Father, Son & Co.

by Thomas J. Watson

  Can you not by looking at our annual Report … convince yourself that we are not doing too bad a job? Can you not take some pride in the fact that the job is being done by T. J. Watson trained men? Can you not find some personal satisfaction and peace of mind in watching this wonderful business enterprise which you have built, grow on to greater heights & move forward on all fronts with a continuing fine profit directed by your team?

  Love to you both,

  Tom

  As I look back, much of this was beside the point, an example of my own desire to have total command. Because on the big issues affecting IBM’s future, Dad already was deferring to me, serving more as mentor than as boss. He had pretty much stopped fighting with me, but it took me a while to notice. He’d gotten over his aversion to debt, for example, and with his permission Williams and I increased IBM’s borrowing at a rate roughly equal to our growth. We ended up owing the Prudential well over a third of a billion dollars, all of which was amply covered by the profits rolling in from new equipment built by our expanded factories. Dad also let me make dramatic improvements in IBM’s pension and benefit plans. The changes were in line with his idea after the war of relieving IBM people of “fear for the care of themselves and their families,” but they went far beyond what he had envisioned. The pensions he’d put in were advanced for their day, but the most any employee could retire on was $3,300 a year, depending solely on the number of years he or she had worked for the company. Under the new, alternative formula, which was more in keeping with the times, we took salary as well as service into account, and a retiree could collect as much as $25,000 a year. IBM also became one of the first companies in America to offer major medical insurance.

  But the concession that surprised me the most was Dad’s letting me persuade him to give stock options for the first time. He was always conservative about anything having to do with IBM’s stock. Although he never owned more than about five percent of IBM—which includes stock he put in family trusts or gave to other family members, as well as his personal holdings—Dad always operated as though the company belonged to him. In earlier years the very mention of selling more stock would sometimes send him into a rage. Dad never issued any options and didn’t believe in them, but he urged IBM employees and everyone else he met to invest in the stock. Some of the men who made sandwiches behind the counter at Halper’s drugstore next door to our headquarters, where I had coffee as a young salesman before the war, ended up with fortunes. But in spite of the dim view he took of options, Dad stopped objecting as soon as I told him they had become accepted practice and that we couldn’t hang on to our best executives without them. The options we gave were liberal, about five times the employee’s salary, so that executives making $70,000 got $350,000 in options that were probably worth seven million dollars eventually. In the first two rounds more than fifty people got them, and each one ended up a wealthy man.

  The only issue we still fought about was antitrust. After the government lawsuit was filed in 1952, IBM spent the last year of Truman’s administration and the first couple of years of Eisenhower’s in negotiations with the Justice Department. I was determined to settle the suit before it went to trial. Periodically our lawyers would have me come to the federal courthouse in Manhattan and sit at a long table with the Justice Department lawyers and the judge. He was a short, raspy voiced man named David Edelstein, only a few years older than I. This was the biggest antitrust case he’d ever had and he was determined to do an exemplary job. But he never had much to say to me, and neither did the prosecutors, and I always thought those meetings accomplished very little. Whether there were legal reasons they couldn’t talk, or whether they just thought I was stupid and not worth their time, I could never tell. I always had the impression that they were more comfortable talking to our lawyers.

  Dad knew we were negotiating, but in some part of his mind he was still adamantly opposed to signing a consent decree. One day he showed up at IBM earlier than usual while I was getting ready to go to the courthouse. He was sitting at his desk, riffling through his mail to see what was interesting and what he had to do in the way of chores, and he must have thought, “Tom! I can see Tom!” So at about nine o’clock the frightful little buzzer he had in my office rang. My appointment downtown was for nine-thirty. But I never ignored that buzzer, so I went up the stairs to his office.

  “Good morning, son!” he said. “Sit down.” I sat down and waited for a minute while he kept reading his mail.

  “Say, Dad, I have an appointment.”

  “What’s that?”

  “I have an appointment. I’ve got to go downtown.”

  “That’s interesting. Why don’t you bring me up to date? What are you going downtown for?”

  “It’s on this antitrust matter. I’m going down to talk to the judge.”

  He instantly went into a rage. “You’re totally incompetent to do that! You have no background! What do you mean, you’re going down to talk to the judge?”

  So I said, “Now, look, Dad. I’ve been talking to the judge every week down there—you’ve known all about it—and we’re going to talk some more today.”

  “Now, young man, I’ve been mixed up in antitrust all my life. I know all about antitrust. I know about those people down at the Justice Department. It’s awfully easy to say the wrong thing down there.”

  I was forty-one years old, but he really bloodied the walls with me. I said, “Dad, I’m going to be ten minutes late if I leave right now. So you either tell me you want me to go, and I’ll leave, or tell me you don’t and I’ll call and cancel.”

  He said, “No, you go. But don’t you make any decisions!”

  There was a car waiting for me downstairs and I went and got in. I was so upset that I was shaking. I got to the courthouse and sat down at that long table. I didn’t say very much to anybody because I was so tense. Then into the back of the room came Dad’s personal secretary. I thought, “Oh, God, Dad’s had a stroke and died.” But the secretary simply passed me a little slip of paper torn out of a “THINK” notebook. It said

  100%

  Confidence

  Appreciation

  Admiration

  Love

  Dad

  It was my father’s way of telling me, “I realize I shouldn’t be throwing you around at your age.”

  The relief was so great that my eyes filled with tears. The judge said, “I take it you’ve had some bad news.”

  “No,” I said, “as a matter of fact, it’s rather good news. It’s just emotional news.”

  Eventually Dad let me persuade him that the prudent thing to do was sign the consent decree. Our lawyers signed on behalf of IBM in January 1956. Settling that case was one of the best moves we ever made, because it cleared the way for IBM to keep expanding at top speed. With Dad the consent decree was always a sore spot and we never discussed it again. But there was no longer any doubt for either of us that I was running the show.

  In retrospect I think Dad may have felt relieved to have our long struggle at an end. I wish I’d noticed it at the time, because it would have made me go easier on him. One thing I kept trying to persuade him to do was ease up on IBM’s liquor ban, even though I knew he’d cared passionately about that issue his whole life. I said, “Dad, we hold these IBM dinners, and the people come half an hour or forty-five minutes ahead of time, and they have to drink orange juice. It’s an awkward time. Maybe we should have white wine during that period.”

  “You can’t temporize with that!” he said. “You start with white wine and the next thing you know …”

  “Look,” I said, “let’s be realistic. What are people doing now? They come to a banquet and one in every ten of them takes a room in the hotel. He puts a nice array of booze up there and everybody goes and fortifies himself before the party. That’s not so great, either.”

  Dad seemed determined not to budge. But the following week there was a large meeting of IBM engineers and scientists in Florida, and both h
e and I were scheduled to go. I’d been traveling and arrived a bit late. When I walked into the banquet hall I thought I detected a slightly louder tone than usual. They showed me to the head table and I was bending over to kiss Dad when I saw that they had wine! In ice buckets, and not just beside his table but all the tables. I got McDowell, the chief of engineering, off to the side and said, “Wally, what in hell is this?”

  “Your father called me twenty minutes before the dinner and said ‘Why don’t we have wine for everybody?’ So I ordered wine.”

  When I made a speech I said, “This is a precedent-breaking dinner.” There was a roar of laughter. But later on I got Dad in his suite and asked him why he had done it.

  He said, “You made such a point about having wine. You’re young, you understand these things, and I’d hate to be an old fuddy-dud. So I changed it!” Of course, he knew that news of that dinner would travel to every corner of IBM instantly, and it was going to take me weeks to put any rhyme or reason back into our liquor policy. I was amazed. It was the first time Dad had shown the mischievous side of his personality in maybe twenty-five years. Now that I was becoming the boss, he was playing a prank by acting like my yes-man.

  Three months later, in May 1956, Dad formally passed the job of chief executive on to me. He made the gesture spontaneously and with a great sense of dignity, which meant a lot to me because it was the first promotion I ever got from him without a fight. After the board voted its approval I went to a bank and bought a stack of five-dollar gold pieces. I handed them out to the directors over lunch, and gave a speech about Dad’s years being the golden years of IBM. Then came a press conference, and the New York Times picture the next morning of Dad and me shaking hands. He made a point of telling the newspapers, “I am not retiring. I simply want to spend more time with IBM World Trade Corporation.” Within a week Dad made a similar move with Dick, promoting him to chief executive of World Trade.

  I somehow had it in my head that Dad would stay around indefinitely, that he’d be by my side as a kind of consultant, just as he had become during the past year. But his health had begun to fail. He’d had an uneasy time that winter in Florida. He couldn’t eat right because of his stomach ulcers. For as long as I could remember, Dad had trouble with his stomach. He was constantly suffering from indigestion and taking bicarbonate of soda. As a boy I used to listen to him let out tremendous belches behind closed doors and then go on about his business. Sometimes he had trouble with bleeding as well, but never any pain. The idea that he had ulcers was intolerable to him, because in his old-fashioned way of looking at things, the only people who got stomach ulcers were people who drank. He forgot that for twenty-five years he’d smoked cigars one after another, and he never accepted the idea that ulcers can be brought on by stress.

  Dad’s doctor was named Arthur Antenucci. He was a great diagnostician whose patients included the Duke of Windsor. After he looked at X rays of Dad’s stomach he told me, “Your father’s stomach looks like the battlefield of the Marne.” The tension of Dad’s career had pretty much pulled him apart inside. Antenucci said that the buildup of scar tissue was so bad that the exit to Dad’s stomach was gradually closing up. That was why he couldn’t eat. A simple operation would have remedied it, but Dad chose not to have it done. He hated the idea of going under the knife as much as he hated the idea of flying in an airplane. He’d never had an operation, not even to fix the painful hernias he’d had for half his life. He just kept putting on his truss every morning and never complained. Antenucci warned Dad that the scar tissue problem could kill him if it turned into a total blockage, and for a while Dad agreed to get his stomach fixed. But then he changed his mind. He and Mother were at the dinner table one night and Dad said, “I don’t think I’m going through with that operation.”

  “But Tom,” she said, “you told Dr. Antenucci you would.”

  “That’s true,” said my father. “But you know, as he was leaving the room, I could just see him sharpening his knives.”

  Without the surgery his digestion began to fail, and my father slowly but surely starved. Over the course of a year he lost twenty or thirty pounds, and by the spring of 1956 he looked very frail. The only thing he’d let Antenucci do was give him blood transfusions. For the last several months of his life, Dad would go down to Roosevelt Hospital about every three weeks and get new blood. It would pep him up for a while, but then he’d hit a period of exhaustion until the next transfusion.

  It’s strange to me that a man as powerful as Dad should have been so superstitious. But he was totally lucid when he decided against surgery, and none of us felt we had a right to intrude. The old man had bursts of amazing vigor right up to the end. I will never forget the last time I saw him before an IBM audience. It was at a sales meeting in Washington that March. There were perhaps five hundred people assembled in a large hotel auditorium. Father got there late. The man running the meeting spotted him in the back of the room and said, “I see that we have the honor of Mr. Watson’s presence. Mr. Watson, won’t you come up and take the floor?” Dad was a wispy old man of eighty-two and he started carefully down the inclined aisle toward the stage. The men jumped to their feet and were clapping and shouting. The more they clapped and the farther he got down the aisle, the more erect he became. He stood up straighter and straighter and walked faster and faster until he finally got to the steps leading up to the stage. He went up them with such a surge of energy that he seemed to take them two at a time. The thrill of salesmen’s accolades was so great that Dad shed about thirty years on the way down that aisle. He grabbed the podium and made a very stirring speech, punching his fist into his hand and telling the men how they must take advantage of the great opportunities before us, and how IBM was going on forever.

  I think that by the time he turned the company over to me, he must have felt the hand of death on his shoulder. Perhaps that was the only thing that could have made him decide to step down. But I also think he willed his death by refusing medical treatment. If Dick and I hadn’t been ready, if he’d still felt IBM depended entirely on him, maybe he’d have risked surgery and survived a few years more. But he could see that I was running the business well, and he could see Dick gaining more and more recognition abroad. I suppose he thought, “It has been a good life. I guess it’s about the time.” Within a month it was obvious that he was going to die. It was a sweltering June in New York, and Dad stayed up at his country house in New Canaan. The 1956 election campaign was on, and he took a lot of pleasure in watching it on television and laughing at the way politicians repeat themselves. He was totally lucid, not in any pain, but he had no strength left because of his inability to eat. He got more blood transfusions, which would briefly perk him up, but then he’d slip back.

  I visited him early in the month before going up to Newport, Rhode Island, to get ready for the Newport-to-Bermuda yacht race. I had a good crew picked out and had my boat all set to go. Dad had been a little ill when I left, but seemed steady enough. The race was to start the next day. But my mother phoned, and I took the call at the end of the dock. She said, “Tom, I just want to tell you, I don’t think you ought to go. I can’t tell you why, because you’re father’s not terribly ill, but you shouldn’t.” I went back to my boat, designated the senior guy as captain, and said, “You take the boat to Bermuda.”

  When I got back to New Canaan, Dad was still perfectly lucid. He said, “Oh, son, that’s too bad, you shouldn’t have to interrupt your race.”

  “I just wanted to be around,” I said.

  My brother and sisters were also at the house. Dad was lying in bed and had each of us in for a long visit. One of us would go in and talk, and then Mother would say, “Why don’t you let him rest a little.” After a time the next would go in. Dad knew he was going to die, but he never said, “This is how I want you to take care of your mother,” or anything like that. Instead he was just renewing his contact with each of his children. I had a long, pleasant conversation with him that s
eemed to cover everything under the sun. He talked about the confidence he had built up in me over the ten years we had worked together, and how he knew that the company was going to move ahead rapidly in the right direction and become much, much bigger. Then somehow we got onto the subject of antique furniture. He said, “If you ever see a piece of furniture you like, buy it, even if you don’t think you can afford it. Because if you don’t buy it, you’ll wish for the rest of your life that you had.”

  Dad had a chance to talk to all of us. But the next day he lost consciousness. It was a Sunday, and we had a doctor come out to the house. He said Dad was suffering from heart failure and got an ambulance to drive him to New York. Meanwhile I called Antenucci, who had a house on Shelter Island. I was piqued at him, because in those days I didn’t understand, as I do now, that many doctors set aside time when they’re going to work—when they’ll go out in the middle of the night or do anything else that’s necessary—and other times when they’re going to rest. Antenucci was in a rest period. He arranged a room for Dad at Roosevelt Hospital and had an assistant greet him at the door, but he didn’t come in until the next day.

  It was too late to operate for the stomach blockage that was causing Dad’s problem. Antenucci told me, “Your father is going to die.” Dad had regained consciousness, but he began drifting in and out of it. We’d go in to see him and sometimes he’d recognize us and sometimes he wouldn’t. I remember his stomach got swollen; you could see it through the sheets. Telegrams and messages began pouring in from all over the world. President Eisenhower tried to call, and when he found out Dad couldn’t talk, he sent a message. It said something like, “You have had a terrific life, but you have many more things to give, so get well soon.” I went in and read it to Dad several times and he seemed to hear it.