Regional Oral History Office University of California the Bancroft Library Berkeley, California
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Regional Oral History Office University of California The Bancroft Library Berkeley, California Richard C. Blum Conversations with Richard C. Blum: Businessman, Philanthropist, President Emeritus Board of Regents University of California Interviews conducted by Victor Geraci, Ann Lage, and Lisa Rubens 2010-2014 Copyright © 2015 by The Regents of the University of California Since 1954 the Regional Oral History Office has been interviewing leading participants in or well-placed witnesses to major events in the development of Northern California, the West, and the nation. Oral History is a method of collecting historical information through tape-recorded interviews between a narrator with firsthand knowledge of historically significant events and a well-informed interviewer, with the goal of preserving substantive additions to the historical record. The tape recording is transcribed, lightly edited for continuity and clarity, and reviewed by the interviewee. The corrected manuscript is bound with photographs and illustrative materials and placed in The Bancroft Library at the University of California, Berkeley, and in other research collections for scholarly use. Because it is primary material, oral history is not intended to present the final, verified, or complete narrative of events. It is a spoken account, offered by the interviewee in response to questioning, and as such it is reflective, partisan, deeply involved, and irreplaceable. ********************************* All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and Richard C. Blum, dated November 5, 2014. The manuscript is thereby made available for research purposes. All literary rights in the manuscript, including the right to publish, are reserved to The Bancroft Library of the University of California, Berkeley. Excerpts up to 1000 words from this interview may be quoted for publication without seeking permission as long as the use is non-commercial and properly cited. Requests for permission to quote for publication should be addressed to The Bancroft Library, Head of Public Services, Mail Code 6000, University of California, Berkeley, 94720-6000, and should follow instructions available online at http://bancroft.berkeley.edu/ROHO/collections/cite.html It is recommended that this oral history be cited as follows: Richard C. Blum, “Conversations with Richard C. Blum: Businessman, Philanthropist, President Emeritus Board of Regents University of California conducted by Victor Geraci, Ann Lage, and Lisa Rubens 2010-2014, Regional Oral History Office, The Bancroft Library, University of California, Berkeley, 2015. v Table of Contents Foreword by Mark Yudof xi Interview History by Lisa Rubens xiii Interview 1: May 19, 2009, Blum Capital, San Francisco Audio File 1 1 Family background — Birth 1936 and growing up in San Francisco — Personal values —Reflections on the political culture of San Francisco — Attending UC the city: a semester abroad in Vienna; advancing interest in finance and foreign marketing — Working as an analyst at Sutro and Company while pursuing a PhD in business at Cal — Assesses the social/cultural landscape of San Francisco brokerage houses — Becomes youngest partner at Sutro — Overseeing a company in Vietnam; questioning U.S. foreign policy and honing a social conscience — Reflections on the changing world of finance in the late ’60s and early ’70s — Forming Blum Capital in 1968, a private equity firm — Taking risks and investing in Asia — First trek in Nepal: dedication to alleviating poverty and establishing relief programs in Nepal; formalizes efforts by establishing the American Himalayan Foundation, 1981 — Lessons learned about international assistance leads to establishing the Brookings Institute Global Policy Reduction Initiative (2003) and the Blum Center for Developing Economies at UC Berkeley (2009) — Diplomatic efforts in China Interview 2: September 1, 2009, Blum Capital, San Francisco Audio File 2 19 Recapping interest in foreign travel and marketing — The role of large trading groups before companies invested directly in Asia — Seemingly menial research assignment at Sutro leads to wealth of knowledge about and success in investments — First marriage to Andrea Schwartz — Role of brokerage houses and adaptation to new growth opportunities — Importance of hard work and motivation — Perspective on 100 years of U.S. economic development — History of Sutro and Company; influence of senior partner Alistair “Shorty” Hall on Blum; importance of one’s word in business — Driven by unquenchable curiosity — On being a risk taker and forming long-lasting programs, friendships, investments — Distrust of bankers Audio File 3 34 Learning all aspects of business at Sutro; working closely with companies as well as philanthropic organizations — Seeing investment opportunities in Japan and Hong Kong — Early interest in politics: pro-bono work for Walter Mondale; hosting fund raisers for John Burton; creating a fiscal advisory committee for George Moscone — Meeting Dianne Feinstein — Discusses his children and grandchildren vi Interview 3: September 18, 2009, Blum Capital, San Francisco Audio File 4 47 More on the landscape of San Francisco brokerages: Sutro one of a handful of Jewish firms — Issues of discrimination: Reflections on President Obama’s election and the persistence of racism — San Francisco as a bastion of liberalism — Assessing causes of the financial collapse of 2008 and effect on Blum Capital: belief in a behavioral economic model; global effect of economic depressions — Attracted to building businesses in a variety of sectors and taking them public — Investment philosophy — Buying and selling Ringling Brothers; making first million dollars Audio File 5 60 Argues for changing business practices at Sutro: ending fixed commissions; investing in Asian markets; targeting money management — Running Blum Capital: Perfecting a business strategy; shifting from individual to institutional investors — Personal interests — Genesis of involvement in the Himalayas Interview 4: October 1, 2009, Blum Capital, San Francisco Audio File 6 67 First major deal with Blum Capital: Investing in an engineering service that becomes URS Corporation — Expanding capital base in the l980s: Finding undervalued companies within a particular niche — Buying Northwest Airlines and DHL — Close friendships with key businessmen Interview 5: March 2, 2010, Blum Capital, San Francisco Audio File 7 85 Further reflections on upbringing: absence of father figure; role of mother and grandmother; effect of family’s diminishing resources; stepfather’s negative influence; tenuous attachment to his Jewish heritage — Attending San Rafael Military Academy and meeting Warren Hellman — Remembering years at Lowell High School — Alastair “Shorty” Hall, mentor at Sutro & Co. — Reaction to anti-Semitism — First year at Cal 1954: dislike of segregated fraternity system; arrest for fraternity prank — Growing interest in academics; influence of Andrea and philosopher Stephen Pepper — Choosing business as a major, a practical decision — Reflecting on San Francisco in the 1950s — Interest in foreign trade and deciding on a career in finance — Distinguishing Jewish vs. WASP investment firms vii Interview 6: March 10, 2010, The Bancroft Library Audio File 8 107 Recalling influential professors in the business school: C. West Churchman, Choh-Ming Li — On business school dean, Ewald T. Grether: a role model; Grether’s advice not to pursue a PhD — Early misjudgments in business and lessons learned — Later involvement with the Haas School of Business: Initiating a night/weekend MBA program; raising faculty salaries — Service on boards of Japanese companies, a cultural divide on governance — The transformative effect of his UC Berkeley education and of the year abroad in Vienna — Reasons for wanting to be on the UC Board of Regents — Selling interest in URS after Los Alamos lab competition; dealing with appearances of conflicts of interest — Assessing his strengths in strategy and finance, not day-to-day management — Appointment by Gray Davis to Board of Regents 2002 — Relationship of Governors Davis and Arnold Schwarzenegger to the Board of Regents; reflecting on their appointments to the board — Thoughts on diversity and admissions policies — On the complicated culture of the university Audio File 9 126 An aside on sports at Cal — Seeing the university as a hopeless bureaucracy — Taking issue with limits on debt capacity; removing capital expenditure caps — The use of tuition to pay back capital debt incurred for new buildings — Dissatisfaction as a regent with President Dynes and Vice President Larry Hershman Interview 7: April 21, 2010, The Bancroft Library Audio File 10 135 First impressions as a regent; UC an unwieldy bureaucracy — Critique of UC president Robert Dynes — Asking for Dynes’s resignation; a straw vote of seven regents and Blum’s understanding of the Academic Senate position on Dynes — Choosing Rory Hume as COO and putting limits on Dynes’s authority — Taking charge of the search for a new president; seeking and hiring Mark Yudof, 2008 — Issues of compensation and the importance of market-based salaries for university executives — Selection of Yudof by full search committee and Board of Regents — Restructuring and cutting personnel from UCOP; urging chancellors to bring in consultants on campuses — Building the Blum Center at UCB; overcoming obstacles Audio File 11 153 Thoughts on the role of the Board of Regents and