Q: When you started Nike Securities, you said your goal was not to try to get there fast, but right. You also said you were not coming out of retirement to "get beat," but rather to win. How close are you in terms of where you want Nike to be?
A: I'm very, very pleased with the progress of Nike. At Nike, they are meeting all their debt service requirements, and they've also had a return on capital, which for a company that new I'm just thrilled. Our objective at Nike is not to make money right here; our objective is to bring together all the pieces.
Let me explain it this way. I think you've got to invest money to make money, and the best investment is in people. To me, business is people and relationships. I'm excited about the people we brought together. We have a good product line. The whole organization is in a state of positive growth. We've been able to do in less than a year what might have taken us seven, eight years to do when I started Van Kampen Wauterlek & Brown years ago. The big difference is that all the people we have here are experienced guys and back then we were starting with inexperienced guys.
Q: Do you have any goals for Nike, in terms of the amount of business you would like the firm to do?
A: My whole life I never set goals. I said 'let's be everything we can be. And let's constantly have an intensity about what we're doing and wherever it takes us.'
I will say right now in the years I ran securities firms actively, and that's over 20 years, we never had a loss year. We came close. I think the closest year was 1979, which was a disaster. That taught me a lot. But I think we ended the year $5,000 in the black.
But the best year we ever had was that year. We worked the hardest we ever did, even though we had some peak years where we made over $50 million to $60 million. But that was our best year. Why? We had to work our hardest just to break even. So what was our goal? Our goal was to be everything we can be, because when business is good everyone makes money. It's not based upon brains, it's based upon hot markets. Where you need brains is in the tough markets. And so to me, what I want Nike to benefit from is my experience, the good things I've done, the bad things.
Q: The municipal bond industry has undergone a lot more contraction than expansion in recent years, with Nike Securities being one of the very few start-ups. Do you think Nike is a harbinger for others to enter the municipal bond business?
A: I'm a contrarian. In the 1960s, mutual funds were tremendous. In the 1970s, mutual fundss didn't exist. Today, they're huge. If you think something is a valid investment vehicle, you sell high and buy low. The time to get into that business is when everybody's getting out. The time to get out of that business is when everybody's getting in. Just like stock.
There'll always be packaged products. There'll always be municipal finance. There'll always be corporate finance. It may change. It may come in a different structure. The country needs debt and as long as they need debt, someone's going to make money. This was a great opportunity to get back into the business. If everything had been rolling, it would have cost Nike just to buy the packaged product arm of Clayton Brown anywhere from five to 10 times more than we paid for it.
Q: Has Fitch lived up to your expectations?
A: Fitch was something I believed in years ago. The way we started Fitch was with Russ Fraser. Both of us always felt there was an opportunity for a really aggressive, entrepreneurial rating firm that was going to focus in on the needs of the people, the issuers, the investors, whoever. We were so frustrated ourselves in our ability to get answers when we were in the business and only had a choice of two organizations. We always thought one of the greatest places to be was in a firm that could respond quickly without politics to an investor's or issuer's needs. And whether you were big or small there ought to be an open door.
At one time there were basically two major players. You had to come hat in hand and stand in line. What we feel we've done with Firth is we really opened up. I think it's been good for the whole industry because the industry has gotten far more responsive to the people seeking the information.
Q: Is there any concern about potential conflicts of interest between your role as chief executive officer of Nike and your investment in Fitch?
A: We worked very hard in the organization to make sure Fitch and Nike are miles apart. Fitch builds its reputation by giving integrity to its ratings. That's why I'm not on the executive committee or on the board of Fitch. I'm not represented in the day-to-day. To say I have no involvement is a lie. My personality flows through all the organizations. I'm more involved in Nike day to day. I keep a huge wall between the two. Actually, Fitch is where financially I am more heavily involved. Compromising the integrity of Fitch is cutting my own throat.
Q: The corporate culture at the firms you have controlled is centered around a commitment to God. Has this helped or hurt you in terms of your businesses or attracting people to work for you?
A: My highest personal commitment is to be faithful to God because I feel whatever gifts I have, whatever success I've had, has been nothing more than God's grace in my life. What I'm trying to do is develop organizations that don't necessarily think the way I do in their personal beliefs. I cannot govern how a man thinks. But I try to instill in my people first to all a great respect for God and his principles because I think that God's principles, the Judee-Christian principles, are absolutely the basis for success for good relationships. Does that mean my people always follow [those principles]? I can't say that.
When people come in, I say number one, I don't want you to violate these principles. Number two, don't do anything that will harm your marriage. Because a man that has a good marriage is a man that's going to be a very good employee. Number three is the business. I think those are keys to success that I've used over the years. I am also just as accountable to those values as anyone.
