For More Than Profit: Why Dan Gilbert Bets on People and Place

[music]

Welcome to the stage: founder, serial entrepreneur, investor, and creator Brad Keywell, and founder and chairman of Rocket Companies, Dan Gilbert.

I'd like to first talk to all of you before I talk with Dan. What I want to share is the honor that it is to be sitting here with someone who's not only a dear friend and a brother. He's also someone whose entrepreneurial spirit I am in awe of. To give you a sense, for those of you who are not fully familiar with Dan's journey: our country is almost 250 years old, and I don't believe there is any example of one person whose name is as synonymous with the revitalization of a city as Dan Gilbert is with Detroit. So with that, I am honored to be here with Dan Gilbert.

[applause]

What I want to start with is: why? I mean, just to set it up — you rolled all of yourself, your money, your reputation, your energy, your time, and your company into this city. Why?

Well, it's a long story, but the short story is: because we can. Because we're here and it's our hometown. So I always figured that if we can make an impact in our hometown, our home city, where else is there to do it besides home? So we got a lot of people with us in our businesses, and we have the capital and the drive and the energy and the loyalty to our own city. So it's not just me, but a bunch of us have jumped in and said we can make a difference here.

You led that decision at a time when your business was headquartered in the suburbs, correct? So the idea of a thriving city — and then for whatever reason, the suburbs become where people spend time. And at a time when the city was challenged, you chose to move your company here.

You have to have — like, I was born in Detroit also. I didn't do what you did. Tell me a little bit more of why.

There's really two forces that are pushing this. One is the business case for it. Believe it or not, there's a business case for it. As you know, one of our biggest challenges — there are a lot of challenges for states like Michigan — is all the kids leave coming out of Michigan State, Wayne State, and all the other colleges. You don't retain our talent. And when we survey young people, you know why they're leaving? "Well, we want to go to Chicago, New York, L.A., Seattle" — one of those cities that you're all from here, but I think — so I'll watch what I say. But they want the experience of the big city. They want the urban experience. It's not like they say, "I'm going to leave Detroit because I'm going to go live in the suburbs of Seattle." They want to be in the city.

And so we said, "Look, if we're going to retain talent in our own city, which is the most important thing to us, we better change the city or we better move to another city" — which wasn't going to happen. So we said, "Let's go for it." And so that's the business case.

The personal case is I'm a fourth-generation Detroiter. My kids are fifth generation. And we have a lot of pride in our city and our hometown. And it got old to go to other cities and look around and see the beautiful other cities. And when people ask, "Where are you from?" we'd say, "Detroit," and they're like — you probably get this — "Oh, I'm sorry." That gets a little bit old. And that happened for years, maybe decades. And I said, "Look, if there's ever an opportunity to change it, let's change it."

The good news is now what I get is, "I heard great things about it," or, "I've been there. It's better than I thought."

That's the thing. You don't understand the city until you put your feet on the ground, which you guys are hopefully doing now, and you get a flavor of it. There's an energy here that I think is unlike any other place now, and a belief that we're going in the right direction, and everybody's swimming in the same direction.

[applause]

Let me add a layer on top of that. At the time that you made this decision — and off and on, let's say at different degrees since — the government was not the leading force of revitalization. And clearly it wasn't when you chose to go all in on Detroit. Both in civic life and also in philanthropic or societal life, the government has to scale to do things that no one with any amount of money can. No private citizen can do that. But private citizens can take the risk that a government then follows. What's been your experience with the public-private balance?

It's a great question. Well, you may know that the city was in bankruptcy back in 2013. Biggest municipal bankruptcy in the history of the world, I think. So probably wasn't the greatest time in the world to move to Detroit. But we had a great mayor the last 12 years who was our partner, and a great city council. I mean, they really all came together.

Detroit has a background of divisiveness for a lot of reasons. It goes back to the management and the unions and the car plants and the car business. We had race issues here. We had east side versus west side, suburbs versus the city. It was a very divisive place, southeast Michigan. But that's probably the reason things went as south as they did for six decades.

But really, the mayor and even the governor — they came together, Democrats and Republicans alike, and we all swam in the same direction. We got philanthropy on our side, and they were already doing good things, but we really stepped that up with them. So you've got civic groups and then neighborhood groups. You put everybody together, swim in the same direction, good things happen.

I think on top of that, what you had was an entrepreneur. And the value of an entrepreneur putting his or her entrepreneurial creation all in with a place is a really special formula. And I'm just curious: when you think about the role of — many people here are either entrepreneurs or extremely entrepreneurial in their lives — what do you think about the role of the entrepreneur in society?

Well, whether it's entrepreneurs or whether it's even advanced corporations, we have this concept that we call — I don't know if it's brand new, but it's the last several years — we call ourselves "for more than profit." So there's for-profits and nonprofits. We like to call ourselves "for more than profit," which means that doesn't mean we don't want to make profits. We do care about profits, but we think profits feed into our mission, and the mission feeds into our profits. We attract great people because of it.

And I think that if companies took the view that they're for more than profit, it'll not only help the community or the mission that they want to take, but it also helps their own profits, because people are attracted to that. We think we've got the best talent we've ever had in the world. And if you interview people about why, they'll say, "Because of the mission. We want to be part of something more than just making profits." I don't want to push the desire to make profits down to nothing, because it's very, very important, of course. But I think it can be both.

Yeah. Well, I heard you saying it's not either/or.

It's not either/or. And when you have a bunch of people — we have like 17,000 or 20,000 people at one time in the city, it's a little bit lower than that now — they all buy in. And it's an army of people. And you can get done a lot with an army of people that are part of a mission. When I tell you that every single person that works for us is involved, they are — at some level, they are involved. Whether it's volunteering, whether it's being a customer at all these new restaurants in town, whether it's investing themselves in things. Every single person's involved in some way. That's a lot of people.

Let me — tomorrow, Shaka and I are going to announce the Street Philosopher Society, which I'm very interested in philosophy.

And I want to frame my question by sharing that you went to law school but chose to not be a lawyer. You chose to take risk. And my philosophical question is: what's your relationship with risk?

Well, I'm not a guy that takes too much risk like physical risk, like jumping out of airplanes and things. Although I did scale down one of these buildings in Detroit a few years ago. But I always took risk. I didn't find a problem taking risk with capital or businesses.

So you don't have fear when you take risk. You have excitement.

You got to believe that you can affect the outcome, right? You can't just — I like taking risk on people I know, or myself, or others that are close to me. Because taking risk on things that you don't know about — that's real risk. But if you're involved in it and you believe in what you're doing, I think you got to take that risk. And you got to bet big.

Yeah. One of my mentors, Sam Zell, always said the job of the entrepreneur is to mitigate risk unemotionally — to just keep understanding where emotion gets in the way and where you can actually strip emotion away and reduce risk and maximize reward. I just feel like you have a unique relationship with risk.

Well, what you always ask yourself is, "What's the worst thing that could happen?" When you have gone through some of the physical things that, let's say, I have and my family has gone through in the last few years, you realize that health is everything. They say a healthy man has a thousand problems. A man who's got a health issue has one. So if you have that — what's really so — you're going to lose some money? I mean, you can make money again. Entrepreneurs always believe they'll come back. So what's the downside?

Speaking of — I shared my mentor story. Talk about mentors in your life and what role they have and how you think about mentorship.

I'm not one of these guys that really can point to one person that said they had — I wish I did, but I did not really have a north-star mentor, if you will. My dad was a — came out of the military and then owned a bar in Detroit. My grandfather owned a car wash in Detroit. So I used to follow them to work. They used to take me to work and I used to love the excitement and the action of the business. That's what attracted me to business — the action and the building. Certainly wasn't to make money. It was just that environment and the energy. So they were mentors to some degree. I did a lot of reading on people, as you do. You try to take a little bit from everybody.

And you write it down and you share. Yeah. This — your book of isms. Just talk about it for one second.

You want me to show it off here? See? $19.95 plus shipping and handling if you want it.

[laughter]

Dan had a philosophy before people that I knew who were building companies had philosophies. I mean, that was my story about you. I came to visit here in the early days, and you were talking every Saturday to new employees, and you were talking about philosophy.

Yeah, culture. I mean, that's a word that gets overused a little bit these days, but I truly believe that, as Drucker said, the great management guru: "Culture eats strategy for breakfast." And I really believe in that. You got to have a great culture to start. It's your foundation. It's everything.

We happen to have these 20 catchy sayings that we use. And all of our people know them. And we sit with them — for every new person, every six weeks, we sit and do a training session in a room like this. And we go through all 20 of our isms with slides and interviews, and we bathe them in our culture from day one. And if they buy into it, it drives decision-making. It drives priorities. It drives their action. It drives their behaviors. They know what your compass is. They know where you're going. It defines who you are.

And you repeat it over and over, right? Everybody. It's everywhere. And it's — I think it's the single reason for our success. Single biggest reason, I'd say.

I think as a leader, having a simple message that you repeat — I was once told, you know, you have a lot of messages. Well, you hope that people remember one. And so the idea of a small set of messages, over and over and over.

And giving them examples — examples of why it works and why it doesn't work.

One thing I learned from you has been the role of artists in shaping a community. As you've taken personal risk — it looks obvious now. You look at Detroit, you're like, "I can't believe Dan — of course, look at what he's done." Well, I guess I say that saying it looks somewhat logical, but it wasn't necessarily logical when you were buying buildings that were empty.

And my recollection was you were offering free space — taking these buildings and offering the space for free to artists, inviting them to populate an area to do what they do. And everybody wins. Tell us about that.

I mean, that's part of it in the early days. But my wife, who's here, Jennifer, and her friend J.J., who's here — they really are big on the art world in Detroit, and they're the ones that push that part of it. And they continue to invest in art areas. There's a big art enclave that they're building here. So I think art and music are the trendsetters. They come in, and when you have a city that's got art and music, young people want to be around it. And Detroit's always been a music town. It's a little bit of an art town, becoming more and more of an art town now.

Just the idea of prioritizing that over, like, "Let's lease the space quick." Instead, it was, "Let's add culture to the space quick. Then we can lease it."

And we also leased it to budding entrepreneurs and let them go in for free. I mean, what is the empty space going to be doing for us? Nothing but being empty.

Let's talk about some of the what. You've been building Rocket for 40 years. You just acquired two public companies in the last month. Why? And what do you think this means for the company that you've built from scratch?

Sure. So, we were an entrepreneurial company and still are for 40 years. And we always had organic growth, and we had CEOs come out of our company and didn't go to the outside. We recently, in the last year and a half, brought in our first CEO from outside of the company — actually from Toronto originally — and I think he spent a lot of time in Silicon Valley and California and even Seattle. So we took a chance on somebody like that from the West Coast, which is — that's a risk right there.

And he's been pushing acquisitions. We bought two companies. One is Redfin, which you probably know. That gets us closer to home buyers, because a huge part of our business is when people buy homes, we do mortgages for them, as you may know. And the other one is Mr. Cooper, which is a big mortgage servicer. And we've got a big servicing portfolio.

Mortgage servicing is where you make your payments every month. They process the payments. If you don't make your payments, they foreclose on you, pay your property taxes, pay your insurance. So that's a big business. It's got fee income, but most importantly, it has customers that we can stay close to. You get a mortgage every seven years, maybe. So our question is, what do we do during those seven years? We want to get your next mortgage, but it's a long time out. So if you have the servicing of that mortgage, you're closer to the customer. That's going to feed our origination business.

It also is a hedge against interest rates when they go up, because servicing is worth more when interest rates go up, and that's always the biggest concern about buying our stock — "Why would we buy your stock when rates go up? What's going to happen?" Well, now we have the servicing portfolio. So these were strategic acquisitions, and I believe in them, and our CEO led them.

You've been in a front-row seat of digital transformation after digital transformation — from dial-up internet, which was how people first experienced Rocket.

You think this internet thing is going to catch on eventually? Right? So — someone told me — well, Steve Case told me that there are still people who put the CD disc into a computer and dial up. There are 375,000 people, last I checked, using Quicken software, believe it or not.

The early version. Yeah, for the checkbooks.

[laughter]

When I'm building a company, what others might not realize is I'm worried that the company is going to be — like, while it's a company, I'm existentially worried. How does this company maintain its existence? Like, something could go wrong. And then at the same time, digital comes along and how do you adapt?

So my question for you is: at what point — this is a long time ago at this point — but do you remember the feeling when you're like, "This is a company that lives. It's got its own life. I don't have to worry that it's not going to be around tomorrow. Now I can focus on how it's going to grow"?

Well, I think that's a good question, because companies take on their own personality, almost their own soul, kind of separate from the individual people working in it. But everybody's got to be a part of it. And I think several years in, you look around, once you have a couple or a few good years in a row, you got to believe it's going to keep going. But I do believe in the philosophy: you grow or die. Just like a tree — trees are either growing or dying.

Speaking of growing — Summit has grown in many ways, and Summit is here now in Detroit.

I know that you've spoken at Summit before. How do you feel that Summit is actually in your backyard?

We're very excited about it. And thank you all for coming, by the way. Thank you.

[applause]

You've talked about how numbers and money follow. They do not lead.

That's one of our isms. See, you got one down — 19 to go.

[laughter]

Say more about that, because the numbers and the money are how you exist. That's the oxygen.

See, I think if you're focused on money and numbers, then you're chasing your own tail. Build, build, build, build — and the numbers and money follow you. I think other people have used this term, but we have a get-rich-slow scheme going on.

Say more about that. That's interesting.

Well, I think people who try to make it fast and quick end up blowing it, because they're too scared and they're feeding their own fear about the money. Most entrepreneurs and people I know who are highly successful, they believe in their vision. They believe in what they're building, and the money follows them.

So when you invest in early-stage companies or speak to early-stage entrepreneurial creators who are focused on growth, is your advice "slow down and focus on quality," or "focus on culture"? What's your reaction?

I usually say, "What's your mission? What's your vision? What's your goal? Where do you want to be a year, five years, seven years from now?" And if they can't answer that, then they whip out the spreadsheet and I run as fast as I can.

[laughter]

And you've been a prolific investor in early-stage technology companies. What's one thing that you know that we might not know? What's one thing that you believe for sure, based upon the experience of Dan Gilbert as an investor?

Well, if you look at the horse and the jockey, we invest in the jockey. Let's say the horse is the business idea, the jockey is the entrepreneur. I'd rather invest in the jockey because a good jockey can find a horse that he can win on. I've seen guys who start off with this idea and this business, and five years later they're in an incredible business that had nothing to do with what they started off with, and they're extremely successful. But if you just invest in the idea, well, that idea could die and then you're done. So who's the best jockey? That's what I would say.

When you assess an investment, your number one priority is: tell me about the person.

100 percent. No such thing as a good deal with a bad guy. No such thing. And anytime I try to do that — "Oh, they're all right. They're not that bad. They're okay" — as soon as your gut tells you, like, you're in a meeting and you're looking at somebody and you go, "I'm not sure" — it's over. It's done. And if it's a team member, you're going to fire them. It's just a matter of when. Just get rid of it. End it now.

I agree strongly with that. I call it a "full-body yes." If my entire body is not in alignment about something, then it's a no.

Yes.

You and I both had the privilege of spending time with Warren Buffett, and that man's building a forever company. You talk about building forever companies. Has he influenced that idea? Tell us about it.

Absolutely. He's, as we all know, one of the icons in American history, mostly not just because of his personality. By the way, Warren Buffett does the best Warren Buffett imitation of anybody I know.

[laughter]

But his idea of just long-term, not going for the short-term buck.

And how has that influenced you?

I mean, we try to take that on. We try to not invest short term. This building you're in right here, we won't see a return on this till your grandkids are 50. I don't even have any grandkids yet.

[laughter]

And when you had the opportunity — give us a two-minute story about this building. I think for those who are not from Detroit, this was — we're sitting on the site of the place that both of our parents would come down here on a Sunday to go shopping. This was like the fanciest.

This was retail holy ground right here. Hudson's, the downtown store, was the biggest-grossing business maybe in America in one location. In 1956, they did something like $250 million out of one store — in those dollars.

In this building? Yeah.

So what was the state of the building when you bought it?

It was terrible. They blew it up in 1998. They imploded it.

Did they implode it before you bought the property?

Yeah. Better do it before than after.

[laughter]

So they imploded in '98. Just a big piece of land?

Yes, pretty much. It's remarkable.

When you think about — beyond Rocket, you have many other businesses and activities. Do you believe in all the different entities interacting? How do you think about you as a leader overseeing many diverse activities?

It's funny you ask that question. We call it the Family of Companies. And actually, one of our isms: we eat our own dog food. What that means is that we do business with each other. We have relationships with each other in these businesses. We do a lot of things — we do basketball, we do mortgages, we do sneaker exchanges, we do a lot of things. But the "who" stays the same. The "who" is our isms, the "who" is our philosophy. But we try to all act as one business and learn off each other and do best practices and maybe get together and have buying power and leverage. So we try to take advantage of each other's strengths.

And it's not easy to do because everybody gets their independent flag going. They don't necessarily — I understand why the colonies broke off from Britain now. Sometimes we can't get numbers from our own companies. "I'm not giving you numbers." "Why not?" "Because I'm not ready. I don't want to."

So what do you do then?

We get out the men in black.

[laughter]

This is a community of creators, and one of the ways you've used your creativity, as we talked about in the beginning, is to influence change in the city. If you were to think about all of us with an interest in doing not just well but doing good — doing well by doing good — how do you think about it? What would you give us as advice for our cities, how to get started, or how to think about, from a philosophical framework, our role in our cities?

Well, first of all, you have to want to take the mission on, right? I was just talking to a gentleman from Wichita who's interested in doing it. The guys at Bentonville, Arkansas, they're interested in doing something now. So it's becoming a thing. And I think — I mean, nobody can change a city's trajectory more than a few entrepreneurs and businesses, as you mentioned earlier. Government does play a role, but governments today, for whatever reason — lack of leadership, don't have the tax bases they used to have — they can't lead as they used to. But they've clearly got to play their own role.

But if you get entrepreneurs and businesses to roll in the same direction, it's amazing. An example is this: we have General Motors moving into the other building on this site, putting their world headquarters here. I'm not sure they would have stayed in Detroit if they didn't have a brand-new, beautiful building to go into. So here we are — entrepreneurial company, one of the oldest, most successful companies in the world in Detroit, and they became part of it.

Ford Motor just completely renovated a train station here, which — I'm not sure if you ever read about this, but our train station was like — we used to call it ruin porn. People would come from all over the world to take pictures and video of our ruin porn in Detroit. It was totally dilapidated. And now there's an event on the last day of this weekend for this community there.

Oh, that's great. You guys should go — you'll love it there. They did a great job with it. But you've got GM, you've got Ford, you've got us, you've got a bunch of entrepreneurs, you've got artists, you've got musicians. I know it sounds a little cliche, but it's really true. When you get going, when you get momentum going, it works. Momentum breeds momentum.

And what's your take on the maxim "no good deed goes unpunished"?

Oh, that happens all day long. You try to do good, and mostly because you've got plaintiffs' lawyers out there screwing things up.

I mean, you're out there trying to do good, and at the same time, you're putting yourself out there and suffering the brunt. I was once told that part of being an entrepreneur is being willing to be misunderstood. How do you feel about that?

I think that's right. And you ever hear the term: if you don't have some people that don't like you, you're not doing something worth doing?

Yeah. I believe in that a lot. And you've got to have a stomach for this stuff, because if you're doing anything that's impacting a lot of people, you're going to have detractors no matter what. You've just got to move on. Ignore the noise, as we like to say.

I want to take a deep breath and shift a little bit, because something happened to you that has not happened to many of us. Maybe anyone. You had a stroke. And I'll start with a question: what is the pain like? Are you in pain right now?

I'm definitely not in physical pain right now. No. And by the way, Oprah, don't make me cry, okay?

[laughter]

On a day-to-day basis, is pain part of the experience of the recovery?

I do get what they call stroke pain from time to time. Actually, after a stroke, you do get something called stroke pain, but usually it lasts just several months and it's brutal. But now I rehab three or four days a week, and I work down here two or three days a week. But I just took some of my first few steps without a cane the other day, so I'm getting there.

[applause]

What do you know that we don't know about the moment when you wake up and you realize your life has changed based upon an uncontrollable thing that happened to you?

You just hit the word: uncontrollable. You can't control it. Anybody can be hit with something like this at any time. I was in pretty good health. There were no issues. And I woke up one day in a hospital. "What happened?" "You had a stroke." "Can you move your right side?" "Yep." "Left side doesn't work." You feel like a mannequin. All of a sudden, you can't move your left leg, your left arm. And then you know, at that moment, things are going to be different forever. And you've just got to take one step and then the next step — not literally, of course, figuratively.

My experience of you is you've always had an extraordinary soul. It's even more extraordinary now. Your empathy and your insight are extraordinary. How do you feel that way? Do you feel like you're a more sensitive person now? How do you think it's affected you emotionally?

You're talking about because of the stroke? Yeah. I think what happens is you start — you spend a lot of time alone when you have something like this. Even though you have a family around, you're just thinking a lot in your head. It's been six years now. It's a long — so I've lived with this for a long time now. And thank God for the people around me.

And you start thinking: what do I have gratitude for? Every day. I know that a lot of people talk about keeping gratitude charts or gratitude diaries. I try to write down three or four things a day that I'm grateful for, and they could be little things and they could be big things. But I think that keeps you grounded.

And something like this can only teach you how to understand the lessons from it. And what are the lessons? Lessons are that you're not infallible. Doesn't matter who you are. When it comes for you, it comes for you. And it can come for anybody. And nobody gets out of this place unscathed. Nobody.

So one thing we know for sure: we're all going to die someday.

Yep.

Speaking of death — we've all had death visited upon us of a loved one, including you. And I'm just curious what you know about grieving since Nick passed away. What do you know about the experience of grieving that you can share with us?

Two and a half years ago, we lost our oldest son at 26 years old, from a condition called neurofibromatosis, which he was born with. So he fought his whole life — 26 years — and it finally got to him.

And grieving is a brutal thing. People grieve differently. Everybody grieves differently. But you've got to make peace with it. And the way I make peace with it is focusing on the kind of life he lived and what he taught us. And he happened to teach us a lot. And we're trying to keep his legacy alive.

If you get a chance, there's a restaurant here called Gillie's, down the street. That was his vision. That was his nickname. And you get the best dish there — it's called Bam Bam Broccoli. And what's ironic about it is this kid never put anything green in his mouth his whole life. Not one piece of green anything.

[laughter]

And this building is on Nick Gilbert Way.

Yeah. As a tribute to your son. Thank you.

[applause]

I think as an entrepreneur — often, or I've come into the thought in the last decade of my life — about the relationship I have with money. And when I bring up that topic with others, it's always fascinating how complicated and toxic and confusing it is. I've yet to meet someone who doesn't have a confusing relationship with themselves and money. Not others, and not the money itself, but just: what is money? How do you think about it? What does it mean? Are you better or worse if you have lots or little? All those questions.

I'm wondering if your stroke and the experience of recovering, and perhaps the depth of your experience of your life — how does it affect your relationship with money?

Yeah, I sort of mentioned that earlier. When you lose your health, you're focused on nothing else but your health. I'm sure some people here have experienced that in some other way. But you really only have one issue in your life, and that's getting your health back. I know you've heard this. Everybody hears this when they're young. Just stay healthy. But I mean, stay healthy. That's all I can say. And strokes suck. They suck.

And has it changed your relationship with your ambition of making money — your idea of giving away money versus making it? Has it really affected in any macro way how you think about making money?

Well, I think, as I mentioned earlier, numbers and money follow. And so we still have these missions, right? The mission of Detroit. We're trying to use these tragedies that happened in our family. Our son — we're trying to eradicate that disease. We've given a lot of money to researchers.