing kids how to play musical instruments. These are good things. It ties in with our image. And what it did was make everybody in the company feel good. One of the things I do, and I go through this in the book, is I’m the board chair of this thing called ONE Campaign. Part of that is (RED). We would partner with companies making products, and what we would find, dealing with Starbucks and others, is that the employees would feel good knowing the company they work for, that they devote their life to, is doing socially positive things as well as marketing a product in the best way possible. So I hope it comes back. I hope we’re just going through a phase. It would seem to me to be a lost opportunity. I think more people would be doing it if they weren’t fearful that somehow it’s going to be lumped into this woke category that you’re going to be attacked for.

Copy LinkWhat we lose when culture no longer gives us shared moments

BERMAN: Tom, I’m very much the MTV generation. I remember Dire Straits. I remember discovering the Beastie Boys and Biggie, and I remember Remote Control. MTV was such a culture shaper for my generation. We gained a lot in the fragmentation to cable, but we still had sort of a monoculture.

FRESTON: Yeah.

BERMAN: What has the world lost now that we are so hyperfragmented?

FRESTON: Outside of big sports events or, say, the last episode of The Stephen Colbert Show, there aren’t a lot of shared moments. What we used to call in the old days, the watercooler moments, where everybody shows up and says, “Hey, did you see this thing last night on Friends?” Or, “Did you see this Unplugged on MTV with Bob Dylan?” Everybody lives in these silos, and everybody is being served things by algorithms. You do see a bit of rebellion against that now. You start seeing vinyl sales go up. People are buying flip phones instead of smartphones. This may still just be a niche thing, but it does suggest there’s an ache and a great nostalgia for the ’90s, when life was simpler. You weren’t deluged with information followed by an avalanche of more information coming your way. I think the disappearance of MTV and a lot of those linear networks and big broadcast shows, I’m not so sure it’s a positive thing for society.

BERMAN: Well, I really can’t recommend your book, Unplugged, enough. It is not only full of actionable insights and lessons, but the stories are just great. I’m so grateful. If you weren’t going to be my boss at MySpace, at least I got to have you on Masters of Scale.

FRESTON: We got close.

BERMAN: We got close. Thank you so much for being with us.

FRESTON: Anyway, it was a pleasure. I really enjoyed the conversation.

BERMAN: Thanks, Tom.

Thanks again to Tom Freston for joining us. His story is a powerful reminder that truly disruptive companies cannot follow an existing playbook. For more fascinating takes from Tom’s life, be sure to check out his memoir. It’s called Unplugged. We’ll put a link in the show notes. I’m Jeff Berman. Thank you for listening.