When Matt Coffin entered an Irvine conference room filled with executives and investment bankers interested in buying his Santa Monica-based Internet company, the significance of the moment hit him all at once.
Coffin was about to begin the process of selling LowerMyBills.com Inc., and he suddenly realized all the sleepless nights and missed weekends the proverbial blood, sweat and tears were culminating in this one meeting.
"I felt like all the air in the room had been sucked out of it," he recalled. "I couldn't get out of my chair to give the presentation. I just kind of sat there, with my hands shaking. I told them 'You'll have to excuse me, I'm kind of nervous.'"
After a few minutes, Coffin pushed through the meeting. The transaction was finalized earlier this month when London-based GUS Plc's financial services unit Experian made a $380 million deal for the company, which provides comparison interest rate information.
Among the richest and most successful businesspeople in Los Angeles, that moment probably has a familiar ring. Everyone has turning points in life marriage, a job offer, a big business transaction. But for a select few, those turning points can become financial and professional watersheds.
"There is always a moment in time, and a moment in every person's career, when the tide reverses," said James Hunt, managing partner at Bison Capital Management LLC. Hunt's own moment came when he went to work for Eli Broad.
The Business Journal asked several local businesspeople to describe that turning point. Some recalled the first big job that led to opening doors down the line, while others spoke almost wistfully about their first investment property.
In most cases, big money followed not quite on the magnitude of this year's 50 richest Angelenos, where the floor is $621 million, but major wealth by just about any other measure. And yet, for people like Coffin, who started his company from scratch in 1999, it's not all dollars and cents.
The weekend after Experian's purchase became final, he took his wife to Beverly Hills for some celebratory shopping in the boutiques along Rodeo Drive and department stores on Wilshire Boulevard. "We came home empty-handed," Coffin said. "We just couldn't find anything we really needed."
Mark Nathanson, a cable industry pioneer, said the turning point in his career wasn't one of the many cable deals that turned him into a multimillionaire.
Rather, it was a single phone call from an industry legend offering him a job at a low point in his life.
At age 26, Nathanson was unemployed and living in his parents' home with his wife and two small children. Six months earlier, he had been a marketing executive at a cable operator that got sold to Warner Cable. He had tried unsuccessfully to put together an investor group to buy another cable company. But those plans fell apart.
Out of the blue, Nathanson got a phone call from Jack Kent Cooke, owner of the NFL's Washington Redskins. The mogul had just taken over an ailing cable operator, Teleprompter Corp.
"Cooke calls me up, introduces himself and says: 'I'd like to talk to you. Can you get on a plane and meet me in New York tomorrow?'"
Nathanson got on a red-eye and walked into Cooke's apartment at the Waldorf Towers.
"It was 11 a.m. and he greeted me in his robe and pajamas," he said. "At that time, Cooke was in his 60s and he started out by asking me if I thought I was pretty smart which is a really tough question. And he said, 'If you're so smart Mark, how come you're not a millionaire like I was at your age?'"
"I told him I hoped to become one, if he was offering me a job," he said. "But then I made the mistake of telling him that I'd have to check with my wife first."
Cooke didn't like that response. He told Nathanson that if he had to check with his wife, then he was the wrong person for the job. The interview was over. Nathanson flew home.
But two days later, he got another call from Cooke, who had a reputation for hiring young stars in the industry and working them like dogs.
"He asked me: 'Do you want to work for Jack Kent Cooke?' he always referred to himself in the third person. But I didn't know what I would be doing and when I asked him, he said: 'You'll be working for Jack Kent Cooke.'"
Nathanson was hired as vice president of marketing and programming at Teleprompter.
Cooke managed in a short time to turn the struggling cable operator around. By the time Nathanson was 29, he had made $600,000 in stock options, which he used along with money borrowed from his family to buy Falcon Cable, an independent cable operator that he sold in 1999 to Paul Allen for $3.6 billion.
"I remember being hired by Cooke as the real pivotal point in my career because it gave me enormous responsibility," he said. "I had 2,000 people working under me, compared to my previous job, where I had about 10 people."
Nathanson also recalled how Cooke, who owned the Los Angeles Lakers and the Los Angeles Kings at the time, treated his employees like star ballplayers. He was making $75,000 a year, compared with his previous salary of $28,000.
More important was that Nathanson earned a reputation for helping turn around Teleprompter. Because of that, the cable company's banks were willing to lend him money when he launched his own cable business a few years later.
"Teleprompter gave me the visibility, but Jack Kent Cooke gave me the chance," he said.
It also paid off to learn the business at the feet of a larger-than-life media mogul. "Cooke was odd," he said. "You had to have lunch with him every day, and if you wanted to have lunch outside of the company, you had to ask permission."
He recalled the day he informed Cooke that he planned to start his own company.
"He pointed his finger in my face and said: 'If you leave me, you'll never work in the cable business again.'"
But the two ended up on good terms. "I was at the right place at the right time, just as the cable industry was taking off," said Nathanson, who currently is chairman of Falcon Waterfree Technology, a Los Angeles-based start-up that makes no-flush urinal systems.
For Malibu financier and developer Richard Weintraub, the deal that changed everything was far from his largest.
It was the sale of a mid-sized apartment building in a dusty Arizona Air Force town. "That's what gave me all the seed money and confidence to go forward and do all the deals I've done now," he said.
In his late 20s, Weintraub had already established a successful residential real estate practice, selling high-end homes in Malibu, Beverly Hills, Encino and Calabasas.
Then came the unthinkable, at least for Weintraub: a lingering recession, the riots and the Northridge Earthquake. Real estate values plummeted as interest rates climbed and repossessed homes were dumped on the market. People weren't buying houses, and for the first time, a newly married Weintraub was really struggling.
"The market just crashed and things only got worse from there," he said. "Every time you thought you saw light at end of tunnel it would get worse."
Ironically, it was the collapse of the savings and loan industry that began turning things around. Congress had established the Resolution Trust Corp. to sell S & L; assets to make-up for the billions in public dollars being used to bail out the industry.
Weintraub knew that if he could raise enough money he could pick up the properties many of them prime real estate for dimes on the dollar. But banks weren't lending and Weintraub didn't yet have a personal fortune to draw upon.
So he went back to his old clients and pitched them on the idea of investing in a pool of money to buy the properties. "I said if you trusted me with your $5 million house, trust me with a $100,000 investment," was his pitch. "It wasn't a hard sell for them because I had done a good job disposing of their real estate and I wasn't asking for an amount that would scare a bunch of high net-worth individuals."
After quickly finding too much competition for RTC properties in L.A., Weintraub began to look in other parts of the country until he found a 366-unit apartment building in Glendale, Ariz., near Luke Air Force Base, that was being sold for $2.7 million.
The building was three-quarters empty and worn around the edges, but Weintraub found it solidly built and in a town that was well-located to capture tenants from the military and commuters to nearby Phoenix. "Fundamentally, it looked like a good deal," he said.
The challenge was getting the deal done. The S & L; crisis had wiped out many of Arizona's lenders. "It's kind of scary to think you could go into a town and even if you could put 90 percent down there still wouldn't be a lender to give you a loan," he said.
Eventually, Weintraub secured a partial loan through Ford Motor Credit Corp., but he still needed to come up with $1 million, "which was everything I had in the whole world," he said.
When it came time to close the deal, he brought his wife. "I'll never forget standing outside the escrow office. I'm so nervous holding this cashier's check, and the broker says 'You have to turn the check over,' and I was trembling, having trouble doing it," he remembered. "I turned it over but I didn't sleep for a week."
After pouring more money into fixing up the building, the property became a stable asset. A little more than a year later, Weintraub got a call from a real estate investment trust wanting to buy the building for $6.4 million five times the equity he had put into it. "It was a price for the property that I thought was crazy," Weintraub said.
It re-established Weintraub's faith in finding good real estate deals, though he has not bought another building outside of Southern California since then. "Real estate is so tangible that I want to be able to be hands on. If there's a problem I want to be there," he said.
"Besides," he added, "Southern California has some of the best demographics in the country. So if I'm already in the right place, why go look for someplace else?"
'Never giving up'
Sometimes the tipping point in a career only becomes obvious with the passage of time.
Lee Perlman, founder, chairman and chief executive of New Age Electronics Inc., was only able to launch his own company by extricating himself from the family business.
Perlman's father owned Zemex, a chain of electronics stores that mostly sold large TV consoles. By the late 1970s, Japan was flooding the U.S. market with electronics VCRs, fax machines, camcorders and computers and old-fashioned electronics stores like Zemex were losing out.
"My father was from the Depression and he became a big obstacle because he didn't know how to sell these products," said Perlman, who became a co-owner of Zemex after working for his father and a third investor, Stanley Hollander. "I had a bug in my head that we had to find a way to sell these products, but my father was from the Old School and he wouldn't listen to us and he wasn't going to be told what to do. So eventually he bought out our portion of the business."
Perlman became a multimillionaire by selling his stake, and he used that money to launch his own company, New Age, which sold mostly Japanese electronics to camera and gift shops in urban areas.
"Selling the business to my father was the wake-up call of my life," said Perlman, whose father, Alvin, died several years ago. "It allowed me to create my own business model that was really 20 years ahead of its time.
"But even more important was that after I sold the company back to my father, we became the best of friends we would talk on the phone for hours and he would pick my brain about the industry, and he grew to have tremendous respect for me as a guy who became successful on his own without him," he said.
Over the course of the next decade, privately held New Age Electronics grew to nearly $1 billion in annual sales by selling low-margin electronics in huge volumes through warehouse clubs.
The Carson-based company moved into supply-chain management, taking over distribution for manufacturers Sharp Electronics, Canon and Panasonic.
New Age was at the forefront of radically altering the distribution channel by taking back damaged goods from retailers, fixing them and reselling them without returning the goods to the manufacturer.
One pivotal deal came when Perlman convinced Hewlett-Packard Co. to ink a contract to distribute its fax machines. "I wrote a white paper and told HP how they could be successful in fax machines, and that was a big turning point," he said. Ultimately, HP gave New Age rights to distribute computers, printers, supplies and digital entertainment.
"It also proved to me something about never giving up," Perlman said. "When someone in this business sees value in what you're doing, they'll eventually come knocking on your door."
Getting free rein
James Hunt is a fan of "The Tipping Point," the bestseller by New Yorker writer Malcolm Gladwell that describes how very small events can have a dramatic impact. "Sometimes an opportunity comes along and you're suddenly in a position where the world is coming to you with opportunities," he said.
For Hunt, that tipping point came mid-career, when he left a job working for billionaire Marvin Davis and began a corporate finance unit for billionaire Eli Broad, the founder of homebuilder KB Home and later insurance giant SunAmerica.
"Nothing ever happened working for Marvin because he only did things that were personally fun for him or that made him look good to the people he cared about," said Hunt, who worked for Davis for just a year, but stayed with Broad for 11. "You could have brought Marvin the best deal in the world, a deal that made perfect sense, and he would have turned it down."
But Broad was the opposite, willing to give his young minions free rein to do whatever they wanted, with an emphasis on creativity.
"Going to work for Eli was a tipping point because there was so much opportunity to create an asset-gathering machine out of whole cloth," he said.
At the time, Broad wanted SunAmerica, which was later acquired by AIG, to buy its own assets and collateralize them just as a bank does. SunAmerica became an early buyer of high-yield bank debt, at a time when the high-yield market was flying high on the West Coast because of deals done at now-defunct Drexel Burnham Lambert.
Hunt got his first taste of the arcane collateralized debt industry when he structured a deal in 1991. A few years later, he purchased Imperial Premium Finance Co., from the government-run Resolution Trust Corp. for $464 million.
"That deal launched me into a great run in structured finance," he said. "What Eli did so unbelievably well was create an environment that revolved around solving a problem and thinking laterally. The whole concept was: Don't miss any opportunities. That was the greatest contribution for me, because instead of becoming a regular old insurance person, I was able to be an asset manager and then eventually do my own deals."
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