Richard Baker
Governor, Executive Chairman, and CEO, Hudson’s Bay Company
If you’re going to have a career, you’re going to need to create a business plan. You’re going to need to have a conviction in what you believe.
Summary
As the Governor, Executive Chairman, and CEO of Hudson’s Bay Company, Richard Baker is one of the premier real estate executives in America. A tried and tested leader, Richard has led a fascinating career that has weaved in and out of luxury retail, property development, big box stores, and everything in between. Richard joins Alan on “Leadership Matters” for an fascinating conversation about the real estate titan’s life, career, and views on leadership.
In his insightful conversation with Alan, Richard dives into the start of his career at the National Reality & Development Corporation, one of the largest real estate development companies in the United States. He walks Alan through his takeover of HBC, the oldest company in North America, and how he’s modernized the company through expansions to the company’s flagship, namesake department store, and acquired the esteemed Saks Fifth Avenue brand, including Saks.com and Saks OFF Fifth. Together, they dive into Richard’s approach to management, passion for the arts, and so much more.
Mentions & Resources in this Episode
Guest Bio
Richard Baker is a renowned retail executive, real estate leader and entrepreneur.
He is the governor, CEO and executive chairman of Hudson’s Bay Company, where he led efforts to take the Canadian company private in March 2020. Richard serves as executive chairman of each of HBC’s portfolio companies, including the iconic Saks brand that he acquired as governor.
Richard is also the chairman and CEO of National Realty & Development Corporation, a private real estate development firm that owns and manages shopping centers and corporate business centers across the U.S.
A proud graduate of Cornell University, Richard serves on its Board of Trustees and is the namesake benefactor of the school’s Baker Program in Real Estate.
Clips from this Episode
Episode Transcription
Alan Fleischmann
You're listening to “Leadership Matters” on SiriusXM, and at leadershipmattersshow.com. I'm your host, Alan Fleischmann. I'm here today with my good friend Richard Baker, who holds many titles: Governor, Chairman, and CEO of the Hudson's Bay Company; owner of Saks Fifth Avenue; investor, philanthropist, thought leader, and visionary who has actually been the CEO and owner of the longest continuously operating company in North America. All these things to talk about today and his journey to become the leader that he is today. I've wanted to have him on the show for a long time, so I'm really excited, Richard, that you are joining us today.
Richard Baker
My pleasure. Good to see you.
Alan Fleischmann
Good to be with you. Let's start a little bit with your early life. I know you grew up in Greenwich, Connecticut as one of four siblings. What was life like around the house?
Richard Baker
Well, actually in my earlier days I grew up in Westchester just outside of New York City. My parents got divorced when I was about 12 and we moved to Greenwich, Connecticut. Both my mother and my father, at the same time moved to Greenwich, and I had a lot of uncles, aunts, cousins, and grandparents around. But Greenwich was a very quiet and insular place, a very difficult place to transition into.
Alan Fleischmann
I'm sure that being a child of divorce meant you went back and forth between two parents’ homes at that point. Luckily, they were near each other
Richard Baker
It was not an easy time. It was a very difficult situation with lots of difficult people. In fact, I think I got a lot of valuable life skills from those early days, as sort of the one negotiating between my parents. Being able to manage and deal with very difficult people: I think that's a life skill that I learned at that time. And it’s suited me well, throughout my life.
Alan Fleischmann
I often talk about how my negotiation skills were developed as a child with my parents, in dealing with very strong willed people, and maximizing how every word mattered.
Richard Baker
In fact, sitting on my desk in front of me is a book called The Game Theorists Guide to Parenting: “how the science of strategic thinking can help you deal with the toughest negotiators,” you know, your children.
Alan Fleischmann
That's great. So tell us a little bit about your parents and their backgrounds.
Richard Baker
So my father was a real estate guy. He learned about the real estate business in many ways from his mother, who was buying and selling houses as he was growing up in Hoboken. Then he later learned from his father-in-law, my mother's father, about the nuts and bolts of the real estate business. He was a Yale undergrad and Yale Law graduate, a real estate entrepreneur. He was very smart and very thoughtful and launched into the real estate world in the very late 1950s after he graduated from Yale Law School.
His father-in-law invited him to work with him in order to work on this new business concept called strip shopping centers. There were literally very few or no shopping centers and the two of them then went into that shopping center business. My mother was a graduate of Vassar, and she was very sophisticated, very smart, and very interested in the arts. She collected art and had an art gallery; she had relationships with artists and was really inspired by what could be done and accomplished in the arts. I got to spend a lot of time with her dissecting that aspect of the world. Art with my mother and real estate with my father.
Alan Fleischmann
That’s amazing. When I think of you, and what sets you out as somebody distinctly different than anyone else, is that you do combine that kind of the right brain and left brain. When you look at the world, you see the power of aesthetics and the importance of understanding the culture that comes from designing and creating. But you also are a great investor and know where there's value. It's a right brain, left brain combination. You don’t see that too often, and I can see you drew that from both of your parents.
Richard Baker
Yeah, I did. Strangely, we'll talk about business today, and that's what people talk with me about mostly. But if you asked what I do, I think of myself as an artist. Bizarrely, not as a business person. I have this combination of a very severe ADD, where in my brain at any given time are 36 channels clicking away from one channel to the next. But also, as I think about those 36 channels, there are really 36 different canvases that I'm painting. I work with these great teams of people on 36 different canvases: one might be the renovation of a building; another one might be the certain aspect of growing a particular business; another one might be the future business plan of a project that we're working on. To me, as I think about it, they're all canvases, and I'm working in my head through each one of those channels–through each one of those canvases.
Alan Fleischmann
That’s extraordinary wonderful.
Richard Baker
I hope they don’t take me away when I get off the radio.
Alan Fleischmann
No, it's a wonderful way to understand how you think. I use the word curator when I think of you, somebody who creates things, but then actually nurtures them along so that they become their own.
On the artistic side, I love that you think of yourself as an artist. That means when you're advocating for something, you're seeing it through a different lens. I'm curious, because your father, obviously, and your grandfather were very established in business. By the time you were growing up, they were very successful as the inventors of the strip mall and real estate.
But your mother's artistry side, and her strong sense of aesthetic, I can almost imagine your mother in her dress and jewelry, the way she carried herself. I can always imagine her in my head when you're talking. You were an entrepreneurial teen on your own, though. You attended a cooking school in Paris and you started a catering business, I'm not mistaken?
Richard Baker
Growing up in school, it wasn't very satisfying for me. School was very difficult for me, I have a hard time going from my brain through my hand. Back in the days, you had to write everything out. I never got very good grades, and schoolwork was not fulfilling for me. I spent my time dreaming about businesses and ideas. And I would follow people like Harry Helmsley, or Steve Roth from NATO. On the walls of my bedroom, I was 11, 12, maybe 13, were the zoning maps from the neighboring town of Portchester, and what buildings could be built, where, and how. That was what was interesting to me.
The way that I had pleasure was being able to make money or being entrepreneurial. So I always had a scheme or a plan or a business going on in high school. One of the things that I was able to do as a 15-year-old was cook and be able to organize and set up events and parties. From 15 throughout high school, I had a catering business with a partner, and the two of us would cook the food and organize everything. Eventually we had to rent equipment from the Smith party rental store and we needed folks to work the parties as bartenders. It was a little ridiculous at 15–I couldn't drive so I used to have one of the waiters who worked for me drive and pick me up after school on Friday so we could pick up the rentals and set up the party. I had my own waiter driver when I was 15.
I went to cooking school one summer, and by the time I graduated high school, which was a private school called Brunswick, all boys, we had 50 young men who were in my class and they all had jackets and ties and were put together. They would work these parties. Eventually, the other caterers in town figured out that I had all the labor and they would hire me to set up the events and to supply the waiters and break down the events and all of that.
We used to sit around at lunch at school, talking about the party on Friday night or Saturday night and how much money we were making doing these different events. That's what helped me get into the hotel school at Cornell, because maybe with my grades alone, I wouldn't have gotten in.
Alan Fleischmann
It's considered the best hotel management school in the world, actually, Cornell. And you studied in Paris before then?
Richard Baker
I think it was the summer of my 16th year, I spent the summer in Paris.I flew over to Paris, spoke no French, and went to this cooking school. One of the scariest things I ever did in my life was get on that plane and go to a country that I didn't speak the language of but I did it. And it was one of the great experiences of my life. In fact, my niece last summer, a little older, had an internship in Paris. She was nervous but she loved it so much. Now she wants to go back and do a semester there. So great to be able to have those types of experiences.
Alan Fleischmann
And you went when people didn't have FaceTime, and they weren't sitting there and texting everyone. You got to be completely immersed.
Richard Baker
Yeah, I was completely alone. I don't even think there was a voicemail at that point. I don't even think you could leave a message at home. It was mid-1982, that was a long time ago.
Alan Fleischmann
I did a similar thing where I went off to Europe when I was 16 years old and can relate to what you're saying there. Only when I got there did I realize I was alone. I didn't realize how far removed I was. If I wanted to call home, I had to go to a post office, wait an hour, they would do a collect call, and if you're lucky somebody answered.
Richard Baker
But it was a great experience, a great way to learn how to be independent. Unfortunately our kids don't have the same opportunities. They're stuck with the cell phones that give them instant security at any moment.
Alan Fleischmann
That's 100% True. But you went to Cornell, which is amazing. You've got a great love of the university, too. Were you always interested in hospitality at that point, because, again, you've got this real estate and investment side of you? Because you also have a highly “tech” side of you today, which people know of when they think of you. They know you are a person who understands how to build culture–the idea of convening and the idea that we are better together than we are apart. So hospitality obviously had to be a big deal, if I'm not mistaken. You also were interested in opening a bunch of restaurants at that point?
Richard Baker
You have to know yourself. And I learned very early on that I was a people pleaser, I like to make people happy. I like to make them dinner, I like them to enjoy the meal. My associates and partners, even today, kid that, “oh, Richard’s really in the food and beverage business.” If you travel with me, or you come visit me, I’m always getting lunch organized or making sure everyone's feeling good and properly organized. The Cornell School of Hotel Management really is a hospitality training program. And we're all in the hospitality business. So if you're a dentist or a lawyer or a train conductor–all of us have the same job, which is to make people happy and feel good about their experience. And if you can’t accomplish that, there's not a lot of jobs that you're going to be successful in.
So one aspect of Cornell that interested me was the hospitality business. And that's carried through with me for my entire career. But also, I was very enamored with people who can operate businesses. Real estate people operate a real estate business, and real estate people can develop and create great value and exciting projects and do all kinds of interesting things. But that's very different than operating a business. And as a youngster, I was very enamored by my father, and my family was in the real estate business of building shopping centers for retailers. As a 12 year old, I became very focused and very obsessed with the idea of being able to operate a business inside of our own real estate. At the time, I didn’t really understand the words, PropCo-OpCo. But that's how we refer to it today. But at the age of 12, I knew I wanted to run a business that lived inside of our own building.
I've spent my entire career creating PropCo-OpCo situations, which is a great way to create value. If you're in the real estate business, it's much easier to operate your own business inside your own real estate than it is to find tenants to occupy the buildings you already have.
Alan Fleischmann
So you knew you were going into business, one way or another. You’d already been an entrepreneur. When you went to college, did you think you might join your father at that point? Or was it not certain?
Richard Baker
I always knew I was always enamored with business, and, as you know, I spent my childhood going with my father and my grandfather to visit shopping centers and construction projects. That's what we did. At family dinners, that's what everyone talked about, the business. So I always expected to be involved and to work with my father. I always imagined that I'd also develop operating businesses that worked alongside of the real estate that we owned.
Alan Fleischmann
Which is what you've done actually, which is amazing. I’ve always loved real estate because, for me, there's something real: you're touching it, you can actually see it, you can create it, you can see something and then at the end of it, you can actually physically know what's there, rather than it being just theoretical. So I can see even from the aesthetic side of you and the creative side of you it being a really exciting part. Anything about your grandfather, your father, your relationship with them, that you'd want to share?
Richard Baker
I would say that my father and my grandfather were both big role models for me as it related to my real estate, career, and real estate brain. I tell people all the time that I run operating companies through the lens of a real estate brain, which is really telling, because real estate people think about risk and reward very differently than operating company people. And I'm an operating company person that analyzes everything through the risk and reward lens of a real estate guy.
But having said that, when I was little, my mother used to take me to museums and visit all kinds of different exhibits. I was a good young man and I would go with her. She would talk about the artist and she talked about the period, and she'd take me out for a hot chocolate or candy or whatever it was afterwards. And I swear, I didn't know what the hell she was talking about for years and years and years. I was trying to be a good son and that's what interested her. So I went along with it. Not until my early 30s did I have a bit of an epiphany. I think very differently than other people. All day long, I look at situations, I look at problems, I look at buildings, and I see things that are different from everyone else. When I was younger, I thought there was something wrong with me because you know, we brainwash our children to think that one plus one is always two, and that George Washington is always the first president. Red and yellow mixed together is always orange. That's how we brainwash and train our children. We don't train them to imagine or think differently.
My wife Lisa and I were working with this artist, James Terrell and I had a bit of an epiphany. The epiphany was, “Wow, this artist does things and thinks about things totally different than everyone else, and the world rewards him.” You know what? Thinking differently than everyone else is not a bad thing: thinking differently than everyone else is a good thing. And I should embrace, and we all should embrace, our ability and nurture our ability to think differently. It sounds so obvious when I say it. But with so many years of brainwashing where we're training everyone to come to the same exact answer all the time, it took me a while to break through. That was a very big breakthrough moment, for me personally, and I often coach students at Cornell or whoever I have a chance to chat with, when they asked me about how they should be entrepreneurs, or how they should grow, I always beg them to go visit and spend time in museums and exercise your brain, what it's like to think about things differently, and why certain artists in certain periods of time have so much respect and so much reward because of their ability to think differently.
That comes from my mother's education. So I had the opportunity of exercising my brain in the arts, while having a tremendous opportunity to learn about real estate and negotiating, and the style of negotiating, with my father and my grandfather.
Alan Fleischmann
That's an amazing combination. Knowing you as I do, and knowing what you do every day, it is that irresistible combination. But I love what you just said, in other words, embrace your originality, I always say, and we talk about this on the show, every human being has their own fingerprint, and we're not born and raised to figure out originality and to embrace our weirdness. We're actually raised to not be weird: to conform and follow others. When you think of the life of an artist, there’s the idea of going to the museum and always seeing the beautiful art, but also to understand their stories–the stories of the artists. They're always weird. They're always original and weird in a good way. They're always people.
Richard Baker
Somehow we haven't been successful. As a community, and as a society, we have not been successful enough. Embracing the weird, if you will, and the different and overstimulating conformity.
Alan Fleischmann
Yeah, 100%. And when you think about everything that's long lasting, that has a great legacy that has a great imprint on our civilization and society, or the weird and the original, it's never the same. So right after Cornell, you went into working at the National Real Estate & Development Corporation, NRDC, with your family?
Richard Baker
My father had this nice business, where he was building some office buildings and some residential communities. He had built a series of strip shopping centers with my grandfather and my uncles. My father had split off and had a separate business that was based in Greenwich called National Realty & Development Corp. So I went into work with him.
The first day, the day after I graduated from Cornell, in 1988. My father said, here's an office, you can do anything you want, just don't sign your name to anything, and don't spend any money. And so that was a great start for me and very logical. I had to start with whole cloth and create whatever it was that I was going to do. I had the backdrop and the base of a great mentor and a great business. But I had to go invent. And so one of the first things I did was, we had a bunch of broken down shopping centers, because the tenants had gone bankrupt at that point. There was this retailer that had no stores east of the Mississippi, and they were very successful. I'd been reading about them and I visited one of their stores in Tennessee, so I thought I'd go visit with them and see if I could encourage them to locate stores east of the Mississippi in the places where we had shopping centers and the places where I could build new shopping centers.
Of course, that company was called Walmart, which you know, in 1988, or 1989, it was amazing how unknown they were, at least on the East Coast. So I met with them and began a relationship with them. It was a great relationship because they loved an energetic 21-year-old who was happy to do everything their way. Real estate on the East Coast, particularly, was not a hospitality business. It's, “me landlord, my corner, tenant: you want to come in? Great. If not, we don't care about you.” It was, “we give one coat of paint, we don't give two coats of paint.” East Coast real estate people were, and still in many cases are not, great hospitality people. Me, at that point in my life and in that industry, I was only too happy to do whatever it was Walmart wanted, in order to make them happy and feel comfortable. And I think they were a little nervous going into the East Coast with some of the sharks that were in the real estate business on the East Coast. And they were comforted by being able to work with this young Richard Baker, hospitality kind of person.
I ended up building 40 Walmart shopping centers, which we still own today and develop additional retail all around it. We created a lot of value, and we had had and continue to have a great relationship with Walmart. I got to meet this nice man, Sam Walton, and I got to meet his son a number of times, Rob Walton. It was a great education for me. And we, basically my father and I, would work together for the next 17 years. We built a team of like 45, 50 people, and were building a million square feet a year of new Walmart anchored shopping centers. It was a great time rolling up shopping centers throughout the Northeast.
Alan Fleischmann
It's amazing, again, this idea of bringing retail and real estate together: not always the same. But that seemed to be an area where you obviously flourished. You went on, we can fast track, to do some pretty amazing acquisitions as well. It's interesting: I'm sure there are people that see you as a real estate inventor, others will see you as a hospitality inventor. A retail inventor, as well, and then a tech inventor. But you really are inventing as you go. You bring all these things under one roof and together, in the same way. It’s just pretty amazing and visionary. Let's talk a little bit about some of those acquisitions.
Richard Baker
I'll tell you what happened. So with a little encouragement from my wife, Lisa, who said to me, “You know, Richard, you can do bigger things in this world and the shopping centers you're doing with your father.” I said to her, “Well, I'm kind of happy doing this. But you know, the world is changing.” I really needed her encouragement and support as I transitioned from developing shopping centers with my father into a new concept.
So what happened was, I still had the bug of the PropCo-OpCo, which I had never really exercised. I began to do research on a lot of operating companies that owned their own real estate. And one such company was Lord and Taylor, which the company now known as Macy's was selling off. Lord and Taylor owned about 49 of its stores, including the Fifth Avenue store, and I saw an opportunity where I could operate the department store business, while monetizing and creating value to the real estate portfolio. After a lot of negotiations working with a lot of different people, I ended up making a deal with Macy's to acquire Lord and Taylor for $1.2 billion.
My father said, “What are you doing? This is not what we do, we develop shopping centers, this is very different.” And I explained to him, you know how important the 49 pieces of real estate were that Lord and Taylor owned, and the operating business. He encouraged me to bring in some new partners along with him and I, which I did. And that was Bill Mac and Lee Knight Bard, who came in to support my father and I in the acquisition of Lord and Taylor.
Basically, the business philosophy that my grandfather had, that my father had, and that he passed on to me, was that we are not investors: we leverage our brains in order to create value. Someone who uses their money to create value? That's fine: they are investors. Every single shopping center, every single deal we ever did, required no money. When we built a shopping center, we got an option for free, we got the approvals, I pre-leased it. Before I closed on the land, I got the financing. And I borrowed the money, built the project, and never invested $1 in any of the 40 Walmart shopping centers that we had built.
When it came to buying Lord and Taylor, I really had to figure out how to buy it with little to no money, because that was not how we operated. So I ended up signing a deal, 11:30 at night, in August of 2006. Maybe it was May of 2006. And I call up my father at 11:30 at night and say I have a signed purchase agreement to buy Lord and Taylor for $1.2 billion. And he says, “Well, that's great. Where are you going to come up with the $1.2 billion?” And I said, “Well, I'll figure that out starting tomorrow morning.” So I had a 120-day free option to buy Lord and Taylor, because the nice folks that Macy's at the time didn't really understand that my entity, NRDC Equity Partners Fund VII had no money in it. They just assumed that it was part of a big private equity firm, which it wasn't. So I basically had a $1.2 billion free option to buy Lord and Taylor.
Well, short version of a long story was that 2006 was a very robust period of time for financing and what have you. And the institutions of Bear Stearns, Lehman Brothers, and CIT, before they went bankrupt the first time, all got together and lent me $1,175,000,000 for a 1,200,000,000. net dollar acquisition. So now I went back to my father and my partners, Bill Mac and Lee Knight Bard. And I said, “we're short $25 million. But we can own this tremendous real estate portfolio and this tremendous business.” So the four of us ended up doing what we never do, which is putting in the $25 million of cash into the transaction. Before the end of the year, we closed in 2006. And now we owned the $1.2 billion Lord and Taylor with a $25 million investment. So I think that was the very beginning of my entry into PropCo-OpCo.
Alan Fleischmann
I love that. And also, you’re right: I should never describe you as an investor, I should describe you as an inventor. Because you obviously approach this with that originality of, “how do I actually, with $25 million, by this enormous network of properties?”
Richard Baker
We call it, if you come and chat with the folks in our office, the infinite return. So we're in the infinite return business. That is the only way my brain works, and that is how we try to look at transactions. That morphs as you end up with the kinds of businesses we have today. But generally, every business, every project, everything that we do: we have 49,000 people who work inside of HBC. The general theme is infinite return, invention, and creating things from the early stages.
Alan Fleischmann
You’re listening to Leadership Matters on SiriusXM and leadershipmattersshow.com. I'm your host, Alan Fleischmann. I'm here today with our good friend, Richard Baker, who's the Governor, Chairman, and CEO of the Hudson's Bay Company. And he's also the owner of Saks Fifth Avenue, and has been an inventor, creator, and curator his whole career. We're getting a lot from his leadership lessons and we're getting a better understanding of the culture that he builds along the way as well.
When I think of you and when Hudson’s Bay Company became a part of your journey, it's North America's oldest company. If I recall, it was struggling with declining revenue when you took it over in 2008. You’ve since transformed the company. Competitors in the real estate world around the same space struggled when you actually succeeded. What was your vision when you acquired HBC, and then that became the umbrella for everything else you’ve tried to do?
Richard Baker
Let's just back up for a second on something you just said, which was culture. None of the things that we're talking about can be accomplished without culture. As a real estate entrepreneur, it wasn't so much about culture: you made a clever deal, and you could figure out how to make money. When you operate businesses and do all the different types of things that the folks at HBC do. It's all about culture, and culture starts at home.
My wife, Lisa, and I wake up every day, and we try to do the best thing we can for anyone we run across. Whether it's our children, or our nephews and nieces, or the folks that work with us, or work for us, the people in our community–my wife is unbelievably selfless, and does tremendous amounts of good work for all kinds of different people. Not the kind of good works, where you go to a big dinner and everyone applauds each other, the kind of good works that no one ever knows about, for people other than those in your life and the people in your community. That's how we wake up every single day and go to sleep every single night.
When we go to work and we spend time with the folks that work for us and work with us, and we spend time with our customers, and we spend time with our vendors: we create a culture. You could spend a lot of time meeting the folks that work inside of Saks or work inside of Saks Off Fifth, or the Hudson Bay Company, or Convene. In a much bigger way than you could ever imagine, we have a shared culture. I used to think that you could hire a Michael Jordan kind of athlete, put them in a chair, and even though they didn't share the same values as everyone else, they were Michael Jordan and they could score lots of baskets, lots of points. That was a huge mistake, that cannot be done.
As we hire people and we look at buying companies, or as we make changes to our existing companies, we put everybody through a sieve in order to make sure that we're hiring people who share our values and our character and the integrity that we have. Then we build a team from there. That's the only possible way you could run what we have today, which is almost $9 billion worth of sales across all of our different businesses. It can only be done through culture.
When we bought the Hudson Bay Company–we bought a piece of it in 2006, and we bought the balance of it in 2008–but in July of 2008, it was in need of a major culture change. It had lost its way. The people who owned the company hadn't really owned it, there was no real owner for many years. It turned into a soulless blob, if you will. We were able to come in and re-work the culture and make a lot of hard decisions. Having culture and treating people the right way isn't a pass for doing difficult things.
We're all watching right now as Elon Musk does whatever it is he's doing at Twitter. You can have culture, and you can build a team of high-quality people with culture–sometimes that requires a lot of change and invention. We had a lot of change and invention at Hudson's Bay which really put us in a position to bring in lots of new people, lots of new energy, and create a lot of value for my investors and for the people that were involved
Alan Fleischmann
When I think of you and when I think of Hudson's Bay, which was founded in the 1670s–which is amazing, when you think about how this company has been around as long as it has–and then you managed to help it find its way. I love the way you said that: it wasn't that you tried to recreate it in a new way, you tried to curate it in a way that actually would add to the legacy that it should have been building and could have been building.
Then I think of Saks Fifth Avenue. I grew up, as the people on this show know, with a mother who was in retail, a department store wife who was a fashion designer. I go now into a Saks Fifth Avenue, I walk in, and I feel that culture, I feel that different vibe there than I do almost anywhere else. When I sit at Greenwich, at the Saks Fifth Avenue store, and I'm eating at Ruby and Bella's, it's not just a restaurant. Almost everything that you touch has an element of culture to it, to use the word. Where you feel like you're going back in time to a place that you can reimagine. It's almost a little bit, Richard, like going to an art museum, where you walk into an art museum, the way you described it, and you want to open your mind and think differently. It brings out that side of you, we get that experience when you walk into the department stores that you own.
Even going online, you've managed to create it as well. Then when I said the restaurants that you’ve created, L’Avenue in New York, and Ruby and Bella's–named after your beloved puppies–it's an amazing experience, you actually want people to experience it. It's not just transactional, I view it as transformational.
Richard Baker
We spend a lot of time supporting mental health initiatives, and you can rewire your brain. There are certain things that you can do that create a more positive, happier version of you. This culture of being grateful for what it is that you have. This process of thinking can take you into very good and very positive places in your life. As you were chatting, I was just thinking: during the pandemic, which was just horrible for everybody everywhere, but particularly difficult in Canada in our Hudson's Bay business and the lockdown for longer, I got a phone call from Grand Chief Jerry Daniels, one of the leaders of the First Nations people in Canada.
The Grand Chief asked if he could come meet with me. I said, of course, we've been partners with the First Nations people of Canada, at Hudson's Bay, since 1670. For 350 years, we've been partners. There's nothing bigger in our mind when we talk about culture, relationships, and partnerships, than that we believe in big, long-term relationships. People who have relationships do good things for each other and take care of each other. And who more important than the First Nations people who we've had a relationship for 350 years.?
Now, having said that, I had never met Grand Chief Daniels, but he came, visited, and said to me, “you have this building in Winnipeg. You're not using it. It's 650,000 square feet. It's in the middle of the city. We could use that building as a place for us to have offices, medical care, and housing for our people. This would be a tremendous moment in time if you can help us get this building.” So after some discussions, we at the Hudson's Bay Company decided to gift the 650,000 square foot building in the middle of Winnipeg, to First Nations people from Winnipeg, and Manitoba. We recently transferred the property to them and we had a beautiful ceremony. But that's what partnership is. That's what culture is. And that doesn't mean you always get everything right, you make lots of mistakes. The Hudson's Bay Company has made plenty of mistakes dealing with the First Nations people over the last 350 years. That doesn't mean we have to hide, that just means we have to keep trying.
This year, we continued to support our friends and support that relationship. And to no benefit for us, they're not paying us any money. It's just: if you wake up every day and do the right thing, the world's round and good things will happen to you.
Alan Fleischmann
Well, there's a word that that strikes me when you're talking, it's the word trust. It is that non-transactional way of doing business. Obviously, business is filled with transactions and acquisitions. But it's that transformational vision that you use and that you have. As you're talking, I think of the word culture, but I also think of the word trust. Ultimately, you trust one another.
You've also put together an amazing team around you: if you hang out in your office, there is this camaraderie, a sense of, “we're in this together.” There is this sense of trust, that we're all watching each other in a good way, not watching each other and looking backward, but watching each other to look forward. I think that's your culture, it's built on that trust. And obviously, you're doing this with your key stakeholders, you're doing it with the community as well.
You mentioned something, and I don't want to forget it, about mental health, especially in the workplace being a big focus area. We have a lot of people listening, who either are CEOs or aspiring CEOs or a part of leadership teams, or people who work at the creative level. How important it is for them to make mental health in the workplace a priority?
Richard Baker
There's many difficult diseases and situations that all of us can raise money and raise awareness for. There's earthquakes, and there's breast cancer, and there's ovarian cancer, there's all kinds of horrible things that we could run the gamut on. Again, my wife, Lisa, and I spent a lot of years trying to think about what would be the most productive use of our podium and of our ability to raise money and our ability to give a voice. That was something that no one likes to talk about, which is mental health. By the way, not only in the workplace, but mental health at home. Mental health affects–the problems, the difficulties, the challenges, from mental health–they affect all of us. There is no family that avoids the very difficult situations that come out of mental health issues.
So we decided, and all of the top management team and all the associates at all of our different companies, decided that we wanted to make mental health something that we could talk, about something we can raise funds for, and something we can be supportive of. Being supportive not only in our own families and not only at work, but being supportive in our communities so that people knew this was something they could talk about and that this is something that isn’t a horrible, confusing mystery, but something we all can talk about. This is something that there are answers to.
Alan Fleischmann
You're one of the first CEOs that I know of, if not the first CEO, who actually created a Chief Mental Health Officer position as well. That was a very strong statement when you did that, that this is not just something we're taking lightly. This is a high priority. I would say others should follow that, it's an extraordinary thing to create.
Richard Baker
It's one of the single largest issues that affects not only our associates, but also our customers. I can't tell you the impact it has on our people when they have a child that has ADD, but they don't know how to deal with it. Or they have a child that has anxiety, or a spouse. And it's crippling. It cripples them in their life, it cripples them in their ability to work. There's just not enough information, and we're not vocal enough about this in our communities, in order to give the support, at least in the United States, that we need to give to families and folks that have to deal with these issues.
This is our primary calling: whatever we can do for the community, or whatever we can do with our associates, we do. I can't tell you how many meetings I go to just with our internal people, where the meeting starts out with someone's particular situation that they're grappling with. We have a very free space, and we're very open to discussing it in our world. But that's not the case everywhere.
Alan Fleischmann
That needs to be the case everywhere. You’re an incredible role model, what you guys have created, what you've created. I’m thinking of the arts differently because of our conversation, too. Because I think there is something there that brings us peace. If we get more involved in the arts, it does give you a sense of that originality, something we all struggle with. I think the mental health issues in many cases, there are so many elements to it–you can't stereotype it. But understanding how being different can be embraced and should be embraced, that can be understood through the arts as well, like you said.
You and Lisa, your wife, do a lot of things. I liked the way you described her understanding approach to doing good in the world. I know that's your case, as well. I know so many things that you're involved in, that nobody would ever know about. Things that you fund, people that you bring together. You're not only a great catalyst and convener in your work, but you are a catalyst and convener in your community leadership life, too, where you bring people together who would normally not know one another. And that spark creates somebody else doing some good work in the world, whether it's in Ukraine, or whether it's in our neighborhood, or in our community. If there's a problem, I know you. You seem to want to fix it by bringing the right people together, creating a new thinking, and maybe there are new partnerships. That seems to be the way you and Lisa do your life.
Tell us a little bit about the family you've created for a moment. You've got beautiful children, I know. Do they get that same ethos and conviction from you, as well?
Richard Baker
Each one of our children and everyone in our family has built their own roadmap. And each one of them is very interested in living their life under their terms and in their direction. As a parent, you want to be supportive and you want to encourage, but you have to let everyone in the family make their own decisions, maybe make their own mistakes and learn from their own mistakes, and go down the road that they want to go down. We spend, as you know, because you're in the office, a lot of time in the office. We spend a lot of time training people, encouraging young people, and nurturing people as they figure out their road in life. Letting people find their way and figure it out with encouragement and direction seems to work well for us.
Alan Fleischmann
Share with us a little bit–when I think of you, honestly, you're my renaissance man. We've had many, many people on this show, who have done, invented, and created so many wonderful things. I don't know anyone who is more of a renaissance person than you, who actually does more to curate convene, catalyze, and invent in the way you do.
One of the things I think of about you: you're a tech pioneer, too. When I think of what you've done with technology, what you've done with bricks and mortar, when you've done in the arts, what you've done in bringing people together and in building culture–through Convene, through Saks Fifth Avenue, through Hudson's Bay Company through so many other things that you've created–what advice would you give to a young man or woman who is hoping to follow in your footsteps, who's heard you today? Who understands that it's okay to embrace many aspects of community, whether it's technology or real estate or hospitality, or bringing people together. I think of you, again, as a convener, a catalyst, and a culture builder. What would you say to them right now? What bit of advice would you want them to hear from you?
Richard Baker
I would say one large direction I would give people, that we don't always see, is that you need to have conviction in something. If you're going to have a career, you need to create a business plan. You need to have a conviction in what it is that you believe. You want to have fun, you want to enjoy what you're doing. You need to be motivated and excited. That comes from people who believe in things. They don't just go from one shiny object to another shiny situation. They believe in something. And what excites me is that I'm a builder. I'm a builder of real estate or buildings. I'm a builder of people. I'm a builder of businesses. Every single business or situation I've got myself involved in, was because I had conviction. I believed in something, and then I had to make it happen.
When we bought Saks Fifth Avenue in 2013, that was a big acquisition during a period of time where people were like, “we don't know what's going to happen to department stores, we don't know what's going to happen to luxury.” At the time, Saks was the number two or number three in the luxury space. In a world where there was Barney's, which has since gone bankrupt and gone away. And there was Neiman's–when we bought Saks, Saks had $2.5 billion of sales, and Neiman's did approximately $6 billion of sales. Since then, Neiman's, went bankrupt during the pandemic and came out of bankruptcy since then. The Neiman business, for example, which was the largest luxury guy at that time, their business has gone from like $6 billion in 2013, to something a little more than 5 billion ending this year. Meanwhile the Saks franchise and all of its businesses went from $2.5 billion in sales to $6.5 billion in sales this year. So tremendous growth and tremendous success at Saks.
The Saks Fifth Avenue franchise: that came because we built a team that's consistently been there since 2013. We had a plan, we had a conviction of what it is we were trying to accomplish. We continued to work away consistently on that mission, and we are making tremendous progress. It's through Saks that we really came to the conclusion that the value of things like our digital business, and the value of data, it's through sacks that we were able to transition our business model from a PropCo-OpCo. We had property companies, we had operating companies. Then with sacks, we understood the value of technology companies and digital companies. And now we have three digital companies. I now spend a large percentage of my time working on data-related projects with tech teams for our digital businesses, as we begin to think about the world as PropCos, OpCos, and DigCos. So lots of lots of fun things out there. But you’ve got to have conviction about what it is that you want to take on.
Alan Fleischmann
It's been amazing. I mean, you have famously now changed the model where you can be proud of the bricks and mortar that you've created in these luxury brands–Saks Fifth Avenue is amazing, when people walk in, it is a cultural transformational moment when you walk in now. And then when you look at what you've done on the tech side, the digital side, that is not just for availability and accessibility, but the journey and experience of being on the digital and tech side of Saks and your other retail brands is pretty amazing as well.
This has been great. You have a young team that grow with you. You've got the pulse of young people, and you are speaking to those at the luxury side of things at the same time. You should be on for another hour, Richard. It has been an absolute pleasure to have you on the show today. I actually wish we had another hour, and we'll have another hour together, we'll bring you back. Because what I want to do is really get deeper in some of these lessons that you shared with us today. As you spoke about your life journey–you were generous with your thoughts about the lessons you've learned. And these are lessons that we all should take into account as well. Continue being original. Keep transforming. And let's get you back on the show at some point as well, because there's a lot more to learn for you. Thank you.
Richard Baker
Alan. My pleasure. This was fun. I'm available anytime.
Alan Fleischmann
I'm looking forward to it. Thanks so much, Richard.
Richard Baker
Thank you. Have a good day.