Plenty of 'pitting' preceded Romney's profits

Published: Tuesday, July 3 2007 12:57 a.m. MDT

A shopper walks past an "Easy Button" at the Staples store in Boston earlier this year. In 1986, backed by an initial Bain Capital investment of $650,000, the first Staples opened. Today, Staples Inc. is an $18 billion company, and Bain reaped $13 million from a $2 million investment.

Charles Krupa, Associated Press

The series
 » Series link — Special report from The Boston Globe

On a winter's evening in 1985, Mitt Romney sat in a drab 10-by-10-foot conference room in Boston's Copley Place, flapping his tie to mimic a rapidly beating heart. His colleagues knew that when Romney flapped his tie, it meant he was under pressure. Lately, the young businessman had been feeling it like never before.

The pressure had been building ever since he'd been tapped by his mentor to create and run an investment firm called Bain Capital. But two years after Romney took the job, and more than a year after he officially launched the firm, Bain Capital had yet to make many investments. And the few it had made were foundering.

Sitting in the conference room, Romney was so worried about the start-up's future that, according to one colleague, he raised the possibility of just returning the millions they had raised from investors and going back to their old jobs.

Dressed in a crisp blue shirt, with a white collar and gold collar-pin, Romney appeared to be the model of a successful young financier, with one exception. His shirt, according to colleague Geoffrey Rehnert, was drenched dark with sweat under his arms.

"Mitt was struggling," Rehnert says. "And he wasn't used to struggling."

In time, Romney would lead the shaky start-up from a staff of seven people managing $37 million to 115 people managing $4 billion in assets. During Romney's 15-year tenure, Bain Capital would post an astonishing record, on average doubling its return on realized investments every year. Thomas H. Lee, founder of cross-town rival Thomas H. Lee Partners, calls the company's performance under Romney "one of the great stories of American capital."

Romney would eventually use his business success as a platform for his political campaigns, stressing his leadership skills and data-driven management acumen. His critics would use his work in this little-understood world of private equity to paint him as a coldhearted profiteer, cutting jobs to line his own pockets.

But there would never be any argument about how perfectly Mitt Romney fit the image of the smooth and supremely confident executive, with never a hair out of place. Privately, his colleagues knew differently.

On his way to the top, Rehnert says, Romney sweat his way through the underarms of so many shirts that his colleagues came up with a term for it: "pitting."

A wanted man

Mitt Romney had long been seen as a hot commodity, even before he entered the job market.

In 1971, he enrolled in a new dual-degree program offered by Harvard Law School and Harvard Business School. He had originally planned to earn just his MBA. But his father, George, a former presidential candidate who was then serving as U.S. housing secretary, insisted a law degree would be more valuable. Ever the diplomat, Mitt Romney found a way to please his dad and himself.

The compromise quickly paid off. Consulting firms and investment banks were always on the hunt for future employees among Harvard's best and brightest, and the select group enrolled in the university's competitive dual-degree program seemed an obvious place to start.

Not long after he arrived on the Cambridge campus carrying a beat-up briefcase that bore his father's initials in faded gold, Romney appeared on the radar of the Boston Consulting Group. Charles Faris was assigned the task of wooing Romney for BCG, then one of the hottest companies in the nascent consulting field. Over the course of Romney's four years at Harvard, Faris kept in frequent contact with the clean-cut grad student, treating him to occasional lunches and dinners, and inviting him to company events.

As Romney neared graduation, Faris found plenty of competition in trying to hire him.

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