The New Business Villains

Four easy steps to the bottom.

Bernie Ebbers, Ken Lay, and Dennis Kozlowski

No longer content with creating the world anew, as they were credited with doing in the 1990s, CEOs are now hell-bent on destroying it. They’re busy breaking accounting rules, bankrupting companies, and wiping out 401ks in a single bound. An SEC investigation promises to be to this decade what a Web site was to the mid-’90s: Without one you’re a nobody, hopelessly behind the curve. How can you, the aspiring business villain, get on top of this hot business trend? Follow these simple guidelines:

1. Start with humble origins. True villains are made, not born. Rising from modest beginnings will allow the press to use your biography to turn the classic Horatio Alger tale on its head. Rather than a wish-fulfillment fantasy, your story becomes a cautionary tale about the dangers of striking it rich. Here’s how the pros did it: Ken Lay is now the alpha male of business villainy, the deposed CEO whom all the other scoundrels can only aspire to be. But he started unexceptionally in rural Missouri as the son of a feed store owner. The nation’s current It Villain, Tyco’s Dennis Kozlowski, was the son of a Newark, N.J., police detective. Global Crossing’s Gary Winnick grew up in Roslyn, N.Y., where his father worked in food services. Adelphia’s John Rigas is the son of Greek immigrants.

But humble birth isn’t enough. If possible, your first job (or more) should be uninspiring, too. It will become your Homeric epithet. WorldCom’s Bernie Ebbers was the master of this. Business reporters had a host of choices: “teen-age milkman,” “former bar bouncer,” “onetime high-school basketball coach,” “former motel-chain operator.” But others aren’t far behind. A Kozlowski story isn’t complete without mentioning that he played guitar in a wedding band to pay his way through college at Seton Hall. Winnick started out in the unglamorous position of junk-bond salesman, and Dynegy’s Chuck Watson began his career as a Conoco trainee in Ponca City, Okla.

2. Embrace a dramatic, world-transforming vision. This will enable your fast rise to the top, preferably including a Forbes cover story (Winnick: Dec. 24, 2001; Kozlowski: Oct. 16, 2000; Watson: April 19, 1999). And in hindsight, the hubris will foreshadow your fall from grace (though no one will predict it at the time).

Kozlowski told Business Week that he envisioned Tyco as “the next General Electric” and that he hoped to be remembered as “some combination of what Jack Welch put together at GE … and Warren Buffett’s very practical ideas on how you go about creating return for shareholders.” Bernie Ebbers’ plan to compete with AT&T in long distance was legendarily drawn up on a napkin during a 1983 meeting at a Mississippi Days Inn. Just as famously, he later declared that WorldCom’s goal was “not to capture market share or be global. … Our goal is to be the No. 1 stock on Wall Street.” Lay preached the gospel of natural-gas deregulation, fundamentally altering world energy markets. So did Dynegy’s Watson. And Winnick’s “one little idea” was to lay fiber-optic cable underneath the Atlantic Ocean, thereby transforming the telecommunications industry.

3. Live as lavishly as possible. Buying lots of toys will make reporters on meager incomes seethe, ensuring that they mention your decadence as a symbol of how you forgot your lowly roots once you reached the top. The role model here is Global Crossing’s Winnick, whose $60 million residence in Bel Air is supposed to be the most expensive single-family home ever purchased in the Unites States. If you can’t meet that standard, buy a yacht (Kozlowski, Ebbers), some portion of a major- or minor-league sports franchise (Ebbers, Watson, Kozlowski, Rigas), or slap your company’s name on a stadium (Lay, Rigas).

If you’re not profligate enough, you may end up like Bernie Ebbers, who lived modestly for a CEO and about whom the Wall Street Journal told this unintentionally symbolic anecdote: “He wears cowboy boots and spends as much as 16 hours each weekend driving a tractor on his brother’s cattle ranch, where it isn’t beneath him to occasionally castrate a bull.” And how!

4. Exhibit a tragic flaw. Though traditional Greek hubris will play a role in your demise, so will a fatal Shakespearean flaw that shows how your rise was inextricable from your fall. Kozlowski, who moved Tyco’s HQ to Bermuda, was renowned for his aversion to taxes—and his resignation was followed by allegations that he illegally avoided sales taxes for his big-ticket art purchases.In a story headlined “Dennis the Menace,” Time turned a classic anecdote about Kozlowski’s thrift into a foreboding omen of greed: “At one of his first restaurant jobs, the staff pooled tips, which didn’t seem fair to a hard worker like him. Within a month, he had moved to another restaurant, where he got to keep every cent he earned.” A colleague observes, “There seems to have been a fanaticism about getting every last nickel. That was his Achilles’ heel.”

Bernie Ebbers’ penny-pinching, which boosted WorldCom’s stock during the boom years, also banished him to failure in the eyes of the business press, becoming a sign that he was a small-minded leader. Business Week reported in May that in March he unveiled “Bernie’s seven points of light” for saving the company. The plan was Carter-esque: He wanted senior executives to count coffee bags to ensure that workers weren’t stealing, to turn their thermostats up, and “to stop watering WorldCom’s plants and let them die to save money.” What Wall Street applauded during Ebbers’ rise, it now jeers.

Gary Winnick, by contrast, was doomed by his extravagance, which “set the tone for what several former employees say was undisciplined and reckless spending at Global Crossing,” according to the New York Times. And you might have thought that illegal accounting shell games doomed Enron and Kenneth Lay, but not according to the April 26 Wall Street Journal: “The same attributes that underpinned Mr. Lay’s success—tireless ambition, stubborn optimism, and sometimes easy trust—helped bring about his downfall.”

Within this template for success as a business villain, there’s room for variety. Should you sell your stock while your company is on the way down? Most experts say yes. This is yet another mistake made by Ebbers, who stubbornly held onto his WorldCom shares. Does this make him a hero? No, only a stupid villain in the eyes of one WorldCom executive, who told Time, “Tying up so much of your financial life in one single investment like that was really dumb.”

No matter what path you choose, if you’re looking to make it big as the next villain, you’d better hurry. In its July issue, Vanity Fair takes aim at AOL Time Warner’s Jerry Levin. True, he stepped down months ago, but he’s also avoided all blame for the stock’s nose-dive. He cashed out $153 million in stock options in 2000, and after the merger, his fanatical mastery of detail turned into a flaw—he lacked a broader vision. One AOL insider tells the magazine, “Levin spent all his time tinkering with the controls in the engine when he should have been up on deck watching out for icebergs.” All of that adds up to Levin as the early favorite for the next evil CEO. But there will no doubt be plenty of competition.