Interview

Business unusual

David Lazarus, a self-described investigative business columnist for the San Francisco Chronicle, has little sympathy for the Wild West corporate culture

By Michael Stoll
Posted Sept. 10, 2004

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David Lazarus

Since coming to the Chronicle from Wired News in 1999, David Lazarus has been one of the most prolific, and influential, writers at the paper. His coverage of the energy crisis in 2001 earned him the Journalist of the Year award from the Society of Professional Journalists, Northern California chapter. He continues to butt heads with corporate executives and write stories that unambiguously take the side of consumers.

Mr. Lazarus, who writes the thrice-weekly business-page column, "Lazarus at Large," also has been honored with the 2004 Journalist of the Year Award from the Consumer Federation of California, the 2003 C. Everett Koop Award for coverage of the tobacco industry, a 2002 National Headliner Award for outstanding business coverage and the John Jacobs Award in 2001 for coverage of the California energy crisis. His work has appeared in Fortune, Wired, Salon.com and National Geographic, among other publications. He is the author of two books about Japan, where he lived for seven years.

David, when you got your start in journalism did you plan to launch on a one-man consumer crusade against corporate malfeasance?

No, no! When I got my start in journalism I started as a crime reporter at the Daily [Californian] at Berkeley, which is a great place for anyone to learn the ropes, because you learn crime and you learn the libel laws real fast.

After that I took more of an interest in feature writing, magazine work specifically. And in the years that I lived overseas I did an awful lot of magazine work and light newspaper work. And it wasn't until I was living in Tokyo, at the time of their bubble economy, and saw that the big story where I was was the carnivorous Japanese economy -- and that was what editors overseas wanted -- that I realized that business journalism was a going concern. ...

I spent two years at Bloomberg in their Tokyo bureau and got the hang of it. Bloomberg, as anyone will tell you, is a boot camp. You will be put through the paces but you will learn. And after that I essentially focused on financial and business journalism after that, writing for Fortune magazine, Time, Newsweek and other publications out of Tokyo. And then coming back to the United States focusing on business and tech after I got here.

I quickly became the go-to guy for a lot of disgruntled consumers and disgruntled employees about what's going on out there, and saw that there was very much a need and a purpose to want to rail against corporate thuggery and corporate arrogance.

It was serendipitous, really, that I got into a consumer-affairs sort of thing because after the energy crisis, which I basically spent an entire year doing as our lead reporter on that, I developed fairly populist tendencies, in looking at where the consumer was relative to these large entities -- PG&E, Enron and all the rest -- and how the little guy was going to get screwed time and time again, and had very little voice and very little power in the face of this.

... The [Chronicle] asked me to do a column. ... At first we sort of thought it would be sort of a quirky, off-beat, "business unusual" sort of thing, which I also am attracted to, but over time I quickly became the go-to guy for a lot of disgruntled consumers and disgruntled employees about what's going on out there, and saw that there was very much a need and a purpose to want to rail against corporate thuggery and corporate arrogance. ...

Now I'm very pleased with where the column is at. Not only can I get on my soapbox and thump my chest from time to time if I want to but sometimes my work can actually have some influence and do some good for consumers. And there's just not enough journalists out there doing that right now. ...

Everywhere I've worked in journalism I've ended up being a columnist. So I think I'm temperamentally suited to the needs of the craft, where you're going to go one step beyond the reporting and the telling, and actually put some topspin on it. Or come to some conclusions or try and become more solution-oriented in your reporting. ...

I don't think there's any mistaking that my work is fairly populist in its sentiment. The rap on what I do is that I'm anti-business -- that's what my critics like to say most often than not. I see myself more as pro-accountability. ... Corporations should be accountable. And if you're going to do something, especially if it affects thousands or millions of customers, you should be able to defend that policy. ...

You do have a reputation -- and you probably have several reputations, depending on who you talk to. I'm sure you're familiar with Chronwatch, the conservative Web site?

They don't like me.

Yeah, they have labeled you, “David Lazarus, Leftist at Large,” and refer to your “purely emotional, anti-business, largely inaccurate view of the power problem,” referring to your reporting on the power crisis of 2000 and 2001. And you did have particularly harsh words for some executives, such as Enron’s CEO Ken Lay, which might explain that position. Do you get this criticism much, do you get criticism from the other side as well, and does it bother you? Or does it encourage you?

Well, with the Chronwatch people, these guys are obviously coming from their little right-wing corner, and they have a fairly narrow worldview. I've tried to engage them. When they first started posting things about me I politely wrote back. One of the first things they said about me was, "Oh, David doesn't know anything about business." And I wrote back and basically told them what my background is and what my experience is and why I do feel that I'm as qualified as many business journalists to comment on the business world. ... I welcome their feedback. I welcome any feedback, because it's always going to be positive and constructive for me. ...

Do you feel your peers in the field are well enough prepared to ask the right questions of business leaders who might have something to hide amid their 10K statements and annual reports?

Sometimes my work can actually have some influence and do some good for consumers. And there's just not enough journalists out there doing that right now.

I think business journalists overall could probably stand to apply themselves more to studying the arcana of regulatory filings. Clearly the Enron debacle showed that if business and financial journalists were more adept at understanding a lot of the filings coming out, they would have caught these things sooner.

Many of the journalists who then parsed what happened with Enron, the question they all asked themselves was, "How come we didn't see this coming? How come we didn't see this earlier? The answer was that Enron was very skillful at hiding it. But once you knew what to look for, a lot of those bits and pieces were in the filings. In this case, they deliberately obfuscated, so you really wouldn't have known. ...

Good business journalism, it should bring the game to life. It should show that we are talking about real people with real stakes, and that many times the business world and corporate activities are a blood sport. You can keep score, because there is money involved, and you can actually see people getting hurt, i.e., customers and consumers getting trashed by disdainful or contemptuous corporations that really are focused solely on their bottom line and no longer [on] customer service. ...

You need to be able to tell the story in a way that is going to make a lay readership or a mainstream readership understand the stakes and understand why they should care about this. I think that's an extremely important thing that most business sections that I read don't really seem to aspire to.

These days reporters in Washington are being blamed, and have to a great degree accepted blame, for not catching the deceptions coming out of Washington from the Iraqi National Congress, intelligence agencies and the Bush administration when it came to Iraq’s military threat. In the same vein, do you think that business reporters in Northern California specifically deserve to shoulder more responsibility for the missing the signals that the high-tech investment bubble was about to burst? In retrospect, what were the telltale signs of an economic meltdown that journalists missed?

Well, in the case of the tech bubble, if we're going to talk about that exclusively, I think there was enough cynicism in the local press -- there were red flags going up even at the height of the bubble. It was very clear that we were experiencing a bubble and the tulip metaphor very quickly surfaced. ...

That's not to say there wasn't a lot of cheerleading going on. Clearly the media got caught up in the hype. And much of the hype was both -- it fed off of the hype coming out of Silicon Valley, and then the hype of Silicon Valley was feeding off of the supportive cheerleading coming out of the media. So you got into, in a sense, a vicious cycle there. ...

Can you give me an example from your own reporting over the last couple of years where this experience has changed the way you ask questions?

I'd say in my case it wasn't so much the dot-com meltdown as much as my brushes with the financial services sector, and the way that they were approaching their customers on a variety of issues, whether it's service, or one of my particular bette noirs, privacy.

I learned that it's OK to question authority, because authority sometimes hasn't asked itself these questions.

It was my digging into the privacy issue that really opened my eyes to corporate interests versus consumer interests. And how these are going to clash from time to time. And when they do clash, there really aren't a lot of champions for the consumers, who can step up and say, "Wait a minute, what about us?" or even more importantly, "This is wrong, what are you going to do about it?" ...

Consumers of these companies have every right to be shocked. No least of which was when I reported that a Wells Fargo consultant here in the Bay Area had his office broken into, had his computer stolen and had thousands of customer Social Security numbers taken in the process. That raises very serious questions about what is that data doing outside of Wells Fargo's corporate headquarters? ...

In the case of my work on those types of stories I learned that it's OK to question authority, because authority sometimes hasn't asked itself these questions. ...

Can you generalize what appears to be your the visceral revulsion to PG&E executives for receiving millions of dollars worth of bonuses just before the company declared bankruptcy? Is this a sign of some larger trend in the business world?

Well, "visceral revulsion" is a strong way of putting it. I think I would more just say that as with a lot of cases of bloated executive compensation I have a healthy sense of outrage and injustice when that sort of thing happens. ...

So that's where I come from in terms of exposing, I think, certain standards of corporate behavior that I find are very consumer unfriendly, or at the very least, give a perception of misplaced priorities. And I think, judging from the e-mail I get, which runs into the hundreds per column, customers and consumers feel the exact same way. And unfortunately in today's corporate world, many people feel disempowered and disenfranchised in this process. I get a healthy sense of relief when I vent like that, and I also get a healthy sense of frustration from many people that they hadn't had any way to vent their own personal resentment or frustration prior to seeing the words in print. ...

Do you think that journalists tend to see it from that perspective? Or do you see a movement one way or the other in terms of seeing business from the bottom up instead of from the top down?

No, I don't see a lot of very aggressive consumer reporting in the United States right now. Which is unfortunate. It used to be a very active thing. Certainly Ralph Nader gets a huge debt of gratitude from anybody who has entered into the consumer field, because this guy pioneered the use of consumer power to affect positive change in society. Nader of course has a lot to answer for at the moment on the political front, but his accomplishments in terms of seatbelts and airbags and other such things are indisputable. Anyone who covers consumer affairs could only aspire to have such a positive impact as he did.

When I look at consumer reporting now, the bulk of it seems to be of the Q&A kind of thing -- "Oh, I just took my car to a muffler shop and I think I got [overcharged], what can you do about it?" And then the answer man contacts the Better Business Bureau and gives you some advice on what to do. That seems to be the level of consumer reporting out there right now. I don't have a lot of patience for that picayune kind of thing.

I wear two hats. I'm an investigative reporter who writes a like a columnist, or I'm a columnist who behaves like an investigative reporter, depending on how you want to slice it. And I apply that skill set to trying to advance consumer and customer issues as much as I can. ...

Last year my work resulted in about a dozen state and federal bills being introduced, which is great. Unfortunately none of them have passed yet. But some of them are still pending, and if any of them could create legislative safeguards for customers, then that's what this whole thing's about. ...

I have a friend who's been a journalist in Japan, and he said the Japanese press had a habit of looking at the foreign press reporting on Japan. Did you find that dynamic going on?

Oh, that's exactly it. There's two dynamics at work right there. On the one hand there's a structure called keisha clubs, which translates as "reporter clubs." The way beat reporting works, at least in covering the government, and then also in covering a number of the business associations that have so much power, is that you have these "clubs" of reporters who are assigned to cover these entities and they work out of the relevant government ministry or the economic agency and they are beholden to them. And so there is this very intimate relationship but they don't bite the hand that feeds. ...

I think the greatest danger to modern journalism is complacency.

The other side of the coin that you mentioned is something called gaiatsu. Gaiatsu could translate as "foreign pressure." Japan has historically in the modern era has relied heavily on gaiatsu to affect change because Japan suffers from an enormous amount of inertia when it comes to change. ...

In the case of how the keisha clubs and gaiatsu come together, yes, many of the Japanese journalists I know wouldn't dream of breaking a scandal story, for fear of bringing down the wrath of the keisha club. And therefore they will leak information to a foreign reporter who will then break it in the Western press and then that gives the Japanese press the license to go after it, because then they can say, "The Washington Post reported yesterday that blah, blah, blah." And suddenly, they're on the story. So they require that as a door to get in, and I saw it time and time again. ...

Do you see any analogies or lessons for the American press in the way that the Japanese press operates?

Well, obviously our structures are different. We have beat reporters who might get too close to their sources. That's why it's not a bad idea to cycle beat reporters in and out with, say, three- or five-year intervals. There's a lot to be said for that, even though the downside is you're going to lose someone who builds up an enormous level of expertise and knowledge. ...

I think at the end of the day it's simply part of the journalist's obligation to remain questioning, to remain skeptical when warranted -- to be cynical, even, when warranted -- and to not be afraid to challenge authority.

I think the greatest danger to modern journalism is complacency. There's so much information out there, there's so much data on the loose that one thing I've seen in the modern press is just this growing complacency to not question authority when things come up that do merit investigation, and to not be aggressive when pressing it home and serving as the Fourth Estate, serving as that check or balance in the equation.

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