The Strategerist Podcast: April 26, 2019

Episode 17: Dan Gilbert

Detroit native Dan Gilbert was forced to watch his hometown go through some hard times that left the city a shell of its former self. But as his businesses saw enormous success, Dan became a central figure in the revitalization of downtown Detroit. 

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Transcript

00:01 Andrew Kaufmann: Detroit native Dan Gilbert, was forced to watch his hometown go through some hard times that left the city a shell of its former self. But as his businesses saw enormous success, Dan became a central figure in the revitalization of Detroit. A revitalization that was carried by the unique character of the city.

00:17 Dan Gilbert: I was asked not too long ago, within the last week say, "You got to name Detroit in one word," and I used "gritty" so... And the grit comes from scars. It comes from being through very difficult challenging times like Detroit has for 50 plus years, maybe 60 years, up until several years ago. And I think the old cliche again of, "What won't kill you makes you stronger," I think that's sort of the feeling and not just in leadership but across the city and the suburbs and the whole state.

00:47 AK: Recorded live minutes before Dan went on stage at the forum on leadership, we talked about Detroit but also let our nerdy sides show in a discussion about dictionaries and thesauruses. And this basketball fan, well this Dallas Mavericks' fan couldn't resist asking the Cleveland Cavaliers' owner about Dirk Nowitzki. I'm Andrew Kaufmann, and this is The Strategerist, presented by the George W. Bush Institute.

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01:15 AK: What happens when you cross the 43rd President, late night sketch comedy and compelling conversation? The Strategerist, a podcast born from the word strategery, which was coined by SNL and embraced by the Georgia W. Bush administration. We highlight the American spirit of leadership and compassion through thought provoking conversations and we're reminded that the most effective leaders are the ones who laugh.

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01:40 AK: Alright. Well we are recording live on location for the first time on The Strategerist. Our first foray into this new adventure and we're joined by Dan Gilbert, a fellow new podcaster, who is the founder and chairman of Quicken Loans and the founder and chairman of Rock Ventures, and of course, the chairman of the Cleveland Cavaliers. Dan, thank you so much for joining us.

01:58 DG: Oh, it's great to be here. I gotta tell you [chuckle] something, so two nights ago, 48 hours ago I was on the other side of the mic, [chuckle] I got to do or got to interview Karlie Kloss and you got me... I think I got the better end of it. [chuckle] She's... You wanna talk about a smart young lady who is killing it in a lot of areas, you guys should... We'll, get her on here too.

02:18 AK: I'm gonna say, we're gonna give her a call and try to get her on this show and... We're also joined by our co-host today, Laura Collins, who's the director at the Bush Institute SMU Economic Growth Initiative. Laura, thanks for spending a few minutes here before you go on the main stage with Dan.

02:29 Laura Collins: Thanks for having me again.

02:30 AK: Well, we're in Dallas and it's been about 12 hours since the Dirk Nowitzki era ended. So I kinda have to start by asking you, as a fellow NBA team owner, what has Dirk meant to the league from your perspective?

02:44 DG: Well, I'll tell you what, Dirk Nowitzki is one of the class acts and there's several of them, of course, or many of them in the NBA, but he is, he's something special 'cause he comes over here from Germany. A lot of times, or over the years, European players, sometimes get a little bit of a bad rep in saying, "Only a handful make it," and this and that, which isn't really true if you look at some of the numbers. But he just carried himself with such class, was always great to the fans, was great to Dallas, love Dallas, was loyal to the franchise all these years and Mark Cuban, who I know fairly well. Just great...

03:15 AK: His first podcast guest.

03:17 DG: True. He'll go down... And he did it in a tank top, if you were watching.

[chuckle]

03:20 AK: Yeah, we don't roll quite that way at the Bush Center.

03:22 DG: I noticed, but I don't know if that was good for anybody. Mark Cuban and I, we like to kid around but I gotta tell you that I just think, man, Dirk Nowitzki, you can't say enough great things about him and hopefully he'll do great things going forward in Dallas and in the United States.

03:37 AK: Well, I think he's established as a leader and we're all about leadership at the Bush Institute and we wanna start with you. What have you learned as an NBA owner about leadership? You come into this as a successful businessman and what lessons have you learned since becoming an owner?

03:52 DG: Well NBA ownership or any professional franchise, sports franchise ownership is really very different than any other business. It is a business in a sense, but when you're an entrepreneur or a business leader or a leader of anything, any political organization, you generally can come in in the morning and there's all these dials, like a hundreds of dials of things you could do to change, adjust ideas and things you can get going. But when you're at that level in sports, there's really three things you can do. If things aren't going good during the season, well, you can maybe say, "How can we draft better players?" Well the draft's one day a year, right? So that takes care of that.

04:28 DG: If there's free agents that are gonna be signed, it's generally in the summer, over 10 days. And then there's trades, is another way to improve your roster, improve your talent. In trades you need the other side has to agree to the trade. It's not always easy. So I guess I would say you have to be more patient than maybe normal and I think you always should be patient, but you really have to have a lot of patience, which is really conflicts with typical entrepreneurs. So I think there's an adjustment period when you realize that, "Hey, you may own this franchise or business but you don't control everything, my man." That's what I would say to somebody. "You don't control it all and you gotta be patient," and you try to set a culture. So what we learn quickly is we have to just set the culture and make sure that we're hiring the people in coaching, front office and everybody else that sort of matches that culture just like any other business.

05:15 LC: Yeah, you mentioned culture. Culture's very important to your other businesses as well. Can you talk a little bit about... I think you have... What is it, 19-isms?

05:23 DG: Yeah, there's 19 now. There might be a 20th one added soon. But we don't add them very lightly. We try to look for... When somebody makes a suggestion, is that covered already? 'Cause when you put too many out there, then it sort of dilutes it all. But we have these 19 little cutesy sayings that we call "isms," but they really are sort of long, thought out and based on observable behavior of what we think works and doesn't work. The way we look at culture is maybe if you look at a garden, good soil, good sunlight, great fertilizer and great water. So if you have those elements, we think that's our job in a business and maybe any entity that we're involved with.

06:03 DG: If you have a great environment, and you have those elements, then the seeds that grow in there are gonna thrive. In our case, in most businesses case, those seeds are talent and people. And so you could take the same seed and you put it in a bad conditioned garden and it'll grow a little bit. But you put it in a great garden, it's gonna thrive. And that's the way we look at it and the isms, these little sayings are sort of the guidepost or the compass. And if people make decisions, priorities and actions and behaviors in line with who we are, in essence, which is our isms, things tend to go a lot better than they would.

06:35 LC: Do you recruit for culture or do you cultivate it?

06:38 DG: So that's a great question. I think both. I think that when people say these words, "Well, I'm not sure he or she's a match." I think that in most cases that's what they mean. They may not be saying it, they probably mean they don't match our culture. And there might be people who do great who just wouldn't thrive in our garden for whatever reason, and it's probably better for them and better for us that they thrive somewhere else. So we definitely pound the table on culture, but we still have miles to go, it's a hard thing to do. And I think that culture is not automatically, or by chance, it could be good or great if you don't have one. With a lot of businesses, we'll tour people through, and I say to them, I always ask people, "Well, what's you're cultural like?" And some people say, "We don't really have a culture." I go, "Well, that means it's bad automatically," [chuckle] because...

07:25 LC: Yeah, yeah, they clearly have one. They just either don't know what it is or don't wanna admit to it.

07:29 DG: Exactly. And it can't just by happenstance, just, "Oh, it happens to be good," because from experience, over three decades in business, we go all out, we state it, we have meetings, we have orientations. I'm still involved with every employee or every team member the first six weeks there, or somewhere in the first six weeks for a full day, we take 'em through it, and we still have challenges. So it automatically deteriorates, like the default is not good.

07:55 LC: Sure. Yeah, yeah.

07:57 DG: But once you get it there and everybody gets and you're hiring for it, it's like magic.

08:02 LC: Yeah, great, yeah.

08:03 AK: Well, you've got such a wide variety of interests and investments through your Rock Holdings, but one of the things that caught our eye is that you're the owner of Dictionary.com and Thesaurus.com and... [chuckle]

08:17 DG: Is there another name for a thesaurus, do you know?

08:18 LC: See, that's an excellent question. Yeah.

08:21 DG: See, you got that, ready...

08:22 AK: Give me 20 minutes, give me 20 minutes.

[laughter]

08:24 DG: But actually, I was being facetious when I asked somebody that the other day, and they said, "Yes, synonym," and they got me, right? "Isn't it synonym?" "Yeah, sort of."

08:31 LC: I can see that.

08:32 DG: Just a little bit.

08:33 LC: Yeah.

08:33 AK: Book of synonyms maybe?

08:34 DG: Yeah, maybe. Yeah, there you go.

08:35 AK: Something like that.

08:36 DG: A collection of synonyms. Well, yeah, we bought that on... I don't wanna say on a whim, but we just are so married to the digital economy, and e-commerce, and all this business. And it was a little bit of a fun play, but we also think it's got a huge upside and connection to all our businesses, because really if you think about language, language is the currency of the digital world. And there's a lot of ideas flying around in a dictionary, but I could... You only have nine minutes left, do you...

[laughter]

09:05 DG: I don't know how many...

09:06 LC: Do you have a favorite word?

09:08 DG: Man, that's another good question. We're thinking actually of getting celebrities and others, that's one of our ideas actually, to put their little page on Dictionary. And then they could put their favorite three words and change them and do things.

09:20 LC: So, as a nerd, I would love that.

09:21 AK: I would too.

09:22 LC: I would be all over that.

09:24 DG: There's a... I'll give you... Since you guys are into the Dictionary thing, man, I finally found some people here...

[chuckle]

09:29 DG: I come to Dallas and I...

09:29 AK: Oh, we love it. Yeah.

09:30 LC: Oh, we're... [chuckle] You're in policy space now, you're dealing with nerds.

09:33 DG: So we think we think we can sell words. Now, what does that really mean? Well, with Dictionary.com as the, well, I guess the self-appointed official keeper of the English language. [chuckle] But we do have Dictionary.com and we were thinking that, so let's say you're Nike. Nike has to buy sneakers if we're gonna have somebody... You go to it and it's owned by Nike. Or let's just say if you really wanna impress your wife, or girlfriend, or husband, or boyfriend, or whatever it might be. If you just imagine it's Valentine's Day, you bought them the word love, and they own it, that's, there's...

[overlapping conversation]

10:05 AK: It's like selling a star.

10:09 DG: Right, yeah. People say that except stars are really... You can't get there there's... It's nice and people go like this. So it's taking that and saying, "These are real words," like it's for businesses. You guys could own George W. Bush or something, it's a free...

10:22 LC: Yeah, trademarks.

10:22 DG: It's a trademark. It's like why not have a certificate, and every time somebody comes to that word, you can play around, maybe get them to go to your site or whatever it might be. So, it's just infancy. We're in the infancy.

10:34 LC: Well, you're a lawyer and I'm a lawyer, so if we had more time on the podcast, we could actually talk about whether you could monetize and trademark general use words. But...

10:42 DG: Well, yeah, you probably can't, but you can sort of unofficially, right?

10:45 LC: Yeah.

10:46 DG: So you can say, "On our site, you own this word."

10:48 LC: Yeah. That's an interesting... Yeah.

10:49 DG: I'll give you one more, 'cause you guys are on... Okay, so micro-dictionaries, like menus. How many times you've been to a restaurant and all these food... So we wanted to have the micro-dictionary that any word that's ever been used in a menu ever, you'll be able to click it.

11:02 LC: Oh, that's interesting.

11:03 DG: Same thing for pharmacies, for drugs. You can go on an app.

11:05 AK: I'm doing that all the time, I can't identify half the foods on the menu when you wanna eat...

11:09 DG: Right, I can't pronounce 'em.

11:11 AK: Right, [chuckle] no kidding.

11:11 LC: They're all tasty though, right?

11:12 AK: That is true.

11:12 LC: Might as well try them.

11:12 DG: I thought in Dallas you guys are all just steak and potatoes. No, that's not the... No.

11:16 LC: Oh no, we've got... I think one of the newest restaurants just got named to the Chef... Something, she got a big award, for being an emerging talent.

11:26 DG: Okay, 'cause I was excited to just go get some steak with...

11:28 LC: This is really basic, 'cause I couldn't think of the name, but...

11:30 AK: But we can do that. We can do steak.

11:31 LC: Yeah, we can do.

11:32 AK: We... Definitely.

11:33 LC: And barbecue.

11:34 AK: But we would be doing a disservice though if we didn't talk a little bit about one of your true loves, which is Detroit. And that leads us into really your conversation that you're gonna have on the main stage here at the Forum on Leadership with Laura. Laura, can you give us a little bit of a preview of what we're gonna be talking about?

11:47 DG: Yeah, can you tell me all the answers before the...

[chuckle]

11:50 LC: Oh, no, no, this is... We're all friends here. We really are interested in the idea that the private sector can affect change in communities. Detroit has had some very public struggles, particularly in the public sector. But you made a decision, almost a decade ago, to move your companies downtown. And you've had an outsized effect, I think, on the community. I've had the good fortune to travel to Detroit, and I've seen the revitalization.

12:23 DG: How long ago were you there last?

12:25 LC: I think I was there in 2016 in the summer.

12:27 DG: Oh, okay. Yeah, I tell you what, three years in Detroit, it's like dog years.

[laughter]

12:30 DG: Where it's like 21. But yeah, because we're on this certain trajectory, but would love to have you come back too. But you even saw in '16, there was significant change.

12:39 LC: Yeah, and you can see it as you drive in, sort of how it's moved outward from downtown, as you drive in from the airport, and you see some of the things that are iconically decayed. And it's so sad what was allowed to happen in that city.

12:56 DG: Yeah, it's funny, 'cause I remember... First, I'm a fourth generation Detroiter, my kids are fifth. So I always tell people, "I'm like a Detroit farmer." [chuckle] We haven't moved in the square mile. Going west to me was going to East Lansing when I was growing up.

[chuckle]

13:11 DG: So I will tell you that I remember pulling up as we moved our first people down to Detroit, so it's almost nine years ago and just saying the same thing that you just said. Looking up saying, "How did this happen? How did this happen? What kind of failure leadership at every level had to happen?" Because to me, that's where it all starts and ends.

13:29 LC: Yeah, yeah. Definitely.

13:30 DG: But it's come a long, long way. And since the bankruptcy in '13, the city's bankruptcy, things have been rolling in the same direction with all groups, which is critical if you're gonna have any public, private partnership or any success.

13:44 LC: Yeah, I think Detroit has this reputation as being sort of gritty. My image of Detroit are the bad boy Pistons teams of the '80s and '90s.

[chuckle]

13:52 DG: Are you old enough to remember that? That's a...

13:54 LC: I am old enough to remember that.

13:55 DG: You were young though. '89 and '90?

13:57 LC: Yeah.

13:58 DG: Yeah, man, I'm impressed. Are you from Texas?

14:00 LC: No, but I'm from a basketball fan family and so I just... Those things were on TV a lot. I remember those teams. I remember Dennis Rodman before the tattoos.

14:09 AK: Yup. [chuckle]

14:10 LC: And in visiting it's... I think people don't realize sort of the deep-seated and beautiful culture of the city that exist independent and maybe even because of the manufacturing that was there before. And so there is this sort of fine arts element and this beautiful architecture that's in a place and it was a lot of crumble. That's fundamentally, I think you mentioned the leadership issue. It's just so sad that there weren't people more invested.

14:39 DG: Yeah. We could go probably...

14:40 LC: Yeah, we could do this forever.

14:42 DG: Definitely more than four minutes.

14:43 AK: The good news is you'll have another...

14:44 DG: Yeah, we will.

14:44 LC: We'll have another chance. Yeah.

14:44 DG: We'll have another shot. But I will tell you that you've hit it right. I think Detroit is a very, very gritty city. In fact, I was asked not too long, within the last week, say, "You gotta name Detroit in one word." And I use gritty so... And the grit comes from scars. It comes from being through very difficult challenging times like Detroit has for 50 plus years, maybe 60 years, up until several years ago. And I think the old cliche again of, "What won't kill you makes you stronger," I think that's sort of the feeling, not just in leadership, but across the city and the suburbs and the whole state. And so now you have people are starting to believe because there's not just us, but us and others. Getting people to believe in things that are happening. What we're saying is happening. Employment now I think it was 25% unemployment at the peak, down in the 7-8% range or something. It's still high, but it's gone comparably. It's a huge...

15:41 LC: Almost to full employment.

15:42 DG: Yeah and... Yeah.

15:42 LC: And you're really close.

15:44 DG: In downtown where we are, which is very... It's a large downtown. It's like 7... What, it's 7.2 square miles of downtown, we are 100% occupied in residential and office. So you can't even... So we gotta go vertical now for the first time in decades to grow. You can't grow, if you don't have any more places for people to go. So that would be unheralded and un... If I were to said to somebody eight or nine years ago, that's gonna be the case here in 2019, they would have probably put me away in an institution but...

[chuckle]

16:11 DG: But people, they start believing in the momentum, breeds momentum, and here we are.

16:17 AK: And as a Detroit businessman, what would you tell the other business people that are wanting, that need to move... That need to find a place for their company? Why would you say, "Come to Detroit"?

16:25 DG: Well Detroit's the best place for your tech company, especially because you can be in Downtown Detroit and a five-hour drive which is a big sort of metric that companies use. Like, how many population... What is the population of five-hour drive of Detroit? It's like 52 million people, all the way up to Toronto and Chicago and Pittsburg and Indianapolis. And you have all these universities that are pumping out computer engineering and tech people. And Canada's on the border and not all people don't know that. So Detroit is actually the only place that is north of Canada in the United States which you...

17:00 LC: Right. You go South to go to Windsor. Yeah.

17:02 DG: You go south to Windsor, right? So I still think... You must have a cousin in Detroit or something.

[laughter]

17:05 LC: No, no. We actually... So we took our work up there. We do work on NAFTA and we took a bunch of people from the US, Canada, Mexico to Detroit and Windsor and we did a couple of days in the city.

17:14 DG: Oh, very good. Tunnel or bridge to Canada? Did you go...

17:17 LC: On my scouting trip, we did tunnel with the group. We took them in a bus across the Ambassador Bridge, which is as you know, quite scary if you get stuck in traffic and you can look down and straight through the concrete into the water.

17:30 DG: Yeah, you don't want... [chuckle] You don't want to... Did they have built...

17:30 LC: Gordie Howe, yeah.

17:31 DG: Yeah. There you go. Second bridge so a few miles away. But I think that... I don't even know what we're talking about. I was just so...

[chuckle]

17:39 LC: Andrew has a couple of more question for you. Let's...

17:41 AK: Actually, I think we need to get you to the main stage now. I think it's time for the big show which you'll be able to watch on www.bushcenter.org/forumonleadership and you should absolutely listen to Dan's new podcast, the Speed of the Game, which has had Mark Cuban and Tom Izzo already and more great guests to come. I'm sure.

17:58 DG: Yeah, as I mentioned earlier, Karlie Kloss. And we also interviewed a quantum physicist from Canada. A woman, I can't remember. Shohini... I can't remember her last name. Ghosh, G-H-O-S-H, brilliant, one of these quantum physicists and we can spend again hours talking about that, maybe we will or maybe we already have a quantum physicist.

18:18 LC: Hey. You know what? You have a podcast, we have a podcast. There's all kinds of time, later.

18:23 AK: Exactly. We'll bring you... Definitely. We had several quantum physics questions written down. We just didn't quite get to them this time. We'll...

18:26 DG: No, we can get to... We're entangled. So we'll... Sometime, maybe we already did. We don't know...

18:30 LC: Yeah, right. [chuckle]

18:31 AK: Dan, thank you so much for doing this.

18:32 DG: Well, thank you guys. Great, I'm looking forward to it.

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