Most Powerful Women

The many lives of Susan Lyne

October 3, 2011: 5:00 AM ET

She's worked with Rupert Murdoch, Martha Stewart, Jane Fonda, and Michael Eisner. She helped put Patty Hearst in jail and Desperate Housewives on the air. Now she's at Gilt Groupe, the hot luxury website, and she's making herself over once again.

By Jennifer Reingold, senior editor

Lyne, at home in her Manhattan apartment, has traveled an interesting road since dropping out of Berkeley.

FORTUNE -- Some résumés are a lot more fun to read than others. Consider that of Hedy Lamarr, the sultry Austrian movie star of the 1930s. She was also something of a rocket scientist, who patented a radio guidance system later used by the U.S. military. Vladimir Nabokov made great contributions not only to literature but also to lepidoptery (the study of moths and butterflies). Duff McKagan rocked out as bassist of Guns N' Roses; today, improbably, he runs a wealth-management firm.

Which brings us to Susan Lyne, the 61-year-old chairman of Gilt Groupe, the hot e-commerce site that sells designer everything from tutus to truffles. Lyne may not have made the kind of contribution to national security that, say, Lamarr did. But imagine a world without Desperate Housewives, or sophisticated movie magazines, or the ability to buy a Valentino bag at 70% off from the comfort of your office at exactly 12:01 p.m. every day. That's the drab existence to which we would be condemned had not the peripatetic Lyne (rhymes with wine) helped bring those things to life. (Although the sales at Gilt Groupe, in truth, have not been good at all for my kids' college funds.)

Lyne is a professional shape-shifter, and she has found great success by taking a distinctly unorthodox approach to her career. Today she is one of Internet 2.0's top names, as comfortable on a panel with the likes of Sheryl Sandberg as she is talking iPad strategy with Gilt's developers. She sits on the board of AOL (AOL), where fellow director Jim Stengel calls her "the ideal board member." But just a few years ago, when she became CEO of Martha Stewart Living Omnimedia (MSO), she was a self-described Net novice. Before that she was a top programming exec at ABC; before that, a magazine editor; once, long ago, a happening hippie.

Yet there are a few common threads running through Susan Lyne's career. First is that she has always been drawn to "where the heat is," as she puts it. Rather than stick with what's familiar, "I've taken a leap of faith on several occasions," she says. "And in every case, on some level, I've become a beginner again."

Another skein is that she's written her own script. In an era when professional women were told to walk a narrow path if they wanted success, Lyne did the opposite. She chooses jobs because they interest her, not because they are the next rung; she finds time for her family; she relies on natural charm and a gracious manner over guns-blazing power plays. "Her grace and EQ [emotional intelligence quotient] are off the charts," says Nick Beim, general partner at Matrix Partners and Gilt Groupe's largest shareholder. She is also, say her fans, nearly unflappable. It's a quality that has proved a welcome contrast to some of the larger-than-life personalities (Rupert? Martha? Jane Fonda? Hello?) with whom she has worked.

Lyne's collaborative style may, in fact, be better suited to today's uncertain business environment than the traditional command-and-control approach. She wears her leader mantle like a cashmere shawl rather than a suit of armor; her ego is there, but it's one of the last things you notice about her. In other words, she doesn't act much like a man. She has become an exceptional leader and mentor, particularly for women, who describe her as a sort of earth mama in Armani. Lyne has her finger on the pulse of popular culture, yes, but what she's great at, it turns out, is getting creative types to do their very best work.

Not your run-of-the-mill radical

"The me of 40 years ago would definitely recognize me," Lyne says with a wry smile over a glass of Pinot Grigio on the Upper East Side of New York City. I'm not so sure: She's a perfect match for Madison Avenue -- a cool, swanlike blonde with the kind of effortless style that most of us aspire to but never manage to pull off. She speaks slowly and quietly, with an apologetic throat-clearing when she's about to say something tough. She is the perfect brand ambassador for Gilt Groupe.

But the Susan Lyne of the early 1970s wasn't exactly thinking about new ways to move Pucci gowns and Calvin Klein suits; she devoted her days to overthrowing the rich rather than marketing to them. And she bought her clothes at Goodwill.

Lyne grew up in privilege -- the eldest of five children (four of them daughters) of a prosperous, Boston-area, Irish Catholic family. Her father, Eugene Lyne, was a lawyer-turned-entrepreneur who taught her to be open to the world -- but not as open as she turned out to be: In four years she managed to drop out of art school, George Washington University, and U.C. Berkeley. "I never really thought twice about leaving school," she says today. "It was a moment when we felt we were going to change history."

Even as a 19-year-old, Lyne had a talent for connecting with the highest-wattage people in town. In Berkeley her closest comrades were, in fact, comrades; she lived in a house run by The Red Family, Tom Hayden's commune. She did silk-screen art and candlemaking projects at the Blue Fairyland preschool for kids, including Jane Fonda's daughter. Even then, she was not your run-of-the-mill radical. "She was never a hippie-dippie type," says Robert Scheer, the journalist and activist (and Lyne's boyfriend at the time). "She was eager to explore the world; she was not a bitter rebel person. But she was nobody's fool, ever."

Lyne was also not much of a leader. "I was not that person with a megaphone," she says. She realized she enjoyed being close to power, without having to wield it.

From hippie to haute couture: A Susan Lyne scrapbook

Lyne grew out of that scene and moved to San Francisco in 1975 in search of the next thing. She found it in magazines, landing a gig at City, Frances Ford Coppola's Bay Area answer to Clay Felker's New York. It was there she realized that she was good -- really good -- at helping other people do their own work better. "I could write a piece and it would be fine," she says, "but I could assign a piece and it would be brilliant. I could make another person's work that much better by the questions I asked."

After City, Lyne jumped to New Times, the edgy biweekly run by Jonathan Larsen. There, working with her now ex-beau Scheer, she got one of the biggest scoops of the era: the first jailhouse interview with Bill and Emily Harris, members of the Symbionese Liberation Army, the radical cell that had kidnapped heiress Patricia Hearst in 1974.

In the New Times interview, Emily Harris made reference to a monkey-face statuette that Hearst's kidnapper -- and, later, lover -- Willie Wolfe had given her. The lawyer prosecuting Hearst, James Browning, read the piece, then reviewed the contents of her purse when she was arrested. There was the monkey face. Browning argued that if she had been forced to participate in an armed robbery, she wouldn't be carrying around a gift from her kidnapper. Hearst went to jail for 22 months.

Even then, Lyne had a sixth sense for when a place had peaked. In 1978, she left New Times -- which folded in 1979 -- to become managing editor of the Village Voice. Rather than waiting for the top job, Lyne took another leap and signed on with IPC Films, the company founded by Jane Fonda (her Blue Fairyland buddy). Lyne's job was to discover articles that could be turned into movies.

Yet it so happened that a movie was complicating her home life. In 1984, Lyne married George Crile III, a producer and reporter at 60 Minutes. Two years earlier, the documentary he produced with Mike Wallace, The Uncounted Enemy: A Vietnam Deception, aired, charging that Gen. William Westmoreland had deliberately downplayed the strength of the North Vietnamese, deepening U.S. involvement in an unwinnable war. Westmoreland sued CBS and Crile for libel and $120 million in damages, and the trial began in 1984.

If the Patty Hearst case was the trial of its era, this was arguably the 1980s equivalent. Crile was castigated as both un-American and a sloppy reporter, but with the help of lawyer David Boies -- who had never tried a libel case -- he was vindicated in 1985, when Westmoreland abruptly settled for a statement that CBS had not intended to impugn his patriotism. Lyne, says Boies, who has remained a close friend, was a huge calming influence on Crile. "She played a critical role in keeping his spirits up," Boies says. "And she was so cool in a crisis."

The premiere of Premiere

Lyne chafed at the slow pace of movie development at Jane Fonda's company, but she made a discovery there: The VCR was reinvigorating film as a cultural touchstone. "I was seeing a technological invention that changed the way people spent their time," she says, "and therefore what they cared about." Opening her deep Rolodex -- remember, she tells employees, "you will meet these people over and over again" -- she pitched Rupert Murdoch, who had owned the Voice, on creating a magazine about movies based loosely on a French publication. It would use top writers to explore the film business rather than simply sucking up to movie stars. When it launched in 1987, the magazine, Premiere, sold out its first run in two weeks.

It was at Premiere, says Lyne, that she learned that she was good at -- and liked -- being in charge. She stood out in journalism -- a field known for blatant disregard of any kind of management -- as the kind of boss who gave writers a lot of freedom and who remembered to ask them about their kids. "I absolutely loved working for her," says Cyndi Stivers, who was Premiere's deputy editor, and who worked for Lyne again at Martha Stewart. "She is decisive, she listens, she loves to brainstorm." She also was unafraid to tackle icons like Robert Redford, whose Sundance Institute was the subject of one critical piece.

Leading as a woman, even in the late 1980s, presented challenges. Soon after starting Premiere, Lyne became pregnant with her second daughter. She hid it for five months (good thing boxy jackets were in!). Lyne went into labor on the way to a screening with colleagues. She switched taxis, had her daughter, Jane, within 10 minutes of arriving at the hospital, and went back to work three weeks later.

Lyne stayed at Premiere for eight years, then zigzagged again when Joe Roth, then the head of Walt Disney Studios, pitched her on developing first films, then made-for-TV movies. "In my 40 years in the business," says Roth, now head of Revolution Studios, "I've rarely asked anyone [out of the business] to come in. But she had great business skills and great people skills and great taste."

Lyne: "I've taken a leap of faith on several occasions. And in every case, on some level, i've become a beginner again."

At first Lyne seemed a natural, greenlighting successful miniseries about Anne Frank and Judy Garland. She gained the attention of CEO Michael Eisner and, in 2002, was promoted to president of ABC Entertainment. Her mandate was simple -- but close to impossible: get ABC out of the ratings basement and restore it to the glory it had when Eisner ran it back in the 1970s.

It was here that Lyne first tasted failure. At Disney (DIS), even Mickey Mouse would have had to watch his back at the time. Eisner was under fire, president Bob Iger was trying to prove himself a worthy successor, and the network hadn't had a hit in years. Lloyd Braun, ABC's chairman and Lyne's boss, butted heads with Iger over many things, including his and Lyne's support of a wildly ambitious (and wildly expensive) drama called Lost.

Lyne was excited about new shows she'd aimed at women, whom she saw as an underserved market. There was Grey's Anatomy, which she picked over a cop show. Then there was a quirky dramedy called Desperate Housewives, about the secret lives of the women who lived on a suburban street called Wisteria Lane. "She takes the script and plops it on my desk," says Braun. "I look at it and go, 'Good title, Susan.' She goes, 'Read this tonight -- I love it!' She knew."

In April 2004, just a few weeks before ABC introduced its fall lineup, Braun got the hook. So, two weeks later, did Lyne, though Iger had said publicly that she was safe. Lyne was devastated: She had always been the one to quit; she had never even looked for a job before. "It was the first job," she says, "where I felt like I wasn't done yet." It was a public hanging -- and it came before her second full season had gone on the air. But although Lyne was furious -- she ignored Eisner's phone calls for a few weeks -- she did ultimately let go of the grudge. "One thing I have learned over time," she says, is not to "worry about all the small slights and political things. It's such a huge time suck and such a girl thing." Desperate Housewives won six Emmys in its first year, and its pilot was the highest-rated new show for ABC since 1996.

Life with Martha

Getting fired, says Lyne, turned out to be a gift, because it led her to her first CEO job. Lyne initially agreed to join the board of Martha Stewart Living Omnimedia (MSLO), which hoped she could help extend the brand. But suddenly the brand itself was heading to jail, and the CEO, Sharon Patrick, was ousted. In part because of her measured style -- a distinct contrast to the more voluble Stewart -- Lyne emerged as a natural candidate to lead the company in a time of turmoil, taking over as CEO in November 2004. "She was such a great match for the brand," says Wenda Millard, a fellow director and, after Lyne left, co-CEO. "And she engendered confidence and trust in people."

At first, Lyne fit with Martha Stewart like a pinecone finial atop a Christmas lantern. "She instantly insinuated herself into the brand and understood what was needed to move it forward," says Rick Boyko, a former director. Lyne made regular pilgrimages to "Camp Cupcake," where Martha was a guest of the federal government in West Virginia, to play Scrabble and brainstorm. She diversified the company; she cut costs and boosted morale both inside MSLO and with advertisers, whom she helped convince that the drama was finally coming to an end. She even looked like Martha: New York called her Stewart's "blonde doppelgänger," then twisted the knife: "Whereas Martha is the image of a nurturer," it read, "Lyne, by all accounts, is an actual nurturer."

And then, suddenly, it was Lyne who needed nurturing. In late 2005, less than a year after she took over as CEO, her husband, George Crile, was diagnosed with pancreatic cancer. Lyne continued to work full-time, speaking at analyst meetings, reviewing joint ventures, helping to choose fonts and fabric. But inside she suffered along with her husband, an adventurer who wrote the book Charlie Wilson's War and interviewed al Qaeda members before 9/11. "I needed a thread to the future," she says, "something that would connect me to life after George. Work was an antidote to the sadness. I can't tell you it was the right decision, but it felt like salvation at the time."

On May 15, 2006, Crile died. Lyne continued on as CEO, but with less comfort than before. Although Stewart was legally barred from running the company, she controlled the voting rights, and had an ally in her handpicked chairman, Charles Koppelman. Lyne clashed with Stewart and Koppelman about everything from Stewart's pay to the appropriateness of Martha Stewart vitamins. Lyne made mistakes too. She launched a design magazine, Blueprint, but soon realized it was costing far too much. She shuttered it -- then, the next morning, Stewart forced her to rehire every staffer.

In June 2008, Lyne stepped down. Although Stewart and Lyne insist they are good friends today, Stewart wouldn't comment for this story. Lyne's timing suggests that stockholders should leave whenever she does; since she left, MSLO's stock has fallen almost 60%, to $3.51.

At the age of 58, Susan Lyne found herself as untethered as she had been back in Berkeley. She could have retreated to her Beaverkill, N.Y., country home, or traveled the world; she might have run Oprah Winfrey's Harpo, for which she was hotly pursued.

Instead she decided to become an Internet guru, in September 2008 accepting the top job at Gilt. It was Matrix Partners' Beim, an old friend of Lyne's and Gilt Groupe's largest investor, who first connected Lyne to Kevin Ryan, who led digital ad agency DoubleClick and, in 2007, founded Gilt. Sure, it was an Internet 2.0 company, but what it really wanted to be was an online lifestyle brand that offered something for every consumer in its demographic. Ryan knew that Lyne understood brands, and he wanted her Rolodex.

The Most Powerful Women in Business

Lyne started as CEO on the day that Lehman Brothers collapsed. In the ensuing recession she guided the company to explosive growth, reaching some $400 million in revenue and over 500 employees by the end of 2010. "She's never above asking about what she doesn't understand," says Alexis Maybank, Gilt's co-founder and chief marketing officer. "I watched her dive in and get her hands around every catch phrase, get the engineers to explain to her what it was that they did day in and day out." The ordeal with her husband, Lyne says, made her a better manager -- and person. "What I gained from that time," she says, "was learning to give 100% to the person I'm talking to rather than obsessing about all the things I should be doing instead."

In September 2010, Lyne moved up to chairman; Ryan says they are "partners," but that his experience bringing companies to market means he should have the title when Gilt goes public. Lyne, for her part, waves off the title change, noting that many of the company's channels and new ventures report to her.

In a September meeting to go over the iPad app prototype for Gilt's gourmet food site, called Taste, Lyne comes across as self-assured and in charge -- though she makes sure to warm up the room before they get down to business. "I made that raw tomato pasta recipe yesterday," she says. "It. Was. Fabulous." But what does she think of the app? She clears her throat, then speaks. "If we're building an app that is going to be the best experience for making a recipe," she says, "you want to let people pull in other recipes that they love." Shouldn't people keep their recipe files on Gilt Taste and use the site to buy ingredients? She offers to set up her own page of favorite recipes to get things started.

The room is silent. Then Ruth Reichl, the feisty former editor of Gourmet and Taste's editorial adviser, speaks up. "That's an incredible idea," she says. "We hadn't thought about it." The meeting shifts -- from a presentation to an enthusiastic interaction. Says Reichl, feigning annoyance: "She always asks the one smart question."

With Gilt Groupe shooting for an IPO sometime next year, it's unlikely that Lyne will move to a new post anytime soon. But if and when she does, what will it be? Lyne was, in fact, screenwriter Rod Lurie's inspiration for the character of the first woman president in the TV show Commander-in-Chief. As he told New York Times columnist Maureen Dowd at the time, he wanted someone "of rather unimpeachable integrity, very kind, very calm." Yes, but that was just a fantasy.

Wasn't it?

This article is from the October 17, 2011 issue of Fortune.

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