Strauss Zelnick: Media Mogul, Turnaround Artist, Fitness Buff

Thanks. Thanks for having me.

Well, the structure of our enterprise at ZMC is that we're a private equity firm. We take control positions in digitally focused media and communications companies and Take-Two is part of the ZMC portfolio. While it's a public company, it's externally managed by ZMC and specifically, I'm the chairman and CEO and Karl Slatoff, who's a partner at ZMC, is the president. So while it's a relatively unusual structure, believe it or not, there are about 20 public companies in the US that are managed in this way, excluding REITs, which are often managed in this way. So while it may appear that I'm wearing two hats, I'm really wearing one hat. There's no doubt that because Take-Two is our biggest enterprise and a public company that I devote a lot of time to my role here. But it fits very well, almost neatly, with what ZMC does.

No. My parents actually had almost no expectations. Their attitude was do what you want to do and be excellent at it. And they actually meant that. So some people, that's code for become a doctor and a really good doctor and then we'll talk. My family really meant it. At one point, for example, I was thinking seriously of becoming a writer and my dad encouraged me to take a year off between college and whatever the real world would bring in order to pursue writing, which I didn't do. So I think, like many people who are ambitious, I was sort of born that way and I was always interested in entertainment, I was always interested in creative businesses and I was always interested in enterprise. So those things naturally led in this direction particularly because I didn't have any creative talent myself. Had I had some creative talent, I probably would have been on the performing side like many entertainment executives. But I found out reasonably early on that I didn't have any.

There you go.

I was really young. It was, believe it or not, so young that I think I read an old article where I said I was three years old. That seems unusually young. But, you know, really early I decided I wanted to be in the movie business. And it's not like we had any family connection to the business. We did not. My father's a lawyer. And it's not like we lived in Los Angeles. We lived in Newton, Massachusetts at that time. So, it's not clear where the ambition came from, but I was always fascinated by motion pictures, television, music, and books.

I mean, I'd love to say that I was an incredible outlier, I suppose, but it's not really true in the entertainment business. Young people often get big opportunities early on in their careers. In my case, I graduated from grad school in 1983 and went to Columbia Pictures International Television and I was responsible for distributing, overseeing the distribution of all of Columbia Pictures motion picture and television library and new production in international markets. And I did well doing that. I was able to develop the first computer system that tracked rights exploitation effectively. I created this with the help obviously of our IT folks at the time. I created a system that would manage rights and then would automatically show our salespeople in the field what was available for sale. And previously they'd been using a manual method that was imperfect at best. So by having a computer printout, and it was a printout in those days, it wasn't online, of everything that was available say in France on January 1st, they were able to be much more effective in selling the rights and we were able to see a very significant increase in our revenues very quickly and my boss was rewarded for that and I in turn was as well. And I became the youngest vice president of Columbia Pictures. And that led to my being recruited at what was then the largest independent home entertainment company, Vestron. And I was brought in as senior vice president of corporate development, a job I had no particular interest in, but I had a reason. I'd been led to believe by the chairman that there may be some management opportunities. And nine months after joining when I was 30 years old, I was named president and chief operating officer of Vestron, which by then was the largest independent movie company and a public company. The first picture that I greenlit became the highest grossing independent film of all time, Dirty Dancing. So obviously, it's better to be lucky than smart.

There we go. Many people's favorite movie. That job where I made a whole lot of independent pictures put me in touch with a lot of people. I developed a number of relationships. And when Joe Roth became chairman of 20th Century Fox, he was looking for a president who would run the business side of the equation and the distribution side of the equation. And we had known one another. Joe had produced a couple movies for us at Vestron. And he hired me along with Barry Diller, Rupert Murdoch. So that's how I got that job.

Well, a lot of, I mean, my observation is a whole lot of people are a whole lot more successful than I. So, I see it somewhat differently, but it's a flattering question. I think the answer is sure. I got lucky in many numerous occasions where opportunities presented themselves or people took a chance on me and I more often than not I think I did a pretty good job when I was put in that position. I definitely was not more ambitious than many people, certainly not smarter and you're right a lot of Harvard Business School graduates, 700 people a year. So does Harvard Law School. I think it was a combination of very much knowing what I want, many people do not, being willing to take risks that most people with my education don't. I turned down McKinsey and Goldman Sachs to go to Columbia Pictures in sales. Having the word sales in your title coming out of the JD/MBA program was really shocking to people. And to me, I knew that if I wanted to run a movie studio, I was much more likely to get there by going to work at Columbia Pictures, even in sales, than I was if I went to Goldman or McKinsey, even though they paid a lot more and they were much more prestigious. So, I definitely made choices that were maybe non-obvious and certainly riskier than my peers. There weren't a lot of people coming out of grad school in those days who were really excited about going into the entertainment business. It's a bit more typical today. And so I was somewhat unusual in those days. There was a whole cohort of HBS guys who went into the business around that time who did well. Chase Carey obviously done phenomenally well. Tom McGrath and then some folks who didn't stay in the business but who were incredibly talented like Ron Beck who went on to build a financial services company. But so I certainly wasn't the only one and those guys did well too.

I'd always wanted to run a movie studio. I didn't expect it to happen as quickly as it did. And so by the time the opportunity to move to Crystal Dynamics came up, I'd been running motion picture companies for almost 7 years. I'd been responsible for over 150 pictures. Been fortunate. I had a lot of hits and our track record at Fox was great. Equally, I was mindful that the asset class is a pretty tough asset class. And my view is that the career of an individual can only be as good as the enterprise is. In other words, your career can't be better than the quality of the business for which you work. That's not going to happen. And I did want to build something. And I was concerned that if I stayed in the motion picture business, eventually where that would take my career was to my becoming an independent producer, which is what happens to former studio executives typically. And that wasn't appealing to me at all. So I think while I always knew what I wanted, when I achieved at least somewhat the goal that I had set out to achieve, I revised that goal to say, you know what, I think I'd really like to do is run a diversified media company and have equity in it. How do I do that? I think I need to start building my entrepreneurial experience and I need to expose myself to other asset classes within media and communications and entertainment. And video games were nascent at the time. And I convinced myself that the quality of the business model for video games was going to be like that in the motion picture business in its early days, which was a much better business model. And I wasn't entirely wrong about that. It was about right. In fact, it did turn out to be a huge growth business. Crystal Dynamics was successful, not the most successful video game business. I left after just a couple years. And ultimately was sold to Eidos successfully. That was my first exposure both to entrepreneurship and to the video game business. And while it seemed not obvious and certainly was very risky, I took a 95% pay cut to do it, it was exciting and it was my first taste of being my own boss.