L.A. Legacy

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L.A. Legacy
CEO Karen Hathaway on the John Wooden Basketball Court at downtown’s Los Angeles Athletic Club

When Karen Hathaway joined the Los Angeles Area Chamber of Commerce several years ago, she had no idea she was following in the footsteps of her great-great grandfather. She only found out recently that Frank C. Garbutt was one of the businessmen who founded the chamber in 1888 in an effort to keep businesses in town amid a real estate bust. Roughly 124 years later, Hathaway is this year’s chamber board chairwoman, responsible for setting policy direction and acting as the lead voice for L.A. business. She is also chief executive of Laaco, the holding company of the family business. Laaco includes a self-storage chain and the Los Angeles Athletic Club, which is also one of the city’s leading business networking organizations. Hathaway is also following in the footsteps of her great-grandfather, Frank A. Garbutt, who helped revive the club in the early 1900s. Hathaway kept the club healthy through the recession, capitalizing on the downtown renaissance. Hathaway met with the Business Journal at the Athletic Club to discuss her role at the chamber and her company. But she is most enthusiastic about the book she recently wrote on her great-great grandfather, “Making His Own Way: A Biography of Frank C. Garbutt.”

Question: What prompted you to write this book on your great-great grandfather?

Answer: It all started when my oldest daughter was going off to Harvard as a freshman. Just before we left, my father mentioned to me in a sort of offhanded way that somebody in my family had gone to Harvard. So, when I got to Harvard with my daughter, I decided to pay a visit to the archives.

What did you find in the Harvard archives?

I found a whole treasure trove on my great-great grandfather, Frank C. Garbutt. It was quite a chronology of his life, from his service in the Civil War to his travels around the country to his settling down for a while in Denver and finally coming to Los Angeles. I had known nothing about him other than the name, as nobody in my family had ever really talked about him. When I returned to Los Angeles, I started researching, looking for anything I could find about him.

So how did this turn into a book?

The information in the Harvard alumni file was the skeleton. I decided to retrace his steps and fill in the skin and the muscle. I spent a couple of years searching dusty archives all over the country, proceeding chronologically. What I found is that he kept reinventing himself. Each place he went, he would make money, make some deals, then lose money and then move on. For example, he was a mining engineer in Colorado; when that petered out, he bought an orange grove from a preacher in Denver and tried to make a go of that, but that also didn’t go well.

So what drew your great-great grandfather to Los Angeles?

It was the prospect of starting over yet again. But this time, his wife, Mary, put her foot down and said they were going to stay. She had grown tired of always pulling up stakes.

How did he get involved in the chamber?

Throughout much of the 1880s, there was a tremendous real estate boom in Los Angeles. In 1884, you could buy property for $20 per square foot of street frontage. By 1887-88, that had soared to $800 per square foot of street frontage. Of course, my great-great grandfather got into the real estate business like everyone else. But then a big bust started. A bunch of business people – among them my great-great grandfather – realized that things were starting to go bad. (They started) a Chamber of Commerce to focus on how to stimulate business in Los Angeles and keep business people from moving away.

Now you’re the chairwoman of that same chamber with some of the very same goals.

Yes, but when I joined the chamber back in the 1990s, I had no idea of my great-great grandfather’s role in founding the organization. That only came recently, when I started researching my book. As for the goals, yes, there is a similarity. We do need a more business-friendly climate, where our elected officials need to look at reducing the regulation businesses face.

What are some of your other goals as chamber chairwoman?

First, we want to elect more business-friendly lawmakers. We also need to focus more on Los Angeles as a global trade hub. The key here is to boost exports from local companies, helping them to figure out what they are going to sell to the rest of the world. And we need to focus more on our local energy and clean tech industries.

Your great-grandfather, Frank A. Garbutt, was a pioneer of L.A. business, too.

My great-grandfather was considered to be the father of the modern Los Angeles Athletic Club and was very prominent in local business circles. He wrote a daily column for the L.A. Times; he ran in the same circles as Edward Doheny and Harry Chandler, and he helped form Lasky Famous Players, which later turned into Paramount Studios.

What was your great grandfather’s role in the Athletic Club?

The Athletic Club had originally formed back in 1880 but petered out after a while. But around 1910, my great-grandfather and several other businessmen bought this parcel here on Seventh Street with the intention of reviving the Athletic Club. They built the first indoor swimming pool on an upper floor of a building in the Western U.S. – quite a feat for the time. They used shipbuilding skills extensively in building the pool. The revived club opened in 1912. He later went on to found the California Yacht Club and the Riviera Country Club.

Were you under any pressure to keep the family tradition going?

No. I wanted to go into medicine and my father was OK with that. But when I graduated with a degree in zoology, I didn’t have a mentor and didn’t see much of a career path. That’s when I had to face my father, who said, “OK, now what’s next for you?” When I was a teenager, I read a biography of Gladys Towles Root, a rather flamboyant criminal defense lawyer in the 1930s. Her career fascinated me, so I decided that I would become a lawyer. I went off to law school and I loved it.

So how did you end up at the Athletic Club?

After I finished law school, I started off doing real estate law. Then there was an opening at Laaco for a real estate lawyer and that’s how I joined the family business.

How did you become chief executive?

I eventually became general counsel. In 1991, my father stepped down as president and I was named his successor. The one big change – and one that I liked – was that I could finally start saying “yes” to things. As general counsel, I was always advising, “You shouldn’t do this because. …” Basically, I had been saying “no” all the time.

What was your strategy after you took over management of the Athletic Club’s parent company?

I sought to hone the strategy that my father started: diversifying the company by getting into other lines of business. We had purchased shopping centers and a hotel and had acquired Self Storage Co. I looked at all this and saw that Self Storage was the best performing asset, so we divested of some of the other lines of business and focused on the Athletic Club and Self Storage. And Self Storage is now the majority of our business.

So you’re going head to head with Public Storage Co.?

Not really. We grow organically. Public Storage went to the public markets to raise capital. We are acquiring properties and developing our own properties.

Didn’t your company at one point also own other clubs including the Riviera Country Club and the California Yacht Club?

Yes, we did. But my father had sold most of these off. The Riviera Country Club was one of the last ones left over from our club expansion; we sold that in 1988. We still own the California Yacht Club.

Private clubs have gone through tough times recently. The Regency Club in Westwood recently shut down, for example.

Well that’s not the case with the Athletic Club. Unlike many other clubs, we were able to hold our own during the 2008-09 downturn and now our membership is on the upswing. The main reason, I think, is because of the renaissance of downtown. We now have tens of thousands of residents here that weren’t here in previous decades. And these are younger residents dedicated to physical fitness. Because we’ve been able to connect with these younger people, we haven’t had the problem of an aging membership like other clubs have.

In the 1990s, you chaired the Central City Association. What was your main accomplishment there?

That was when downtown Los Angeles was at its nadir. We decided we had to do something, so that’s when we launched the Downtown Business Improvement District, to try to revitalize the area and provide more safety and security. It has worked beautifully.

You must have been pretty busy in recent years, running the Athletic Club and Self Storage, serving at the chamber and writing this book. How have you balanced all these interests?

No question, during the five years I was researching and writing the book, I devoted less time than I might have to the chamber and other civic activities. Now that the book is done and I’m chamber board chair, I’m spending about two days a week on chamber business and the rest of the time running the company.

Doesn’t sound like you’ve had much time for hobbies and family.

Well, now that our kids are grown, I have more time to devote to civic interests like the chamber. However, it was a challenge while I was writing my book.

How did you meet your husband,

Fred Zepeda?

He worked here at Laaco and we met through another civic organization called the Los Angeles Junior Chamber of Commerce. And his L.A. roots are even deeper than mine.

How is that possible?

He’s part California Indian. His grandmother was a member of the Pala Indian tribe. So I have no bragging rights about my L.A. roots in front of him.

You like running. Have you participated in any marathons or road races?

Not really. I just like to run about 10 miles or so as part of my usual routine.

Do you have any other hobbies?

Not really. Though now that I’ve written a book, I just might try my hand at another book.

Really? What would be the subject?

I’m really intrigued with my great-great grandmother, Mary Garbutt. As I mentioned earlier, she’s the one who insisted my great-great grandfather settle down in Los Angeles. But I had no idea just how unusual a figure she was in her own right. She became a suffragette. Then, after World War I, she actually ran for Congress on the Socialist Party ticket alongside Upton Sinclair, who later ran for California governor. Neither of them won, of course.

That must have been quite a marriage: the businessman and chamber co-founder whose wife runs for office as a socialist.

Well, by that time, Frank C. Garbutt, my great-great grandfather, was retired and she had taken the lead on things. He also became a bit of a socialist himself towards the end of his life. No, the real conflict wasn’t with him but with their son, Frank A. Garbutt. By that time, the son was the real pillar of the business community and whenever the topic of his mother’s political leanings came up, he would just roll his eyes and say, “Yep, that’s my mother.”

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