May 14. 2012 9:00AM

The Art of Professional Ownership

Sheldon Lubar is Lifetime Achievement Award recipient

By Steve Jagler

  
The 2012 BizTimes Bravo! Entrepreneur Lifetime Achievement Award will go to Sheldon Lubar, founder and chairman of Lubar & Co. in Milwaukee.
Sheldon Lubar

The 2012 BizTimes Bravo! Entrepreneur Lifetime Achievement Award will go to Sheldon Lubar, founder and chairman of Lubar & Co. in Milwaukee.

Lubar, 82, has made a significant positive impact on his community, his state and his country as an entrepreneur, a banker, a venture capitalist, an investor, a director, a public servant and a philanthropist. Lubar, his wife, Marianne, and their family continue to help move Milwaukee forward.

Past recipients of the Bravo! Entrepreneur Lifetime Achievement Award have included Fritz and Debra Usinger of the Usinger family, Stephen Marcus of The Marcus Corp., George Dalton of Fiserv Inc., Robert Kern of Generac, Joe Zilber of Towne Realty and Harry Quadracci of Quad/Graphics Inc.

Lubar is a director of several public companies, including Crosstex Energy, Star Gas, Approach Resources, and Hallador Energy as well as other private companies. Previously, he served as chairman of Christiana Companies, Inc., chairman of C2 Inc. and a director of MassMutual Life Insurance Co., U.S. Bancorp, MGIC Investment Corp., Ameritech Corp., Weatherford International, Grant Prideco and other public companies.

During his career, Lubar has held governmental appointments under three U.S. Presidents. President Richard Nixon appointed him assistant secretary, Housing Production and Mortgage Credit, Department of Housing and Urban Development, and commissioner of the Federal Housing Administration, and director of the Federal National Mortgage Association, in 1973-74. Lubar completed that assignment under President Gerald Ford. President Jimmy Carter named him commissioner of the White House Conference on Small Business in 1979-80.

Lubar served as a member of the Board of Regents of the University of Wisconsin System and as its president. In 1991, Lubar served as co-chairman of the Governor’s Conference on Small Business. He was trustee and acting chairman of the State of Wisconsin Investment Board and president of the Milwaukee Art Museum.

Lubar also donated $10 million to the University of Wisconsin-Milwaukee, which renamed its business school after him.

BizTimes executive editor Steve Jagler recently interviewed Lubar about his storied career. The following are excerpts from that interview.



BizTimes: You’ve accomplished so much. You’ve worn so many hats – as an entrepreneur, a venture capitalist, an investor, a director, a public servant and a philanthropist. It’s difficult to know where to begin. One does not just wake up one day and become Sheldon Lubar. So, let’s start at the beginning. At 18 years old, what did you want to be when you grew up?

Lubar: “You know, I can tell you this. I had no idea whatsoever. I knew I wasn’t going to be a policeman or a fireman or a doctor. There was one thing I was certain of, and that’s that I was going to go to college. I was just taking basic courses. And then I went to law school (at the University of Wisconsin in Madison). I started to develop and think analytically. But then my decision was that ultimately, I really wanted to be in my own business. But I didn’t really know anything about business. So, I thought the best thing for me was to go work for a commercial bank and learn. So, that’s what I did at the Marine National Exchange Bank (in Milwaukee). And I learned a lot. After working in the bank for 10 years, I developed a strategy that I call Professional Ownership.”



BizTimes: That concept of Professional Ownership has proven to be critical to your entrepreneurial journey. Can you summarize that concept for us?

Lubar: “I don’t think there are many owners that are professional. There are owners and there are managers, and in small companies, it’s usually the same person. I own the business, and I’m also the president, I’m the boss. And usually a small business is run by someone whose ambition is to build up a business that will pay for his lifestyle. It will pay for and he charges off his country club, his car, his trips. That’s the idea. And the employees all know this is John Jones’ business, and it’s run for his purposes. Whereas the first company I bought, I talked to the employees, and I said, ‘I want you to understand something. We have one important thing in common. This is where you make your living, and this is where I’m going to be spending my time. And the thing we have in common is the success of this business. I’m not going to take an inordinate amount of money out of this business, because I control it. I’m going to take very little out. I think my salary was $20,000. But the one thing we are going to have is that you will share in the success of this business.’

“The way I organized the business was I had about half of the business. The institutional investors had about 35 percent and management had about 15 percent. And it was a great success. We tripled the earnings in five years, and then a large electrical company, Square D, came down the street and wanted to buy it. And they did.”



BizTimes: Collaboration is a very important component to your investment philosophy, isn’t it?

Lubar: “That’s right. I mean, I’m involved in strategic decisions. I’m involved in compensation and in motivating the people. I’m not involved in the day-to-day operation. I’m a teacher of things I know about, and I’m a cheerleader of everything. I’m totally behind management. I tell them, ‘You are in charge of the left side of the balance sheet, the return on assets. I am responsible for the right side, and that is to have the lowest cost of capital.’ That’s the way we’ve operated. We buy companies or we buy into companies, and we make them larger and more profitable.”



BizTimes: I interviewed the late George Dalton, who won this award a few years ago, and he also acquired or bought into a lot of companies. He always said that he liked to walk the shop floor of a company he was considering buying, and he would watch how the employees interacted with the CEO. Did they know him? Did they act like they were fearful of interacting with him or giving him their great ideas? If he didn’t like what he saw there, those were red flags, and he would walk away. Does that ring true with you, with all of the companies you’ve bought over the years?

Lubar: “Not exactly. But when I walk into a manufacturing company and I see that the floors are swept, and the people are alert and working, that does make an impression. You know, George Dalton and I started at the Marine Bank at about the same time. And then I was CEO at Midland Bank. And George was head of operations. And the best operation we had was upstairs on the sixth floor, where George Dalton was working away. He ultimately took that department and spun it off and made Fiserv (Inc.) out of it. That was his style. Not exactly the same. But everybody has their own recipe, Steve.”



BizTimes: As you reflect on the Great Recession that we’re still trying to work out of, does someone like you take away any great lessons from that whole experience?

Lubar: “I think so. But I had been in the mortgage banking business. And I was on the board of Fannie Mae. And I saw it coming. It was absolute madness. That the people in Congress, the president (George W. Bush) and businessmen didn’t understand what was happening. So, I wasn’t shocked by it. I guess everyone was impacted by it. But our companies, they weren’t in that business to begin with, so they all keep doing well.”



BizTimes: Let’s talk about one of your most recent investments. You bought Ixonia Bancshares, the parent company of ISB Community Bank. Interesting. Can you tell us more about your motivation for doing that?

Lubar: “Watertown is a very big market for that bank. I think it’s a great area, I really do. It has that proximity to Madison and Milwaukee. Those are the highest household incomes in the state.”



BizTimes: Did those demographics play into your decision to buy this bank?

Lubar: “Yes, and the educational level. Half the people have college degrees.”



BizTimes: Was the bank in trouble financially?

Lubar: “To the extent that the regulators wanted them to add capital. So, we invested. I wanted to invest in a bank, one that I could practice my ideas and really make it a special bank and develop commercial banking with smaller companies. We talked to a lot of different banks before we decided to do this.”



BizTimes: Let’s talk about some of your other investments over the years. When Milwaukee Brewers owner Mark Attanasio came to town, what impressed you? What made you decide to own a minority share of the team?

Lubar: “Well, I was introduced to him by a mutual friend. And he said that Mark wanted to buy the baseball team and asked if I could introduce him to the (Major League Baseball) commissioner (former Brewers owner Bud Selig). At the same time, my son, David, had a call from someone who was working for Mark, saying ‘Can you help us?’ So, Mark came in, and we talked to him and got to know him and thought he was a pretty decent guy. And then I introduced him to the commissioner. Frankly, I thought that was the end of it. And then David was the one who said Mark also would like to add local interests, and he’d like us to invest. And we did.”



BizTimes: I would say Attanasio has grown the value of that franchise, hasn’t he?

Lubar: “He’s done a wonderful job. But I have to tell you. We bought something that was all set up. I mean, they had this wonderful stadium. They had (general manager) Doug Melvin. They had (executive vice president Robert) Quinn. They had a wonderful staff.”



BizTimes: And then there’s the Lake Express ferry. How has that worked out for you? Has that been more or less a civic thing, or is it a worthwhile investment?

Lubar: “We did that because the (former) Milwaukee Harbor Commissioner Dan Steininger, who’s a longtime friend of mine, came to me and said, ‘We’re trying to renew the Milwaukee-to-Muskegon ferry. Is this something you’d be interested in?’ We decided to do it. It was a real project. You know, it’s always been an earner. The high price of diesel fuel has eaten into our profit, but it’s always in the black.”



BizTimes: As you look forward, what industries are you most bullish about from an investment standpoint?

Lubar: “My activities are in the energy business. I think that will continue to be the case. Another major one is health care.”



BizTimes: As you look back on your long career, do you have any regrets, anything you wish you’d done differently?

Lubar: “Not a thing. I’ve had a really happy life. I’ve enjoyed the philanthropic things I’ve done. They’ve been very gratifying to me.”



BizTimes: To round this off, you served both Republican and Democratic presidents. You put public service ahead of partisanship and party affiliation. Are you worried that we’ve lost some of that? Have we become too polarized as a nation? Are people putting party before patriotism?

Lubar: “I think you put your finger on the biggest problem we’re facing. I would like to read from you part of my eulogy that I gave for my friend (attorney) David Beckwith, who recently passed away. He was the epitome of civility, that quality that leads to honest and informed debate, that recognizes both sides of every issue and resolves differences fairly. Both our state and our country need more of what David Beckwith represented. It was what the founders of our country sought to create. That is lacking.”



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