I’m surprised that this community seems to spend some time on Romney’s dog. Out of all the things that were exposed in that in depth series of articles on Romney, the dog is the least of it. A look at part three of the series should show you why.
In Part 3, we learned that Romney’s success is business took a lot of sweat, and that he and his friends look like robots with money sticking out of them.
But Romney’s cowardice with regard to his reputation is much more interesting.
When Bain was looking to create Bain Capital, the organization took a big risk on its strategies to retool other companies with their model. Bain picked Romney to lead in this project.
After all, Bain & Company was taking a big risk. If Bain Capital-run companies failed, using the “Bain way,” clients might well reconsider paying big fees for Bain & Company’s consulting services.
In early spring of 1983, with the sun pouring into his office in the Faneuil Hall marketplace, Bain offered Romney the job that would make his career. Romney balked, catching Bain off guard.
Why did Romney “balk?” Well, it’s a big risk. I can certainly understand that it would be a major shift in his career and it would make or break his reputation. This sounds about right:
Romney explained that he didn’t want to risk his position, earnings, and reputation on an experiment in investing. The offer was appealing, Romney recalled in a recent interview, but he wasn’t going to make such a decision in a “light or flippant manner.”
So Bain sweetened the offer. He guaranteed that if the experiment failed, Romney would get his old job and salary back, plus any raises handed out during his absence.
Romney had one more concern: the impact on his reputation should he prove unable to do the job. In the end, Bain agreed to craft a cover story if necessary, promising to bring Romney back to the consulting firm and explain Romney’s return as a matter of his being more valuable to Bain as a consultant.
“So,” Bain says, “there was no professional or financial risk.”
Let me get this straight – Romney was asked to lead an experimental business team which could potentially make the company and Romney millions of dollars if he’s successful. If he’s not successful, not only will his financial situation not change from where he started, he’d actually be making the raises he would have gotten otherwise. And if it’s not successful, Bain would lie about why Romney was leaving the team.
Let me repeat that: if Romney failed, they’d lie about Romney’s shortcomings.
I’ll admit, I don’t know much about venture capitalism, and I certainly don’t know much about business practices in the 1980s. But this strikes me as absolutely insane and sleazy.
Please, somebody correct me, but I thought that venture capitalism was all about using the large amount of capital at the company’s disposal to take risks that businesses could not otherwise take. And what people respect venture capitalists for is their ability to take a financial risk on a client. What risk did Romney personally take? It wasn’t financial – it was the company’s money. It wasn’t his reputation – they’d lie about why he failed, if he failed.
How is this not a story? Or am I getting worked up over nothing?