Disney’s Michael Eisner. President George W. Bush. Former Columbia/HCA chairman and Florida’s current Governor Rick Scott. The list of those whose careers have been made or influenced by billionaire investor Richard Rainwater reads like a guide to contemporary American business.
Struck in 2009 with a debilitating neurological disease, Rainwater, 67, no longer dominates rooms or makes the incisive calls. But the people he turned into players are speaking out about the man who gave them opportunities and advice. “There are certain people you meet in your life and it was one of those moments where you say this guy is something special,” ESL Partners founder Eddie Lampert said on CNBC’s "Squawk Box"this morning.
Lampert, who met Rainwater as a 25-year-old Goldman Sachs trainee in 1987, was joined on the morning program by David Bonderman, Texas Pacific Group founding partner; and Barry Sternlicht, Starwood Capital Group chairman & CEO. All of the leaders paid homage to talk about Rainwater’s legacy.
Bonderman recalls meeting Rainwater in his office in Forth Worth, where he managed the fortune of the legendary Texas oilmen and investors the Bass brothers. Bonderman had come to Texas to work for Robert Bass. “You don’t know what you’re getting into,” Rainwater told the lawyer. “I'll tell you what, come sit in my office and watch what I do and you'll learn. Just show up any time, spend the day with me, whenever you want.”
The experience left an indelible mark. “Richard might be standing on a desk to make a point,” Bonderman recalls. “You could never tell who you would find in the office. One of the people Richard put into business was Rick Scott [and] George Bush who Richard hired to run the baseball team that his guys had bought.”
Rainwater’s skill was to see the potential of the right person in the right job. “Richard made people believe in themselves more than they actually believed in themselves," said Lampert.
He was also able to make his clients believe in deals no one else believed in. His most famous deal for the Bass brothers was their $478 million investment in Disney in 1984, where he installed then Paramount Pictures studio head Michael Eisner based on a seven minute phone conversation.
The same faith in his own ideas marked his strategy when Rainwater left the Bass umbrella to found Rainwater Inc. in 1986. “I was there during periods of time where energy and natural gas didn't do well,” recalled Lampert on "Squawk Box." “He never really wavered.”
Asked how Rainwater specifically influenced his proteges, Starwood’s Lichtman pointed to Lampert’s record in building ESL. “You made very few, very large, concentrated bets and you’ve been very patient,” Lichtman said. “Richard would sit for years in a position that was under water and he didn't care. That was his style.” Rainwater’s bet on gas would prove to be very lucrative for everyone involved.
Rainwater went into semi-retirement in the mid-1990s, after making his wife and partner Darla Moore the CEO, and gradually retreated from deal-making. Idiosyncratic and disruptive in his heyday, Rainwater would be a curious figure in today’s digitally-driven, hyperanalytical financial world. “Richard had the view if you couldn't pencil it out on the back of an envelope it wasn't worth doing,” said Bonderman. "If it took spreadsheets and computer programs, et cetera, et cetera, you shouldn't do it. If you couldn't pencil it out in six lines on the back of an envelope, forget about it.”