Michael Milken invented the junk bond industry and then pleaded guilty to felony charges for violating security laws. He was banned from the business and vilified by the media. But it’s easy to forget that many of the business titans you worship today were funded by him.
Milken financed more than 3,200 companies across a wide swath of industries. He backed Rupert Murdoch, Craig McCaw, John Malone, Bill McGowan, Ron Perelman, Ted Turner, Steven Wynn, T. Boone Pickens and a couple dozen others in the business hall of fame.
In a recent interview which we’ve transcribed for members [HERE], Milken was asked if he had any regrets. I thought the last sentence of his answer was perhaps the greatest “zinger” of all time.
I regret that the American public didn’t understand. Almost every person is high yield junk. When things started coming from Japan in the sixties and seventies, everyone said they were junk. It’s junk. And then all of a sudden, we felt by the eighties the quality of their products and cars was better. Everything coming out of China was junk. The American public didn’t understand they were talking about themselves. 60 million jobs being created by non-investment grade companies in the latter third of the 20th century minus jobs being created by investment grade companies.
Steve Wynn turned the Golden Nugget around in Las Vegas, but the casino was probably only worth $5 million. Wynn wanted to build a casino in Atlantic City, so he met with Michael Milken. Milken was 32 years old, and Wynn was 36. Milken heard the pitch and raised Wynn $120 million. That was the launch of Steve Wynn’s career.
In this short clip, Steve Wynn talks about meeting Milken for the first time.
"I was 36 and he was 32. And from that day, he sat down and said, “Tell me about the gaming industry and tell me about Atlantic City.” He sat and listened, he interrupted a 45 minute monologue with two or three small questions about terminology. And, at the end of that period, a thing began in my life that I can only describe as an education. Michael began to explain what it meant to be at a public company, what it meant to be a person who was in a capital intensive business. And how it was that a person in my position who was young and inexperienced, who had a very narrow strip of knowledge about a certain thing. A gambling hall called, “The Golden Nugget”, with no rooms. How a person like myself could get into a position to have access to the capital markets in America.
It was truly an education. He talked to me man-to-man, like a brother, but in very didactic tones. “Steve, in this business of borrowing money and the bond market, you cannot hit a home run, you can only hit singles. We’re going to make realistic promises and we’re going to keep those promises. And one day, single-by-single, small promise by small promise kept, kept. You will be able to phone in a half a billion or a billion dollars, to people who will learn to trust you.”
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