Following in Eli Broad’s footsteps (quite literally), it’s impossible not to marvel at the gait of the pin-striped, silver-haired multi-billionaire as he leads the way from boardroom to his office at the Broad Foundations headquarters in Westwood. Purposeful and brisk with a slight hitch in his stride––one would never guess this founder of two Fortune 500 companies will be an octogenarian in less than a year. Even when following a familiar path down the hall, Eli Broad is a man on a mission.
CSQ is the first meeting on the day’s agenda, and the punctual appearance by LA’s most influential venture philanthropist is at once invigorating. Game on, indeed. Sagaciously engaged at the roundtable of his office, Broad takes occasional sips from a tall glass of water while nimbly transitioning across topics in his diversified portfolio of exceptional achievements. The walls are populated with framed photographs of presidents, dignitaries, and corporate influencers posing next to the man who is leading the charge to transform Grand Avenue and downtown Los Angeles into a cultural mecca worthy of the second largest city in the nation. Engaging and accessible from the get-go, the Bronx-born, Detroit-raised, West Coast icon (he’ll celebrate 50 years in LA next year) has a gentle yet direct manner that is all lean and no fat.
Energized by the positive reception his new book “The Art of Being Unreasonable” has garnered (see Required Reading, p.94), Broad cuts a crisp profile as a sea-tested captain of multiple industries who is not bashful about calling attention to the positive impact his financial support has rendered in science, education, the arts, and the civic rejuvenation of downtown Los Angeles. (One need only survey the crop of prominent buildings and institutions around town that bear his and his wife’s name for evidence of the latter.) Today, he and Edythe (affectionately known as Edye) have traced parallel lines in terms of their philanthropic passions, cultural contributions, and aesthetic sensibilities.
The city is teeming with evidence of their commitment to the arts, with more on the immediate horizon; next year, a new contemporary art museum, simply called The Broad, will open on Grand Avenue. Designed by Diller Scofidio + Renfro, the site will also serve as the new headquarters of The Broad Art Foundation. Broad has collaborated with many other architects of notable stature. His relationship with Frank Gehry grew strained then repaired in years past, and the association yielded Walt Disney Concert Hall, a structure that Broad proudly calls the finest symphony house in the world.
As a young man, Broad would introduce himself and add “rhymes with road” to imprint the pronunciation (and the name) in the minds of those he met. Bright and exceptionally driven, he graduated cum laude from Michigan State University in just three years, then became the youngest CPA in the state’s history at age 20. A couple years later, he was growing restless. “I was pretty good at accounting, but I got bored very quickly and became an entrepreneur,” he says. “A number of the clients to the firm I worked with were homebuilders, and they were doing very well. I thought, ‘They’re not so smart. I can do that.’”
He was certainly smarter than the $67.40 per week he was bringing home crunching numbers all day. He began to do his homework on the home-building industry. “Whatever I do, I spend a lot of time studying it,” affirms Broad. “I’m a risk taker, but I look at the down side, also.” Using a $25,000 loan from Edye’s parents, he formed a partnership with Eyde’s cousin Donald Kaufman to form Kaufman and Broad Home Corporation when he was 23. In addition to applying universal rules of efficiency to the housing market, the company took the unconventional step of eliminating basements from the building plan. “Nobody will buy houses without basements,” Broad recalls more than one industry veteran scoffing at the time. “It’s gonna go broke.” Five years later, the biggest gamble of his life paid dividends when KB Home became the first homebuilder to go public on the New York Stock Exchange, in 1961. In addition to selling homes at a price a few thousand dollars less than the competition (at around $13,500), KBH operated with the mentality of a manufacturing company rather than a real estate company, a revolutionary concept that reaped substantial rewards. Within a decade, other business investment opportunities beckoned.
In 1971, Broad purchased 80-year-old insurance company Sun Life for $52.1 million. “We thought it would be a good thing to own because of how well it had done during tough times,” he explains. Shrewdly determining that the company’s new niche should be retirement savings, Broad’s market prescience was rewarded with a steady stream of aging baby boomers. Rebranded SunAmerica, the company went on to become the market’s top-performing stock for a decade. “We were the darling of Wall Street,” he says, referring to the stock’s heyday the 1990s.
In 1999, he sold SunAmerica for $18 billion, personally netting $3.4 billion from the buyout. He remained a fixture at the company for a few more years, however, staying on as CEO for two years and sitting on the board for another two. With about 90 percent of his worth tied up in company stock, Broad was looking to diversify his assets. Reminded that as a director, he couldn’t sell his stock, he replied, “Well, I guess I shouldn’t be a director then.” He extracted himself from what was now AIG SunAmerica, and, using the tax-free earnings from his stock sale, infused The Broad Foundations with significant assets.
With a rocking-chair voice that sounds perfectly suited to read aloud from an E.B. White classic, Broad discusses the history of his support of the human genome project, which has fueled much of the Broad Institute’s subsequent research. The Broads had given a small grant to Eric Lander, lead scientist for the project. In October 2001, while in Cambridge to be inducted into the Academy of American Arts and Sciences, Broad called Lander and expressed interest in seeing his lab. Lander was researching a gene related to Crohn’s disease, and the Broads were funding early-stage research into inflammatory bowel disease.“We were blown away with 140,000 square feet of robotics and computers going 24 hours a day, with young people from Harvard Medical School and MIT that were so excited they didn’t want to go home,” recalls Broad, his words still bearing the a trace of child-like wonder from the experience.
He proceeded to pepper Lander with a series of questions. “When are you going to be finished [cracking the code of the human genome]?” Lander’s prognosis: April of 2003. “What do you want to do then?” Start an institute dedicated to its clinical application, responded Lander. “What do you need to do that?” $800 million.
“Well, I hope you get it somewhere,” Broad replied.
In a reasonable world with finite limitations and practical considerations, that would be the end of that. But this is Eli’s world. “I stayed in touch and played entrepreneur and said we’ll commit $100 million over 10 years if Harvard and MIT will do likewise.” The Broads eventually picked up $600 million of the tab and in 2003, the Massachusetts Institute of Technology (MIT), Harvard University, and the Whitehead Institute entered into an unprecedented partnership to form The Broad Institute, the permanent home for the world’s leading genomics laboratory. “Scientific and medical research is a joy because you are dealing with brilliant people [who] do not want to maintain the status quo,” Broad muses.
Such a statement further illuminates how contemporary art—with its tendency to flout convention and embrace unreasonableness–managed to pique Broad’s curiosity in the early 1970s. Inspired by Edye’s evolving interest in the art world, Broad began to develop a taste for the modern masters: Cy Twombly, Jasper Johns, Jeff Koons (his personal favorite), and Jackson Pollock, among others. As with anything that captures his attention, Broad immersed himself and consulted with highly capable people. He befriended Taft Schreiber, a political opposite but one of the city’s most knowledgeable art collectors, who, in turn, introduced him to leading New York gallery owners.
The Broads worked their way backwards through various periods of European and American art. In 1972, they made their first significant art acquisition, paying $95,000 for a Van Gogh drawing. Eventually, their interests settled on more contemporary works. “Great artists,” Broad says, “are very bright and very thoughtful about society and are very different than how we business people, bankers, and accountants think, which I found very broadening.” In November 2005, Broad made a big splash when he purchased David Smith’s steel sculpture Cubi XXVIII, for $23.8 million, and a 1961 Cy Twombly painting, for $7.8 million, on the same day at a Sotheby’s New York auction. The Broad Art Foundation operates a lending library, which makes more than 2,000 works by 200 artists available on loan to art institutions throughout the world.
In the ensuing years, the Broads’ civic involvement brought about a new cultural identity for the city. A founding chairman and life trustee of the Museum of Contemporary Art (MOCA), he is also a life trustee at the Los Angeles County Museum of Art, where the Broads gave a $60 million gift to fund the Renzo Piano-designed Broad Contemporary Art Museum. “I think we are the contemporary art capital of the world,” says Broad. “Not from a commercial point of view,” he clarifies. “That would still be New York and London.” But the colorful palette of museums, galleries, institutions, theatre and performance venues, and art schools, however, makes Los Angeles a viable option for talented artists who at one time would have had to go to New York to pursue a career.
Since 1984, The Broad Art Foundation has made close to 8,000 loans of artwork to nearly 500 museums and university galleries around the globe through its “lending library.”
Not prone to obfuscation, Broad concurs, “Yes, let’s talk about MOCA,” when the subject is broached. The founding chairman for MOCA in 1979, Broad remained on the board until 1993. “We had a great board of trustees and a great director who I recruited, Richard Koshalek,” he says. “It was an auspicious beginning.” When Koshalek left in 1999, MOCA had a $40 million endowment. Through mismanagement and improper spending, Broad says, the endowment dwindled to $5 million, while the budget ballooned to $25 million, and attendance plummeted. Seeing dire implications for downtown if the museum was allowed to go bankrupt, Broad stepped in, issued a challenge grant, and helped recruit a new director, Jeffrey Deitch, who was unanimously approved by the board.
But all was not picture perfect at MOCA. Earlier this year, an exodus of board members leveled scathing criticism at the museum’s artistic direction. Taking to the media, several board members signed a letter to the Los Angeles Times, detailing displeasure with MOCA’s artistic direction. The letter came on the heels of the resignation of longtime chief curator Paul Schimmel, who had been with MOCA for 20-plus years and was the architect of many of the museum’s marquee showings.
“Jeffrey Deitch came along and did what he was charged to do: Serve a broader audience, get attendance up, get membership up. Which he’s done,” maintains Broad. “But the old guard trustees and some of the older artists were upset with some of the things he was doing. They did not appreciate art mysteries, for example, which was a great hit.” Broad concedes that mistakes were made in the transition to Deitch’s leadership, suggesting that the new director would have been better served to bring in his own team from the start. Instead, he says, “They left the old people in place and they were somewhat subversive.” With a collection of art valued at well over $2 billion, MOCA’s future is intact, but “the rift in governance has got to be resolved. I’ve been supportive of Jeffrey and others,” continues Broad. “But others, rather than talk about it at the board meeting, they go to the press. Which is sad.” Of Deitch, Broad says, “He’s not happy. He never bargained for all this.” Summing up the matter, he adds, “It will get resolved one way or the other. Soon.” Soon, as in, by the end of this year? “Absolutely,” he fires back.
One issue that is going to take considerably more time to resolve is that of America’s lagging education system when compared with the rest of the world. “Our kids are getting two thirds or maybe half of the academic time they’re getting in other countries,” says Broad, noting that the original purpose for the summer-long break two centuries ago was to tend the crops. Today, there are no crops to tend, but America’s learning potential continues to be put on ice for a few months out of the year. Summer break is hardly the biggest concern looming in the country’s educational system, however. “We need better teachers,” Broad says flatly. “Unlike other countries that have their top students go into teaching, we get the bottom third of the barrel. We need to create incentives, build in rewards for success. Right now everyone’s in lock step. They get paid not based upon results, but seniority.”
“I believe we need a bigger federal role in education,” he continues. “All the changes that have taken place in the last decade have, like it or not, have come from Washington,” he says, citing George W. Bush’s No Child Left Behind Act and President Obama’s Race to the Top.” Another concern is the dropout rate, which is near 50 percent in some urban areas. “A lot of kids, when they get to the 8th or 9th grade, they know they’re not going to college. So they say, ‘What’s the point of staying in school?’” Broad believes re-emphasizing vocational training in the building trades, auto mechanics, and utility companies would be a step in the right direction. “The dropout rate is a huge cost to society,” he says, making another salient point. “As a nation, we have a higher percentage of population in prison than any other country in the world. In California, the cost for incarceration exceeds what we’re paying for higher education. We can’t imprison our way out of these problems. It all begins and ends with education reform.”
Broad is hardly all talk when it comes to education reform. For all of his opinions, the man who overcame dyslexia as a child “by reading a lot” is ultimately a man of action. The Eli and Edythe Broad Foundation has put forth several major education initiatives designed to tackle the problem from the top on down. The Broad Prize for Urban Education is awarded annually to urban school districts that have shown the greatest overall improvement in student achievement. The Broad Superintendents Academy is a 10-month training program that grooms top executives from other fields to lead urban public education. Finally, The Broad Residency in Urban Education is a two-year program that trains business and law graduates for entry into managerial positions in the central operations of urban school districts.
The biggest hurdle to keeping up with the world pace setters in education, as Broad sees it, is societal. “The American people, until recently, have been fat, dumb, and happy,” he contends. “We came out of World War II better than any nation on earth. Then we had the GI Bill of Rights, which created several decades of intellectual capital. Then we had all these smart people coming from Europe and Asia. We thought, ‘We’re the best.’ We had the number one graduation rate in the world. Now we’re, like, 22nd. In science and math, we’re 17th and 22nd. If our athletes were 17th or 22nd in the Olympics, people would be outraged.”
Years prior to building KB Home and SunAmerica into Fortune 500 companies, Eli Broad set a personal standard for business ingenuity. Before he was old enough to drive, Broad turned his interest in stamp collecting into a modest business. Twelve-year-old Eli, a budding “adventure capitalist,” would hop on a streetcar and then take a bus to Chrysler International Headquarters in downtown Detroit. Once a week, the automaker would sell boxes of cancelled stamps by the kilo that came in from all over the world, which Broad would then take home and sell individually through catalogs.
If he were launching a start-up today, perhaps he could rescue the U.S. Postal Service, which in June announced that its ratio of debt-to-revenue is comparable with Greece’s ratio of debt to gross domestic product. For the foreseeable future, however, Broad’s plate is completely full. And he still has a hearty appetite.
In November, his alma mater, to which he has given ample support through the years, will dedicate The Eli and Edythe Broad Museum, a $45 million edifice perched on the MSU campus. Having scaled multiple mountains in his career, there is little left for Broad to accomplish. Yet he keeps raising the bar with his limitless capacity for philanthropic giving. A life trustee at Caltech, where the Broads created the Broad Fellows Program in Brain Circuitry, the third-wealthiest man in Los Angeles has proven over the years that wealth may come from hard work and diligence, but the richness of rewards can be accounted for in numerous ways.