Joshua Roberts

Nothing But Net: Ted Leonsis

Ted Leonsis didn’t believe Ernest Hemingway was telling the truth. His gut told him so. And so did a mainframe computer. The year was 1976, when few tech geeks roamed the earth. But this was Leonsis, a man who would, over the next 20 years, pave the way for new media.

In '76, Leonsis, who owns the Washington Capitals, Wizards and Mystics, was at Georgetown University considering a career in law or politics. “But the mentor assigned to me was a 75-year-old priest, Father Joseph Durkin,” says Leonsis, a Brooklyn-born, Massachusetts-raised son of a waiter.

At the end of the student’s second year, Durkin told Leonsis to read Hemingway’s “The Old Man and the Sea” over the summer. The ever-industrious Leonsis (who graduated first in his class) read not only that book, but also Hemingway’s previous novel, “Across the River and Into the Trees.”

Noticing stylistic differences, he wondered if “The Old Man and the Sea” had been written earlier than its author claimed. How to find out?

At the time, the only computer on the entire Georgetown campus was an IBM 360 mainframe with a terminal in the registrar’s office. Somehow, Father Durkin made the arrangements, and, working late at night and early in the morning, Leonsis entered almost 10,000 words of Hemingway prose. Through linguistic analysis on the computer, he argued that “The Old Man and the Sea” had been written in 1943, and not, as its author had always claimed, in 1951.

“I’m not sure Father Durkin high-fived me,” Leonsis was recently quoted as
saying, “but I know he was as thrilled as I was. Most important to me in the short run was that I won an award for the best junior thesis.”

Hemingway scholars may not all agree with his conclusion, but most important to American business history is that a future Internet star was born.

The concept of “mash-ups” would become a guiding one for Ted Leonsis.

“You take an idea from one industry and a business practice from another industry and you ‘mash them up.’ AOL was just a big mash-up. We were next-generation communications-network-datacom-advertising—and we mashed that all together and created an important enterprise.”

The Life List

After graduation, Ted Leonsis returned to Lowell, Mass., where his parents hoped he’d find a steady job in a steady field. And he did, with Wang Laboratories, but he was already charting a different course, especially as he watched with fascination the birth of the history-changing device called a personal computer.

Then Leonsis made the mistake of taking a job in Florida because he couldn’t resist the $98,000 salary. “By then it was 1980,” he writes in his new book, The Business of Happiness, “and I was almost 25 years old, prosperous, but miserable at work. Success had not brought me happiness.”

A near-fatal accident in 1984 caused him to reassess his life. He took a hard look at his priorities and saw that in chasing money, thinking it would bring him happiness, he’d gotten it all backward. Instead, he began to chase happiness, suspecting that if he found it, the money would follow. Leonsis made a list of 101 things he would do before he hit delete.

The list, coupled with a new approach to having fun with business, certainly delivered personal and professional gold: Leonsis eventually launched his own tech company, Redgate Communications, which he sold to AOL in 1994 for $60 million. Leonsis was 37.

After 13 years of helping AOL reach dizzying heights (he helped the company grow from 800,000 users a year to 8 million, and grow revenues to $1.5 billion), with entrepreneurial side ventures along the way, Leonsis was a multi-millionaire. So it didn’t take long to reach No. 40 on his life list: own a sports franchise.

He bought the Washington Capitals in 1999 for a reported $200 million, with $85 million for the hockey team and the rest for a minority share of Abe Pollin’s Washington Sports & Entertainment and the right of first refusal to buy the remainder of Pollin’s empire down the road. Last year, the Pollin family honored the deal, and Ted Leonsis became the owner of, among other things, the Washington Wizards NBA team.

Will the emotional side of being an avid sports fan cloud his practical business judgment? “Not interfering is difficult sometimes, but I know my coaches and general managers are professionals, and I empower them,” says Leonsis. “My belief is that owners should set strategy and vision and provide the resources for the teams to be successful—and be a cheerleader and care passionately about the team, but don’t be the general manager or the coach. But if we introduce a new website or new social-media product, or if we’re introducing new technology infrastructure, I can add value.”

And add value he does. Leonsis blogs every day, and the owner interacts with fans on Facebook and Twitter. “We have an online database of hundreds of thousands of people whom we communicate with. We created a blogosphere, and we embrace the bloggers.”

Such openness can be costly, as Leonsis learned last fall when he told a group of Northern Virginia business leaders that he expected the NBA would soon have a hard salary cap like that of the NHL. NBA Commissioner David Stern fined Leonsis $100,000 for what Stern termed a “lapse in judgment.”

Pucks and PCs

It’s hard to tell which power the 54-year-old Leonsis believes in more strongly, sports or the Internet.

“When I was a kid in Brooklyn, I would go to the park after school until 7 at night, when my parents got home from work. At the park, if you turned right, there were courts and ball fields. All the kids who played there graduated from high school and went on to have productive lives. But a hundred yards to the left, the kids were drinking, smoking pot and beginning to do hard drugs. Those kids usually ended up in prison or dead.”

As for the Internet, he says, “I straddled the first generation, where computers and the Internet became the primary means of communication. My children will be defined as having lived their lives on the Net.”

On his website, tedstake.com, Leonsis often startles fans by replying within seconds of their post or tweet. And he loves bloggers.

“There must be a reason why God made 77 million bloggers. I believe self-expression is one of the six key tenets of happiness and self-actualization, and blogging is the ultimate in self-expression. It’s the individual’s way of saying ‘What I have to say matters, listen to me.’”

When he finds time to get away from the rink, the court and the office, Leonsis likes several local restaurants, especially those that remind him of his Greek-American roots. “My new favorite restaurant in D.C. is a little place called Cava in a hip area of Southeast. It’s run by some young Greek kids, entrepreneurs, who serve Greek food with an interesting twist. The lamb sliders are the best I’ve ever had. I also like Kellari on K Street and Zaytinya near Verizon Center.”

More than 36 years after he came here for college, Leonsis, who could live and work anywhere in the world, remains deeply committed to Washington.

“First of all,” he says, “I’ve never really looked at this as just Washington. I think this concept of the DMV—the District, Maryland and Virginia—is really a smart one. The fifth-biggest market in the country, it’s probably the most ‘wired’ and educated community on earth. The academic community is fantastic, and the fact that it’s the seat of power of the most powerful, wealthiest nation on earth is remarkable. It’s a great time to be part of the city’s renaissance.”

The man sounds like the pied piper of regional PR. But one gets the sense that, as with most things finding their way onto his list of passions, it’s better to let the kid from Brooklyn have his say.