Putting all your eggs in one basket is rarely a wise thing to do, but for the Forbes family the decision to buy Faberge eggs turned out to be an inspired one.
The funds from the timely sale of the Russian Imperial treasures helped the family turn around its print media company and build a formidable new online brand as well, says vice-chairman Christopher Forbes.
The timing of the family’s decision, coinciding with the beginning of the dot-com bust a dozen years ago, surprised many, admits the grandson of founder B.C. Forbes.
“We had a wonderful collection of Faberge eggs, so when the time came in 2001 when the world fell off the cliff, we had a choice to make: whether we keep these lovely eggs or invest in the dot-com business — and in those days it was still hemorrhaging money — so we decided to switch eggs for dot-com. We kept investing while the others didn’t, and that’s why Forbes.com is bigger than the others,” the man known to his friends as “Kip” said in a recent chat with Asia Focus.
The investments paid off because at one point Forbes.com was bigger than its main online rivals from Fortune, the Wall Street Journal and BusinessWeek combined.
The man telling the story cheerfully admits to being “technologically challenged”, and what’s more, he’s from the third generation, typically the one responsible for the decline and fall of many a family business empire.
“Shirtsleeve to shirtsleeve in three generations is what is usually expected,” he admitted, adding that none of the five Forbes siblings foresaw the rapidity and breadth of the changes the internet was about to unleash. For a media empire built on print, the consequences were potentially dire.
“This was taking place in our generation and one would have to be thankful that we were not a daily or a weekly, which are news-dependent. Having started as a fortnightly, Forbes had to offer insight, as my grandfather used to put it,” he said
Although its quality content was not under attack from the new technology, the company had to adapt to the changing world and it hired professionals to help make the changes. The magazine’s editor convinced the family that one cannot just put a biweekly magazine online and expect people to follow it.
The internet, says Mr Forbes, is an instantaneous medium and one has to create a product that is going to serve the needs of the audience at the same time.
The original change was a slow and painful process, which included a reduction in the workforce at the Fifth Avenue office in New York to 400 from more than 700.
But the belief that online was the way forward, despite the collapse of the dot-com industry in 2001, was a brave move that has paid off for Forbes Inc. Today about 55% of the company’s revenues in the United States are derived from the website, a huge shift from a 100% print-reliant business.
Globally, the company has yet to see similarly big numbers online because many of its local publications, such as the recently launched Forbes Thailand, are in vernacular languages and internet access in some of these markets is low.
The Thai-language edition, launched with Post International Media Co Ltd, an affiliate of Post Publishing Plc, joins other Forbes titles in China, India and Indonesia as well as Forbes Asia. The operations are managed in a streamlined process in which stories in local languages are translated into English, rather than simply reusing material from the English publication and translating it into local languages.
THE NEXT GENERATION
All this expansion is helping the company expand its readership at a time when advertising revenues from the print side have “fallen off the face of the earth”, as Mr Forbes puts it.
The shift to the internet was a tactical move necessary to tap the younger generation of readers.
He chuckles at the mention of the venerable publication in a popular rap song by Travie McCoy: “I wanna be a billionaire so xxxxing bad, I wanna be on the cover of Forbes magazine.”
“I’m not giving the full context of the song but it shows how we transcend the various generations,” he said. But digital access has definitely helped Forbes tap a younger audience, perhaps not as young as Michael Dell, who reportedly picked up his first Forbes magazine when he was 11 years old. He has since become a billionaire and a Forbes cover subject.
“Yes, the electronic medium has helped us to tap into audience that we would have had difficulty picking up from print products,” he said.
The working style of Forbes has also been very different ever since his brother Steve Forbes, who is the chairman and editor-in-chief, returned to the company fold.
“We actually had to buy out his company to bring him into the group,” Christopher Forbes said while admitting that his brother was the smartest of the siblings when it came to media.
“He’s probably the best, and he has adapted the best [practices] to the changing environment, and even the likes of the [Wall Street] Journal had invited him to go and speak at their event.”
The Steve Forbes approach in the newsroom is to allow editors to manage talent, and to stress that everybody is writing for the Forbes brand, not the magazine, not the internet, or any other particular platform. Remuneration is based to some extent on reader response: if everybody is clamouring to read a story, then the writer of that story will receive more money as more advertising would be attracted to that story.
“He calls it entrepreneurial journalism,” said Christopher Forbes.
The aim, he says, is to “get the eyeballs” of the readers and once they are there, Forbes as a company know how to monetise that. It has been successful on PCs and tablets and now the company is ready to raise its game on smartphones.
“Now there’s a new Forbes app which, according to my brother, is a ‘killer app’. I wouldn’t know that because I’m technologically challenged and I wouldn’t know it even if I fell over it,” he admits.
So where is the future for the group?
In 10 years from now, Christopher Forbes says he wants to maintain the print edition of the company although he himself is not certain to what degree it will be relevant at that point.
“An analogy that I can make is that if you go to an Hermes boutique they still invariably have a saddle, as they have not forgotten how they started out. Now, I’m not sure how relevant the saddle is these days to the bottom line for them, although when the Sultan of Brunei orders it for the cavalry every few years it may be making a blip to the bottom line,” he joked.
“Print may be more relevant to Forbes than the saddle is to Hermes, but the Forbes brand is going to be like Hermes, which is a strong brand regardless of the changes.”
‘CAPITALIST TOOL’
Back in during Cold War era, when “Capitalist Tool” was a term of derision used by Russian and Chinese Communists, the late Malcolm Forbes liked the phrase so much that he built an entire marketing campaign around it for his magazine. He saw nothing wrong with celebrating money as well as the people who make it, including those who appear on its most popular annual feature, the Billionaires’ List.
Malcolm Forbes’ son acknowledges the popularity of the list but admits that it can never be totally accurate because the compilation process is extremely difficult.
“There are questions about accuracy and is it totally accurate? The answer is no, but it is more accurate than any other list that is compiled. Is it perfect? No. Have people slipped under the radar? Yes,” he says.
He recalls a dinner he had with four people in Singapore last year, when he was surprised to hear from the three billionaires there that the fourth person at the table was richer than all the others.
“Now he’s ‘out’ and he’s on the list. Eventually we get it right.”
Mr Forbes, 62, declines to say where his family’s fortunes are on the list, saying only that he wished the media business was as profitable as some people think it is.
But the globe-trotting vice-chairman says his own job gives him the opportunity to meet a lot of people across the world.
“It is a wonderful position to be in (vice-chairman) because nobody knows what you do and therefore no one can blame you, but as long as my siblings confuse motion (travelling) with productivity, they will continue to think I’m productive,” he says with a hearty laugh.
Out of the five siblings, his sister runs a charity but the four brothers are all involved in the Forbes business.
FASCINATION WITH ARTIFACTS
Mr Forbes, who studied art, admits that he has had a great run from his and his father’s fascination with artifacts, be they Faberge eggs, Victorian paintings or expensive wines.
The Faberge eggs helped the family invest in a new business line at a time when print was just about to enter its intensive-care unit, while his paintings have seen a good returns.
“The RoI (return on investment) on the eggs and the Victorian paintings has been very satisfactory. My favourite story is of a Victorian painting that I bought when I started as an undergraduate student at Princeton,” he recalled.
“The painting was by a man named Frank Dicksee and was called “Chivalry”. It cost me $850 in 1972 and when it was hammered down in 2002 it went for just over half a million pounds.”
Quoting Warren Buffet he said: “If you buy what you know, then you will do all right.”
Asked if he was as good an investor in the capital markets, he admitted that he was not.
“I don’t invest in the other markets such as equity as I call myself an ‘equity market idiot’. My holdings are entirely in Forbes and a biotech company that my son-in-law started, which is going through some clinical trials and hope it will pay for my grandchildren’s future,” he said.
But the self-confessed Faberge egg and Victorian painting expert has had his fair share of humiliation as well.
Mr Forbes continues to remain in the record books for paying a record $156,450 in 1985 for a bottle of wine that eventually turned out to be a fake.
“The most notorious purchase I ever made was for a wine which continues to be listed as the most expensive wine ever purchased. I did it because I was told to do it. It was a buy bid,” he said.
“My father used to drive all of us crazy and if he could not go to a sale he would tell us to ‘buy’ something, and you were dammed if you bought it and you were dammed if you didn’t buy it.”
The notorious bottle was one such case whereby a ‘buy’ bid was given because the seller claimed the wine had belonged to Thomas Jefferson, one of the founding fathers of the modern United States.
Five years prior to the wine purchase, Christopher Forbes recalls having been shouted at by his father for not buying the original deceleration of war by Italian dictator Benito Mussolini, which he had anticipated would go for a maximum of 6,000 pounds but went for 100,000 pounds instead.
His brother Steve, meanwhile, earned their father’s wrath for spending too much acquiring the famous Mason & Dixon survey done in the 1760s, which became the basis for the line dividing the northern and southern United States in the Civil war era.
“So when it came to the bottle of wine, he loved the Jefferson association and he was furious when we purchased this and he was shouting on the phone,” he said.
As it turns out, there were other investors who were taken in, as documented in the book Billionaire’s Vinegar.
“Absolutely, I would go and buy it again if I had to turn back time. I am a good son and do what I’m told, almost,” says Mr Forbes.
Mr Forbes, who earned his first salary as the curator of the magazine’s art collection, which helped him pay for the tuition in college, says the family bonds remain strong even as the third generation prepares to make way for the fourth.
What is the trade secret?
“We don’t always agree but when we do that we do it behind the scenes. We show a unified front when it comes to running the business,” he says.
But getting along was something that the family was raised with, and he credits his father, who would make all the children learn to play the bagpipes and wear kilts to church every Sunday and take annual trips together.
“We used to drive to Wyoming every summer, packing five children, two dogs, a nanny and your parents in one car, and if you do that enough then you can do anything together,” he says.
This family vacation continues to this day, and now the fourth and fifth generations are travelling annually to build that special Forbes bond.