By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
After a few hours, my eyes glazed over, but Henry T. Nicholas III had only begun to talk. The glaze dried into a crust that baked my eyeballs into jelly-filled cookies, which eventually fell out of my head, dropped to the floor, and disintegrated into two little piles of crumbs and goo. We left the mess for the maid.
Henry T. Nicholas III—who told me when we met just after lunch that I could call him "Nick," although I never really got the chance—still had a few more things to say, something about a mathematical equation called the Golden Ratio, then something about fatherhood, then about the invention of the electric guitar, the Air Force Academy, running 10Ks at 3 in the morning, revolutionizing the educational system, cursing at Christmas parties, the UC Irvine crew team, Korn, about whether time-with-a-capital-T is concave or convex. Night had fallen by the time he got it all out—seven hours and 49 minutes later, not counting our wait for the delivery of my new seeing-eye dog.
But just about everything Henry T. Nicholas III said was fascinating—even the second time through as I transcribed the tapes. You'll have to take my word for it, though: after writing this story, I stomped those cassettes into plastic glitter and electromagnetic tinsel. I shredded the paper transcripts. I moved to Mexico, where I am living in a nondescript apartment in a second-tier seaside resort. That was the verbal deal I struck with Henry T. Nicho—you know, it is easier to just call him Nick—when he got a little hinky about me turning on the tape recorder.
"When you have $2 billion, you're a walking target for frivolous lawsuits," Nick explained. "Any record of anything you say—on tape or on paper—has the potential of ending up as evidence in a courtroom."
Oh, did I forget to mention the part about Henry T. Nicholas III having $2 billion? Yep. Fascinating guy.
"For some reason, people like to read about me," he acknowledged with a little laugh that was almost apologetic, as if I'd taken some bait by coming to the hilltop in Nellie Gail Ranch, where he lives in a 15,000-square-foot brick castle that's being prepped for an addition. He's gotta know the most obvious reason: it's why people like to read about lottery winners—assuming people read those stories—or that anybody has read any of the many newspaper and magazine articles already printed about Nicholas and his mansion with its touch-screen, wall-mounted computers; its hidden wooden panel in the study that opens to a secret underground tunnel to a gym, a sports bar, a wine cellar, a recording studio and a basketball court; its upstairs movie theater; its rock grotto with waterfalls that's in the back yard. Really, all we know for sure is that reporters like to write about Henry T. Nicholas III. They want to be billionaires, too.
But after listening to Nicholas talk all day, being a billionaire doesn't sound quiteso great. You gotta take math. You gotta know a lot about computers. In fact, you gotta know a lot about just about everything, or want to, anyway, and you gotta want to baaaaaaaad, which means you gotta have this jumping-bean brain that works faster than some computer thingy that hasn't even been invented yet, so you gotta invent it or you gotta find people who can, and you gotta carp at them relentlessly until they do. You've gotta have co-founded a company called Broadcom in 1991 and have dedicated it to changing the world by connecting every electrical appliance—from your computer and TV to your coffee-bean grinder—via a network sped by communication chips, meanwhile kicking the crap out of the competition, and you've gotta have driven everybody simultaneously toward success and insanity with your from-here-to-eternity work habits and your want-it-yesterday demands. And then you've gotta actually have done it—started changing the world and kicking the crap out of those companies—but you also had to have pursued those goals so single-mindedly that your neglected wife filed for divorce, prompting you to retire in your prime, with your mind and your mouth still going like a motorboat engine pulled from the water full-throttle. You gotta be a 44-year-old brainiac, tall and handsome and athletic and driven, with family in place, fortune made and reputation secure. And then you gotta figure out what the hell to do with the second half of your life.
"That's not a problem for me," Nick objected, rather adamantly. "I have a wife and three young children. Ask any good husband and father if that isn't a project big and important enough to fill a life. I'm not bored. My problem when I wake up every morning is figuring out how to squeeze in all the things I want to do that day. If you want to call that a problem, it's the same one I've always had."
One of the things that's always on Henry T. Nicholas III's to-do list is "revolutionize the entire paradigm of access to education, using the profit-based business model of broadband Internet to develop virtual campuses that enable millions of people to attend the best schools in the world." He writes that on the line where the rest of us put "clean lint screen on dryer." To Nicholas, they are sort of the same thing.
The whole purpose of Broadcom is to unclog and speed up the arteries of computer communication so more and more digitalized information—e-mail, movies, music, radio and TV stations, telephone calls, and the increasingly important whatever—can flow simultaneously, back and forth, into your world and out. Broadcom makes the tiny computer chips that blast this information. Nicholas envisions a future where nearly every machine will be interconnected by this network. And nearly every human, too.
"The reason this will happen—the reason it is unstoppable—is that there is immense money to be made," Nicholas said while sitting in his study like $2 billion worth of unarguable proof. He took a sip from a cup of black coffee and a bite from a MET-Rx energy bar and then sunk back into the couch in his office. It is a high-ceilinged room royally swathed in draperies of maroon and gold and illuminated by the glow of sunlight, which prisms through hundreds of diamond-shaped panes of beveled glass. The décor includes an elaborate antique Austrian clock, a full suit of knight's armor and one of Shaquille O'Neal's boat-like basketball shoes. "The future of commerce will be based on this interactive network—advertising and buying and selling products. We already have the model. Its entire existence and development is being driven and paid for and self-perpetuated by the profit motive."
But just because the network is created by greed doesn't mean it can only be used that way. Humanitarian causes can piggyback on the technology and on the profit motive to pursue higher purposes. "The idea," said Nicholas, "is to ride along on the business model that companies are directing toward profit—while reaching for results that will push them toward altruism."
Nicholas is very specific about which humanitarian cause he'd like to see riding the business model: he'd like to break down the traditional barriers to universal-quality education, which he says basically boil down to the economic law of supply and demand, although they are often compounded by elitism, too. He says the computer technology he has helped pioneer can do it. "The ever-widening broadband capability that Broadcom is at the forefront of," said Nicholas, "can also be used to transmit . . . Hey! A classroom!"
Nicholas has laid out $10 million in seed money to start. His donation to St. Margaret's Episcopal—the expensive private elementary school his kids attend in San Juan Capistrano—set up a relationship with the engineers at UCI. The goal is to create a meaningful, interactive classroom experience that could be transmitted to anybody via their home computer. The results could change dramatically the way we think about such enduring school issues as racial integration, voucher systems, affirmative action, the teacher shortage and public-education funding.
"We have freedom of speech and freedom of information, but there are substantial economic and social barriers to getting an education," said Nicholas. "We don't have enough money to build enough schools, buy enough materials, find and train enough good teachers, or get enough students to those schools in a good-enough frame of mind to learn. We've got millions of kids whose only perception of school is a place where there aren't enough textbooks, graffiti is sprayed all over the place, they're afraid because they're not Crips and they're made to feel like dorks if they somehow still get A's. What chance do they have, really?"
The answer to that question tempted Nicholas to give his $10 million to disadvantaged schools rather than St. Margaret's.
"There would have been immediate gratification for a lot more schools and a lot more kids—and they would have had a big parade for me," he punch lined, but he wasn't smiling. "That would have been plugging holes in the dike. When the money ran out, they would have needed another $10 million. I wanted to invest in changing the system—changing the future of how children are educated."
And not just children.
"Our system of education limits almost all of us," Nicholas charged. "Right now, the average person can't wake up one morning and say, 'You know, I've decided I'm going to be a doctor—and I'm going to Harvard Medical School 'cause it's the best!' Most people, because they have passed a certain crossroads in their lives, are permanently banned. But they wouldn't be banned if there was a Harvard Medical School Channel. Or a UCLA Channel. Or a UC Irvine Channel. If they could connect to the education they want at the time in their lives when they want it, can you imagine the potential benefits to them—and to the world?"
The obstacles are significant. "The technology cannot degrade the education in any way, and it must be easy to use," said Nicholas. "So we are making the technologists at UC Irvine answerable to the kindergarten teachers at St. Margaret's. Rather than creating a complicated tool that the teachers must learn how to use, the teachers demand what they need, and the technologists fill the order."
Nicholas recited this technological wish list as though he were reading from his résumé. And in a way, he was.
"Very few people know what the world is going to look like four years from now," he acknowledged. "But Broadcom has a major role in determining what the world is going to be like. That makes me the exception.
"We've already helped change the world. The first wireless chip Broadcom built cost $20 million to design, but the copies sell for $12. Hell, it's gotten to the point that you can get cable TV even if you're on welfare."
Nicholas was grinning when he made the welfare crack. He knew it was kind of an audacious thing to say, coming from a guy with $2 billion. But that's the way Nicholas often makes his points. He's a man of quick studies, blunt truisms, knee-jerk reactions and constant revisions.
"I am a media-relations nightmare," he announced proudly. "I never prep, and I generally say what I think—and sometimes I say things before I think. I don't know how many times people in the company have heard me say something to a reporter and later told me, "Jesus Christ, that's going to be in the paper!'"
Even when he's comported himself well, staying far away from such off-limits subjects as the details of his marriage and Broadcom's corporate secrets, Nicholas can't resist tormenting the people he has paid to look after him—such as when his PR guy, former Times Orange Countypresident Bob Magnuson, called the mansion via speakerphone to inquire how our interview was going. "Great, Bob!" Nicholas said hyper-enthusiastically. "I spent most of the afternoon making forward-looking statements and telling about Broadcom's next-quarter results." Magnuson responded with stunned silence until Nicholas ka-boomed a big laugh that let him know it was a joke.
Apparently, it's always been this way. Henry T. Nicholas III was a fidgety kid.
"To me, it has always seemed that things move too slow," he said. "Nowadays, a kid like me, they'd say he had ADD, but they didn't call it that then. I'm dyslexic, too, but they didn't know that right away, either. I spent six months in the retarded kids' class, and they were the happiest days of my life. I got candy bars for not acting out!"
Nicholas' agitation may have been abetted by the complicated energies that swirled in his home while he was growing up in middle-class Cincinnati. He may not know from welfare, but he didn't know stability, either. His father was both a gifted attorney and an alcoholic with a mercurial temper.
"Eventually, my mother screwed up my good deal at school," Nicholas laughed. "She wasn't going for that retarded-kid stuff. She got me back in with the regular kids."
Nick's mother, Marcella, finally got bottom line like that at home, too. She put her husband out. Soon afterward, she put Henry and his sister in the car and everything she could stuff into a U-Haul trailer. They settled in California, where Marcella used $5,000 in academic-grant money to study journalism at UCLA graduate school. When she married a screenwriter named Robert Leach, the family moved to Malibu, which in the 1960s was more of a colony of nouveau bohemians than a compound for the beaucoup-bucks set. The added sense of security helped young Henry focus better, and he dreamed of becoming a scientist.
"But I was still a C student up till 10th grade. I was terrible at arithmetic; I still can't add numbers in my head," Nicholas said. "It wasn't until we got to the more conceptual stuff—geometry, trigonometry, calculus—that I began to appreciate that mathematics is a beautiful thing." Many years later, Nicholas would write "Architectures, Optimization Techniques and VLSI Implementations for Direct Digital Frequency Synthesizers," his doctoral dissertation in electrical engineering.
But he never stopped ricocheting around. After graduating from Santa Monica High School in 1977, he went to the Air Force Academy, only to learn he was too tall to be a fighter pilot. He went to UCLA, where he earned his bachelor of science and his master's but insists he learned everything he really needed to know about business while rowing for the crew team, a lesson he recently summed up for a pasty-looking class of umbilicaled-to-their-laptops undergrads at UCI. "Go out for a sport!" he barked. "Athletics teaches you how to compete, but business school just teaches you how to form a committee. Academia in general keeps competition quiet—like your grades, for instance, which are confidential. The world of athletics is not like that. You row a race for your crew team, you immediately know who wins—and everybody gets to see who finishes last."
Nicholas got a job at the El Segundo offices of satellite maker TRW Inc. That's where he met the two most-important electrical engineers in his life—a woman named Stacey, who became his wife in 1987, and a man named Henry Samueli, who became his partner at Broadcom in 1991.
From all accounts, building the Broadcom empire was a torturous experience for everyone involved. Nicholas described his interview sessions with prospective employees as "crucibles of pain," and the corporate culture didn't get any easier when people started drawing paychecks. Work weeks of 60 to 70 hours were routine, and staff meetings could be called any time of the day or night—Nicholas convened one on Christmas Eve. It got worse when Broadcom went public in 1998, the same year Stacey Nicholas was pregnant with their third child. The birth was induced so that Nick could make an important business trip. When the couple finally went to Hawaii to celebrate their 10th wedding anniversary in 2000—three years late—Nick turned an intimate dinner into a business meeting by inviting an executive to join them.
Nicholas is only sort of repentant about this behavior. "I had an imbalance in my life," he conceded. "But I still believe that if you aren't wondering if your work is worth it—if you don't think about quitting at least a couple of times a week—then you are not putting enough pressure on yourself."
Nine months after Broadcom went public in April 1998, Nicholas and Samueli were billionaires, and hundreds of their employees—whose below-market salaries had been sweetened with stock options—became millionaires. By 2000, when Forbes magazine calculated their net worth at $10 billion each, Nicholas and Samueli supplanted Donald Bren of the Irvine Co. as Orange County's richest residents.
Meanwhile, Nicholas' reputation expanded, from autocratic tyrant at work to outrageously conspicuous consumer. He tricked out his home by seamlessly blending the latest in computer gadgetry with a stunning array of antiques from centuries ago. He bought Harleys, Ferraris and Lamborghinis. He bought a charter-airline company. He became a high-profile philanthropist, donating millions not only to the arts and children's charities but also $1.28 million to the UCI crew team. At the press conference announcing the latter, Nick challenged the team's captain to a pull-ups contest. The kid dropped out after 11; Nick went for 27.
He became known as such a party animal that maybe only Dennis Rodman got more publicity for his carrying on. Of course, the dot-com bubble popped, and the stock plummeted, and Nicholas' net worth diminished by 80 percent. But Broadcom survived, and when Nicholas retired—with 34.4 percent of the stock—he still had $2 billion and the reputation, whatever that was worth.
It's difficult to get a feel for that because Nicholas' public profile is as jagged as an electrocardiogram. Additionally, although his riches and generosity qualify him as a prized recruit to the innermost circles of OC's high-society philanthropists, somehow he inevitably remains an outsider.
For example, although Nicholas and Samueli have donated upwards of $13 million to the Orange County Performing Arts Center and served on its board of directors, in 2002 four other directors—Broadcom shareholders who'd lost money when the stock tanked—accused them of securities fraud in a $50 million lawsuit.
The names on the lawsuit were among the most highfalutin in OC business circles—Thomas T. Tierney, chief executive of Tustin-based VitaTech International, Inc. and BodyWise International, Inc.; Benjamin Du of Newport Beach, president and founder of FloJet; Robert J. Follman of Coto de Caza, president and CEO of RA Industries; and Thomas E. Tucker of Newport Beach, president of Genstar Capitol and chairman of the Republican political-action committee known as the New Majority. Their suit accused Nicholas and Samueli of accounting practices that misrepresented Broadcom's revenue, keeping stock prices artificially high and enabling Nicholas and Samueli to sell shares at a greater profit.
Though not part of the suit, New Yorker film critic David Denby voiced similar criticisms while promoting his book American Sucker.
"I don't blame anyone else for the stupid things that I do. But I am angry that so many CEOs behaved badly, that they got their boards to vote them options in 2001 before the telecom crash or during it, when they knew that the market for their goods—say Broadcom was about to collapse," Denby said while on CNNfn in February. "Henry Nicholas, the CEO of Broadcom, took $800 million, you know, cashed in his options, while the outsiders, the small-time investors like myself, having bought the stock at a very high price, crashed and burned."
Nicholas described the lawsuit as "completely without merit. I sell my stock according to a schedule. Beyond that I think there should be more requirements on when CEOs can sell stocks. I think CEOs should have to announce stock sales 6 months in advance—provide the market with that much advance warning, get rid of all the suspicion.
"I view our legal system as a means of last resort for people who cannot resolve their differences. If someone has a problem with something I do—and I know them?—I expect them to come to me and tell me. I make mistakes sometimes. I can accept that. But none of them had that kind of integrity."
Nicholas and Samueli reacted to the suit by resigning from the OCPAC board.""Their actions caused somewhat of a rift in the OC conservative business community," said Nicholas. "I think a lot of people were disgusted by what they did. It's not something I would have done. But then, I do things differently."After all the stories, Nick insisted, nobody's gotten him right."So apparently, now I have an image," he snorted, sounding disgusted but also starting to smile. "I tell you, it's amazing to me that I have an image. I never thought I would have an image. Like, there's me, and then there are these things that people say about me."Yet Nick wasn't quite complaining about the journalism he said has caricatured him. He giddily bragged, "I'm the only person who's ever had a full-page photo in Forbes wearing a work-out T-shirt—and a full-page photo in Muscle & Fitness wearing a three-piece suit!" As with most things, Nick preferred analyzing the media machine. He figured he's got the qualifications. "My mother was a teacher, and my stepfather actually taught in journalism school at UCLA," he said, "so I can understand and empathize with reporters and their problems."And dwell on them, too. More than four years after being profiled in an extensive Los Angeles Times Magazine cover story, Nicholas could still dissect from memory the passages where he thought the reporter was "trying to be artistic" or "going for the shock value" and "trying to create a kind of analogy between what the modern CEO has become and rock musicians." Ultimately, he traced the story's "failure to capture the real Henry Nicholas" to the desks of the editors and headline writers "who slashed it, and then they put it like, you know, 'Henry Nicholas, who worked and partied his way to the top.'"Nicholas paused and rose from his couch—and kept rising, as if by hydraulics, his long, slender torso riding higher and higher on legs that seemed to extend like telescopes until the swatches of brown hair on the top of his head were six feet, seven inches off the ground. Dude is seriously tall. He dramatically unfolded his long arms, then placed his hands on his hips and held them there, elbows out, in a pose not unlike a comic-book superhero. He stood like that, in his dark, pin-striped, three-piece suit with the blue shirt and gold tie, basically allowing me to decide if the flesh-and-fabric reality of an all-business man like this matched the image of the X-treme giga-geek genius described in those stories."Anyone who knows me . . . well, look . . ." Nick challenged me. "Everyone was saying, 'Parties his way to the top?' Yeah, all those parties! Boy, wouldn't that have been cool!"But no," Nick said, definitively. "No!"He sat down; got quiet for a moment. "Okay . . . okay, okay, okay! Back then, I threw two parties a year," Nick acknowledged. "There was one, I turned 40. That's when I met the guys from Orgy. They played at my party. But originally they didn't want to play. See, at that time, I was getting all tied in with Time-Warner; they had a lot of music properties and whatnot and Sony distribution. So I get tied in with Jimmy Iovine, the music exec, and I tell Jimmy, 'Let these guys know that I like rock music.' Like Korn or whatever. I wanted Korn to play. But then Korn decided, 'We're too cool.' So then I thought, 'We can get Orgy!' But Orgy decided, 'We're too cool.' I mean, come on, playing at a 40th birthday party in a guy's back yard? Can you imagine anything more compromising to your integrity as an artist than doing that?"But then Orgy decided they were going to break up. A couple of 'em said, 'We should get money because this is our last deal.' The guy most against playing my party came to check me out, thinking he was going to confirm all the reasons not to do it. We met, I told him who was going to be here, told him the band could bring friends, told him I wanted them to bring a list of songs because, in addition to the band playing, I have an Integrated Voice Video Data System with all sorts of music, and one of the things I like to do is expand my musical horizon by finding out what you listen to. We start talking about music, and he went back to the band and said, 'Guys, I was against this, but all I can say is this is not going to be uncool.' So Orgy came, and this was going to be their last gig, but it ends up . . ."Nick took a breath. He took a gulp from his second cup of black coffee. He took a couple of bites from his third Met-Rx energy bar."If you are only going to have a couple of parties a year, they should be good," he continued. "So at 5 in the morning, actually, we went through till the next night, and I ended up at my 40th birthday party being the psychiatrist and marriage counselor to the band. I talked them out of breaking up! I convinced them! They came out with their second album. And we got to be very close friends."Nick leaned back on his couch, looking proud. But only for a second or two. Then he leaned forward for another blast of coffee and another chunk of Met-Rx bar. His face was serious as he seemed to reconsider what he'd just said. Then he chuckled, kind of lovingly, the way people chuckle at an incorrigibly mischievous but ultimately good-hearted kid. It was a disarmingly sweet moment."Well, if that image helps me get my message and my ideas out," Nick shrugged, kind of surrendering and grasping at straws at the same time, "well, okay then."How does being a multibillionaire not make somebody at least a little bit bonkers? Maybe if they're already made a little bit that way. By the end of the day with Henry T. Nicholas III, it had become clear that he's pretty much the same guy he would have been with any sized bank account. He has a brilliant intellect that won't let him alone—or you, either. He's the jawboning buzz saw you find yourself next to in a bar or on a plane or sometimes standing on a street corner, blabbing away to nobody in particular. He has a mind like a tack, a heart of gold and a very hard ass. He is the nicest, brightest guy you just know would be the boss from hell at a company he'd make sure never went out of business.Making $2 billion has barely begun to teach Nicholas how to live with that kind of money. How to raise his kids with it. How to relate to his old friends or make new ones. How to recognize the limits of what money can buy, not only himself, but also, maybe more important, others. Because now Nicholas is living in a world of so many problems that his money might solve—and so many more that it cannot. Where do you begin to make those judgments when faced with countless appeals to your generosity? Or do you just forget the whole thing and get a thicker, darker layer of window tint on your limo?Confronted with those questions, Nicholas slowed down for the first time all day."It's hard," he admitted. "It boils down to individual decisions in countless situations day after day. But I realize I am in a position where I can make a difference—and I have decided that if I can, I must. At the same time, though, the responsibility to try to help brings with it a responsibility to make sure I am really helping—that the situation is for real or that I am helping in the most productive way."But there is a whole cottage industry of parasites who make it their business to be friends of billionaires. The problem is that because they have an agenda, they are often better with you than your real friends, who don't know how to act with you anymore. And then there are the bullshitters. Maybe they have hard-luck tales to tell or maybe they want advice. In general, you constantly encounter people who treat you differently because of the money or just because they perceive you as a success."Doesn't $2 billion pretty much advance the perception of Nick's success to the point of confirming it? With that question, he ramped up to warp speed again."All I've done is make money," he scoffed. "I have achieved none of my goals. All I can say is that I still have a chance of achieving them—if in five years, Broadcom has changed the world, if we think of the Internet the way we think of dial tone. The fact that nobody talks about dial tone means it is a success. The fact that we do nothing but talk about the Internet means it's a piece of shit. There is a long way to go."And if that world comes after all that frenetic work, will it be better in the most immediate sense? Would Nicholas want his kids to work for a guy like him?"I would hope," he said, hesitating a little, "that they find something in their lives to be passionate about. Where that takes them or how they channel that passion is for them to discover. What I hope they see in me is that I have something I believe in. As a role model, I am glad my kids have seen me working hard. But they have also seen me discover that it is not healthy to make work 100 percent of everything you do. Not that I regret a thing. I've never made a decision I regretted. There are some I would do differently, but I think I've always made the best decision I could at the time. After that, I've always accepted the results and seen the process through. That's the best anybody can do."A few minutes later, Nick was playing air guitar to Rage Against Machine's "Killing in the Name Of," and a few minutes after that, he was talking about his cars, listing every one he's ever owned, in order, beginning with the 1962 Catalina his aunt gave him. When he got to the Lamborghini, he got excited. "Want to drive it?" he asked. "You can. You should!"After thinking about it for a moment, I said no. Something about the thought of being on the open road in a Lamborghini with a multibillionaire like Henry T. Nicholas III worried me into wondering if I'd ever get home. Plus, by then, he'd already talked me blind.I had a real problem serving on a board with people like that," said Nicholas. "And their response to our resignation made it even worse—they couldn't understand why Henry and I would be upset. To them, it was just business. Just business! Henry and I founded Broadcom! To me, Broadcom and the integrity with which we run it—we've prided ourselves on being able to do business on our word and a handshake—makes their lawsuit a personal affront.