Frenemies Page 6

  “I just want to tell you I think I’m in love with you,” she announced.

  They kissed and embraced. She mentioned that she was flying to New York in June to be matron of honor at her friend Randi’s wedding. “I should go to New York with you,” he told her.

  He wasn’t invited, she said. Besides, Randi didn’t know him or even know she was dating him.

  “Tell her you’re bringing someone,” he persisted.

  She dialed Randi. Cupping the phone as it rang, she asked him, “Who do I tell her I’m bringing?”

  “Tell her you’re bringing your fiancé.”

  “Randi,” she blurted, “I have to call you back. I think I just got engaged!”

  They married in December 1974 and moved to New York. He enrolled in NYU law school’s Master of Law (LLM) program in tax law; Ronnie supported them by working various jobs. They went back to Los Angeles in 1976. With his mother orchestrating the search, they tried to buy a house, but lacked the money to get what they wanted, so they rented an apartment. The next day “Michael went out and bought a Porsche, which was a little irresponsible,” Ronnie says. Then his mother discovered a great house in Sherman Oaks, which they were able to purchase with a helpful loan from his cousin, major Disney shareholder Stanley Gold, and from their parents.

  Ronnie might have been exasperated by the Porsche, but by now she understood her husband. “Michael feels that everything will work out all the time,” she says. There is a reason the epigram at the end of each e-mail he sends reads ALL GOOD.

  Michael was doing tax law for a firm; Ronnie was pregnant with the first of their three children. His salary was $1,500 per month, plus a percentage of any new business he brought in. He recruited twelve new clients the first month. “Being a rainmaker was easy for me,” he says. In 1977 he joined another firm, and a year later he and some friends opened their own law offices. Michael was restless. “He always wanted to be in business,” Ronnie says. “I think he felt that through some client somewhere something would happen. And it did.”

  He became counsel to his law firm in 1986 when one of his clients, International Video Entertainment, at the time the largest independent home video company, distributor of such popular fare as G.I. Joe and The Transformers, enticed him to become president and COO. The company was run by Jose Menendez, one of the few individuals Kassan will not volunteer a kind word about. “He was very tough,” he says. “He had a chip on his shoulder the size of Cuba. And he used it always. ‘Good morning’ to him was adversarial.” Kassan helped engineer the sale of the company and left in 1987, two years before Menendez and his wife were famously murdered by their two aggrieved sons. He returned to his law firm, but still yearned to be a businessman.

  Some years before, while attending a children’s birthday party at Harry’s Open Pit, the owner asked if he knew anything about franchise law because he wanted to franchise his rib restaurant. Michael said he did, and told him a first step with a franchise was to hire an accountant to prepare an audited financial statement for the state Division of Corporations. He put him in touch with an accountant, and some months later the accountant called Michael and said he was working with the owner of a Mexican chicken restaurant, El Pollo Loco, who wanted to franchise. Michael became both their lawyer and a believer. “I tasted the chicken in the guy’s garage and said, ‘This is unbelievable.’ It was healthy, nonfried fast food.” He recruited some of his law partners as fellow investors. He went to the American Heart Association and persuaded them, he says, “to put the heart-healthy logo on a fast-food restaurant. It had never been done.” The healthful and delicious Mexican chicken franchise would take off. Over the next fifteen years El Pollo Loco opened forty franchises, and Michael branched out by investing in Rally’s Hamburgers. He also continued as a law partner at his firm.

  But he made a classic business mistake. The chicken franchise expanded too rapidly. “We took the concept to Las Vegas and we got our clock cleaned,” he says. They poured money into Vegas, and soon the business plunged from profit to loss. In California, the vast Hispanic population might eat at El Pollo Loco three times per week; in Vegas, with a relatively minuscule Hispanic population, one visit per month was more common. To shore up the franchises in Vegas and prevent its bankruptcy, Kassan became more engaged. They borrowed more money from the banks, and without seeking board approval transferred monies from El Pollo Loco franchises in California, weakening them. He had shifted monies from healthy California chicken franchises, albeit not to enrich himself, but to fortify cash-starved Las Vegas franchises. On the books, Kassan did not camouflage this act, recording these as loans. Soon the business could not meet the bank loan payments. Kassan drained $150,000 from his own pocket to help make the payments. In January 1994, investor Joel Ladin, one of the four partners in the law firm and the best man at Michael and Ronnie’s wedding, confronted Kassan with evidence of the unauthorized withdrawals. After Kassan admitted that he withdrew the funds, he was terminated. The next month Ladin filed a formal complaint against Kassan to the police, charging him with embezzlement. Kassan quickly repaid the entire $240,000 he had borrowed from the healthy El Pollo Locos, plus interest. “There were nights,” Kassan says, “Ronnie would say to me, ‘I just want to keep the house.’ It was Armageddon.”

  In June 1995, a Superior Court judge found him guilty of “grand theft by embezzlement,” but ruled that his motive in taking the money was not personal greed but a desire to keep El Pollo Loco alive. Kassan won a measure of leniency when he reached an agreement with prosecutors to withdraw a planned not guilty plea. He says he did not know that a guilty plea resulted in automatic legal suspension in California, and he would not have pled guilty if he knew this. He received a suspended sentence, was placed on probation for three years, and ordered to perform five hundred hours of community service. He knew that if he successfully completed the terms of his probation, California law allowed him to change his plea to not guilty, and his felony conviction was reduced to a misdemeanor and eventually expunged. The State Bar of California, however, offered no leniency; he was formally suspended. In June 1996, after completing a year of probation, Kassan’s felony conviction was reduced to a misdemeanor and erased from his record. But the shame continued to haunt him.

  Kassan was despondent. He poured out his hurt to a psychiatrist—four times each week, he says. He was determined to appeal the State Bar ruling, not because he cared to practice law again—he says he did not want to—but because he couldn’t bear the thought of his Jewish mother knowing her son could not practice law. “My mother always said, ‘You need something to fall back on.’” He appealed to the Supreme Court of California, challenging his suspension from the State Bar. “The one and only chance to tell my story was by challenging the California State Bar,” he says. After hearing the case, in April 1999 the state’s highest court ruled in his favor, finding:

  In the matter before us the record is clear that respondent’s primary motivation was to save the various El Pollo Loco operations. . . . In respondent’s case there was no attempt to hide this conduct, and when confronted he immediately acknowledged his actions and made immediate arrangements to make good his theft. . . . We make no effort to minimize the seriousness of respondent’s criminal misconduct. He fraudulently converted a large amount of money to his own use in violation of a most fundamental rule of honesty. Nevertheless, considering the circumstances surrounding the criminal conduct, twenty years of blemish-free practice prior to the misconduct, respondent’s immediate restitution, recognition of wrongdoing and genuine remorse we believe the record demonstrates that disbarment is not required to achieve the goals of attorney discipline.

  A Google search for Michael Kassan finds mention of his felony conviction and near disbarment only if one is willing to scroll through many pages; his Wikipedia profile is silent about it. Understandably, it is something he would prefer not to dwell on, and yet it’s never entirely gone from hi
s thoughts. For much of his adult life since, he says, he has glanced up at the rearview mirror, fearing that he was being chased. His shame has remained dormant, but ever since there have been two Michael Kassans—the cheerful charmer and the sinner. Most see Michael Kassan the successful optimist; few see the self-conscious man fearful that his humiliating past could somehow come back to haunt him.

  Dennis Holt, who had been a law client of Kassan’s, knew of his legal tribulations and in 1994 offered him an outstretched hand. Holt had founded Western International Media in 1970. At a time when agencies sold themselves as one-stop shopping places, offering clients a full range of creative, strategic, and media-buying services, Western successfully unbundled media buying. With thirty-seven offices and a thousand employees, Western became the world’s foremost buyer of local TV, radio, and out-of-home advertising like billboards or supermarket promotions. “He was the equivalent of what Irwin Gotlieb is today,” standing atop the most powerful media agency, Kassan says. “He was the largest independent media agency in the world.” Holt says he chose to ignore Kassan’s prior felony conviction. “I was the one who restored him,” Holt says. The business had outgrown Holt’s managerial style, which was to personally sign every check. “We had gotten so big and did so many different things that I wasn’t having fun anymore,” Holt says. He was determined to hire Kassan. At Nate’n Al’s in Beverly Hills, Holt looked him in the eye and said, “I’m not offering you a job. I’m offering you a life.” He was offering a way to regain his self-confidence, his swagger. Kassan’s prime mission would be to sell Western. Within six months, Kassan succeeded, consummating a sale to the Interpublic Group, then the world’s largest advertising holding company.

  Kassan remained as president of the company for five years. By 1999, he was clashing with Holt, who had stayed on as chairman, as well as with senior executives at the parent company. Asked if Kassan did a good job, Holt did not answer for several seconds, then said “No,” adding, “he did a good job with the process of selling the company.” The clash with IPG became ugly. In August 1999, the firm locked Kassan out of his office and Kassan filed a $63.5 million lawsuit against them, alleging that IPG defamed him by claiming financial misconduct, and also breached his five-year employment contract. Days later the company announced that Kassan was “terminated.” IPG executives won’t discuss the matter. Kassan will only say, “What I am allowed to say is we amicably resolved our differences.” Dennis Holt, who remained with the company until 2000, says, “IPG wanted to fire him many times, but I defended him,” a claim that causes Ronnie Kassan to roll her eyes. IPG was offended by Kassan’s steep expenses, Holt says, including massages and charges on the New York City suite he maintained at the St. Regis hotel. Baloney, says Kassan’s friend Irwin Gotlieb, who first got to know him as a Western competitor. Because Michael was paid a handsome annual bonus from IPG as part of his five-year payout from the sale of Western, his jealous IPG boss “wasn’t the kind of guy who could watch someone else make a lot of money.”

  The lawsuit was settled out of court, with IPG stating that it had conducted an audit and was satisfied there were no irregularities. But for the second time in less than a decade, it wasn’t “ALL GOOD” for Michael Kassan. “He was depressed,” Ronnie Kassan remembers. “We have a very close friend”—now Cerberus Capital Management vice chair, Lenard B. Tessler—“who called Michael every day and said, ‘I’m calling you because I don’t want you to think no one calls you.’ Michael didn’t want to go back to law. He just didn’t know what he wanted to do.”

  Another close friend, prominent attorney Howard Weitzman, who is known in Los Angeles as an attorney for Hollywood celebrities, had participated in the launch of a software digital rights business, Massive Media, and in late 1999 Kassan was recruited. Kassan was enthused about the media and marketing business and intrigued because he saw Massive Media as a vehicle to broaden his expertise. “It gave me exposure to what was happening in the digital sphere,” Kassan says. His task, Weitzman says, was to boost sales and help shape business strategy.

  One of the other partners in the company, former Viacom CEO Frank Biondi, who had never met Kassan before, was impressed by him; Kassan struck him as “a huge personality.” Biondi was shaken when a lawyer friend phoned to say he was representing a potential investor that Kassan had approached, and when the lawyer did his due diligence he discovered that Kassan had been convicted of fraud and almost disbarred. Weitzman assured Biondi that Kassan was of good character. And Biondi says that for the first year Kassan did a good job. “But the firm needed to raise more money, and Michael volunteered to lead the raise. The Internet bubble had begun to burst.” The money dried up. “In the end, Michael was totally unsuccessful in raising funds. In fairness to him, I’m not sure God could have raised money at that point.”

  “He was home a lot,” Ronnie Kassan says, and people would call seeking his advice. “Michael, why don’t you charge them?” she asked him.

  * * *

  ■ ■ ■

  He listened to her. Over the next three years he performed a variety of consulting jobs for companies in the U.S. and Europe, mostly smaller companies asking him to help them strategize and to connect them to other companies.

  Kassan saw a void he could fill. The advertising and marketing world was in turmoil, soon to be disrupted by the Internet and digital upstarts like Google and Yahoo. Clients who paid for and media platforms that sold advertising sought guidance, but couldn’t turn to agencies for neutral advice. Sellers wanted to be introduced to buyers, digital companies to brands. His experience with brands and media companies at Western and with digital companies at Massive Media—plus the insecurities of an industry seeking a life raft, plus his charm and connections and the three years he spent as a consultant—convinced Kassan he could build a unique service company. He and MediaLink would serve as both a connector and a hand-holder.

  He set out to recruit a financial partner to help him quickly scale the business, and thought the Hollywood talent agencies would be a natural fit. “I walked up Wilshire where the talent agencies were located with my hat in my hand,” he recalls. “I didn’t need a job. My consulting business was doing well. But I wanted to do it with a team. The agencies gave me a lot of ‘Ya, ya. No, no.’”

  Undaunted, he launched MediaLink himself in 2003, expanding over time to perform an array of related functions. MediaLink’s purpose, Kassan said, “was to provide adult supervision in the midst of chaos.” His friend Irwin Gotlieb sees a perfect match between a warm, capable personality and a frightened industry. “He knows everybody. My special talent is, you show me a number and I’ll remember it forever. Introduce me to three people, and I will have forgotten their names in five seconds. Michael will remember their names forever. He would be a natural politician.”

  This time, Kassan monitored his appetite, growing MediaLink slowly. The fifth employee, Karl Spangenberg, was not hired until 2007. An experienced ad sales executive with a wide range of media and digital companies, Spangenberg says that when he was a senior marketing executive at AT&T he “hired Kassan and MediaLink to open doors for me.”

  A New York office with a creaky freight elevator and little furniture was opened in 2008. Kassan gained a measure of fame when he was hired by Microsoft in 2008 to galvanize the digital community in opposition to Google making a search deal with Yahoo, and succeeded.

  “When Wenda joined in 2009, the business exploded,” Spangenberg says. Wenda Millard’s résumé displays the laurels of thirty-five years of traditional publishing and digital media jobs, including publisher of Family Circle and group publisher of Adweek, Mediaweek, and Brandweek magazines; chief sales officer for six years at Yahoo when that company was an Internet darling; and chief Internet officer at Ziff Davis Media and executive vice president of DoubleClick. She had also chaired the Interactive Advertising Bureau and was former president of the Advertising Club of New York. Millard and Kassan
had known each other for years. When he approached her she was president and co-CEO of Martha Stewart Living Omnimedia, a company whose mercurial owner could be unsettling. Like Kassan, Millard knew most people in the business. Unlike him, she was fastidiously well organized. She mentioned that she was about to leave as co-CEO of Martha Stewart and was thinking of setting up her own marketing consultancy.

  “Don’t do that,” he exclaimed. “We might end up as competitors. Let’s do this together and have some fun.” He then owned 100 percent of MediaLink, and offered her one-third ownership and the title of president and COO. He gave her the pitch: “MediaLink lives where Madison Avenue meets Silicon Valley, meets Hollywood, meets Wall Street. We live at that nexus.” She was intrigued, though some of her friends were not. One close friend says she told Millard she thought his slickness didn’t mesh with her sincerity, and mentioned a vague recollection of a rumor that some people in the industry whispered: Wasn’t he once convicted of something?

  Millard signed on. Their sail has not always been smooth—they are indeed opposites in many ways, but measured by growth and reach, their partnership has been a success. Together, by the spring of 2017 they supervised 120 or so employees; most work with assigned clients in several divisions. Data & Technology Solutions under managing director Matt Spiegel, a digital entrepreneur who was Omnicom Media Group’s global digital CEO, advises companies on a range of technological solutions they might pursue, from programmatic advertising to AI to cybersecurity. If clients want to meet key people at Google, Kassan will help introduce them. When Unilever, one of MediaLink’s initial clients, was their first client to ask, seven years ago, for a tour of Silicon Valley, Kassan arranged it, including visits with Google, Facebook, and Twitter. “We were keen to understand what was going on,” Unilever’s Keith Weed says. “I’m a great believer in what Woody Allen once said: ‘Eighty percent of success is just showing up.’” Unilever, the world’s second largest advertiser, is today one of Google and Facebook’s biggest advertisers.