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Renaissance Manby Thomas Connors | Men's Book Chicago magazine | August 24, 2011
Talk about an eye for excellence. When Chicago investment legend Richard Driehaus isn’t managing the $8 billion under his watch at Driehaus Capital Management he’s generally doing one of two things: Pursuing his own aesthetic interests or helping others pursue theirs. In addition to untold gifts bequeathed through the Richard H. Driehaus Foundation, he supports the Richard H. Driehaus Museum of Decorative Arts, the Driehaus Prize for Classical Architecture, the Driehaus Awards for Fashion Excellence and the Form-Based Codes Institute. We sat down for a chat with Driehaus, 69, as he returned from vacationing at his house on Nantucket—and taking his two daughters to a Katy Perry concert.
You grew up on the South Side. What was your first job? It was a newspaper boy, delivering The Southtown Economist. Twice a week, Wednesday and Sunday. I started that in fifth grade and held the route until my third year in high school. I made about $18 a month.
When did you make your first stock purchase? Two days after I turned 15. July 29, 1957. I bought 20 shares of Sperry Rand [electronics company] and 15 shares of Union Tank Car Company.
You went to college at DePaul. What was your first job after graduating? No one would hire me. I was a C+ student. We called a C a ‘gentleman’s grade.’ I was more interested in learning than being learned. So I had to get creative. I put an ad in The Wall Street Journal that cost me $52.50. ‘Ambitious young student recently graduated from DePaul University desires position in the investment industry.’ Through that I got a job at a Chicago firm, Rothschild & Company.
What is your investment philosophy? It’s a growth philosophy based on the belief that earnings growth is the primary motive of business and the crucial factor in determining stock prices over the long term. Only through earnings growth can cash flows be enhanced, dividends raised and book values increased. I’m not saying mergers are necessarily bad. But the greatest growth companies do things internally through their own self-funding, through their own success, executing their business model to what’s relevant at the time.
Where’s the smart money going right now? DNA. Biotechnology. Those are the big market winners in the future. And internationally. That’s where the growth is. A lot of that growth has already happened but there’s more to come. Almost all institutions and individuals are underinvested in worldwide growth.
What is the biggest current impediment to economic recovery? I don’t think it’s one thing. It’s a lack of our competitiveness worldwide. It’s bureaucracy. It’s harder to start new businesses and create jobs. We haven’t solved the energy problem. And the government itself is very big and not efficient. It’s not about interest rates. Interest rates are low. It’s that companies don’t see the demand there. The dollar is not strong, but neither is the euro. It’s like an ugly dog fight, they’re all going down. That’s why it’s hard to create real wealth.
On a lighter note, what do you do for fun? Are you a golfer? No, golf is not me. I enjoy collecting cars. Like Ralph Lauren. He collects international beauties, I collect American beauties from the ’30s to the ’50s. Cars of distinction. Cars people remember from their childhood. Cords, Cadillacs, Dusenbergs, Auburns, Packards, Buicks. Then I’ve got some concept cars. A Thunderbolt and a Mercury Dream Car. You can spend $500,000 on a contemporary Italian car and nobody will look at it. You take one of those old cars that you get for $100,000 and people notice.
Which one do you drive every day? I take cabs.
You once owned a bar. What was that all about? Oh, Gilhooley’s. A good friend of mine, Tom McCarthy, and I bought this little tavern on the South Side, gutted it and turned it into a Victorian saloon. I put a lot of money into it. I bought Tiffany glass, terra cotta, 20th-century posters, fireplace mantels. That’s how the collecting started. Tom taught me about the big picture, and how it was not transferable. It took me years to understand what he meant, but he was right.
Gilhooley’s wasn’t profitable but it introduced me to new areas and new experiences. You learn a lot when you try to expand. Because you can’t survive with your specifics and your particular knowledge. You have to survive within a larger context, and your knowledge may not be relevant. You can get very lost. Like Alan Greenspan got totally lost. He thought the markets were totally efficient. And he’s a bright guy. But wrong.
What’s more fun for you, making money or giving it away? Both. But both require work. I couldn’t do the charitable thing well unless I earned the money first, providing a service. So I understand from a business side what’s necessary to make good charitable investments. They’re really connected in terms of doing things well. If you had an inheritance you might want to give it all away and make a big splash. But we’re not trying to make a splash, we’re trying to set a road for the better, whether it’s in design or architecture or the arts.