Ep. 33 Lloyd Greif

Chris Rising: 00:49 Welcome to the real market. Really looking forward to sharing this conversation today with Lloyd Greif with you. Lloyd's company, Greif & Co. is an investment banking firm based here in Los Angeles. We talk about how he started the company, the challenges he had. I just really think this audience is really going to like the conversation, Lloyd and I have, so here you go.

Chris Rising: 01:09 Thanks for being here and I'd really love to hear a little bit about Greif & Co.

Lloyd Greif: 01:13 Well, Chris, thanks for having me. It's a pleasure to be here today.

Chris Rising: 01:16 Terrific. Well, tell us a little bit about your company.

Lloyd Greif: 01:20 So Greif & Co. was founded in 1992 during a, well at the time, what was the worst recession to hit California since the Great Depression. That's since been eclipsed by the Great Recession 10 years ago. But we're a middle-market growth focused investment bank based in downtown Los Angeles in the US Bank Tower.

Lloyd Greif: 01:40 We do mergers and acquisitions and corporate financings of equity and debt securities for entrepreneurs. Hence, “The Entrepreneur's Investment Bank” tagline. About half our clients are family businesses. They're normally privately held, although we have worked with some public company clients and in a broad spectrum of industries. So we do deals in real estate and hospitality, but we're doing deals in consumer, retail and eCommerce, aerospace defense, industrial manufacturing and distribution, media, entertainment, healthcare, medical technology. Pretty much anywhere you find an entrepreneur you're going to find us.

Chris Rising: 02:16 And you know, I think a lot of people have heard the term investment banker and they envision Wall Street and Goldman Sachs, but what would be your definition of what an investment banker does?

Lloyd Greif: 02:27 Dealmaker. So, when I got in the business, which was in 1981 at Sutro and Company, I didn't have a clue what an investment banker was. I mean, we don't bank investments. So, the term investment banker is a misnomer. It doesn't really describe what the job is. The job is as a dealmaker.

Lloyd Greif: 02:42 So, we put deals together, we'll raise capital growth capital for companies, we will help companies recapitalize or make dividend distributions to their shareholders, if they don't want to bring in a partner. We'll also bring in partners. But we're a marketing company, we're negotiating the deal, we're closing the deal. So my definition of an investment banker is a glorified salesman with financial skills. Everyone talks about the financial engineering that occurs on Wall Street, that's all well and good. But it's kind of like the prerequisite.

Lloyd Greif: 03:15 What really separates the women from the girls and the men from the boys in this business is how good a salesman you are. How good are you at positioning a company? How good a strategist are you in terms of knowing what buttons to push, predicting what the investor, or the lender, or the buyer, across the table from you is thinking or what they may or may not be prepared to do. And getting them to do as much as possible to get the best deal on the table for your client.

Chris Rising: 03:40 Now, how much of your business is you being called, receiving a call from someone and saying, "I need help." And how much of it is you developing a relationship so you can start to talk to that business owner about things they should be thinking about.

Lloyd Greif: 03:59 So we don't cold call. I would have to answer that, Chris, and say 100% of our business is referral based. So we're typically getting referred in by other professionals or past clients. We do a lot of repeat business with our clients and a lot of times if we do a deal for the client and they're “retired”, they still play golf, they still hang out, entrepreneurs flock together and they'll refer us to one of their buddies who's thinking about doing a transaction.

Lloyd Greif: 04:25 But we are definitely relationship focused. We have long term relationships. We did a deal for Don Friese back in 2015. We sold his architectural hardware company called CR Laurence Co. for $1.3 billion and three years later he called upon us to sell his real estate portfolio, which we sold for close to $400 million. And he's also referred us into three other opportunities that are totally unrelated to his business, but companies he knows in the industry that he felt would be in good hands with us.

Chris Rising: 05:00 So when you think about the term entrepreneur, I think in today's world there's a lot of creating celebrities around people in tech who are entrepreneurs. But, in your mindset, what would be your definition of an entrepreneur?

Lloyd Greif: 05:15 An entrepreneur is a risk-taker. An entrepreneur is somebody who, let's put it this way, the E in entrepreneur has nothing to do with the E in employee. It's probably closer to the E in eccentric than it is to the E in employee. An entrepreneur is somebody who's prepared, who sees an opportunity, a market opportunity and doesn't just see it but they act upon it. And the act part is a big part of being an entrepreneur. Identifying opportunities isall well and good, but you need to seize the moment.

Lloyd Greif: 05:48 And that means they're taking risks, but they're typically taking calculated risks. You're an entrepreneur, I'm an entrepreneur, you know? I'm making payroll every two weeks just like you are. So it's a different breed of cat. Some people aren't comfortable with that level of uncertainty because there is uncertainty. You are betting on yourself as an entrepreneur. But what better bet can you make? And I think there's nothing more gratifying than being an entrepreneur. So when I'm sitting across the table from an entrepreneur and they're considering using our services, they get that I get what they're going through day in and day out because I'm doing the same thing at Greif & Co.

Lloyd Greif: 06:24 At USC, there's a program called the Lloyd Greif Center for Entrepreneurial Studies. I founded it back in 1997 and we're all about giving students the inspiration to go out and do it and be entrepreneurs. And we've had some very successful graduates like Mark Benioff at SalesForce.com or Sean Rad at Tinder or Aaron Levy at Box or Chris DeWolfe who did MySpace and now is a serial entrepreneur, has done Jam City, which is a mobile gaming company. Brandon Beck at Riot Games, the list goes on.

Lloyd Greif: 06:58 So you don't need to have a college degree to be an entrepreneur. A lot of our clients like Don Friese at C.R. Laurence didn't go to college, but you do need to be a risk taker.

Chris Rising: 07:10 When you sit in a room with someone who's an entrepreneur, can you just feel it and sense it that this person's not, this is who they are as opposed to someone who's trying hard to be an entrepreneur but it's not in their blood?

Lloyd Greif: 07:23 Yes. There is no one definition of, or one type of entrepreneur in terms of personality or role model. I do find more often than not that entrepreneurs tend to be pretty dynamic, pretty hard charging, pretty high energy. They are for sure passionate about their business, passionate about what they're doing, and you can sense that. It's almost like grabbing hold of the third rail. You feel it, those volts of electricity coursing through because they're coursing through them. So yes, I can tell the real thing when I see it.

Chris Rising: 08:01 So of your years, 28 years with Greif & Co. and then 10 years with Sutro. So, been doing it for 38 years are there are some characters.

Lloyd Greif: 08:11 Don't remind me.

Chris Rising: 08:12 Are there some characters out there or some people that you've worked with and advised who just stand out as just wow, that person's just different and you really enjoyed it?

Lloyd Greif: 08:27 Quite a few. Don Friese would be one. Another would be Martin Crowley, may he rest in peace. Martin Crowley was the gentleman who had the idea that tequila could be used for something other than Margaritas. He was the father of Patron Tequila and he was the first one who said, "Hey, there's room for an ultra premium tequila. If you can sip a good scotch and you can sip a good bourbon, why not sip a good tequila?" And he was very passionate and very zealous. But there's also been Sandy Gooch who had Mrs. Gooch's Natural Food Markets. For some people listening, some of your listeners here in Southern California, would understand that she was the first, she was the pioneer of the natural food supermarket industry, which of course is best known with Whole Foods and other such companies, but it's a huge industry today.

Lloyd Greif: 09:19 It was her vision that people should be able to go to one place where they can get everything they need that's natural and organic to have a healthy lifestyle. Yeah, what I love about this and why I'm still doing it after 38 years as you observed, is every day is new and different, for me, every day is fresh. Every entrepreneur is different because of the fact we're covering such a broad spectrum of industries including tech. We've seen a lot of innovative products and services out there. We do financial services and business services and obviously FinTech is a big area of growth right now.

Lloyd Greif: 09:57 It's just not dull. Okay? It's never dull. Every day, I wake up in the morning, I look forward to getting in there and getting right at it. When I was at Sutro and Vice Chairman and head of the investment banking division at Sutro, I'd agreed to undertake those job responsibilities with the understanding that the administrative aspect of running the investment banking division and co-running the firm with four other guys on the management committee - I was the senior guy in LA for the San Francisco-based firm that went back all the way to 1858, the California gold rush.

Lloyd Greif: 10:28 I did so with the understanding that the administrative aspect of what I was doing was only going to be 10% to 20% of my time so I could still do deals, my first love, is, deal-making, 80% to 90% of my time. When that 10% to 20% became 30% to 40% and I wasn't having as much fun, I pulled the ripcord and jumped out and launched my own firm, and I've never looked back. So I still am on the front lines doing deals and I will until they probably carry me out.

Chris Rising: 10:54 Well, I think we talked about earlier that as an entrepreneur you're just really born, I think with some ability to have that, to not appreciate maybe all the risks and have the passion to go do it. But tell us a little bit about what was it about your growing up and your experiences that led you toward investment banking? Because you know, that's not, especially for people from Southern California, that's not necessarily a path most people take, because we don't have the exposure. We don't have those big Wall Street banks. So tell us a little bit about your upbringing and what brought you... How that path started to lead towards being an investment banker?

Lloyd Greif: 11:33 Well, it was one big accident to be quite blunt, but Wall Street West was a good fit. Now I grew up in, I was born in LA, so I'm a native. I grew up in Santa Monica and my family moved there. I have an older brother and we moved there when my father passed away. He passed away when I was six years old, he was an entrepreneur. He had a company in downtown LA here on Spring. He had two locations, one on Spring and one on Main Street and the company was Paris Handbag Manufacturing Company.

Lloyd Greif: 11:59 He made woman's fashion accessories made from leather, but when he passed we went to Santa Monica, so I grew up there. I'm a product of the public school system in Santa Monica - McKinley Elementary School, Lincoln Junior High, SAMOHI, and then I went to UCLA undergrad in economics and, while I was there, my mom was working as a beautician to support the family. She had been the accountant at the family business before that.

Lloyd Greif: 12:28 I couldn't have gone to UCLA without working full time. I couldn't have gone to USC without working full time and that’s where I got my MBA. I became a box boy at Ralph's Grocery Company and worked my way through school doing things like running the morning crew working from midnight to nine. Take a half hour lunch, get off at 8:30, go home, shower and go to school at 10, be in class until five go home, eat dinner, go to sleep, get up 11 and go to work at midnight. I could do that so long as one of my days off from Ralphs was a weekend, so I had no school and work and could maintain some degree of sanity.

Lloyd Greif: 13:04 So I did that, six years with Ralphs, throughout my UCLA undergrad in economics and USC MBA. When I got my MBA, I departed the food industry and took a position with Xerox Business Systems Group in El Segundo where they were bringing a revolutionary product to market. What attracted me to USC was the Entrepreneur Program that they had. It was the forerunner of the Greif Entrepreneurship Center. And at that time nobody else had an entrepreneurial studies focused program like USCs business school did. UCLA didn't get into the entrepreneurship studies business until 10 years later.

Lloyd Greif: 13:43 So I went to Xerox Business Systems Group and I was there in charge of financial analysis and planning, which is a pretty high falooting title. But the truth of matter is, it was a one man department. We were commercializing a product that didn't exist yet. It was codenamed the Star System. It was the... I had a PC on my desk in 1979.

Chris Rising: 14:00 Wow.

Chris Rising: 14:02 Pretty large PC.

Lloyd Greif: 14:03 Yeah. Actually it wasn't that large. That was the whole point. It was pretty much the size PC you'd see today, a desktop, not a laptop, and we're going to rush this product to market. They wanted to have this entrepreneurial business that had its own board of directors, its own CEO and everything, and what attracted them to me, why I got the job offer was because I had a major in entrepreneurship. I'm there just 45 days, Chris, and there's this big tug of war between the Office Products Division in Dallas and little old Xerox Business Systems Group and El Segundo.

Lloyd Greif: 14:38 Guess who won and guess who lost? Office Products, where they made the copier. Our CEO lost, gone, CFO gone. I had a choice. My responsibilities at XBSG were being a liaison between manufacturing, marketing, engineering, and design, and finance. That position totally changed, so no longer financial analysis and planning head, but now I have an opportunity to be a financial analyst and I could follow the Star System as it was codenamed to Dallas or I could take a lateral move in Los Angeles, in El Segundo. Instead, I came up with a third option, which was I resigned.

Lloyd Greif: 15:11 So I was literally there for 90 days. You look at my resume, you'll never see this stint. I went into a management consulting role at Touche Ross & Co. and loved that but got recruited into investment banking. So I had been a management consultant for two years doing operations reviews, cash management studies, management audits, strategic planning, you name it.

Lloyd Greif: 15:34 Touche Ross, for those who don't know it, those of your listeners who don't know is Deloitte today because Touche and Deloitte merged some time ago. So it was a great consulting gig, but what I didn't like is no closure. What do I mean by that? You would analyze, advise, recommend, you'd be problem-solving but guess what you wouldn't do? You wouldn't implement because back then, at least at Touche Ross's practice, they virtually never used us to actually put our better mouse trap into play to see if it worked and so I got no satisfaction that we were actually making anything happen. That we were actually changing anything.

Lloyd Greif: 16:11 That's when a headhunter came knocking on the door and saying, "Hey look, Sutro & Co. is looking for an associate investment banker in our Los Angeles office," which at the time had one investment banker, a vice president by the name of Roger Kuppiger.

Lloyd Greif: 16:25 I looked into it and I remember talking to one of my professors, one of my mentors, Bob Emmons and I said, "What do you think?" And he said, "Investment banking. Perfect!" He described it at the time as a cross between a vampire and a prostitute and he said, "Lloyd, it's great for you." He was obviously being funny, but the truth of the matter is, it's a very challenging role. There is closure, which I wasn't getting at consulting. Specifically, if I merge two companies, I put them together. If I'm negotiating a sale, I'm there until the closing, and the client gets the money. If I'm financing a company like LA Gear, which I took public, which is the same company that Robert Greenberg now has as Skechers - another brilliant entrepreneur, by the way, that's one of our clients – then I’ve facilitated their growth.

Lloyd Greif: 17:17 It's just you get a different feeling, you're really making a difference in accomplishing something. So I kind of backed into investment banking. I never took a single investment banking or corporate finance class at USC when I was getting my MBA. And if I hadn't gone and taken that role at a Xerox Business Systems Group, I wouldn't be a lawyer today.

Lloyd Greif: 17:36 And you're saying, "Well, wait a minute, I thought you're an investment banker?" I am. But Xerox during that three-month period was a nine to five job and for a guy who was working full-time and going to school full-time, I was climbing the walls. I'd sit at my desk and at five o'clock - everybody ate at the company cafeteria at lunch hour - and at five o'clock if you were still seated at your desk, people were filing by you saying, "Hey, come on, Lloyd, it's time to go." Because, they didn't want you to make them look bad.

Lloyd Greif: 18:02 So I was thinking, what am I going to do? I'm used to working and going to school full-time. So I ended up applying to Loyola Law School at night, I figured I'm doing this day job at Xerox, I can easily go to law school at night. And when my application came back accepted, I was a management consultant who spends 40% of his time on the road, not conducive to going to law school, not a 40-hour a week job. Management consulting is 60 70 hours a week. But I toughed it out and got my degree and that's where I met my wife.

Chris Rising: 18:30 As a Loyola Law School graduate,I know what you went through. I did it during the day and I was always in great awe of the people who were working full time and doing it at night.

Lloyd Greif: 18:38 They have a great evening division program and their day program is similarly spectacular.

Chris Rising: 18:43 Well, let's break down a few things because we have a big tech audience for our podcast. So I have to ask when you were at Xerox, was that technology, the very famous technology that Steve Jobs saw and some say stole for the Macintosh computer? Lloyd Greif: 18:58 Yes. I mean I had a mouse on my desk, I had some very interesting software, graphic software.... It was absolutely. No, there's no question in my mind that Xerox blew it.

Chris Rising: 19:11 Yeah. And they had the opportunity and they chose the copier business.

Lloyd Greif: 19:14 Well, what they really had is you had a corporate ego. You had the head, I don't know his name, I don't remember his name, who wanted this product. He saw the potential of it, but he put it into a bureaucracy.

Lloyd Greif: 19:25 Xerox was right. Somebody somewhere had figured out, that you know what, time is of the essence here. We need to get this out. Let's have this streamlined business that can make quick decisions and rush the product to market. And that's what appealed to me when I took the position. And it ended up 45 days later, they reneged on their deal. Right? Everybody was disappointed. I remember when I resigned looking at the guy who hired me, Jack Kelly, and he was trying to convince me to stay and I said, "No, I can't do it." But I could see the look in his eyes and there was sadness in his eyes, not sadness that he was losing me. Sadness- PART 1 OF 3 ENDS [00:20:04]

Lloyd Greif: 20:03 ... recognize that there was sadness in his eyes. Not sadness that he was losing me, sadness that he couldn't do what I was doing. Well, I could do that. I could resign, I could go into a job for 90 days and bail. I didn't feel that I had let them down in any way and signed a contract. They hadn't paid for any of my tuition or anything. And the truth of the matter is, they hadn't fulfilled their part of the bargain. My view today is, if you're a youngster out there, get into a meritocracy. Get into a situation where you have the ability to advance based on how good you are, and don't get into a situation where events way beyond you, that you can't see and you can't impact, can determine your career.

Lloyd Greif: 20:40 When I went to Sutro, that was a corporate environment. When I went to Touche Ross, that was a corporate environment, but each office was its own P & L. The Los Angeles office was its own P & L, and I knew everybody on the consulting side. It was a small, tight knit organization, about 30, 35 management consultants. I knew, there I could perform. And similarly at Sutro, the investment banking division, I said, there were only two people in L.A. when I joined them, I was the second guy. In San Francisco maybe it was, a dozen or 15 people. So it was easy to see that it was more much more predictable than huge Fortune 500 Xerox.

Chris Rising: 21:24 Well, one of the other things I want to unfold a little bit here is, I know when I was young, the lessons I learned on the athletic fields were the ones that really have crystallized and been with me. And one of the things I learned when I was young was that I might not have been the best athlete, but if I worked really hard and if I knew things and studied, I could be a better athlete on the field, and that led to being a better student in the classroom. What were some of the things that, when you were young ...

Chris Rising: 21:51 I mean, that's a lot, to lose your father at six years old. It's a lot to have a mother who's bringing home the money for the family and you went out and got a job. What was it, early in your career, what were some of those lessons that you think set you up for the success later in your career, when you first started as a box boy at Ralphs?

Lloyd Greif: 22:12 So I'm the son of Holocaust survivors. My dad was in the Auschwitz and Dora Nordhausen concentration camps. My mom evaded capture, but was in hiding in the southwest part of France during the war. So they were tough. And I think some of that strength, some of that perseverance, clearly got translated into my DNA. I've never known anything other than work hard, do the best you can. I did it when I had a paper route, I did that when I was working in a gas station in high school, and I did that when I was a box boy when I first started at Ralphs that summer before my freshman year at UCLA. As a result, I advanced from being a box boy to being a clerk to being a clerk cashier to being an assistant store manager, etc. Actually got scholarships that Ralphs nominated me for to go to USC's food industry management program, which I did as well in addition to the entrepreneur program.

Lloyd Greif: 23:18 So I don't know anything other than hard work, and if you want to get ahead in this world, there is no other way to get ahead than hard work. It's like, there's things beyond your control in terms of your destiny. Some of it's luck, some of it's timing, but what runs throughout, if you look at people that are successful, I think it's hard work. They're not looking to cut corners, they're not looking to do less than their best in whatever that role is. If something about that role doesn't fit or it doesn't suit you well, then change the role, go somewhere else. But go someplace where you can feel good about busting your butt and bust your butt.

Chris Rising: 23:59 One of the things that our audience should know, there's a wonderful YouTube video of you giving the commencement speech for UCLA's School of Economics and I would point everybody there and we'll put a link on the website to it, but as you were being asked to give that speech, what were some of the things that you felt that that audience of newly graduated, are they even millennials now or are they moved on to Gen Zs? I think they may be Gen Zs. But what was it that you felt like this generation really needs to understand? Without going through word for word on your speech, but what were the main themes?

Lloyd Greif: 24:37 Well, there were several main themes. Thanks, Chris, I appreciate the kind words. Hard work was one of them. Put yourself into an environment that's a meritocracy. If it's not an environment where you're being rewarded for your efforts, leave and move to an environment that is a meritocracy, where you can impact your future. Integrity was a big message, and I've lived this so, Greif & Co., the investment bank has a symbol. When I formed Greif & Co., I wanted something that stood for what our values are. Merrill Lynch has the bull. If you look at Goldman Sachs, no symbol. Morgan Stanley, no symbol, etc. We have a great horned owl. We don't show the owl sitting dormant on a branch holding a book or with a mortar board or glasses, we show him in a hunting posture, swooping in for the kill.

Lloyd Greif: 25:31 The great horned owl imagery goes back to the Greek goddess, Athena, goddess of wisdom and integrity. We bring that to our assignments but also, the great horned owl's is nature's most efficient hunter. It can kill an animal four times its weight and size. So we bring that strength and aggressiveness, as well. We have a mission statement, that no investment bank on or off Wall Street has but us, and that is, “do unto others as you would have them do unto you.” That's obviously from the Bible. But what I mean by that is, we treat our clients as if it was our securities we're selling. We're not going to leave any money on the table and we'll never put ourselves into a situation where there's a conflict of interest, where we're not striving to do the best we can for the client. Everybody hears about Wall Street and conflicts of interest and self-dealing. You'll never hear that about Greif & Co.

Lloyd Greif: 26:16 But I was counseling the students, the graduates that they should never perceive gray. Life is black and white, but not gray. When you start seeing gray is when you start rationalizing decisions and you start crossing the line. You might go an inch across the line at one point and the next time you look, it'll be a mile across the line and just keeps going. You just have to do the right thing. And you know what the right thing is, what your conscience tells you is the right thing. But if you do the right thing, things will work out for you. Integrity, I think, is a big deal. Business ethics, very important. But also in your life. Not just in your work, but in your life. The other thing is, speak up. Let yourself be heard. If you see something that's wrong, don't turn the other cheek.

Lloyd Greif: 27:01 I gave the students an example of the situation involving the Dean of the Marshall School of Business at USC, who I felt was wrongfully accused and being dismissed without due process. I led, what in effect, became an alumni movement against that to fight that. I put my neck out there because the allegations were of discriminatory conduct from a race and/or gender bias basis. It was totally 100% untrue. You know who your friends are when they stand up for you, and I couldn't possibly look the other way and not do my part to help out. To me, if I hadn't done anything, if I just turned a deaf ear, turned the other cheek, it would be like I'd be complicit in the wrong.

Lloyd Greif: 27:52 I talk about the kids making a difference and being the difference, and standing up for what their values are and what they believe is right and taking a stand. I think it is important to do that. I can tell you, when it comes to either taking care of my clients or doing what I think is important, what I think is right, I sleep very well at night.

Chris Rising: 28:13 Let me ask you, as you were giving that speech and as you talk about it here, is there any reflection you have about how business has changed over the last 38 years in your career? I mean, there's certain fundamental truths, which you just described, but are there things that are about doing business and getting a deal done today that you think are very noticeably different than what it was 15, 20 years ago?

Lloyd Greif: 28:37 Well, the technology we use certainly is different. The access to information is different. It's so much easier to get up to speed on an industry or a company or an individual than at any time in the past. When I got in this business, you relied on fax machines and they were thermal faxes. You didn't use a computer, you used an IBM Selectric typewriter. Life is so much easier today. In 1989, I started using a pager, which made it easier for clients to get a hold of me because investment banking has always been a 24/7 industry. Now, the pager today, of course, is your cell phone. But the principles of investment banking remain the same, at least the deal-making side. It's very much a personal services business. It's very much being across the table from the other party.

Lloyd Greif: 29:42 A lot of what we do, yes, of course we're using email and we're using virtual data rooms and we're using all kinds of databases and what have you and a variety of financial modeling and what have you, but what it gets down to is that personal connection with the client and that personal connection with the investor or the buyer, the lender across the table. I prefer certainly phone contact to email and I prefer face-to-face meetings to phone contact. So I do that whenever possible, just to build a bond, build a relationship, and more importantly to figure out where they're coming from.

Lloyd Greif: 30:18 Somebody can tell you something on the phone and I'm going to listen very intently to what they say, because as a deal-maker it's much more important to be a good listener then to be a good speaker. Because you have to learn from the other party in order to be able to use that information, ultimately, to your client's advantage and against that other party. So being a good negotiator means asking the right questions and listening for those answers, and then using that information in determining your next move. But, yes, the technology has made it a lot easier in some respects. It's also made it a lot tougher to have a life. And what I mean by that is, it's much easier for a client to get me wherever they are and wherever I am. But such is the business I signed up for.

Chris Rising: 31:00 I often joke about what fast must have meant in 1776, when someone would want an immediate response versus today where they ... I think one of my biggest frustrations is, there's no willingness to allow people to actually think. People want immediate responses. And in your business, thinking about how to solve issues, that's the core of your business. How do you interact in a world where, especially those who are younger, want that immediate response? How do you counsel people on the most effective way to produce a result that they want, in terms of timing?

Lloyd Greif: 31:40 I'm always giving my clients and my colleagues the advice of playing a cool hand. What I mean by being a cool hand is be deliberate. Don't be too quick to respond, don't be too quick to act. Make sure you have all the facts, make sure you understand all the facts, you've integrated them, and do the research. If we know 99% of what we need to know, I've sent them back to get me the 100%. Because I don't want to operate on a basis of not knowing everything in order to optimize that decision for the client. Email allows you to respond rapidly, but that doesn't mean you have to respond rapidly, and it certainly doesn't mean you should respond rapidly. We take our time to do it right and the clients hire us because they know we're going to do it right.

Chris Rising: 32:31 Can you tell us a little bit about your family? I want us to segue over because there's a lot of interesting things about your family. And then also, one of the things I'd love to get into is your office space, because I think it's pretty unique. Let's just start, you met your wife in law school, and how long have you been married?

Lloyd Greif: 32:47 This past September 20th marked our 33rd anniversary.

Chris Rising: 32:50 Terrific.

Lloyd Greif: 32:51 Thank you for that. We got married two years after we graduated. Neither one of us wanted to do it while we were in law school. But we started off as study buddies. I mentioned I was a management consultant at Touche; I needed somebody whose notes I could borrow, and Reneé was seated next to me in my contracts class. Because that professor had a seating chart, she was always seated next to me.

Chris Rising: 33:15 Do you remember who the professor was, I wonder if I had him?

Lloyd Greif: 33:18 Jerry Rosen.

Chris Rising: 33:21 Oh, I did not.

Lloyd Greif: 33:24 That made it so that we were seated next to each other. So it first started off just borrowing her notes when I was out of town on business, and then having access to her law library, because back then you didn't have LexisNexis. So you needed that law book that was on the shelf and everyone had the same assignment that you did and you're using Loyola’s law library. What limited time I had to actually do the assignment, if that book wasn't on the shelf, I was toast. The fact that she, at the time, was a legal secretary and then became a law clerk at the law firm, meant we could access that law firm's law library. We never had a problem, so we ended up studying together because of that.

Lloyd Greif: 33:57 We went from friends to, obviously, being lovers and husband and wife. We have three kids. By the way, unlike me, she actually went into the practice of law. We took and passed the bar the year we graduated, in 1984, and we took it in San Diego because we wanted to get out of L.A. because the Olympics were going on and everybody said the traffic was going to be terrible. Traffic was a piece of cake. We ended up coming back and attending a lot of the events. But we have three kids ... She went into the practice of law, she became a litigator, and when our oldest was born, Nick, is when she then gave up the practice of law and focused on being a full-time mom.

Lloyd Greif: 34:33 Nick is 31, he's chief of staff for David Ryu, one of the city council members here in Los Angeles. He went to Harvard-Westlake and then he went to Wharton, and like father like son, he became a management consultant at Deloitte in Boston and San Francisco. And then he joined Mayor Garcetti's office during the mayor's first term, was on his business team. Put together the minimum wage, which was the signature accomplishment for the mayor in his first term. And then Nick got recruited into being director of policy and legislation for David Ryu when he was elected, and about a year ago got promoted to chief of staff.

Chris Rising: 35:10 Wow.

Lloyd Greif: 35:11 He's our oldest. Our daughter Lauren is our second child. She went to Oakwood and then USC. She's at USC now. She took some time off and became a real estate broker with Berkshire Hathaway Home Services, and then with Hilton & Hyland, and wanted to go back and finish her degree. So she's currently at the Marshall School doing that. She's 28. And then our 26 year-old, Ben, went to Harvard-Westlake, then he went to West Point.

Chris Rising: 35:44 Oh, wow.

Lloyd Greif: 35:46 He's always been wanting to serve his country, military focused. It was, in some respects, our family's way of saying thank you to the U.S. Army for liberating the camp where my dad was, which was Dora Nordhausen. If the U.S. Army doesn't liberate that camp, I'm not here today. So Ben right now, he's a First Lieutenant. He's flying Blackhawks for the U.S. Army. He was deployed in Afghanistan earlier this year and he just had a baby. So he's back at Fort Bliss in El Paso with my first grandson, Ascher James, who is about two and a half weeks old right now.

Chris Rising: 36:23 Oh, Congratulations.

Lloyd Greif: 36:24 Thank you.

Chris Rising: 36:24 You think he's going to be a career military?

Lloyd Greif: 36:26 Ben? Remains to be seen, but I think he's up for captain next year, so that's certainly a possibility.

Chris Rising: 36:37 That's awesome. Building a company over all those years, how did you find the pressures of building the company and being a parent and a husband? How did you deal with all that?

Lloyd Greif: 36:47 I'd love to say that there was work-life balance, but there wasn't. I did the best I could to be at the games the kids would have or the plays or concerts or what have you, wherever they would perform. But I put in long hours as an investment banker, so I would say that was probably tilted towards work. I remember one of my mentors, John Anderson of Anderson School of Management fame and Topa fame, may he rest in peace. Great man. His advice to me throughout the years was, divide your life, your time in thirds. You can have one third business, one third investments, one third family. I haven't necessarily followed that advice, but then, neither did John.

Chris Rising: 37:43 But you've been able to develop some hobbies as well through all that. I don't know where that fits in to the third, a third, a third. But one of the things, it was a great article, I think it was in the L.A. Business Journal, maybe it was the L.A. Times, about your office space. Can you talk a little bit about your interests as it relate to art and such?

Lloyd Greif: 38:04 Guilty as charged, I'm an art collector. Our office, like your building here, where Rising Realty Partners is headquartered, is in an art deco environment. But ours, we furnished it. You're in an actual building that was built during the '30s.

Chris Rising: 38:22 Not true, 1928.

Lloyd Greif: 38:23 1928.

Lloyd Greif: 38:25 Right before the '30s. But art deco spanned the two World Wars, 1918 to 1938, and it was a period of time when people were looking for release from the Great War, which was World War I. It was kind of a free-flowing art form. I mean, I've always thought it was a beautiful period, from an art standpoint. So our office has antiques, paintings and sculpture from the art deco period. American artists, Russian artists, European artists, French and what have you. It's a very nice creative work environment. Art collecting is one of my other passions. I like to hunt, I like to read, I like to write. So yes, I found time for that.

Lloyd Greif: 39:07 I don't want to people to get the wrong idea, that I haven't found time to be a father either. I have, I just know that building a company, you make sacrifices. Rising from associate to vice-chairman of Sutro, I certainly made sacrifices. And then running Greif & Co. for the last 28 years, I've done the same. You do have an obligation to clients, and we're never going to let those clients down.

Chris Rising: 39:33 I think it's a great story. I think it's been an honor getting to know you and hear about the challenges and the things you've accomplished. Let me ask you this, here we are in October of 2019, and there's a lot of uncertainty in the world. There's geopolitical risk around the globe, every other conversation I have with an investor is, where are we in the cycle and what should we be doing? What's your take on where we are today? PART 2 OF 3 ENDS [00:40:04]

Chris Rising: 40:03 ... and what should we be doing? What's your take on where we are today, and what are the headwinds and opportunities that you see?

Lloyd Greif: 40:09 So we have a pretty good window to that, Chris, because of the fact that we have such a diverse customer base, client base, in terms of the industry spread I mentioned. I can say that a lot of the companies that we're working with are having record years in 2019 in terms of top and bottom line performance, but I do sense a sentiment swing. I think people are getting more concerned that the music's going to stop and that there's storm clouds on the horizon. So I do know that private equity buyers, institutional investors, or what have you are beginning to put on the hat of being more conservative in terms of the industries they get involved in, in terms of what those prospects are.

Lloyd Greif: 40:57 You and I are speaking right in the midst of what looks like a retrenchment or a pullback by the IPO market with the WeWorks offering having been pulled and Endeavor IPO having been pulled. I think those are healthy signs, and why do I say that? So, I've been through multiple cycles since getting in this business in November of '81. The cycle at the end of the '80s, '89, '90, '91, '92, actually when I launched Greif & Co., which was a very contrarian thing to do. And then the cycle, the dot com bust, and of course the Great Recession and now we've had this 10-year bull market.

Lloyd Greif: 41:35 What I like about those offerings having been pulled as opposed to going effective and then cratering in the after market is it means there's still a semblance of sanity amongst the investment community, such that those deals couldn't get done. Back in the dot com bust, the problem with deals that shouldn't have gotten done, is they got done and the market blew sky high and it went down like a rock.

Lloyd Greif: 41:59 So if there's discipline out there, and investors will say no, then maybe, just maybe this will continue for awhile. But we do appear to be approaching an inflection point, and I think a lot has to do with whether people make the right decisions at all levels of the financial markets.

Chris Rising: 42:23 What's interesting about WeWork, we follow it very closely. WeWork is a tenant of ours in Denver. In fact, I was in Denver yesterday and toured one of their spaces that's open at the Wells Fargo Center, and it was packed. We are building out 60,000 feet for them right now. They are totally on budget and on time to build it out. However, I had met Adam Neumann in 2012 and spoke on panels with him. He's exactly the guy that has been identified. I have spent the last seven years at times going, "I can't believe this guy gets to raise all this money on a business strategy that doesn't work." And so I don't wish ill on anybody, but all of this that's come out was stuff we knew about him, especially in the real estate community.

Chris Rising: 43:12 If it had gone public, I think I would have lost all faith in our financial system because this is an arbitrage, and it is. And have people changed? Absolutely. Would people like to have one-year leases? Absolutely, but they've always wanted one-year leases. It was the lenders who won't let us do it. I would do 30% of a building on one-to three-year leases, because I know how these things work, but my lender won't let me do it. And so what was happening is we've just transferred that risk over to this entity called We Companies that raised an unbelievable amount of money. But the same risk is still there that you spend money that you could amortize over 10 years and you spend it in one year and it doesn't get amortized, and that company blows up and there's specialized improvements.

Chris Rising: 43:56 So what I found gratifying about them pulling the IPO was I was like, "Wow, I really am not dumb," because I was feeling really dumb that I couldn't see it. So I hope that's a great explanation that there is some sanity in the market, and especially the moms and pops whose brokers might've put them into that. I think it's great that that didn't happen.

Chris Rising: 44:20 Now, having said all that, it makes me nervous. I think people are getting tired of the volatility out of the White House and down the street, down at Capitol Hill. I think people are just tired of it. I think there's uncertainty in what businesses are going to make it and not. So I'm pretty nervous about where we're at. But it sounds like there's been enough profits coming out of companies today that you're not as nervous as I am.

Lloyd Greif: 44:47 So you're very focused on real estate, and real estate is one of our verticals. But we've got nine other verticals, right?

Chris Rising: 44:53 Yeah.

Lloyd Greif: 44:53 So I don't want to say that I'm not aware of it, because I'm absolutely aware of it and I'm definitely watching it. And I'm encouraging our clients who want to raise capital, whether it's equity or debt or want to sell their businesses, I'm encouraging them to get off their duff and get into the market now. Don't assume that you know you're going to get a higher evaluation in 2020 just because you’ve got 2019 under your belt, now you're going to sell off higher 2020 financial results. It doesn't work that way because if you have a market turn, you may have higher earnings upon which to base valuation or higher revenues, but that multiple may go down, right? Because multiples rise and multiples fall with markets and the private markets definitely follow the public markets.

Lloyd Greif: 45:45 So there's enough nonsense going on in Washington right now that there's plenty of reason for concern. It's not going to get any better with all the impeachment talk that's going on. You have the tariffs in China and now there's talk about tariffs in Europe. There was a decision that came down today that looks like that got cleared where the Trump administration can impose tariffs there. Tariffs serve a purpose, but to assume that the US economy goes through that unscathed is a false assumption. And I think unless there's some agreement reached here in the near term, we're going to increasingly feel the pain and the consumer is going to increasingly feel the pain of those tariffs. And we are ultimately a consumer-driven economy and that will ripple throughout everything that consumers spend money on, which is any business that is a tenant of yours or a client of mine.

Lloyd Greif: 46:49 So, yes, I'm saying that what I'm seeing right now in terms of our existing clients, they're doing well, but I think anybody with their head on their shoulders and their eyes open recognizes that if the window is open, you go through it now. The IPO window may in fact be closing before our very eyes. The private placement market, deals are still getting done at a pretty good clip both for equity and debt financings and the M & A market, absolutely. Even in a down economy, strategic buyers need to make acquisitions in order to expand and frankly expand faster than the consumer price index.

Chris Rising: 47:34 So if we are starting to head towards something that looks like choppy waters and interest rates are pretty darn low, what do you think? How do you see this? Is it a tsunami that wiped us out like the Great Recession? Is it something that you brought up '92? I still remember the household mantra of my father that stay alive till '95 was the term there. Just make it three years, things will get better. I think everybody has seared in their brain how terrible 2007 to '09 or '08 to '10 was. You think it could be that bad or you think we have-

Lloyd Greif: 48:11 That's a great question, Chris. I currently don't think it could be that bad. I think, yes, you have a retrenchment and I think it could be a long drawn out period of malaise, maybe comparable to what Japan went through, in some respects still goes through. So I don't think necessarily a sharp and steep decline, but more of a gradual and extended decline. So yeah, I would say it's more likely that. And then the reason I say that is I still think there's some sanity in the markets. That being said, some of the valuations I see on some of these companies don’t make sense and we just talked about WeWork. WeWork's last private placement that they did with SoftBank earlier this year was at an $47 billion market cap. They couldn't get their IPO done for a third of that value.

Lloyd Greif: 49:09 So some of these private market valuations that have been accorded to unicorns are unsustainable. And so I think we've had two major private investors, major institutional private investors in SoftBank with respect to WeWork and in SoftBank and Silver Lake Partners with respect to Endeavor, the media and entertainment company. Both of them have had wake up calls with the IPO markets not being available to them for their normal exit.

Lloyd Greif: 49:45 So I hope that ripples through and that sanity gets back to some of the private market pricing that's occurring routinely in these unicorns; maybe stop walking on clouds and start walking on the ground again on terra firma.

Chris Rising: 50:04 Yeah, well you know what I think it would be nice is if people actually got valued on being profitable. That would be a nice thing.

Lloyd Greif: 50:10 That harks back to the dot com bust, right?

Chris Rising: 50:11 Yeah.

Lloyd Greif: 50:12 Everything was about market share. And I remember going to ... and it was funny, except it wasn't funny. I remember going to a holiday party probably in 2000 at Leonard Green Partners, the largest private equity firm here in Los Angeles. And there were some investment bankers there and I was, of course, at Greif & Co. and there was some investment bankers there from Donaldson, Lufkin & Jenrette and another firm and they were joking about these companies they had just taken public. They were laughing about it, Chris. They were talking about how comical it was, the valuations that they were taking them out at and they were just ridiculous multiples of what ... thin air, right?

Lloyd Greif: 50:55 As you say, no earnings and then no likelihood of having earnings, which is part of the issue with the WeWorks deal. If they can't make money in a boom economy, how are they going to make money in a recession with their model with having tenants with short-term leases and they have long-term commitments that they're matching them up with? And I remember thinking and I remember walking away from those people because I didn't see any humor in what they were saying at all. And just walking to another group and thinking in the back of my mind, "You're laughing today, one year from now, you're going to be ... or one month or six months you're going to be crying, not laughing, and you're going to be the guys who are going to be laid off because your whole industry is going to get slammed."

Lloyd Greif: 51:35 We've never laid off an investment banker in the history of Greif & Co., but we don't engage in those excesses either and we're not doing deals that don't make sense. If it's not a deal that I would do personally then we won't undertake it.

Chris Rising: 51:48 I think that's exactly how business needs to be done. It's maybe easier in the real estate business, but if it's not something that I'd put my own money in, I don't want to put anybody else with money into it and I think that's important. Being in the business for 38 years, there must be some funny anecdotes or stories that you have about the business. Is there anything you want to share with the audience?

Lloyd Greif: 52:09 Sure. There's plenty, but I'll just give you one. So this goes back to my Sutro days, 1989 right before the market crashed and I'm in New York at the offices of Morgan Stanley. I'm representing Unicord Co. Ltd. out of Thailand, which was the largest exporter of tuna to the US and their client was Bumblebee Seafoods. Bumblebee Seafoods at the time was owned by Pillsbury, which had just been acquired by Grand Metropolitan PLC, which is now Diageo, and they were looking to sell it. And I'm representing Unicord. They wanted to go from being a supplier to also being the marketer and having the brand. They wanted the Bumblebee Tuna brand. Bumblebee is number one in white meat tuna.

Lloyd Greif: 52:59 So this was the day of the final bids and final bids were due and our client from Bangkok, Dumri Konuntakiet, CEO of Unicord, an American style entrepreneur in Thailand, wanted to be there. He wanted to make sure we submitted a winning bid and we'd also financed the bid and he wanted to be there to, to make sure we can negotiate the contract, the purchase agreement. So we don't even know if we've won the auction, okay? But we're there-

Chris Rising: 53:27 Was it just a blind auction or did you have some sense-

Lloyd Greif: 53:30 Yeah, absolutely. They're always blind auctions, yeah, in this business. They're not like a bankruptcy auction, which would not be blind. So we're there awaiting word at our hotel from Morgan Stanley, whether we go over the to their offices to commence negotiating a contract, which would be the case if we'd won the bid. And I'm there with my client and I'm there with the attorney from Baker & McKenzie, who's representing our client and it's Friday and this goes from Friday morning to Friday afternoon. And he's saying, "You know what? We haven't heard anything. I want to be home with my family in Los Angeles over the weekend. If we don't hear anything by whatever time I'm going to catch the last plane out of JFK." And I said, "If I'm staying here, you're staying here. You're not going anywhere because I can't negotiate the contract." Yes, I'm a lawyer, but I'm not playing lawyer. I'm playing investment banker on this deal, right? I'm not going to negotiate the contract with my client. Good way to get malpractice coming my way.

Lloyd Greif: 54:26 But of course he doesn't answer to me, right? He answers to Dumri and Dumri was wherever he was. I think Dumri and his wife were out shopping on Madison Fifth Avenue. So he hits the time and he says, "Okay, I'm out of here." And I said, "Where are you going?" And he says, "I'm going to the airport," and boom, he’s gone. And I found out what airline he was flying so I picked up the phone, called the airline, canceled his ticket. I said I was him. I said, "I changed my mind. I'm not flying," and I canceled his ticket. A few hours later he comes back to the hotel mad as hell because that was the last flight out, they canceled his ticket. He couldn't get on it because it was a sold-out flight and he was stuck. And he gets back there and he's not a happy camper.

Chris Rising: 55:17 Did he know that you did it or he just thought he got-

Lloyd Greif: 55:19 I told him. Honesty is my policy, I told him. And I said, "I told you not to go." Dumri, the client, was fine with what I did. One hour later we found out we won the bid and so we needed to be there that night negotiating that contract. But I thought it was hilarious, he, not so much.

Chris Rising: 55:39 That's a great story. But it goes to the whole business of investment banking, right? It's you've got to be there.

Lloyd Greif: 55:44 You've got to be there for the client and the lawyer was obviously operating with a different work ethic than me. And it's actually not funny because we're there that entire weekend and that Sunday was Nick, I mentioned my oldest child, that was his first birthday party. And literally I was negotiating that deal from that Friday all the way through Monday. I didn't get back to LA until Monday and nobody felt more guilty than this dad. I went to FAO Schwartz in New York and bought him a Steiff leopard named Softy that he’s slept with forever.

Chris Rising: 56:24 Well, fortunately, at one years old, I think the memory's short, but those are the challenges.

Lloyd Greif: 56:30 Yeah, but then ... Yeah, but the memory was here, Chris. It's been with me ever since.

Chris Rising: 56:32 I know I have a few of those ways out. That's a great story. I really appreciate you sharing that.

Lloyd Greif: 56:37 My pleasure. Thanks for asking.