Dear Don,
As you know, I have been a business partner and personal friend of Mitt Romney since 1977--thirty-five years ago. In the past you have asked me to share some of my memories of Mitt with you and I thought today--our great nation's birthday--would be an appropriate time to do so.
At the outset let me state openly that I am a strong supporter of Mitt and in this campaign I am an active fund-raiser for him (feel free to send your donations to me!). And, although I did not vote for Obama in 2008 (my wife did, although she now says she is "so over Obama" and supports Mitt), I admit I felt proud that our country, with its long and lamentable history of racial problems, had elected its first African-American President. Unfortunately, it now seems to me he was ill-prepared for the job. But I will not recite the publicly-available pro and con arguments in the campaign as you can access those arguments yourself. But my 35 years of association with Mitt do give me what I hope you will agree is a rare insight into what the public Presidential candidate is like in private.
I apologize in advance for the length of this letter but, long as it is, I will have to skip over most of a very long relationship.
First, a little setting of the stage. At the time I graduated from Harvard Business School in 1971, the top-ranked MBAs (top 5% academically) were heavily recruited by and tended to join one of two prestigious strategic consulting firms, McKinsey and Company or the Boston Consulting Group (BCG). I joined BCG where I worked for a charismatic executive named Bill Bain. Two years later, Bill persuaded me and three others to leave with him to form our own consulting firm, Bain and Company. By 1977 demand for our consulting services was severely outstripping our staff levels and we decided to try to "raid" our old firm. We learned that the most highly- regarded young consultant there was Mitt Romney. Apparently Mitt had managed to pursue both the two-year Harvard MBA program and the three year Harvard Law School program simultaneously, graduating from both in only four years while earning high honors in both programs. His work at BCG, which he joined in 1975, was outstanding. I was chosen to make the approach to Mitt, and when I interviewed him I was dazzled. And I have interviewed some outstanding business brains in my day. Other than an inexplicable decision to not use a wonderful first name (Willard) in favor of a weird second name (Mitt), I thought he was perfect and we hired him.
Mitt worked in our consulting practice for seven years, 1977 to 1984. Bain then chose him to start up our new private equity company, Bain Capital, which he built up and led until 2002, with a leave to save the 2002 Winter Olympics. During his consulting years and the first part of his Bain Capital years, I worked closely with him. I then continued to invest as a limited partner in Bain Capital and throughout both periods we maintained a personal friendship. I could tell many stories but in the interest of time I will tell just a few...
On the topic of Mitt's business and economic acumen, Mitt has developed a reputation for excellence in this area (even former President Bill Clinton called his record "sterling" ) and believe me he is the real deal. In action, in a case team meeting or evaluating a business investment, he was brilliant, creative, inspiring, yet also possessing an eye for detail. He was always pushing towards a practical solution, usually focusing on how to achieve the upside he saw. Let me give you two examples.
One of our clients was a large agricultural chemicals producer whose research labs had just invented and patented an exciting new broad-spectrum herbicide. At this stage how to commercialize the new product was quite controversial. It was clearly superior in efficacy and selectivity, but was extremely expensive to produce and would compete with, or "cannibalize" a highly-profitable herbicide also made by the division. Some senior executives wanted to proceed cautiously. Indeed only a very high forecast of demand would justify the massive rollout of sales force additions and advertising other executives advocated. Don, I wish you could have seen a 30-something buttoned-down Mitt out in the Iowa cornfields interviewing farmers and understanding their economics! Mitt's thorough and brilliant analysis convinced the company that a massive rollout would be successful. Billions of dollars of profitable revenue and thousands of jobs ensued.
As you know, I have been a business partner and personal friend of Mitt Romney since 1977--thirty-five years ago. In the past you have asked me to share some of my memories of Mitt with you and I thought today--our great nation's birthday--would be an appropriate time to do so.
At the outset let me state openly that I am a strong supporter of Mitt and in this campaign I am an active fund-raiser for him (feel free to send your donations to me!). And, although I did not vote for Obama in 2008 (my wife did, although she now says she is "so over Obama" and supports Mitt), I admit I felt proud that our country, with its long and lamentable history of racial problems, had elected its first African-American President. Unfortunately, it now seems to me he was ill-prepared for the job. But I will not recite the publicly-available pro and con arguments in the campaign as you can access those arguments yourself. But my 35 years of association with Mitt do give me what I hope you will agree is a rare insight into what the public Presidential candidate is like in private.
I apologize in advance for the length of this letter but, long as it is, I will have to skip over most of a very long relationship.
First, a little setting of the stage. At the time I graduated from Harvard Business School in 1971, the top-ranked MBAs (top 5% academically) were heavily recruited by and tended to join one of two prestigious strategic consulting firms, McKinsey and Company or the Boston Consulting Group (BCG). I joined BCG where I worked for a charismatic executive named Bill Bain. Two years later, Bill persuaded me and three others to leave with him to form our own consulting firm, Bain and Company. By 1977 demand for our consulting services was severely outstripping our staff levels and we decided to try to "raid" our old firm. We learned that the most highly- regarded young consultant there was Mitt Romney. Apparently Mitt had managed to pursue both the two-year Harvard MBA program and the three year Harvard Law School program simultaneously, graduating from both in only four years while earning high honors in both programs. His work at BCG, which he joined in 1975, was outstanding. I was chosen to make the approach to Mitt, and when I interviewed him I was dazzled. And I have interviewed some outstanding business brains in my day. Other than an inexplicable decision to not use a wonderful first name (Willard) in favor of a weird second name (Mitt), I thought he was perfect and we hired him.
Mitt worked in our consulting practice for seven years, 1977 to 1984. Bain then chose him to start up our new private equity company, Bain Capital, which he built up and led until 2002, with a leave to save the 2002 Winter Olympics. During his consulting years and the first part of his Bain Capital years, I worked closely with him. I then continued to invest as a limited partner in Bain Capital and throughout both periods we maintained a personal friendship. I could tell many stories but in the interest of time I will tell just a few...
On the topic of Mitt's business and economic acumen, Mitt has developed a reputation for excellence in this area (even former President Bill Clinton called his record "sterling" ) and believe me he is the real deal. In action, in a case team meeting or evaluating a business investment, he was brilliant, creative, inspiring, yet also possessing an eye for detail. He was always pushing towards a practical solution, usually focusing on how to achieve the upside he saw. Let me give you two examples.
One of our clients was a large agricultural chemicals producer whose research labs had just invented and patented an exciting new broad-spectrum herbicide. At this stage how to commercialize the new product was quite controversial. It was clearly superior in efficacy and selectivity, but was extremely expensive to produce and would compete with, or "cannibalize" a highly-profitable herbicide also made by the division. Some senior executives wanted to proceed cautiously. Indeed only a very high forecast of demand would justify the massive rollout of sales force additions and advertising other executives advocated. Don, I wish you could have seen a 30-something buttoned-down Mitt out in the Iowa cornfields interviewing farmers and understanding their economics! Mitt's thorough and brilliant analysis convinced the company that a massive rollout would be successful. Billions of dollars of profitable revenue and thousands of jobs ensued.
Second is the story of Mitt's first major investment decision at Bain Capital, to invest in the office products start-up Staples. Now everyone can say, after its huge success, what a good and obvious idea it was, but at the time it seemed to most people a loser of an idea. When Mitt presented his proposal to the senior executives at Bain, we gave it a chilly reception to say the least. We thought the average company spend on office products was low and unimportant, that the existing supply channels were doing a good job inventorying and supplying with low margins and that the sleepy Purchasing Departments would not want to disturb their cozy relationships with the existing vendors. Well, it turns out that on these three critical points we were wrong, wrong and wrong and not only a great company, but a great industry was born. Mitt was by turns detailed, relentless and inspiring and got the deal done.
By the way, there is a lot of uninformed talk going around about Bain Capital's job creation record, outsourcing and the like. We should be clear that Bain Capital exists to earn a good return on the investment its limited partners make in its various investment funds. Its investors were principally institutions such as State Retirement and Pension funds, college endowments, Teachers Pension Plans, charitable institutions and private investors such as me. Bain Capital had both a moral and a legal duty as a fiduciary to maximize the profits of these investors. It did not exist in order to make jobs for people. It was not an employment agency. If it acquired a company that was in serious financial trouble and needed a quick turn around, and if that turnaround required reducing staff or shuttering operations which could not be saved, then that is what they did and what they should have done. But I have had the advantage of attending reviews of Bain Capital's investments since 1984 and I do not recall a single example of the "investment thesis" of a proposed deal being to acquire a bad company and somehow make it good by firing a lot of people. The reason is simple: it is hard to make significant profit gains sustained over time doing that. Bain's consulting background meant that people like Mitt looked for deals where they could improve the competitive effectiveness of the company and thus grow profits for a period and then sell the company at a "higher exit multiple" (or price/earnings ratio) than their original purchase price. My estimate is that on about 80% of deals Bain Capital ended up with significant employment growth during their ownership but not because that was their main objective but because that is the best way to show superior returns to their investors. During the time Mitt started and ran Bain Capital and then turned the management of the firm over to people he recruited and trained the investment capital rose from $37 million to over $40 billion. That happens by creating sustained profit growth which you then sell to others at a premium. Any one who claims you do that by firing people is an economic illiterate.
Twenty-five years of growing most companies but seeing some fail makes Mitt an expert on what causes sustainable growth in revenues and profits and thus in employment and what leads to failure. Mitt has it hard-wired in his DNA how employment grows and how it shrinks. He will know what to do from day one.
Another thing that mystifies me is the notion that Mitt's reserve or "stiffness" is a handicap. Mitt grew up in the 50's in a true "Ozzie and Harriet" family with a wonderful (but dignified) and successful mother and father. He then entered a career where you make oral presentations to Company Boards and CEOs and ask large prestigious institutions to invest hundreds of millions of dollars in your private equity fund, despite the fact that you are twenty to thirty years younger than they are. You had better be formal, dignified and polite. They don't want to go have a beer with you, they want you to be trustworthy, diligent and competent. I want that in a President too. But the larger question is, does his reserve translate into being aloof, arrogant, selfish, self-absorbed? Everyone who knows Mitt would say no, absolutely not. This is a man who is genuinely funny, warm and compassionate to others. Let me give you some examples.
First, he can laugh at himself. A year or two after Mitt joined the company we had an annual company meeting. All staff were assembled--probably about 200 in all. We thought it was time for Mitt to make his debut with a presentation to the audience. People who hadn't worked with Mitt but had simply seen him charging through the halls would joke about him looking like the groom on a wedding cake or a Ken doll. Mitt followed my speech so he mounted to the podium next to me. I tried to put the microphone cord over his head but in the brief tangle up his perfectly coiffed, gleaming hair was slightly mussed. Mitt feigned horror and said "Omigosh I broke my hair!" The room collapsed in laughter and Mitt's speech was a hit. Another example occurred at my 60th birthday party at our home on Cape Cod (attended by the way by the Maycumbers and the MacMillans). Mitt was Massachusetts Governor then but he still participated in the Roast. He told many self-deprecating stories about what it was like to work for me when he was a young consultant ("Ralph worked us so hard we didn't have time for sex"). Then Mitt referred to my wife who was seven months pregnant with twins. His comment then was "I know what it's like, Gizelda. When I worked for Ralph he was such a control freak I'm not surprised to learn he has decided to skip a step in the process and make his own grandchildren."
In addition to being genuinely funny, he is thoughtful and sensitive to others. When my dad died, Mitt was still Governor. Somehow he found out that I had lost my dad. He wrote me a sensitive, thoughtful two-page letter--hand-written--expressing his sympathy and discussing the difficulties he experienced when his own father had died. Now family members and friends had expressed their sympathy to me but no one and I mean no one had reached out and touched my inner grief in the way Mitt's letter did. It is a gift of empathy very few people have but Mitt does.
Indeed Mitt is a very private person but his charity to his church and its members to friends and neighbors and numerous charitable causes is enormous. He decided as a young man to tithe to his church and he has done so every year for more than 40 years. He donated every single penny of his inheritance to charity. He has helped countless others with his time, his counsel and his resources. Let me close with a final example.
In the summer of 1996, one of Mitt's partners walked in his office with a problem. His 16-year old daughter had run away from home and taken a train to New York City . He had learned that she was going to a rave party. She had been missing for three days. The father had no leads and was distraught.
Mitt didn't hesitate. He immediately closed the company down. Completely! All 50 partners and employees flew to New York , set up shop in a local hotel, and got to work. Co-ordinating with NYPD, he hired a private detective firm, established a toll-free number for tips, and solicited the help of New York based clients and friends. Hundreds of professionals from Price Waterhouse and Goldman Sachs prowled the mean streets of New York and Central Park night and day. A Bain client printed 300,000 leaflets. Another Bain client had the leaflets handed out in its 300 New York area stores. The frenzied activity led to massive TV and radio publicity.
Finally a nervous boy called the hot line to ask if there would be a reward. The police traced the call to a home in New Jersey where the girl was found suffering from a massive dose of ecstasy and other drugs. Doctors told the father his daughter would probably not have lasted another day. The father says to this day that without Mitt's decisive action and leadership, he doubts whether his daughter would be alive.
Look, this is the quintessential Mitt, the man who is not revealed on the debate stage. Compassionate, thoughtful and humane. But also energetic, focused, decisive and highly, highly highly competent.
God has designed the perfect problem-solver for the problems we face.
Best regards,
Ralph
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