Many of the entrepreneurs I write about are able to master one thing and mine it.
Then there are people like Fred Malek, whose 50-year career spans many worlds, from hotels (Marriott president) to airlines (Northwest Airlines chief executive) to sports (former partner in baseball’s Texas Rangers).
After stints at West Point and with the Army Rangers, this Washington insider has also taken on politics (finance chair for the Republican Governors Association), investing (the Carlyle Group), real estate (CBRE Group) and the federal government (deputy director of the Office of Management and Budget).
I think he is probably worth around $500 million.
The first couple million arrived at age 32, when he sold his interest in a tool company. Instead of retiring to the golf course, he headed to Washington, where the White House, Marriott and Carlyle awaited.
I wanted to know whether there was a business lesson in how he bridged so many spheres.
“If you take discipline, listening to people, if you focus people on the development of objectives, and appreciate what they do, the chances are, you are going to be successful,” Malek said. “If you apply these things in any single field, hospitality, finance, sports, the chances are you are going to be successful. It’s leadership 101.”
I know Malek mostly from one of his sports phases. It was around 2005, when he was trying to buy the Washington Nationals from Major League Baseball.
Malek and Jeffrey Zients, who is now President Obama’s economic adviser, helped bring the Nationals, then known as the Montreal Expos, to Washington. But it was real estate mogul Theodore N. Lerner who won the auction with a bid of $450 million.
“It would have been a really great challenge . . . but they are doing a good job,” Malek said. “I have no complaints.”
He shouldn’t. Malek, 77, worked hard, but he has been blessed. He had recently beaten bladder cancer when we chatted in his office last summer.
“It’s gone. . . . But it scares the heck out of you when it happens.”
Malek is always direct, which isn’t surprising for someone known as an efficiency expert. He is demanding: one consultant turns his smartphone on for Sunday in case Malek calls.
We discussed his philanthropy, his love of West Point, and what was going on in his business and political lives.
“This past year has been the most eventful year of my career,” he said.
His investment company, Thayer Lodging Group (named for the founder of West Point) merged with Brookfield Asset Management and has been on a roll, with such major acquisitions as the 998-room Diplomat hotel in South Florida.
CBRE Group, the publicly held real estate company in which he owns a significant stake, topped $1 billion in earnings. Its stock price blew through $30.
He and his wife, Marlene, endowed a school for health professionals at Marymount University, from which she graduated. He gave a seven-figure gift to the University of Texas MD Anderson Cancer Center for research.
West Point gave him its prestigious Distinguished Graduate Award on May 19.
“I get a huge amount of satisfaction from that,” he said of his West Point philanthropy.
Like most risk-takers, he has experienced success as well as disappointment.
When he sold his ownership stake in the Texas Rangers (co-owned with George W. Bush and others), he earned back his money fivefold. CBRE is a home run, as was his stint at Marriott. Thayer Lodging made him a bundle, too.
On the disappointment side, the financial crisis slammed his private equity firm, Thayer Capital, and he merged it with HCI Equity Partners. He wishes he held onto Northwest Airlines long enough to merge it with another airline. He might have turned his early work with the Carlyle Group into an ownership stake, but he moved on.
A big chunk of Malek’s success comes from a strong network developed at West Point, Harvard and at the Nixon White House, where his dream team included a young White House fellow named Colin L. Powell.
“It’s not enough to be a networker. You’ve got to be there for people. If you say you’re going to do this, do it. That’s a big part of a successful career.”
Success, said Malek, is “drive, perseverance and character.”
The character thing took a hit when it became public years ago that while working in the Nixon White House, he had carried out an order from President Richard M. Nixon to count the number of Jewish employees at the Bureau of Labor Statistics.
“I’ve acknowledged that mistake and apologized for it many times,” he said.
Malek knew early on that he wanted out of his blue-collar neighborhood near Chicago, where his father drove a beer delivery truck.
After graduating from West Point in 1959, he became an Army Ranger and ended up in the jungles of Vietnam in 1961. He was on a training mission attached to a new Special Forces group called the Green Berets.
He transferred to the Army’s finance group in Hawaii and decided to pursue a business career. He graduated from the Harvard Business School in 1964, paying tuition from what he had earned selling encyclopedias.
It was at Harvard — where he and Marlene lived in a cramped attic apartment — that he became hungry.
“I saw a lot of people there who had a lot. And I didn’t have much. I felt that I wanted to develop financial independence if I could.”
I always ask my subjects the details of their first breakout deal. Malek’s began when he was at McKinsey & Co. in Los Angeles. He and two guys he had met through Harvard decided to look for a company in which to invest.
They had no money. They worked day jobs. They weren’t taken seriously.
“The only way we were going to get this done is if one of us worked full time at finding a company. The other two would pool their salaries and we would split it three ways.”
They found the Utica Tool Co.in Orangeburg, S.C., which had moved south from New York to save on labor costs.
They raised $1.95 million, including a pile from Fayez Sarofim & Co., a Houston investment firm that they found — again — through a Harvard classmate. Malek and his partners invested $50,000. The banks supplied the rest.
“The idea was to . . . improve its profitability,” said Malek, who quit McKinsey and drove cross-country with his wife and newborn son to take over sales at the company he had just purchased.
They turned around the company, pulling in new orders from Sears and the government, creating new distribution channels and streamlining the manufacturing process.
By 1969, when new Health, Education & Welfare Secretary Robert Finch phoned to ask for his help in managing the sprawling department, Malek had enough wealth to say yes.
It was on to the next thing, and the next, and the next.
“One of the most important lessons for me is a saying I got from Bill Marriott Sr., the founder of Marriott,” said Malek. “Just remember, he said, that success is never final. As soon as you start patting yourself on the back, the probability is that you are on a downward slope.”