by Ed Mattson
The 2012 national elections are over. Conservatives are at a loss for words to describe the election results, while liberal progressives are giddy with joy. Nobody can really explain what has happened though many will try to explain away the results, but the facts are that Mitt Romney and team failed because of just one reason…Bain Capital. It wasn’t race, it wasn’t ethnicity, it wasn’t foreign policy, and it wasn’t the economy… it was Bain Capital and Romney’s failure to turn Bain into the asset that it is. It is as simple as that.
Any military man who has ever faced combat understands that the winner of a battle is most often the one who has the focus on the target and pulls the trigger. Romney didn’t understand that and let the Obama Team and the main street media, push him all over the lot on that one single issue, when in fact, it was his biggest asset. The sluggish, starving, and underperforming economy had an opportunity for resuscitation from a Romney victory, but the electorate was never educated in what was needed to bring America back from the fiscal brink we are approaching. It was all rhetoric and talking points.
Bain Capital became an issue in the Republican debates by many in the party seeking the Republican top slot. The astute Obama Team picked that up early-on and even before Romney won the primary, was hammering him about Bain Capital. The funny thing is, I bet there isn’t more than a handful of voters who even knows what or who Bain Capital really is, and there isn’t a Republican, including Romney, who took the time to explain. In short, it should have been Romney’s biggest edge, not his Achilles heel.
So, let me educate you about Bain Capital by first discussing what a venture capital firm is. To do this let me tell you about a conversation I heard at Starbuck not too long ago. There were two young men discussing the idea of opening a business together. They decided they needed to put together a business plan and then find one of their friends willing to put up some money. They started to write down a list of names, but at the top of the list I believe they wrote down a local bank. Now this might have been okay back in 1950 when banks were much more flexible with loaning money to start-up companies, but this is 2012. What these gentlemen really needed was a venture capital firm.
Venture capitalists are committed to funding the most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive job creation and economic growth. People, institutions, labor unions, retirement funds, university trust funds, individual retirement funds, mutual funds, and other global investors purchase stock in venture capital firms which in turn provides money to invest in start-up, expanding, and troubled businesses. Such investment by investors is not to make the venture capital company out to be the tooth fairy or Santa Claus. They invest in capital venture companies to make their depositors money grow…you know…they want to earn a return on their investment.
According to a Global Insight study, venture-backed companies accounted for nearly 12 million jobs and $3.1 trillion in revenues in 2010 in the United States alone. I believe this private sector approach is the only way to same our country.
Now back to the two gentlemen in Starbucks. They will probably make a proposal at the bank, present their business plan, cross their fingers, and possibly even pray that the bank with loan them money so they can become the next entrepreneurial business star…maybe even the next Bill Gates. They will probably not have positive results unless they go for a personal bank loan on their home, property, their first born, and pledge every asset they and their families can put together, OR they may get lucky and find a friend who will bankroll their idea, but in the long run, they really need a venture capitalist to take the investment risk with them.
Since the failure rate for start-ups is a conservative 30 to 40 percent, according to Shikhar Ghosh, a senior lecturer at Harvard Business School who has held top executive positions at some eight technology-based start-ups, for a venture capitalist to invest, they more than likely will want a controlling stake, but will bring expertise, and technology to protect their investment, and give the burgeoning business (for a start-up business) the best opportunity for success. For a company looking to expand, or for a company on the verge of collapse, the venture capitalist might just be the answer that insures growth or saves the company from insolvency. Once the commitment has been made to provide the needed funding, every effort is made to protect the investors of the venture funding company and to make a profit. That is CAPITALISM in a nut shell. It’s what has built every modern industrialized country, particularly in the US.
Now back to Bain Capital. The firm was founded in 1984 by partners from the consulting firm Bain & Company, who put together a group of wealthy partners and investors to become one of the most profitable venture capital firms in America. Since inception Bain has invested in or acquired hundreds of companies including businesses involved in manufacturing, technology, and other goods and services, many of which were in financial trouble. Some of the more notables have been…
- AMC Entertainment
- Aspen Education Group
- Burger King
- Burlington Coat Factory
- Clear Channel Communications
- Domino’s Pizza
- Dunkin’ Donuts
- D&M Holdings
- Guitar Center
- Hospital Corporation of America (HCA)
- The Sports Authority
- Toys “R” Us
- Warner Music Group
- The Weather Channel
These companies employ hundreds of thousands and possibly millions of workers; provide benefits, and produce products that make a difference in the lives of all American.
When President Clinton remarked to the media (following Romney’s selection to be the Republican nominee) calling Mitt Romney’s business record “sterling,” it meant that Clinton was not keen on the Obama campaign’s attacks on Bain. Team Obama ignored Clinton. The main street media, without even doing the slightest bit of research parroted the Obama Tem talking points, and that my friends, was the end of Romney. As Romney wouldn’t defend himself and Bain Capital, it became his undoing, and it was the path that lead to his defeat.
Romney’s business background was exactly what the country needed to change the stagnant economy, create jobs, and march us back to prosperity, but as I said, everyone was blind to Bain capital. The facts are really simple and irrefutable. Did some jobs end up getting shipped overseas…of course. Did some companies fail…yes.
In fact, about 20% companies in which Bain Capital invested didn’t make it, but most stayed afloat for a couple of years providing jobs and benefits. That’s an 800% batting and why many of the union pension funds, major foundations, and state/local retirement funds, bought big interests in Bain Capital, something about which the unions never told their members…more lies, more deceit.
So, who really owns Bain Capital? I find it ironic that they very people who were lambasting Bain Capital probably owned a stake in the company! Bain capital wouldn’t be Bain Capital a capital venture firm without a lot on investors looking to make a reasonable return of their investment. Again, there probably aren’t more than a few hundred people who could name the stockholders in Bain and the list will shock many, but since most of the electorate tuned-out the minute the next reality TV show came on following the election, most will continue to live in the dark and never know. The lessons to be learned from the 2012 election will be ignored as we, the sheep, march off into indentured tax servitude to the national debt.
Here’s the facts on Bain capital ownership; check them out for yourself:
Bain Capital has enriched dozens of organizations and millions of individuals in the Democratic base — including some who scream most loudly for President Obama’s re-election. It has to be ignorance. Government-worker pension funds are the chief beneficiaries of Bain’s economic stewardship. According to New York-based Preqin (using public documents, news accounts and Freedom of Information to track private-equity holdings), the following funds have entrusted some $1.56 billion to Bain:
- Illinois Municipal Retirement Fund ($2.2 million)
- Indiana Public Retirement System ($39.3 million)
- Iowa Public Employees’ Retirement System ($177.1 million)
- The Los Angeles Fire and Police Pension System ($19.5 million)
- Maryland State Retirement and Pension System ($117.5 million)
- Public Employees’ Retirement System of Nevada ($20.3 million)
- State Teachers Retirement System of Ohio ($767.3 million)
- Pennsylvania State Employees’ Retirement System ($231.5 million)
- Employees’ Retirement System of Rhode Island ($25 million)
- San Diego County Employees Retirement Association ($23.5 million)
- Teacher Retirement System of Texas ($122.5 million)
- Tennessee Consolidated Retirement System ($15 million)
Leading universities have also profited from Bain’s expertise. According to Foley-Hoag Emerging Enterprise Center the normal investment of a fund in Bain in $20,000,000, and Infrastructure Investor, states that Bain Capital Ventures Fund I managed the investments of many endowments and foundations such as Columbia, Princeton and Yale universities, while BuyOuts Magazine claims Bain’s other college clients have included Cornell, Emory, the Massachusetts Institute of Technology, Notre Dame and the University of Pittsburgh. Preqin also reports that other leading schools invested at least $424.6 million with Bain Capital between 1998 and 2008:
- Purdue University ($15.9 million)
- University of California ($225.7 million)
- University of Michigan ($130 million)
- University of Virginia ($20 million)
- University of Washington ($33 million)
Major, center-left foundations and cultural establishments:
- Charles Stewart Mott Foundation
- Doris Duke Foundation
- Metropolitan Museum of Art
- Ford Foundation
- Heinz Endowments (John and Teresa-Heinz Kerry’s foundation)
- Oprah Winfrey Foundation (huge Obama supporter)
Ask yourself, “Why would government-union leaders, university presidents and foundation chiefs let Bain oversee their precious assets?” Because Bain and Romney know what they are doing!
“The scrutiny generated by a heated election year matters less than the performance the portfolio generates to the fund,” California State Teachers’ Retirement System spokesman Ricardo Duran said in the Aug. 12 Boston Globe. California State Teachers’ Retirement System (CalSTRS) has pumped some $1.25 billion into Bain. Since 1988, Duran says, private-equity companies like Bain have outperformed every other asset class to which they have allocated the cash of its 856,360 largely unionized members. This should have been a Romney landslide victory!
Obama on the other hand, dumped a trillion dollars into “shovel-ready jobs” (which Mr. Obama later said “weren’t so shovel ready”), invested hundreds of billions of dollars into 16 failed green energy boondoggles to reward campaign contributors, and issued a mindboggling 140 executive orders to put burden after burden on the private sector economy. The true and ONLY focus should have been on the Obama record, job creation, and the national debt. Those are the only discussion that will get us out of the hole!
Amazingly, Obama has declared that all the projects received funding “based solely on their merits.” But as Hoover Institution scholar Peter Schweizer reported in his book, “Throw Them All Out,” fully 71 percent of the Obama Energy Department’s grants and loans went to “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Collectively, these Obama cronies raised $457,834 for his campaign, and they were in turn approved for grants or loans of nearly $11.35 billion. Obama said this week it’s not the president’s job “to make a lot of money for investors.” Well, he sure seems to have made a lot of (taxpayer) money for investors in his political machine.
But wait…there’s more. The Progressive liberals want America to buy into their dream of a Western-European style socialist utopia. They are driving the bus as quickly as possible in that direction. For those so inclined, here’s what’s in store for you…
Americans currently enjoy a great quality of life with relative freedom to pursue religious beliefs, private property, the right of assembly, freedom of press and speech, and to be the master of our own destiny. We grant our government the power to govern and limit their powers. Most other countries the government specifies what liberties their citizen may enjoy. After living in other countries I find it strange that government who are devoted to the concept of “spreading the wealth around” to insure more equality always seem to have that selected few who are more equal than others and live exceedingly well on the backs of the citizenry.
In the US the average family home is 2300 square feet; with an average garage size of between 600 and 700 sf. The fans of the Liberal-Progressive Utopia central planning are leading you to Western-European lifestyles. Here’s that facts in home size that you should know.
- US: 2,300sf
- Australia: 2,217sf
- Denmark: 1,475sf
- France: 1,216sf
- Spain: 1,044sf
- Ireland: 947sf
- UK: 818sf
- Eastern Europe:
The idea of your own “personal space” was considered anti-revolutionary and Soviet authorities worked hard to make life to be the same from block to block, city to city. Suffice it to say that you’ll live, like everyone else, in a large apartment building, Central planning at its best. All apartments are very small (about 330 sf) but they don’t count the kitchen and bath areas as “rooms.” You don’t get a separate “living room.” Usually the largest room in an apartment is considered to be the “living room” by day, dining room in evening, and bedroom at night. So much for the family pet! Verify this by taking a trip to IKEA where each room display is based on central planning Utopia.
Having lived in Eastern Europe and still having a home over there, I can attest the average apartment/flat/home size is less than half of the UK, and many utilize a centralized communal kitchen and bathroom. Can you imagine living like that? Do you have any idea of what it is like to cook next to your bed, which doubles as a couch in the day (futons were invented in Scandinavia); brush your teeth, shower, and shave while sitting on the toilet. Compact is the polite way of describing living the Liberal-Progressive Crackerjack Box Utopia.
Now compare the Romney record to the Obama record. 30 plus failures of taxpayer invested money in green energy jobs by Obama given to those who donated to his campaign (and even more on the way). They couldn’t stay afloat for more than two years (some closing almost right after they took OUR MONEY), ended up producing zero NET JOBS. Can you run your family or business without a budget? Can you borrow your way out of debt? Can America ever succeed going into debt at the rate of $4.1 billion dollars every day? That’s what voters should have asked themselves instead of following blindly like sheep.
The public has spoken with their vote. It was not a thoughtful vote. It was not a learned vote. It was a vote from an ill-informed, manipulated electorate that is DEMANDING FOUR MORE YEARS OF PAIN. The last four years saw family wealth devalued by over $40,000; family annual income reduced by $4400); 25% increase in healthcare insurance; more dependence on foreign oil which has doubled in price; and 20 million unemployed and underemployed, which is even more than when the 2008 collapse happened in spite of the administration’s claim we are making a dent in the total number of those working.
Romney has only Romney to blame for the loss. He should have stood tall defending Bain capital’s superlative record. It was an opportunity to show the contrast between capitalism and central-planned socialism and might have even captured many of those hard-working immigrants. He should have paid close attention to Obama’s threat…”If they bring a knife to the fight, we bring a gun.”
Following his service in the Marine Corps Ed Mattson built a diverse career in business in both sales/marketing and management. He is a medical research specialist and published author. His latest book is Down on Main Street: Searching for American Exceptionalism
Ed is currently Development Director of the National Guard Bureau of International Affairs-State Partnership Program, Fundraising Coordinator for the Warrior2Citizen Project, and Managing Partner of Center-Point Consultants in North Carolina.
Mr. Mattson is a noted speaker and has addressed more than 3000 audiences in 42 states and 5 foreign countries. He has been awarded the Order of the Sword by American Cancer Society, is a Rotarian Paul Harris Fellow and appeared on more than 15 radio and television talk-shows.
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