Thursday, October 5, 2017
Former Secretary of Commerce Penny Pritzker: On Her Early Business Career in "Senior Living" & Avoiding Conflicts of Interest
I'm a fan of early morning podcasts of high-profile interviews. For me there is something about listening to them in dim light before my day gets fully started. It allows me to fully "hear" little nuggets of information, ideas about innovations or even law-related gems.
Recently I listened to the August 28, 2017 podcast of David Axelrod's interview of Penny Pritzker, who was Secretary of Commerce during the second term of President Obama. I'd forgotten that Pritzker's early business career included a start-up with "Classic Residence by Hyatt," later rebranded as Vi, a form of high-end senior living communities, operated mostly in the "CCRC" model. Pritzker talks about a family tradition of "graduating from law into business." From the interview transcript, where shes discusses her entry into the family business:
I went to law school [and] I went to business school [at Stanford]. I came back to Chicago and and arrived. And it wasn't obvious what I was going to do but I wanted I had seen my family build businesses and I figured I wanted to do that too. And but it was an environment where there were no women. There were no women, there were no women vice presidents, there were no women in the organization. There was--there were no women parking in the parking garage if you will know women eating in the dining room if you will. And so it required me to I think find what I call the white space. I had to figure out where did I fit. And I felt that the place that I fit best was to really actually create new businesses. And so I became an entrepreneur within two years of arriving back in Chicago. I--there was talk of starting a new business in senior living and I basically said to my uncle I want to do that. And that's how I started my first business which was Classic Residence by Hyatt. And it was you know I was 27 years old. I had a terrific education and I had worked during school as well but there was so much I needed to learn and I had to learn by doing. And I made a ton of mistakes. I didn't know. Some of the people I hired were wrong, some of the decisions I made were wrong.
She speaks candidly about the experience, admitting "we didn't really know what we were doing and we weren't sure exactly what the market [of senior living] wanted or needed." At one point, she realized a $40 billion family investment in her business was at risk, and she talked to the then-patriarch of the Pritzker family, her uncle Jay Pritzker , and said that "if we can't turn this around in six months you should fire me and we should liquidate."
Her uncle encouraged her to keep going, with an eye on "demographics" of aging in the country.
She was still fully engaged in family businesses when, as an early supporter of Barack Obama, she was in line for a cabinet position when he was first elected. But she wasn't able to serve then, unable to meet the ethics requirements for avoiding conflicts of interest with her business responsibilities. By the second term, she was in a better position to serve (having sold business interests), and her comments about serving as Secretary of Commerce seem especially interesting in light of the business/conflict issues identified during the Trump presidency:
You know there's no greater honor than serving your country and you've had the privilege of doing that. It's hard work and you're barraged by different issues coming at you and it's really important that your focus is on what's right for the American people and what's right for the country and not any distraction about either a conflict of interest or an apparent conflict of interest. And so I found yes it's hard to comply. It's not easy but there--you sacrifice that many people have made to comply with the ethics standards that we've had historically. But it frees you to be able to be completely focused on what's in the best interest of our country and that the privilege of serving. You owe that to your country is the way I think about it. So for me it was not easy to do. I--they claim that when I sent in my forms I crashed the system because our situation was so large. But I feel I would do it all again.