This week we offer up another edition of Frank Thoughts.  In this edition, Frank reflects back to a round a golf he played back in 1966 and the lesson he learned that day: the importace of luck in business.
 

THE RICHEST MAN IN THE CLUB

The put put put sound of a gas powered golf cart was getting closer to me.  It was the spring of 1966 and I was hitting golf balls on the practice range.  The noisy cart finally pulled up to within a few feet of me.  “Hi,” said a man somewhere in his 60’s.  “I’m Lloyd Coffin.  Want to go out and play a round?”  As a new and young member I felt it more a command than a question.  But I responded, “Sure.  I’m Frank Boland.   I’ll meet you on the first tee in about ten minutes.”  And so it was done.

For four holes he said nothing but, “Nice shot.”  But then on the fifth tee, after we had hit our drives, he stopped before getting into his golf cart and turning towards me asked, “What do you do for a living?” “I’m in the investment business,” I replied. “Oh,” he said shaking his head.  “It’s been a tough market this year.   Well, I’m so rich it doesn’t matter what the stock market does.”  It wasn’t said with the slightest bravo.  It was simply stated as fact.   I didn’t know how to respond, so I said nothing.  After the round we sat and had drinks in the 19^th hole.  Mr. Coffin then got up, shook my hand, and headed for the door.  As the door closed another member rushed up to me.  “Do you know who that man is?” he asked, gesturing towards the door.  “Lloyd Coffin,” I answered.  “Well, he’s the richest man in the club!  He doesn’t play golf with any of us” said the member.

For the second time that afternoon I didn’t know what to say so, again, I said nothing.  It would be ten more years before I knew the source and extent of his wealth.  Mr. Coffin and his brother Bruce owned 25% of the television network CBS.  They were the largest stock holders in the company!  Their holdings exceeded over $250,000,000.  This in 1966!  And it was all an accident.  It would prove to be my first business lesson … the role of luck in achieving great wealth.

The Coffins had owned a business called Hytron Radio and Electronics.  In 1951, 15 years before I was to meet him, Lloyd sold his business to CBS for $17.7 million in stock.  William Paley, the head of CBS, wanted desperately to transition CBS, then a radio network, into the new world of television.  Television hadn’t yet been reflected in CBS’ stock.  Hytron had evolved from a manufacturer of vacuum tube radios into the new business of making television sets.  From Paley’s point of view you simply couldn’t grow a television network if people didn’t have televisions.  It was analogous to the razor/ razor blade business.  Give the customer the razor and collect forever on the blades.  So a deal was struck.

Unfortunately, for William Paley, the transistor was invented a year later.  When Paley questioned Hytron he was told, “the transistor is a toy … It will never beat the vacuum tube!”  Shortly thereafter the business was totally worthless.  But the Coffins were to become immensely rich.

FRANCIS PATRICK BOLAND

5-15-10