Chuck Feeney: All duty

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1:20Welcome to Good Bad Billionaire, the podcast from BBC Sounds where we unravel the story of how a billionaire got so rich. And then we judge them. Are they good? Are they bad? Or just another billionaire? I'm Zing Singh and I am a journalist, author and podcaster. And I'm Simon Jack. I'm the BBC's business editor. And neither of us are billionaires. Just to make it absolutely clear. But we are interested in billionaires. Why do you find them fascinating, Simon? Because money gets you power and that power is largely unaccountable. And that's kind of an interesting position to be in. Exactly. But they could use their power for good, which is exactly what we're going to talk about in today's episode.

2:04OK, this week's billionaire is a guy called Charles Chuck Feeney, an Irish-American born in the 1930s. Now, a lot of the billionaires we cover in this series are pretty well-known household names. But this one was completely unknown to me and one of the most fascinating stories of all the ones we've looked at. Yeah, I have to say I had never heard of Chuck Feeney either. But the more I read about him and the more I researched him, the more I kind of think he's one of the more fascinating characters on our list, right? Definitely. I mean, you won't know his name. I didn't know his name. But you'll be very aware of the empire that he created.

2:40Every time you come out of an airport and you see this glittering palace to consumerism, then you get bombarded by pictures of film stars and their perfume of choice and whiskey offers and cigarettes. Toblerones. Toblerones. What is it with Toblerones and duty free? Anyway, that's what we're talking about. Duty free. He kind of is the godfather of duty free shopping.

3:07So to try and get to grips with who exactly Chuck Feeney is, we're going to throw some numbers at you. So he made$8 billion, but he also donated$8 billion. Yeah, so he was described as the billionaire who wasn't. As fast as he made money, he gave it away. In fact, he gave away$1.5 billion in donations to Ireland alone, to a single country. Don't forget, He's Irish-American, so that's a link. Yeah, and basically helped build 1 ,000 buildings across five continents. And in 2023, when his remaining personal net worth is less than$2 million, he's aiming for it to be zero by the time he dies. I've got a feeling when we come to score him on philanthropy, it's going to be pretty high.

3:51Even though he was a billionaire, he wears a$15 Casio watch and lives in a two-bed rental in San Francisco, a rental. He doesn't even own a house. And he said he'd quite as happily eat a cheese and tomato sandwich as dining in a fancy restaurant. So among the pantheon of billionaires, he's kind of an oddball, to say the least. Definitely an outlier and fascinating case.

4:18So let's tell the story of how he went from a zero to a million, the Chuck Feeney story from childhood. He's born during the Great Depression in 1931 into a very working class Irish-American neighbourhood where everyone seems like they helped each other out. Yeah, his parents had this great work ethic, selflessness. His mum would give people a ride when they needed it and pretended that she was going that way anyway. So an early influence that would be reflected in his later life. And he kind of shows these glimmerings of youthful entrepreneurialism quite early on. So he takes off selling Christmas cards and caddying at the golf club.

4:55So like a lot of the other billionaires, you know, he's got an early interest in making money. Yeah, we've seen that. He also did snow shoveling in the winter. So he would go and basically, I'm going to shovel your snow and then go and get the biggest guy in the class to help him shovel the snow. He managed to attract other people to do the work for him. So that's always quite an entrepreneurial trait. Classic hustler. So Chuck Feeney's childhood actually spans this really interesting point in time, right? So he's born into the Great Depression. Then afterwards, there's the New Deal. You know, there's World War II.

5:24He basically has to live through all these tumultuous times. What do you think that does to a person? I think it means that you are not particularly rooted anywhere because there's such flux. The flow of history, you can feel it going through his story. There's the great questions you say, Franklin D. Roosevelt's New Deal to try and sort that out. You then go into the Second World War. what happens in Japan, what happens in the US. He's basically a kind of, I don't know, like a Forrest Gump of post-war America. He really is. And he even served in the US Air Force. So it actually played a pretty big part in his life.

6:03It brought him travel, it brought him education. At 17, he joins up as a radio operator during the Korean War. And he ends up going to Cornell because he goes on a military scholarship. That's right. People who served in the war were eligible to basically continue their education and would get a grant to do it. And he was smart enough to go to an Ivy League university, used his GI scholarship to do that. And that propelled him into an entirely different life than the one he was used to from his Irish-American background. And it sounds like even there he was still displaying that real kind of hustler streak.

6:36So he became known as the sandwich guy on campus because he realised there wasn't a McDonald's or an equivalent kind of place people could get late night food. So he ended up setting up his own business to sell sandwiches to hungry freshmen. So he's, you know, he's still continuing to illustrate a flair for making money. Yeah, he's got that entrepreneurism. And also he, I think that thing about that in that war period, he's also quite an internationalist. I mean, he used the scholarship money he had left and probably from his sandwich proceeds. He left to do political science at the University of Grenoble in France.

7:11So he's a jet setter, this guy. And that's going to be absolutely pivotal as to how he makes his fortune and then gives it away. And he's pretty cosmopolitan as well. I mean, he learns French and later on we'll see he'll also learn Japanese. Yeah. And Japan, actually, for my money, the emergence of post-war Japan is probably the pivotal fact in this whole story. But before we get there, he has to meet someone called Roger Miller in France, who becomes his business partner. And that's where they come up with the idea of selling duty free items to US Navy personnel. But before all that, I think we need an explanation of what exactly duty free is, because I'm so used to seeing it in airports, I've never really stopped to question myself on what that term even means.

7:53It's a weird one because duty-free operates in this kind of weird zone, this netherworld, which is sort of between countries where taxes of the country that the actual store is in or where you're going, you're not in either place really. And therefore consumption taxes, things like, you know, tobacco tax, VAT that we're very used to, all of those things that would apply in that country don't apply there because you're kind of between countries and not really in one at all. Is that what an airport really is considered, you know, a zone in between countries? You're basically considered to be in transit.

8:28So you're kind of in outer space in a way. You're basically not in one country and not in another, which means the taxes for the country you're going to don't apply and the taxes the one you're leaving don't apply, which means that stuff is cheaper because those consumption taxes are not added to the cost of the item you're buying. And most importantly for Chuck Feeney's story, that same rule also applies to US Navy personnel, which is why he and Miller started this business selling duty-free items to them. That's right. So they were allowed, US service people serving abroad, were allowed to bring a certain amount of booze, cigarettes, etc.

9:01back to the US without paying the taxes they would otherwise pay on it. Having served in the army himself, he knew the mind of the GI, the US service person, knew the kind of things that they wanted. And also in a post-war world, there were lots of US people living abroad, both in Japan, in Germany and elsewhere. So there was this kind of community of people coming in and out of countries. So there's a lot of travel involved in that. And that's where that kind of little gap in the market, the duty free, when you're between countries, that's where it opened up. And it's kind of crazy because, you know, at this period in Feeney's life, him and Miller are literally just talking their way onto military vessels, chatting up all these soldiers, kind of finding out what they want, what they could get for them, how much they could sell it for.

9:48there's a real kind of catch me if you can vibe to this era in his life you can just kind of imagine himself being played by george clooney or leo dicaprio you know this charming fast-talking irish american young buck who goes around selling stuff yeah a real salesman yeah like yeah you want this i can get you this i can get you that we've got a great deal on this a very glamorous arthur daly maybe for the for british listeners but crucially at this point they start expanding beyond just tobacco and alcohol and they expand into duty-free concessions and this is where we see the real roots of DFS being planted right they buy these concessions in Hong Kong and Honolulu in Hawaii and they turn them from just kind of market stores of counters held together with tape into actual shops and concept stores yeah and they started out with things like liquor alcohol but then they realized if we can do that cheaply why don't we do perfume and if you look at the duty-free stores today.

10:44It's absolutely ranks of perfume. So those kind of luxury goods. So yes, by 1964, their company, which at that time was called Tourist International, is in 27 countries, have 200 employees. So a pretty substantial business. Yeah. I mean, we're talking a multinational company at a time when the world is literally just opening up for international travel, which when you think about it, is pretty wild. Yeah, but it wasn't plain sailing. In fact, the wheels came off that business in quite a big way. Yeah, in quite a literal way, actually. They made what I would not describe as a canny detour into trying to sell cars to GIs.

11:20Unfortunately, a car is not a bottle of whiskey, and it's not a bottle of perfume, and it's significantly harder to ship out and sell to people. So that lost them quite a lot of money. But after they sold off most of the assets to try and recoup their losses, they then decided to focus on what really matters to the story, which is duty free, specifically the Honolulu concession. So they focus on Honolulu, they get their act together, and that starts to really make money. And it is in this period, towards the end of the 1960s, we can say that Chuck Feeney gets towards his first million, our first stage of our story.

11:52And it can't be over emphasised how important this tilt towards Honolulu was, right? Because at the time, Japan was literally opening up. So before the 60s, Japan was quite a closed off country. It's quite protectionist. So you weren't actually even allowed to leave the country for leisure travel. But it was around the time of the 1964 Tokyo Olympics that the government started loosening the restrictions. So for the first time, all these Japanese people with lots of savings were going out into the big wide world and were desperate to spend their money. And Hawaii, which was actually relatively close to Japan, was one of the first places they alighted on.

12:27One of the first ports of call for the Japanese tourists. And as you say, post-war Japan had not wanted Japanese people to take money out of the country as things opened up what started as a trickle of Japanese tourism became a flood from the 1960s onwards and this is one of the questions we're always going to ask in this series is it question of being just in the right place at the right time and riding the right wave and this was a big one. I think it's a mix of both to be honest because he did luck out with Japan opening up but at the same time he did do everything in his power to take advantage of it.

12:59I mean, he learned to speak Japanese. That is no mean feat considering, I mean, he went to an Ivy League university, but he didn't study languages. And you hear tales of sales assistants saying that, you know, they would turn around and Chuck Feeney would suddenly be on the display floor speaking in flawless Japanese to a Japanese tourist trying to flog them even more stuff. You know, so this guy really was quite a savvy operator and he knew how important the market was going to be. So he hired the right people through the language and through affinity with that country. He managed to get the product offering right and knew exactly what his customers wanted.

13:29So by the end of the 60s, Feeney and also Miller, don't forget because he's in business with Miller, are millionaires. From a pretty modest Irish-American background, he's now a globe-trotting, pretty jet-set millionaire at a time when being a millionaire really meant something. You see, this is what I mean about the whole George Clooney thing. He speaks multiple languages. He's this kind of charismatic, fast-talking guy. I mean, where's the movie about Chuck Feeney? Yeah, I kind of think of a person like Han Solo or something in Star Wars. He's sort of, you know, just on the border, slightly sailing pretty close to the wind on the rules, charming the locals, knowing where the business is being done, giving people the products and the services they want.

14:12Quite a maverick sort of character. You know, sounds pretty exciting, actually.

14:22The 70s also brings about a new era for him to live through, which is the era of the jet age. And not only the jet, the jumbo jet, which comes into service in the 70s. And at which point you're funneling many more people through international airports. It was the glamorous jet age when international travel became fashionable, desirable, and how you looked when you travel and what you bought was part of the whole deal. Yeah, it brings to mind that madman age of, you know, being able to light a cigarette on a plane and having a pretty air stewardess pour you a cocktail. You know, that's the age that we're operating in.

14:57Against that backdrop, duty-free shoppers is basically there as a kind of toll booth, just taking a little bit of money every time someone goes through these airports. Because people, I think, when they are travelling, get a different image of themselves. And they're saying, I could, look at me, I'm an international traveller, particularly back in the 70s. Look at me, I'm an international traveller. maybe an international traveler like me should have some nice perfume, or maybe I should have a nice handbag, or maybe I should have a cool pair of sunglasses. You catch people at a time where they've got money in their pocket and are feeling adventurous.

15:33That's a very good way of looking at it. And especially if you're going somewhere you've never been to before, right? Because when the Boeing 747 gets developed, that changes everything. So all of a sudden, all these new places open up as potential stopovers stopovers and you know pit stops like anchorage for instance which becomes quite an important dfs outpost nobody was going to anchorage before until it became a place where the boeing 747s could refuel and chuck feeney is right there opening up a concession store and the japan thing's really important because during that period from the 70s into the 80s that japan was buying up half of california their japanese investors were buying country clubs the success of the Japanese economy meant they had plenty of money.

16:16The yen had strengthened in value on the basis of that. So you got more dollars for your yen at that particular time. So they were outbound, confident, well-heeled consumers. And Chuck Feeney was right in the middle to take his slice. And I think what's so interesting is that they were also creating new luxury brands as a result of what they were putting in DFS. So I've always asked myself, you know, you walk through DFS and you look at Kamu Kognak. Kognak? I have never drunk it. and you can probably do cognac. Yeah. I had never heard of it until I saw it in DFS. Similarly with something like Nina Ritchie.

16:48Ritchie, I think. Ritchie, yeah. And apparently those brands were made by being in DFS because by putting them front and centre, the Japanese tourists learned to associate them with Western luxury. Yeah. When you had a country which basically had been devastated by the Second World War, had two atomic bombs dropped on it, let's not forget, the refinding of confidence and looking for international experiences all fed into that kind of perfect consumer storm, which Chuck Vini was able to exploit. And DFS rode the wave all the way to the end of the decade. So at the end of the 70s, they have 5 ,000 to 6 ,000 employees and they're taking in$3 billion a year.

17:25So on the one hand, he's living high on the hog. He says, we drank a lot of champagne. We drank a lot of everything. We worked hard and we played hard, lavish parties. But at the same time, he had a slightly different message to his own family. He never lost those roots that he had. No, he always told his children the importance of working hard. His kids had summer jobs, you know, when they were on holiday from school. You know, it seems like even though he travelled quite a long way financially from his roots as, you know, a young working class Irish American, that kind of sense of humility never quite left him.

17:58In fact, you could say he felt pretty uncomfortable almost. There was a sort of disquiet in him about the fact that he just felt a bit funny about the wealth he was creating. And that becomes a very big part of why we're even discussing this today. I mean, yeah, because just as he's approaching the billionaire club, there's quite a pivotal moment in his life where his lawyer, Harvey Dale, introduces him to philanthropic literature. Now, I had no idea philanthropy even had literature to speak of, but it became a pretty big deal to Feeney. Yeah, there was an essay by Andrew Carnegie, famous philanthropist, huge industrialist, an essay called Wealth.

18:36and a quote from a guy called the Reverend Frederick Gates. No relation to Bill Gates as far as I know. But he said this to the world's first billionaire, John D. Rockefeller. Who knows? Maybe we'll cover him at some point. It says, Mr. Rockefeller, your fortune is rolling up like an avalanche. You must distribute it faster than it grows. If you do not, it will crush you and your children and your children's children. Wow. Yeah, I mean, pretty punchy words. It kind of comes off more like a threat, to be honest. Yeah, it's basically saying the god of mammon money. will eventually destroy you. And anyway, he takes it to heart, right?

19:10Yeah, he really does. Because at 50, Chuck Feeney makes his first major philanthropic donation. He gives 700 ,000 to his alma mater, the place that started him off on this journey, Cornell. So that's in 1981. So he's already starting to give away quite a lot of money. But, you know, he got a taste for it. So he set up this foundation called Atlantic Philanthropies. Five million dollars of his own money. and within two years he'd given$15 million through that foundation. But the really interesting thing about Atlantic is the absolute code of silence that he insists upon. It's almost like a mafia-like Omerta.

19:47If you receive a donation from Atlantic, you are not allowed to say where it comes from. You are not allowed to breathe a word of his name. There's an amazing story, maybe an apocryphal story, where he turns up at an event and the photographer is given an empty camera without any filming. So he thinks he's taking pictures of Chuck Feeney, but no pictures are ever developed because Chuck Feeney does not want to be associated with what he's giving away at all. It's really odd that, isn't it? Because most philanthropic benefactors quite like the name above the library, quite like the name on the hospital wing.

20:20In America, it's a bit like their honours system. You don't get made a sir or a lord in America, but you do get, if you're rich, you do get things named after you because you become a benefactor. And, you know, that's kind of the expectation in the US. Perfectly fine for you to get filthy rich, but you then have to start giving back. But when you give back, you usually let everyone know that you're doing it. And I think it's a really interesting mindset. They said, if you reveal the source of these funds, you won't get any. I mean, I've tried to puzzle out why he was so insistent on this kind of secrecy, because it is quite unusual.

20:54I mean, like you say, you walk up to any big museum or hospital or university in America, there is going to be someone who donated a huge chunk of money with a name on a building. And I kind of feel like maybe something happened when he served in the military that it was impressed upon him the importance of secrecy and being discreet. One theory I have is that the reason he didn't want to give too much away is that people would realise just how much money duty-free shoppers were actually making. And that would inspire jealousy and competition. And actually, they were very handily off radar because they're basically not really in any countries at all.

21:29They're kind of between the countries. And they were quite happy to make that money in secret because they didn't want anyone else to realise what a good thing they had going. I also think part of it maybe is because he'd seen rich people throw their cash around and been targeted for things like their children got kidnapped. They were extorted. Exactly. This is a time of Patty Hearst. He had kids that he absolutely adored and he would not have wanted any of them to go through what she went through. So maybe there was a bit of that, a little bit of self-protection as well. Maybe it's like his mum pretended that she was going the way when she gave lifts to people, said she was going that way anyway.

22:03maybe it's because if you want recognition, it's kind of doing the right thing for the wrong reason. That is a good theory. And so, listen, he's making tons of money. He's secretly giving some of it away. In the mid-80s, his wealth was estimated around then to be close to a billion dollars. But just as he reached the moment that allows him inclusion into this whole programme series, there was a pivotal moment. He signs away his fortune to that foundation. Atlantic. And that also includes a 38.5 % stake in duty-free shoppers. And that is incredible. I mean, let's put that into perspective. He's basically signed away all his wealth.