Talking with Pat McGovern, you wouldn’t automatically label him as a “media mogul.” He doesn’t exhibit the ego or display the bombast you think of with empire builders like Rupert Murdoch, Barry Diller, or Ted Turner. He comes across more as a jovial and caring grandfather, than he does as someone who needs to leave his mark globally.

But as founder and chairman of IDG—International Data Group—a mogul is exactly what McGovern is. He presides over a diverse media company that last year had more than $3 billion in revenue, employed 13,000 people, and operated 200 magazines and 460 websites worldwide. Among the company’s best-known titles are PC World, Macworld, and Computerworld. But it also owns the foreign publishing rights in China to such broad consumer titles as Cosmopolitan, National Geographic, and Esquire.

McGovern, a 73-year-old billionaire (Forbes pegs him at 130 on their list of the 400 richest people in America), sat and chatted with me during a recent trip to New York. Following are highlights from the conversation, which touched on the nature of entrepreneurship today, IDG’s success in the Chinese market, the shift from print to online, his support for brain research, and his approach to rewarding his employees.

On the differences in entrepreneurs today versus 1964, when he and a friend created International Data Corporation, a market research company, which was the forerunner of IDG:

When I was starting in 1964, there was virtually no venture capital, and in a way I was lucky. I couldn’t raise money from others, so I really raised all my money from my customers. We called them non-equity investors. They didn’t pay interest, they didn’t own stock, but once they made a commitment, they called their friends and said, "I want to make sure McGovern survives, so you should buy his service too." So they became missionaries for me.

Now there’s so much money out there that the entrepreneur says, "My first job is to raise the money, so I’ll spend all my time just making a conceptual business plan, make it seem exciting, then I’ll go and try and raise the money, then I’ll go to market and find out if I can succeed." Eight out of 10 companies backed in Silicon Valley never really make any return on investment because they started on the wrong end. What they should do is go out and find something that needs a real solid need that they can fulfill and then come back and say, "Here are the customers, here are the orders, and this is how much I need to provide working capital for my cash flow for the business."

On his approach to investing in companies and being a venture capitalist:

I remember coming back from a trip and seeing a big stack of paper in my in-basket asking for approval of this new hire or this new project, and I thought, I’m slowing the company’s progress because they’re waiting for me to make decisions…. If there was a key [to success], it would be choose a good market and get a very passionate entrepreneur who is able to hire and inspire a team to do the work and let them go ahead and engage their time on the customer side, report back to headquarters, and then just celebrate—treat them the way you’d like to be treated. People like to have their success celebrated, and so you should be a cheerleader for them.

People tell us, "You’re like a venture-capital company because you invest in entrepreneurs who run their businesses. The only difference is you’re not planning on selling these companies off in five or seven years. You’re growing them to be part of IDG."

On breaking into the Chinese market early:

We were fortunate to be the first company to start a joint venture in China in 1980. We invested a quarter-of-a-million dollars to start a weekly newspaper about computers, and we’ve made over $83 million as profit from that project over the last 30 years. If you reinvested the profits from China back into China, they would give you half of your taxes back. That was an incentive.

In '92 and '93, the country was dominated by state-owned enterprises and still only about 10 or 15 percent private sector. There was no stock market available. You couldn’t form stock-based companies, so you couldn’t do stock options. People said we were crazy, but we met with the Chinese president, who happened to have been at the Ministry of Electronics, so he knew our publication activity. And he said, "We need you to draw the talented people back to China. We need to have that Silicon Valley environment in China. We’re going to move from a manufacturing society to an information society, and we’ll welcome your venture capital." [McGovern rattled off a series of early IDG investments in China, including the Chinese search engine Baidu and the real estate company SoHo, both of which saw significant returns on their investments.]

All of a sudden, the VC community and Silicon Valley said: "We were wrong here. We laughed at this crazy guy McGovern, who was investing in China where we thought there was no chance of success, and he’s making a fortune." In the last five or six years, any company of any substantial size in Silicon Valley has rushed to get their funds started over in china. We’re still regarded as the most desirable venture investor in China, and we started off with a $100 million fund back in 1992 and now have $3.5 billion dollars to invest in China.

On the secret to running a successful business in China:

Adjust totally to the local market conditions. We’re in 90 countries, and not a single employee is a foreign national, they’re all local nationals to that country. We think the local people really understand how to serve local needs. A lot of problems that U.S. companies have had when they started in China is they said, "We’re going to bring to China our winning ways that we’ve developed here in the U.S." And of course the culture is different, the attitude towards business is different—it’s a very sort of family-oriented, personal-relationship approach to business. First they have to know who you are, and you have to build up trust as a human being, and then they’ll do business with you after they become comfortable with your personality. In Germany, for example, there’s a Western style of thinking, so logically if the spec sheet is good, if the price is good, then we’ll buy the product. It doesn’t work in Asia. First you have to trust the people, and whatever you’re buying is a secondary concern.

On the shift from traditional publishing, to Web-only publishing:

If you have information, where time is valuable —business information, financial information, information on how to do your job, business to business—that is going all on to the Web because that information is more valuable to you the faster you know it. When we had a weekly newspaper and a website, where together they’d break even, and then we’d cancel the weekly print and only go with the website, a year later, the actual size of the business would grow. It would have, like, 10 percent revenue growth because everyone would concentrate on making the Web really great. You can triple your investment in content on the Web and still make more money, so we think the B-to-B side is going to be all Web-based, but the aspirational publications—magazines about yachting or travel or how to cook or where to buy the latest clothes—that’s not something you particularly have an urgent time need for. So I think there’s always going to be a role for the fancy consumer magazines that let people think about and dream about their future.

On business options for media entrepreneurs within IDG:

You can launch a special-interest website, creating your own blog and then getting other people to contribute for $10,000 a month total cost, and then there are all these advertising networks that will represent your site. You go out and sell your advertisers, you can get income from these ad networks at maybe $15,000 a month. So you have the proliferation of all these entrepreneurs creating niche websites and getting maybe 20,000 to 40,000 regular people coming to the site who are passionate about that one special thing, offering some very special information about that field.

For sites we find interesting, what we do is say, "Right now, you don’t know month to month where your income is coming from. Join us. We’ll pay you $15,000 a month and then give a share of the revenue." And they’ll say, "That’s great. I can do exactly what I’m doing, except now I know I can pay my mortgage." Then we go out and we become the exclusive ad rep for 500 of these sites—we call it the IDG tech network—and we sell advertising to all the big companies that get spread around these sites. And then we do a 50-50 split with the site owners, so we have no product costs and selling costs maybe 20 percent—and then we’re keeping 50 percent, so it turns out to be a profitable business.

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J. Jennings Moss is editor of Portfolio.com.