The Billionaire Who Wasn't (16 page)

Tony Pilaro recalled a comment made by Feeney: “Tony, you are foolish; you put 100 percent of yourself into the company and take only two and a half percent out. I'm not going to put in 100 percent and only take 38.75 percent.”

Feeney had meanwhile been looking around the Pacific for his own investment opportunities. He flew to Tahiti, the French-speaking island in the southern Pacific Ocean that promotes itself as the Island of Love, and invested in a $12-million commercial complex called the Vaima Center, with shops, apartments, and offices on the waterfront in the capital, Papeete. The Vaima Center got the concession to operate a duty-free store specializing in French perfumes. When they heard about this, Feeney's DFS co-owners became upset, as they felt he was interfering in the core business of DFS, but it was so small an operation they did not kick up a fuss. It was hardly a top tourist destination for the Japanese, who faced a ten-hour flight from Tokyo to reach the Polynesian Islands. “This was peanut stuff, it didn't become an issue,” recalled Feeney. Miller agreed it was “sort of irritating, but not harmful.” Nevertheless, the issue led to the signing by all four owners of a non-compete clause that prohibited an individual owner from bidding on a duty-free concession in any airport in the world that was a hub for Japanese tourists. That right they agreed belonged to DFS.

Chuck Feeney's next significant investment, which would cause much more dissension, came about by chance. In December 1976 in Hawaii, he met an elderly retailer named Dick Wheeler, who with his wife, Sylvia, owned Andrade, a sleepy old Portuguese company that had thirty-four general retailing and resort shops in the Hawaiian Islands. Wheeler, who was dying, told Feeney he wanted to sell Andrade but would prefer that it were run by a single proprietor and not a corporate group. Feeney agreed to buy the company from him for $2 million. He took over Andrade's outlets. They didn't sell duty-free items, but the customers included some of the Japanese tourists that DFS specialized in corralling into the duty-free store.

Feeney moved his family to Hawaii for a year while he took over the Andrade retail chain. He founded a company there to run the stores and develop and operate other ventures in the Pacific Basin. He called it General
Atlantic Pacific (later InterPacific) and recruited Mike Windsor to run it from Honolulu. One of Windsor's earliest memories is of entering the duty-free shop in Tahiti and finding Feeney alone behind the counter conducting a sale with a Japanese tourist—in Japanese. Windsor found Feeney very focused and serious about business. “He brings a focus on business that I hadn't experienced before. If something doesn't work, he has four or so different thoughts. He has a multifaceted way of looking at business. He is detail oriented in his approach. Chuck would fly in to Honolulu in late afternoon, and before he went to bed, he would visit the main store. He would talk to the salespeople and check on display and pricing. The following morning, he would have a list of things to discuss. A lot of managers like to talk down and don't really listen. Chuck listened to the salespeople.”

The next year, when back in France, Feeney engaged George Parker to group all of his investments together in a holding company. Parker identified Bermuda as an ideal location, as the U.K. territory did not tax company profits or individuals. They decided on the name General Atlantic Group Limited, or GAGL, which they pronounced “gaggle.” GAGL was registered in 1978 in Bermuda as a private holding company for Feeney's 38.75 percent of DFS, plus his burgeoning investments in real estate, retail stores, and other businesses. As Feeney was a U.S. citizen and subject to the attentions of the Internal Revenue Service, everything was registered in the name of Danielle Juliette Feeney, French citizen. Chuck Feeney assumed the role of chairman and chief executive, with George Parker, Mike Windsor, Jack Moore, and Jean Karoubi as directors. Karoubi, a cousin of Danielle, was a former president of Duty Free Shoppers in Paris and would later head the Feeney family office.

The vagueness of the title suited Chuck, with his penchant for keeping a low profile. Many companies used generic words like “General” and “Atlantic,” but nobody had both. The name sounded familiar to the public, but it gave nothing away. When they held a staff conference in a Bermuda hotel, a man in the lobby, spotting a notice saying, “Meeting of General Atlantic,” asked Feeney, “Aren't they the people who own General Electric?” “Yeah, they're the ones,” Feeney assured him with a straight face.

GAGL grew fast. Within a couple of years, Feeney's private company had established or invested in over twenty enterprises across the world in a bewildering array of locations: New York, Delaware, Texas, Illinois, Bermuda, Hawaii, the British Virgin Islands, the Netherlands Antilles, and Guam.
Investments ranged from Royal Hawaiian Perfumes Inc. and Pacific Resorts Ltd. to G.A. Land Development of Texas, Inc. and Société Civile General Atlantic of Paris. They varied in size from the Andrade retail chain in Hawaii to Ian McClean Antiques Inc. in New York. Feeney invested in a six-store retail company in San Antonio, Texas, called Solo Serve that was successful for a time selling seconds merchandise, and in Carl's, a small chain of department stores in upstate New York. He got a multi-million-dollar contract to renovate and manage the Richmont Hotel in Chicago, and he had an interest for a time in a chain of motels in France called Mini-Mote.

Some early opportunistic ventures flopped. The mall with its duty-free store in Tahiti never really worked economically. The China Import Store in the Royal Hawaiian Shopping Center in Waikiki, modeled on the big Friendship Store for tourists in Beijing that Feeney saw on a visit to China in 1979, never caught on, despite the promotional antics of his teenage daughter Caroleen. During her college vacation, she put on a panda suit and handed out leaflets to entice customers to enter. She became such an attraction that Japanese vacationers began asking the tourist office when her performance began, and she was required to stop as she was causing “congregating in a public place.” Feeney closed the store after three years, with losses of $4 million.

His multi-million-dollar investment in an 800-room luxury hotel in Guam in 1978 proved much more profitable. It was run in such a way that Japanese tourists checked out for a late-night flight as incoming groups checked in for the same bed night.

Meanwhile, the cash dividends from DFS kept getting bigger. In 1978, Feeney banked $18 million in cash. By the first year of the new decade, his share of the DFS dividend had risen to $23 million. Rarely in corporate history did owners receive such an abundance of dollars, in cash, on a regular and ever-growing basis.

As his own businesses generated a separate cash flow, Feeney set up a subsidiary capital investment company in New York in 1980, naming it General Atlantic Inc. It was headed first by former McKinsey & Company partner Ed Cohen, and then by former U.S. Navy officer Steve Denning. It invested in new ventures such as real estate, software, and oil and gas interests around the world. Wall Street was recovering from a long spell in the doldrums, and there was money to be made on speculative investments and acquisitions. Its
first investment of $4 million in a company called Transportation Management Systems was a disaster, but it was to prove an exception. A $5-million investment in Universal Health Services tripled in value in three years.

Feeney continued to acquire property. Despite his unease with wealth, his lifestyle was characterized by fine family houses. In Saint-Jean-Cap-Ferrat, he bought two neighboring properties on the same road as the family home, at the behest of their elderly cash-strapped owners, who continued to live in the houses. The Feeneys kept their residence in Hong Kong until 1980. They acquired a house in the fashionable Paris suburb of Neuilly-sur-Seine, a villa in a beachside suburb of Honolulu, and a rented apartment in Manhattan. Feeney often made real estate purchases on the spur of the moment. He saw a townhouse on Fifty-fifth Street in Manhattan for sale while in a taxi stuck in traffic and bought it for offices.

On a family car journey to New York after the Olympic Games in Montreal in August 1976, he bought a mansion in just such an opportunistic fashion that would become the family holiday home for many years. Feeney had made a detour to Salisbury in northwest Connecticut to visit a Cornell classmate, John Harney, of the company Master Tea Blender. They stayed at the nineteenth-century White Hart Inn, and in the evening enjoyed cook-outs in the Harneys' yard. The children loved it so much they kept pleading for one more day. At the end of two weeks, Chuck drove them to nearby Lakeville, a village on Lake Wononskopomuc, and stopped at a big white lakeside house at 9 Elm Street where a town mayor used to live. “I'm just going in to do some business,” he said, leaving them in the car. He came back to say: “So what do you think of your new house?”

Lakeville became the Feeneys' summer home, where the children could bring their friends during school vacations, and where Chuck and Danielle could entertain. They often had two dozen kids in bunk beds in the front room. When Cornell friends like Chuck Rolles came to stay, the Sandwich Man would make the sandwiches. Feeney would go walking and running every day and read books and four or five newspapers spread out on a long picnic table on the back porch. It became part of the summer vacation ritual at Lakeville that he would take the kids aside for serious talks about goals and budgets, about being thrifty and sharing everything with other people. When Caroleen got a part in a play at college, he suggested that she share the role with her understudy and give the second understudy a chance—she had to tell him that the theater didn't work like that.

Both Danielle and Chuck were aware of the dangers of too much money in bringing up the children: Danielle knew she tended to spoil them more, but she saw that Chuck gave them a strong backbone of selflessness and self-reliance, and taught them to value knowledge. Like his father before him, he insisted on taking them to public libraries.

Wherever he was, Feeney liked to jog. His mother, Madaline, who had been overweight, died in 1964, aged only sixty-two, and he lectured his family on keeping slim and fit. As with everything else, he pushed himself to excel, and in 1979 he resolved to complete the Boston Marathon, one of the world's most prestigious running events. To enter, competitors had to complete a standard marathon elsewhere. Chuck and Danielle flew to Hawaii so Feeney could enter the Honolulu Marathon. He was in great shape but found the hilly twenty-six-mile course and high temperatures too much for him. Near the finish, he began to run erratically from one side to the other, bumping into other runners who shouldered him back out of their way, until he finally collapsed at the side of the road, not far from his house. Danielle and Jean Gentzbourger, who was staying with the Feeneys, saw what was happening and ran to help. Feeney was in a state of shock and quite rigid. He was rushed to the hospital by ambulance with an intravenous drip in his arm. The cardiologist told Danielle that Chuck had been very close to a fatal heart attack, due to lack of fluids and food in his body.

Feeney's pride was evidently hurt, as he didn't like talking about it afterward. He was just dehydrated, he recalled, though he admitted, “I'm a bad loser.” But this intimation of mortality may subconsciously have given him pause to reflect on his life and to figure out what he really should be doing with the vast wealth he was accumulating.

CHAPTER 11

Boremuda

As he became more wealthy, Feeney began giving some of his money away in a piecemeal fashion. He was generous to colleagues and often paid for hospital treatment for staff or their kids. The earliest significant act of giving that he remembers was a donation of $10,000 that he sent in the 1960s to his friend and former professor, Robert A. (Bob) Beck, who was dean of the Hotel School from 1961 to 1981. The Hotel School had asked for $1,000, but “I wanted to make a gift that was meaningful, and I reckoned $10,000 was meaningful,” he said. He recalled with a laugh how Beck, who had lost a leg in Normandy, told him that he was so excited at getting such an amount that he held up the check to get a good look at it and a gust of wind came along “and the next thing he was running across a field to catch up with it.”

The first instance of active philanthropy was the provision of a sports center for the Blanche de Castille Catholic school in Nice, which his children attended. He paid to have a sports complex carved into the slope of the hill, with indoor facilities and outdoor tennis courts that could also be used for basketball and handball. Thereafter he contributed to various charities, but he was not satisfied with being just a donor. He told a persistent correspondent from
Pacific Business News
who caught up with him in Honolulu in June 1980 that his idea of helping charities was not simply handing money over but personally seeing that it was effectively used to help as many people as possible.

“I am not really into money,” he told the reporter. “Some people get their kicks that way. That's not my style.” He was “intensely competitive,” but his motivation was derived from the creative challenge of applying a better approach to something that already existed. His definition of success, he said, was not having all the money one desired, but being able to raise a happy, healthy family. “There has to be a balance in life. A balance of business, family, and the opportunity to learn and teach.”

He had already begun to tease out these themes in conversation with Harvey Dale. Feeney and the lawyer had become friends since Dale first advised Tourists International on restructuring company finances in the early 1960s. The New York attorney had established himself as the Feeney family consigliere, advising Chuck and Danielle, mostly on tax issues. An accomplished pianist with a passion for Mozart and a gift for mastering complex tax issues, Dale had become a partner in a number of New York law firms and was made professor of law at New York University in 1979. He was intense, focused, and legalistic, but had no operational background, a perfect foil for Feeney, who was restless and business oriented. They balanced each other, observed Mike Windsor, like yin and yang. Dale considered Feeney a brilliant retailer, while Feeney was in awe of Dale's intellectual powers. “If you were to ask me who is smarter, Harvey or myself, that's a dumb question,” he said, “It's Harvey. He is a brilliant lawyer with a mind like a machine.”