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This is Capitalism: Up Close, Inspired, Explained

Mar 8, 2019

Charles Morgan is a lot of fun to be around and to learn from. He learned about business first from working with his father, starting when he was a little boy. As IBM’s top systems engineer for the entire state of Arkansas, Charles sold Sam Walton his first IBM System 360 Mainframe, which allowed Walmart to take off. He’s a pioneer of big data, having built one of the first companies in the industry, Acxiom Corp. And now, at a time when most of his contemporaries are retired, he’s having fun being a very hands-on CEO at First Orion, whose Privacy Star app is blocking literally billions of scam calls. But then, he has also driven the 24-hours at Daytona, and at most of the other major tracks around the U.S., too. He has the X-rays to show for it.


Key Takeaways:

[:25] Ray Hoffman introduces the guest, Charles Morgan, First Orion CEO.

[1:30] What shaped Charles and gave him the confidence to take on the risk that allows the reward in capitalism? Charles credits the DNA he inherited from his father and grandfather. He says a family history of starting businesses helps. He wasn’t afraid of entrepreneurism and worked in the family business.

[2:32] Charles doesn’t think it was courage that drove him but just the understanding that entrepreneurism is what he ought to do.

[2:39] Charles sees capitalism as the freedom to pursue your own talent and interests in a business sense that allows you to be all you can be for yourself, for your creative side, and for your family. That is also, for Charles, the essence of the joy of life.

[3:09] Charles would not do well in a controlled environment with little or no self-direction.

[3:30] Why is Charles, at age 76, still heavily involved as a CEO? He says his wife is pleased that she is free to do lunch with whomever she wants, as Charles is at work!

[4:18] Charles is a geek at heart and loves problem-solving. His enjoyment in racing comes from the technical problem-solving of getting a car setup right. Charles has designed some race cars.

[4:39] Charles likes people problem-solving and business problem-solving; coming up with a really good organizational strategy can be an exciting thing. Innovation, producing results for the customer, and putting the right person in charge of each area, are important for small companies like First Orion or large companies like Acxiom.

[5:09] Business is and always has been a ‘people game.’

[5:12] Charles still loves technical problems. He is still programming prototype software for the solutions First Orion offers. Charles wakes up at 5:00 a.m. and goes to his computer to work on the current problem for an uninterrupted couple of hours. Then he goes to work at 9:00 a.m.

[5:57] Charles says we all decide what to do with our lives. He believes retirement is the freedom to be able to get up every day and do what you love to do. Everybody’s job ought to be retirement every day, from the age of 21 on.

[6:32] In Charles’s first book, Matters of Life and Data, he said his businessman father understood reward but not risk. His father had the vision for opportunities but did not understand how to make them happen —  how to get the right people doing the right things, and where to take the right risks. He didn’t achieve the level of focus he needed.

[7:23] In his father’s hardware business, he diverged from hardware to wood doors and frames, aluminum windows, and plywood. He tried to be all things to all people. He didn’t have the discipline to decide how his business would grow and where he would get the resources to grow it. It was helter-skelter.

[7:59] His father knew the reward he wanted was a successful business but he couldn’t organize it very well.

[8:16] At age 17, at the direction of his father, Charles took a truck and drove his 15-year-old brother from Fort Smith to the Andersen Window factory in Philadelphia for Charles to pick up a load of windows and pitch to the Andersen brothers an improvement on their window design. His father had sent a letter to Andersen about it.
[9:44] The Andersen brothers had a conference room prepared for them, with the company engineers ready to hear his presentation. Charles explained it to them and they were very interested to see if they could incorporate the idea into their windows.

[10:12] That night, Charles and his brother headed on a train to New York City for two plays their father had bought tickets for them to see. They picked up the tickets at will-call. After two nights in New York, they took the train back to Philadelphia and drove back to Fort Smith with their window order.

[10:52] In 1966, Charles started his first career job at IBM. He was made the top systems engineer for IBM for Arkansas.

[10:59] In Charles’s book, What Now?, he recalls a lesson he learned early on from a senior IBM executive. He was told never to burn bridges with someone at work, whether it’s a poor employee or a bad boss. Respect them as human beings. Circumstances change and you may work together again. Decades later, that advice still serves.

[12:05] Charles made his first investment in First Orion/ PrivacyStar when a representative presented it to him as a concept of putting software into the switching systems of telecoms’ networks to allow individual customers of the telecom to block numbers that they didn’t want to call them.

[12:43] The obstacle ahead of them was that the telecoms weren’t interested in granting network access to outside software engineers. So that idea didn’t work.

[12:56] The idea came at a time when Charles expected he would be leaving Acxiom and he was looking for something “to dabble with.” Charles moved to Dallas and invested in First Orion with $1 million with Jeff Stalnaker, the COO. At first, Charles was not expecting to become extremely involved with the investment.

[13:44] Charles talks about how he left Acxiom, as the face of the company. He had been getting tired of the process of running a company of that size and new regulations, such as the Sarbanes-Oxley Act of 2002, added to the burden. A large investor, Jeff Ubben, brought a proxy battle, then joined the board and started trying to oust Charles.

[15:58] Charles was tired of the conflict. He invested in First Orion to get his mind off the struggle on the board at Acxiom.

[16:24] Going into First Orion/ PrivacyStar, Charles didn’t keep in his mind how long it took and how difficult it was to build up Acxiom. But he did remember some of the things that didn’t work, so he was able to avoid some of the early mistakes.

[17:27] As the most dominant company in the direct marketing industry, Acxiom got a little cocky at the influence they had. As CEO, Charles could call on executives at any level and knew all the senior guys at major corporations. His son tells him, “You were kind of a big deal!”

[17:50] Charles wrote in his first book, “A good entrepreneur knows what he doesn’t know.” At the beginning of his involvement with First Orion, Charles didn’t know the telecom industry, nor did he know how little the man dragging him into it knew about the telecom industry; most of his claimed knowledge was actually stuff he’d made up.

[18:28] Charles asked his friend, Bill Connor, to meet with the man from First Orion. The meeting didn’t happen until after Charles had put in the $1 million. Bill told him “Well, I hope you’re successful,” but didn’t say what he thought — that the man was a fraud — until Charles cut off the relationship with the man.

[19:31] Charles wrote in his book that “We had no idea of the vastness, the complicatedness, the downright convolutedness of the systems that we were stepping into.” Charles says the networks pre-date IT. There is layer upon layer of technology that all has to work together. Somehow, phone calls get through.

[20:25] First Orion has had to integrate their technology into those networks, thanks only to a bunch of amazing people. The systems, to this day, are very complicated. First Orion interrogates every single phone call to every user of T-Mobile today, to see all its characteristics, to try to figure out if it’s a scam call. It’s a complicated process.

[21:19] Today, PrivacyStar is able to block or identify about 90% of scam calls. If you used to get 30 scam calls a week, that cuts it down to three scam calls. They’re heading to cutting it down to one or fewer a week. They are covering 62 million customers and they see every call that is made to them.

[22:08] There is about 2K of data for each incoming call. This includes where it came from, where it’s going, and the routing that gets it there, the equipment that sent it, and other characteristics of the call.

[22:28] PrivacyStar does not get involved in the voice call itself, and they are careful not to transmit outside of the network the call is being made to, to protect personal information. The only data they take outside the network is not identifiable to the person receiving the call.

[22:53] In ten years, First Orion has come a long way. Eighteen months after Charles’s initial $1 million investment, the company was out of money. Charles had a big decision to make. His gut told him to put more money into it. His worst-case scenario told him he could lose another few million and it would not impact his lifestyle significantly.

[23:53] Charles doesn’t make decisions out of fear, or because he has to. He says people make terrible decisions at times of dissolution of marriage or bankruptcy or another financial nightmare. People should not make decisions at the time of trouble.

[24:25] Charles made the decision that he believed in First Orion for the long-term. The idea was adapted to mobile technology instead of the originally planned wire-line network software.

[24:38] In 2000, Charles started getting excited about mobile technology. In 2009-2010 Charles realized that this little computer you put in your hand was going to change the world. They started with a Blackberry app and realized there would be a lot more mobile devices.

[25:19] A successful entrepreneur or executive needs to be inspired by dealing with multiple difficult issues. If problems worry you to death, you probably ought to be doing something else. When Charles sleeps, he does not want to lay awake worrying.

[25:53] Don’t sit and mope about something — do something about it! Sometimes it’s better to do something, even if it’s wrong. You can’t be frozen by indecision. Take action to move toward a solution. Hit problems head-on.

[26:37] A good entrepreneur has got to move quickly — measuredly but quickly.

[26:56] Charles describes how he went from observing to taking over the company. It came down to the decision to either stop putting money into it to lose or to take over with a plan to turn the company around. He planned for First Orion to make a profit by December of 2013, and they did it.

[28:19] You can’t direct that kind of change from over the fence.

[28:24] It was a problem for Charles to win over the non-believers at the company. Charles came up with a very specific plan with the detailed changes he was going to make in how they organize and approach things. He declared he would take on the task cut their IT cost in half. He delegated other problems at the company to other staff.

[29:19] Charles cut the IT cost by more than half, trading pay cuts for stock options. He wants everybody to be a partner and not an employee. Putting stock in their hands with options does that.

[29:39] You can’t just have good technology. You can’t just have good people. You need good products, good service, and other things. For a small company, these are even more important.

[29:51] Charles is audacious, meeting with senior people like he has a right to have a relationship with them. In the early days at Acxiom, Charles took it on himself as a challenge to meet with senior people at Citi. He kept pushing the relationship higher and higher to the head of the credit card department. The relationship is important.

[31:27] Now, First Orion’s service is important to the senior-most people at T-Mobile and the carriers. So they are getting the same kind of relationship with them. John Legere, T-Mobile CEO, knows very well who First Orion is and has some dialog with First Orion President, Jeff Stalnaker. There is regular communication with top executives.

[32:00] First Orion first thought they were providing a service. Now they see themselves as a data analytics company, using data analytics to make the phone experience better. Charles compares the services of Acxiom and First Orion. It’s all about the data.

[33:26] First Orion uses a massive AWS footprint to do a lot of analytics. They use software in the network that takes the AWS data and builds a knowledge base to compare each phone call against. They do this comparison about 175 million times a day. They send the results of the comparisons back into AWS to update the analytics.

[34:24] They update the analytics every six minutes. It is very challenging to stay ahead of the scammers. The carriers themselves built into the system, for their own reasons, the ability to obscure the source of a call. This was before scam calls were common.

[35:42] First Orion has 50 people continually iterating the software. It can never stop.

[36:02] Scammers today are sending texts and emails with a scam fraud alert phone number for the recipient to call and get scammed. People fall for it in amazing numbers. [36:29] First Orion has blocked or tagged 10 billion calls. The savings to the customers at T-Mobile is now in the billions of dollars.

[37:08] Charles talks about how he recruited some of the early employees to Acxiom, telling them they would have fun and he would do everything he could to make sure they became millionaires.

[37:24] A lot of the reward Charles got between Acxiom and First Orion is being able to help people out. Acxiom made quite a few millionaires. At First Orion, Charles has given out 25% of the company as stock options to the employees. Stockholders will make a lot of money if First Orion is successful.

[38:01] First Orion is looking to monetize. They are generating good cash flow. Charles would like to start buying people’s stock back from them and allow them to monetize significant numbers of dollars and not have to wait until the company is sold. Charles does not really want to run a public company again.

[38:38] What is it about Arkansas water or the soil that has nourished a disproportionate number of very successful entrepreneurs, including the Fords, the Waltons, the Stephens, the Tysons, the Dillards, the Murphys, and the Morgans? Charles used the working title “It’s in the Water” for his book, Now What? as he was fascinated by that.

[39:12] Charles did research the topic and interviewed some of the big names. There is something about the culture of Arkansas that allows success to happen. Charles doesn’t want to preview his next book, but that will be in it!

[39:54] Charles Morgan is capitalism, and This is Capitalism.


Mentioned in This Episode:

Charles Morgan


Sam Walton



First Orion

PrivacyStar App for iPhone

PrivacyStar App for Android

24 Hours at Daytona

Matters of Life and Data: The Remarkable Journey of a Big Data Visionary Whose Work Impacted Millions (Including You), by Charles D. Morgan

Andersen Windows

Now What? The Biography Of A (Finally) Successful Startup, by Charles D. Morgan

Jeff Stalnaker

Sarbanes-Oxley Act of 2002

Jeff Ubben

Bill Dillard



John Legere



Companies based in or started in Arkansas

This Is Capitalism