The Bootstraps Billionaire
How I Got My Start in Finance
Featuring Jim Palotta
Published on: May 27th, 2019 • Duration: 14 minutesJim Palotta, founder of Raptor Group, recounts his humble beginnings growing up in the North End of Boston and tells of his uniquely American story of how he broke into financial services in the early 80’s, after his father secretly barred him from his first job application. This video is excerpted from a piece published on Real Vision on March 12, 2019 entitled “Boston’s Billion-Dollar Man.”
JUSTINE UNDERHILL: Welcome to Real Vision's How I Got My Start in Finance. This week we have Jim Palotta, a bootstraps billionaire. From humble beginnings in the North End of Boston to the owner's box in the TD Garden, Palotta carved out a uniquely American experience. Hear him retell the story of his career beginnings to Real Vision's Brian Price.
JIM PALOTTA: Born in '58, in Boston, in the North End, as you said, largest Italian section in probably the United States. It's changed a lot. I grew up there till I was 11 years old.
Father was an orphan, oldest of six. I didn't know any of my grandparents at all, actually. Three of them had been dead by the time I was 2. And the fourth one had taken off I think when my father was 8 or so.
And when shit started hitting the fan in Boston and some issues, and drugs, and other stuff, Father worked a couple of jobs and moved us out to Stoneham. Ended up in Stoneham through high school. Big, big change for me. I mean, I'm a kid growing up in the North End. And you go to Stoneham and they're wearing jeans and the old telephone boots just to school. And I'm going in like a little different version of Travolta with the shirt open and--
--St. Anthony's medal. And so the one thing that actually helped me there was more sports than anything else-- playing sports there basketball, football, and baseball. And then I went to UMass. Hated school. I just never was anybody who liked school at all.
I always was more self-taught. And I could remember to this day just I'd probably order 12, 13 books per week for the last 35 years or so. I don't get through them all. But I do read quite a bit. And that's probably what saved me more than anything else.
Come out of UMass, I had worked summer jobs either unloading food trucks down the terminals at 3:00 in the morning, and/or working at Polaroid as a security guard. And my father had been at Polaroid since I think he was about 19 years old. I think he had gone about a tenth grade education and ended up running the black and white laboratories over at Polaroid for Dr. Land. And I could remember actually going in some Saturdays-- I'd be 5 or 6 years old-- and this old guy would go come on let's go get an ice cream or something. And never realized until much later on it was Edwin Land.
So the only place I actually wanted to work after UMass was Polaroid because at the time-- you're looking back in 1979-- it still was a hot company. Hadn't been completely disrupted and destroyed. I remember applying for a job in the spring and getting a ding letter, which I'm like, you must be the stupidest person in the history of the world.
So I talked to my father. He says, I don't know what happened. I'll find out. But you should go back to school. And I'm like, school? I said, I hated school. I mean, I don't like it at all.
I was trying to figure out what I was going to do. And with a few friends I was building tennis courts and basketball courts around Massachusetts, until I got into Northeastern. And got into this MBA intern program, which turned out to be great. And the only reason I got in, to be honest, is I had a couple of recommendations, and references, and letters, and some people helped me get into Northeastern.
So it was a great program where it was six months of school, six months of work, and then nine months of school-- the MBA intern program. In the first six months went to school. Worked at Texas Instruments the next six months.
And Texas Instruments, I'll never forget the first month there, because I was an accounting major. Finance in undergrad, accounting and finance and grad school. And after one month of cost accounting, I'm like there is no way I'm going to be a CPA. There's not a fucking chance in the world that I'm doing this month after month after month.
The good thing about the program, it actually helped you figure out what you might not want to do as much as what you might want to do. Then the next 9 months, had a professor there who just recently died, Professor Marples, who taught intermediate accounting one and two, but he taught it in the case method. And I think it was the only course probably in my whole life that I got A's in. And actually, other than Miss Raimondi in fifth grade, I think he's the only professor or teacher that I even remember their names throughout my whatever school years or so.
So a couple of months into the last nine months, I applied for a job. There was a guy, Mason Klink, who had a company called Trustee and Investors on Devonshire Street, managing about 100 million. Started working part time for him.
I actually remember calling him up on a Friday, because he was looking for someone to work part time. He had ads up at all the schools. And I spoke to him for about 20 minutes or so. And he says, well, you sound like what you're doing. But I already hired someone, hired this woman from Harvard. Let's see how that works out.
Tuesday I come back from a weekend up at UMass visiting some friends, and there's a voicemail-- way back then in voice mail days, right? And it said, well, she didn't work out. Why don't you come in for an interview. So I went in for an interview. He made me do his tax returns for about eight hours, and said, I'll hire you part time.
So I worked there for about 20-25 hours a week and he offered me a full time job. And he said I'll give you a piece of the business over a year I'll give you a portion of what you bring in. So he was managing about 100 million in '81 when I joined him. Over the next year or so I actually brought in somewhere around $400 plus million of new business to him. I mean, I have no idea. It was just timing.
First account that I got was having dinner with Arm & Hammer in a board meeting in Los Angeles. And it was so fucked up for me that at the end of the dinner they're handing out cigars, and they're cutting these cigars, and I'm like what are they cutting cigars? I don't-- I mean don't you just bite off the tip?
I asked him what it was. And he said, we'll start you guys off with 5 million.
And so at the end of '82 I'm working there. He owed me quite a bit of money. I was 24 years old, and he owed me-- if you took it as a percentage, it would have been somewhere over a million dollars. So he decided to give me a bonus check of $5,000.
BRIAN PRICE: A little bit of a difference from what you rode.
JIM PALOTTA: A little bit of the difference. I remember calling up some friends and go let's go to the Cape for the weekend, and blew a chunk of that. Called up a friend of mine, who had been in my fraternity at UMass, but about 12-13 years old or a guy, Ricky Greenfield, who had worked at Bear Stearns in Waltham.
And he was in the equity group. And I said, just give me two places that I could talk to. And he says, well, call up Jerry Jordan and call up Joe McNay. Jerry was home in Jordan I think at the time, and Joe was Essex.
Jerry said, we have nothing. Joe said come on in and let's talk. I went in. Spent six weeks there, got hired, started the job there in I think it was March of '83. Yeah, it was March of '83.
I thought I was a genius. After one week in the place I was like, oh, my god, you don't know shit. Like they were really, really smart guys at the firm.
Essex was really a good, good firm. And Essex was managing a chunk of hedge fund money at the time too, before anybody called it hedge funds. We called them limited partnerships and offshore accounts. Houseman Holdings, Leveraged Capital Holdings, Huggins.
And it was Joe McNay, Mike Hassett, Wally Weidman, and Ted Duncan. And the four of them were just incredibly, incredibly talented. And so after one week I'm like, I'm fucked.
And I remember saying, you know, the only choice I have is-- I used to come in every single weekend and try and learn as much as I could. And some of them would come in on the weekends. They were probably, at the time, late 40s-50s years old all of them. And they would help me on the weekends also.
And I remember the first year I was traveling all over the country. And I was seeing all these companies that I thought were the greatest thing since sliced bread. And most of them were turned out to be very speculative stuff. And Mike Hassett calls me up one day after a year there and he said, you know, why don't we go have lunch. And I thought he was going to just tell me how well I was doing.
And the conversation was like what the fuck are you doing, like, you're like a kid in a candy store. And if you don't start figuring this out you should probably go and find another job. And that was kind of the wake up call to me at that time. And I didn't have any kids then.
BRIAN PRICE: How old were you at this point?
JIM PALOTTA: I was at that 26.
BRIAN PRICE: 26.
JIM PALOTTA: 26 years old. After Mike Hassett did that I started looking at some industries. And was like the beginning of looking at things like telecommunication sync, which was Malone's company, which was the forerunner to all of the Liberty and Liberty spin offs. And there were a bunch of other smaller cable companies. There were some biotechs that were starting to come public a few years after that.
But I was visiting them then when they were private like Genentech, and Amgen, and Genzyme, and Genetics Institute. And so I started, I guess, sort of making a name for myself in a couple of industries. And then in '86, I started managing a piece or a chunk of what was the Essex Performance Fund, which was another hedge fund that we started for domestics.
And at the time, I think we were managing it might have been 200-250 million or so of hedge fund money, which was a pretty good amount back then. Actually, a really sizable amount. Funny story is in 1988 or '89, after managing for a few years, did well in '87, '88, '89, throughout all the turmoil, I walk into a restaurant and the head of Polaroid's marketing department was there.
And I'll never forget, he's screaming, hey, Jimmy come on over here. Come and have a drink. And I'm kind of looking at him like, you douche bag, like you didn't hire me, or something. I was still actually kind of pissed off about 8 years later about not getting the job.
I go over. We're having a drink. He said, your father said you're doing great, on, and on, and on. And after 10 minutes I said to him, you know, Bob, I can I ask you a question.
He said, yeah, sure, what? And I said, well, how come I didn't get the job? And he looks at me and he goes, you're serious? And I said, yeah, I'm just curious.
He said, you don't know? I said, I don't know what? He said, your father said, if you hire my son, I'll break your fucking legs and split your head open.
And I said, what? He goes, your father said, I don't want my kid to be like me. If he starts making any money, he'll never go back to school. So you hire him, you know I'll break your fucking legs.
And that's how I ended up really, literally in the investment business, because my father essentially got them to ding me.
JUSTINE UNDERHILL: Jim Palotta didn't have an easy start in finance. But after striving to be better than his peers, and learning from his failures, he found his edge in the investment world that made him a very wealthy man and the co-owner of two major sports teams. For Real Vision, I'm Justine Underhill.