The seven Bain Capital founders believed they were so destined to make millions that the young men posed for a photo on the grand marble staircase of Boston’s Copley Place with $10 and $20 bills popping out of their shirt collars, tucked behind their eyeglasses and clutched in their teeth.

Their confidence was warranted. One went on to run an airline, another to buy a basketball team, and another to oversee two health-care companies and build custom roadsters.

Their leader, Mitt Romney, went on to become governor of Massachusetts and this year’s likely Republican presidential nominee.

At the 1984 photo shoot, Romney and his partners were celebrating not only their new company but also the ethos of their era. They had just given up their jobs as consultants at Bain & Co. to start Bain Capital with one overarching goal: to create wealth. They were, to use a favorite Romneyism, “dreamers.”

Nearly three decades later, the black-and-white snapshot captures a moment when Romney was about to become wildly successful in business, giving him the resources and a critical credential for entering national politics.

(The Boston Globe)

Yet the photo also embodies one of Romney’s challenges as a candidate: his wealth.

President Obama has seized upon his challenger’s position at the apex of American capitalism to portray him as elite and out of touch.

“We’re the poster children for class warfare now,” said Geoffrey S. Rehnert, one of the seven partners in the photograph. “That’s something I never anticipated.” Rehnert and other partners said they are unhappy about the politicization of the image. One of Romney’s mentors called the shot “tacky” and “inappropriate.”

The cocky assurance that Romney and his buddies displayed in the photo belied their youth and inexperience. Romney, then 36, was a success by any measure. He had risen through the Bain ranks quickly, and he was earning a good living and raising five sons.

Running Bain Capital was the biggest challenge yet in his career, and he approached it cautiously and gradually, with the same careful evaluation and reliance on analytics that would characterize his political campaigns and term as governor.

“We put Mitt in charge,” said Patrick Graham, a mentor of Romney’s at Bain & Co. “He’s an outstanding guy. He’s a leader. He didn’t have any financial expertise, by the way. But we just wanted to give him a bigger challenge.”

‘Driven for success’

When Bain Capital was started, the seven founding partners took pay cuts and pooled much of their savings to invest in the firm. They wouldn’t see a return for at least two years, and they say they feared failure. As one of Romney’s partners said, only half-joking, the money they were holding up in the 1984 photo was all they had.

“We were excited about the prospects, but it was scary,” said Robert F. White, one of the co-founders, who would become one of Romney’s closest friends. “We were making a big bet, we still had student loans, and we had very little money to invest.”

Scarier still, they were all rookies. They had excelled as young consultants advising companies on management decisions, but none had worked on Wall Street. “We came in cold,” Rehnert said.

“They weren’t financial guys,” Graham said. “They had their own language: ‘cash cows,’ ‘experience curves,’ ‘market definition and market segmentation,’ ‘relative competitive performance.’ ”


Still, they were ambitious. They were the stars of Bain & Co., a consulting machine that guided companies on strategy and operations. They charged their clients healthy fees but grew frustrated watching clients heed their advice to generate profits that were many times what they paid Bain.

So, they figured, why not become their own clients? The consulting partners at Bain & Co. would pool their money, as well as money from wealthy investors and institutions such as universities and pension funds, to buy struggling companies or invest in new ones. They would apply their management acumen to retool companies to maximize profits. Then they would reap the rewards. It was a new field: private equity.

“Most of the people in the venture-capital and private-equity world had finance backgrounds, they had come from banks, and they did a good job finding opportunities and doing financial restructuring,” White said, “but very few people had operating backgrounds to help improve the companies.”

Steven N. Kaplan, a professor at the University of Chicago who studies the private-equity industry, said Bain Capital was a pioneer because it was the first firm to apply “strategic insight that the financial engineers didn’t have.”

“That turned out to be absolutely correct, because everybody else today does what they started doing 20 to 25 years ago,” Kaplan added.

Bill Bain tapped Romney, one of his firm’s top consultants, to lead the new venture. Six years earlier, Romney was a prize recruit; Graham flew to Florida to urge Romney’s father, George, a former Michigan governor and presidential candidate, to let Romney join Bain. Now, they were trying to persuade Romney to leave his comfortable consulting perch to start something new.

“We knew he was a high-profile guy,” Graham continued. “He could do anything he wanted to, and we wanted to keep him, frankly. We offered him this job, and I was half-surprised he took it.”

Romney did not want to risk his position or reputation at Bain & Co. with what he considered an experiment, so he privately negotiated a sort of golden parachute with Bill Bain. If Bain Capital failed, Romney was guaranteed to return to his former consulting job and receive his old salary — plus any raises he had missed.

With his escape hatch in place, Romney was in, and he began a year-long study of the business and assembled a team of fellow Bain consultants to join him. His senior partner would be T. Coleman Andrews III, whom Romney had hired as a young associate at the consulting firm five years earlier. Like Romney, Andrews came from a prominent political family; his grandfather, T. Coleman Andrews of Virginia, ran for president in 1956 on the States’ Rights ticket.

Romney chose Eric A. Kriss, a bookish Californian who had recently made partner, to help run the venture-capital arm of the new company. And he picked White, a charismatic son of a machinist who grew up in working-class Woburn, Mass., and was the first in his family to graduate from college, to handle the private-equity side. A trio of younger consultants — Joshua Bekenstein, Fraser Bullock and Rehnert — rounded out the team.

“My father went broke on a farm in southern Canada,” Bullock said. “That’s the kind of heritage that many of us came from. But a common heritage was that we were all driven for success. . . . You’re driven to make sure that you can return money, hopefully a very nice profit, to your investors.”

‘A moment of giddiness’

Soon after starting Bain Capital, the seven founding partners gathered at Copley Place in downtown Boston to pose for a new brochure promoting the firm’s first fund. At the end of a long, stiff shoot for a formal portrait, the partners took a silly outtake holding up dollar bills, several of the partners recalled in interviews. The photographer gave copies to each of them as a memento, but the photograph was never published or widely distributed.

But years later, as Romney pursued the presidency, the photo surfaced on the front page of the Boston Globe, part of the newspaper’s 2007 biographical series about Romney. Most executives at Bain & Co., the parent consulting company, did not know it existed until they saw it in the Globe, Graham said.

“I was stunned when I saw it,” said Graham, who was not in the picture. “I was upset. I thought it was tacky. I thought it was inappropriate. They must’ve done it in a moment of giddiness.”

The photograph depicts the Bain culture — which the partners described as staid, strict and as purposefully un-Wall Street as the consultancy’s Tennessee-born founder, Bill Bain — as the epitome of the ostentatious world of high finance.

Robert Shrum, a longtime Democratic strategist who advised the late senator Edward M. Kennedy (Mass.) in his 1994 race against Romney, said of the photo that “we certainly would have used it had we had it.” Shrum called it “an iconic image of what could be perceived of greed or a total focus only on the bottom line and making a buck. That’s why it’s so powerful. It’s iconic.”

Over the past year, super PACs supporting Obama as well as Romney’s GOP primary rival Newt Gingrich used the image in attack ads, and the photo has been featured prominently on cable news shows and magazine covers.

Romney, who declined to be interviewed for this article, told Fox News last year that he long expected that the Democrats would use it against him. “I know that’ll be used — I know that. It’ll be fun,” he said, adding that he and his partners were “just celebrating” their early successes.

In the three decades since starting Bain Capital, the founders have maintained their network. Four of Romney’s six partners have donated to his campaigns, together giving at least $56,000 since he began plotting a presidential run in 2006, according to federal records.

Bekenstein, the only founding partner still at Bain Capital, remains a friend and supporter of Romney’s, but records show that he also gave $2,500 to Obama’s campaign in 2011 and has given tens of thousands of dollars to other Democrats.

Others have worked for Romney in different capacities. When he ran the 2002 Winter Olympics, he selected Bullock, a fellow Mormon, to be his No. 2. And when he was governor, Romney recruited Kriss to be his secretary of administration and finance.

None is closer to Romney than White, a trusted corporate wingman who has become Romney’s political alter ego. When he’s not keeping Romney company on the campaign trail, White is in his second-floor office at Romney’s headquarters strategizing with advisers or cheering up exhausted staff members — a part-owner of the Boston Celtics, he is known to dispense free tickets — or taking on sensitive tasks, such as the January release of Romney’s tax returns.

‘Success stories’

The founders came to Bain from different backgrounds, yet they were a homogenous group. Each was white and male, and by 1994, a decade after the company started, there were still no black or Hispanic employees among the 40 professionals and eight support staff members, the Boston Globe reported at the time.

Romney tried to import the culture of Bain & Co. — an insular firm where clean-cut “Bainies” wore starched white shirts and red power ties, sang company songs and were known for their secrecy — to the private-equity start-up.

“It was completely different than Wall Street — I mean the opposite, not just subtle differences,” Graham said of the consulting firm. “If you were a self-aggrandizing, competitive person trying to take credit, we just fired you.”

Romney and the other founders were so secretive that they sometimes joked that they were in the CIA. At first, some recalled, they didn’t carry business cards or give out their phone numbers. They did not speak about their work on airplanes, lest another passenger overhear too much.

“It’s a culture focused on excellence, on winning and very high ethics. They wanted to make money, they wanted to create success stories and make an impact,” said Tom Stemberg, who came to Bain Capital seeking help starting an office-supplies superstore. Staples would would become one of Bain’s first success stories.

When Romney and his partners collected money for the first fund, they raised millions from Bain & Co. employees but were turned down by many of the nation’s richest families and trusts. Harry Strachan, a Bain & Co. consultant based in Costa Rica, suggested that Romney’s team look overseas — specifically to oligarchic families he knew in Ecuador, El Salvador and Panama.

Romney feared that some of the families were linked to the drug trade or to guerrilla groups, according to the Boston Globe, but Strachan vouched for the individual investors and, in 1984, Romney flew to Miami to meet them and deliver them his pitch.

“We investigated the individuals’ integrity and looked for any obvious signs of illegal activity and problems in their background, and found none,” Romney told the Globe in 1994. “We did not investigate in-laws and relatives.”

The Latin Americans contributed about $6 million of the $38 million that made up the first Bain Capital fund, according to the Globe.

With the fund raised, Romney and his partners had to decide what to do with the money. They spent more than a year sifting through hundreds of pitches, from the goofy (an idea for packaged peanut-butter-and-jelly sandwiches that could last on supermarket shelves for up to five years) to the serious (an airline that chartered military flights).

Most proposals were tossed aside after a cursory review, but those that piqued a partner’s interest received intense scrutiny. After researching the idea, the partner would present the proposal at a weekly Bain Capital Business Review meeting.

BCBRs could be torturous, some partners recalled, with Romney treating them like a prosecutor. They grew so heated that Romney often would sweat through his shirts. He would cross examine the presenting partner and ask another partner to play devil’s advocate. Any of the seven could veto a proposal.

“What we prided ourselves on was doing deeper due diligence than anybody else,” Bullock said.

This was a room full of strong-willed egos, but Graham said fights were rare, at least in the founding years. “This is survival,” he said. “This is like being in a military unit being shot at by the enemy. You’re either all winners or you’re all losers. You pull together. These guys liked each other. They’re not out there rearranging the deck chairs to see who gets the better view, because it wasn’t guaranteed to succeed. The fear of failure was a real motivator.”

Betting their careers

By the summer of 1986, Romney and his team had settled on their first major purchase: Calumet Coach, a company that built custom vehicles to transport large and fragile CAT scan and MRI units. But before investing $1 million to buy the company, Romney and Rehnert toured the factory in Calumet City, Ill., near the Indiana border.

Over dinner the night before, as Rehnert recalled, Romney asked him, “Are you ready to bet your career on this?”

Rehnert said he gulped and told his boss he didn’t have much to lose.

“Good,” Romney replied, “because we’re all betting ours on this. It’s our first buyout.”

The next morning, during the tour, Calumet’s head of manufacturing gave Romney and Rehnert a puzzled look and asked, “You guys really bought this thing?”

“Mitt says, nervously, ‘Yeah, why?’ ” Rehnert recalled.

Then the factory chief pointed to the trucks lined up on the floor and said the previous owner made the workers paint the names of customers on them, but nobody was really buying the vehicles. “There’s no customers for these,” Rehnert recalled him saying. “I can’t believe you bought this company.”

“I thought Mitt was going to have a heart attack,” Rehnert recalled. “He looked over at me like he was going to kill me, like I had been snookered. Then the guy burst out in a big grin and said, ‘I’m just kidding!’ ”

There were more than enough customers. Bain Capital’s $1 million investment paid off spectacularly. Two years later, the company sold Calumet Coach for $34 million, giving the founders a taste of the wealth their new venture would generate.