As chairman of the Seagram liquor company, Edgar Bronfman Jr. was in control of a family fortune. Grandfather Sam Bronfman founded the business in the early part of the twentieth century and took full advantage of every opportunity he found. The result was a Canadian powerhouse who waited out Prohibition before entering the US market. By operating in Canada, Seagrams were fully operational when the ban was lifted and had a huge supply of product for the thirsty Americans. This gave the brand such a head start in the country that they instantly became one of the top sellers in the industry, a position they maintained for decades.
Edgar Bronfman Sr. eventually took over the thriving business and decided to grow it by making blue chip investments. A key one was his purchase of DuPont stock, which was large enough to land Seagrams a 25% stake in the chemical giant. Bronfman Sr. had a taste for the film business as well and produced a few. The most successful of these was a children’s cartoon version of the classic Charlotte’s Web in 1971.
Billionaire heir Edgar Jr. had also been smitten by the entertainment business, specifically the music industry. When he succeeded his father as Seagram’s chairman in 1994, he immediately started looking for record labels to buy. To raise the cash, he convinced the board to sell the family’s extremely profitable stake in DuPont.
Fortune’s Fool reads like a Greek tragedy. The billionaire heir wanted into what he saw as a glamorous and profitable business. The problem was the fact that Wall Street was right about being wary of the music industry. It is incredibly unpredictable. In fact, author Fred Goodman rightly points out that the huge success and ultimate failure of the companies was almost a generational phenomenon. Baby Boomers built it up, and their children took it down.
Born in 1955, Edgar Bronfman Jr. is a card-carrying member of the Baby Boom generation. His work ethic and passion for business are undeniable. But his blinding drive towards becoming a major player in music will forever mark him as a failure. Even as he has grown Warner Music’s market share in the past couple of years, the business itself is almost extinct.
Fortune’s Fool is filled with stories of flamboyant characters such as Ahmet Ertegun, Michael Ovitz, and Lyor Cohen, among many others. And the boardroom intrigues are laid out clearly, making them easy to understand. What emerges is a fascinating tale of good intentions, bad luck, and the affirmation of the corporate maxim “Eat or be eaten.”
It is hard to disagree with the author’s opinion that the Seagram’s family fortune would have been better served if Edgar had been content to be a billionaire playboy rather than company CEO. Still you have to admire the guy for how hard he tried. Once Napster let the genie out of the bottle with file-sharing though, there was no turning back.
Fortune’s Fool details the many mistakes the industry made in trying to respond to the Internet challenge. In the same way that Bill Gates and Microsoft took over the entire computer industry in one fell swoop with Windows, Steve Jobs and Apple have accomplished the same thing in music with iTunes.
It is a remarkable turn of events, and Fortune’s Fool lays out all of the intrigues in a very readable manner. This is a book that I thoroughly enjoyed.
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