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Interview with: Gene Vaughan
Interviewed by: David Goldstein
Date: February 12, 2010
DG: Today is February 12, 2010. We are in the home of Gene Vaughan who is being interviewed for the Houston Oral History Project. My name is David Goldstein. How are you today, Mr. Vaughan?
GV: David, I am just fine. This is one of those rare cool days in Houston but all we have to do is look to Dallas and they have 12 inches of snow and if that isn’t enough, we look to Washington, and they are in about 30 inches of snow. It is wonderful to be a Houstonian all year ‘round, particular this time of year.
DG: Yes, sir. Well, let’s begin at the beginning. Tell us where you were born and when and about your early life.
GV: Like so many Texans, I am a Tennessean by birth, following a great tradition of Davy Crockett and Sam Houston himself, Jesse H. Jones. I tell my children who are all native Houstonians and they lord it over Susan and me, I say, “Well, the only thing that trumps a native Texan is a native Tennessean because if it hadn’t been for us Tennesseans, I am sure that Texas would be part of Mexico still.” I was born in a small town, Brownsville, Tennessee, a town of about 7,000. Scotch-Irish history, ancestry. Very delighted recently to read that and find out that not only was Braveheart . . . an ancestor of him but Ronald Reagan also. So I am very glad to have the good qualities and some of the bad qualities of the Scotch-Irish.
DG: What did you do when you were a kid? What did you enjoy for fun?
GV: I really loved reading. I won all the reading prizes from about the second grade on. A small town, as I said, and an agrarian society, one of the things I really enjoyed was manure fights. They did not start off as manure fights but my friends and I would start off with cow chip fights. But there was a stream running through the pasture and we quickly discovered if you soaked that cow chip, it became a lot soggier when it hit you. I did have a small town upbringing. I loved it. I would not want to go back to my small town except to visit because of the incredible advantages of living in a city like Houston. But just nothing better, I think, than growing up in a town where everybody knows you.
My family was multigenerational in Brownsville, Tennessee, and I grew up with all of the friends. I had no economic knowledge at all. The richest classmate of mine was one of the richest men in Brownsville. Poor Railey Baby Pal (sp?) got a $10 bill for Christmas. We all felt so sorry for Railey Baby. It was a warm, loving environment with the fundamental values of treating other people right and you never considered otherwise. My family was modest by Houston’s theme, but very well-off by Brownsville standards. I had a very well loving mother and father. Mother gave me the greatest gift any young person can receive. She said, “Gene, you are my very heart.” Mother died of cancer when I was a sophomore in college but whatever I might become in life, much of it was because my dad and my mother deeply believed in me and I did not know any different.
DG: What did your parents do for a living?
GV: As I said, we were from a farming community. My grandfather’s farm, which I still own, on the outskirts of Brownsville. It used to be the main road between Memphis and Nashville. An interstate has bypassed us now. My dad was in the postal service.
I was born in 1933 and it is amazing how Dad was the most successful graduate at that time because he was able to get a job and most of his fellow graduates could not. My grandfather, when he died, there was an editorial in the Brownsville States Graphic that said that Dan Vaughan had lived in that community for 68 years and did not have an enemy. In fact, everyone that knew him spoke highly of him. He was absolutely remarkable but when I went back to home for my dad’s funeral a few years ago, that night before Dad’s funeral, I went by home and pulled out the scrapbook and saw again what the editorial had said about my grandfather. The next day, his funeral service in Brownsville Baptist Church. This was one of the testimonials: “Eugene Vaughan had lived in this community all of his life and had nothing but friends and no one had ever heard anything said bad about Eugene Vaughan.” Now, that is what I have grown up with. Now, what a burden to bear! But that is a wonderful heritage. Dad was the youngest deacon in his church and Dad was the oldest deacon in his church. You asked what I did – I think I went to church all the time because we were there for Sunday school on Sunday and Sunday morning preaching and Sunday night preaching. And then, on Wednesday night, we were there for a prayer meeting. In fact, I still feel guilty on a Wednesday night if we go out and do anything else. I have this Calvinistic feeling in me – gosh, this does not feel right, I need to be somewhere. And then I realize I need to be at prayer meeting.
I had an incredibly wonderful growing up. I went to high school at Hayward High School. A tradition in Brownsville, as it is in Texas – football. I mean, you could play something else but it never occurred to me not to play football. Brownsville was one of the state powers. We had _____ Edmonds in my class and team. He was high school All-American. Freshman year, we had a high school All-American. Big guys. I am talking about 280 pounds, and agile. I came out and I weighed 105 pounds but thank goodness I had a coach, Coach Bill Taylor, who had played under General Robert Neyland at the University of Tennessee. Coach Taylor never let on that he had any idea I was 105 pounds. I participated in everything. I was out for football and that was all there was to it. So I took the beatings and was knocked out a few times. Never anything broken. My senior year, and this really did have significance in my life, not only was I light but I was playing behind the person at tailback in the Tennessee Single Wing. I was playing behind Jackie Kane who is the all-time . . . that was at the courthouse . . . Brownsville’s all-time team and Jackie Kane is there at tailback. So my playing time was very limited, let’s say. It is senior year. I was president of my freshman class and sophomore class and senior class and so I was quite active . . . August training tour days. That is just one of the . . . I go through life and just about the worst thing that . . . any of us who has ever gone through August tour days knows that . . . well, I went through all of that and the week before the first game, I asked the coach if I could talk with him. I said, “Coach, I have been out here for 3 and now, the 4th tour day. I’ve really got a lot of things I’d like to do and need to do my senior year. I would like to drop off the team and do them.” “Gene, you’re gonna quit?” “No, sir. I’m not going to quit. I just have other things that I need to do and I am needed more there.” He said, “Gene, what did Jackie Kane do this summer?” “Well, Coach, he was lifeguard at the swimming pool.” “Yeah, and what did you do this summer?” “Well, again, this summer, I cut right away for the TBA.” “Yeah, you and ____ Evans cut right away for the TBA. That is the toughest thing anybody can do in Hayward County. Gene, I don’t want you to quit,” and then when he said, “quit,” he was spitting it out, like it was just something nasty in his mouth and he had to get it out. And he said, “I’ll tell you what. You stay out for the first game and then if you still want to quit, I’ll let you.” I mean, General Neyland football players were tough.
So, like habit, for the first time in history at Hayward High, there was some kind of big electrical shortage and the first game had to be canceled so yes, I had already made my mind that I was going to leave the team but it was delayed. Well, that first game, I got in, I scored 2 touchdowns, I intercepted a couple, three passes, and I was voted player of the week and asked to come to the Brownsville Rotary Club on Tuesday dinner. And so, needless to say, I was on the team. And the reason I tell that story is because I think if Coach Taylor had permitted me to quit, then quitting would have become easier and if I had stopped playing then, probably the next time I was up against something really tough, I might have quit then. As it is, I developed that tenacity that has served me well all of my life, and I think I am smart enough – I went to Vanderbilt and Harvard Business School – but I always felt that there might be smarter people but there is nobody around that could outwork me or had more perseverance than I did.
It is funny the self-image one develops. I was a cry baby in the first grade. Ms. Annie Rhee would call my mother and say, “You’d better come and get Gene. He’s not happy.” Well, my next year though, I had Ms. Laura Williams and in those days, Arm & Hammer baking soda had Audubon bird pictures in them. And so, our class formed the Audubon Society. Now, I do not know how in the world it happened but I became the president of the Audubon Society. So, crybaby one year, president of the Audubon Society the next year. What it did for my image . . . well, I think my classmates from then on viewed me as a leader but what really happened is I began to think of my own self as a leader and that was embedded in me. And football, 105 pounds, but the high school principal who had been a little All-American himself and was a marvelous man, came by and told Dad one day – this was when I was in 8th grade – he said, “Gene, I was watching practice today and your son really has a lot of athletic talent.” Well, Dad came home and he told me that and in that magical way, in my mind, I had athletic talent. And the most I ever weighed in high school was 126 pounds but Coach Taylor listed me in the program at 142. I said, “Coach, you know that is not my right weight. Why did you put that in?” He said, “Because I want to scare the opposition.” I was small but I was a really good passer. In the Single Wing, the tailback is everything. You call the plays, you run the ball, you pass the ball, and I was second string to Jackie Kane but I received a college scholarship to the University of Tennessee at Martin. That is a school that is kind of a stepping stone to the Hill in Knoxville. And fortunately, I was not tempted to take that scholarship because I was fortunate enough to win a naval ROTC scholarship to Vanderbilt. That was just an incredible scholarship. You had your choice of 51 universities to go to throughout the United States and it paid all of your tuition, your books, your housing and $50 a month stipend. All you had to go was to go 3 years of active duty in the Navy which also was one of the best things that ever happened to me.
DG: So tell me about these years at Vanderbilt. You were living in a small town. You go to, even then, it must have been an important school, a prestigious school. What were those college years like for Gene Vaughan?
DG: It was just like somebody had lifted a shade and showed me a whole new horizon. I would have gone to college but I would have gone nearby to college. Rough, my goodness. Vanderbilt was then . . . as you say, it was an outstanding school and most of my classmates had gone to McCauley or Baylor or some prep school that really prepared them, in effect, they had to have their freshman year while still in high school, and I did struggle. I had a really good high school education but it was nothing like what a high percentage of my class had gotten. And so, I really had to hit the books my first year but again, that ____ to my great benefit because while others were kind of goofing off because they did not have to work very hard, I had to develop very strong work habits and I have always been able to count on luck. The best piece of luck was that I was by far too small to play college ball even though the University of Tennessee at Martin had thought so but even on my fraternity team in intramural football, we had two all-state players on that. I pledged SAE fraternity and part of the exercise there is there is a race and all the pledges of every fraternity have to run it. I had never done any running. Brownsville basically had football and basketball and that was it. We did not have a track team or even a baseball team back in those days. Well, I came in third. There must have been 400 people running in this and I came in third behind the varsity distance runner. Well, wonderful track coach, Herc Alley, was waiting at the finish line. “Son, what’s your name? I’m going to make you a Conference champion.” Herc Alley had been All-American at University of Tennessee and is now the beloved track coach at Vanderbilt. So I was introduced to track and became a varsity track man for my next 3 years. Loved it. In any given race, I ran both the mile at the beginning of the track meet and the 2 mile at the end of the track meet. That is nothing compared to the marathonists these days running the 50 mile run and all. That was iron man stuff. But mainly, it gave me access to a sport which . . . man, I loved sports. Another piece of luck is I liked to write and had written in high school, so I volunteered my first year to write for the campus newspaper. And lo and behold, at the end of my sophomore year, I got a call from an incoming editor, he said, “Gene, I want you to be my sports editor.” Well, you know, there are things you know you are inadequate to do. I said, “Well, I don’t have the slightest idea” . . . he said, “Let me decide that.” So, I ended up that way being sports editor of the Vanderbilt Hustler my last 2 years. I absolutely loved that when I graduated. Grantland Rice who many people believe was the greatest sportswriter of all times, he was an earlier Red Smith. Grantland Rice, called the dean of sportswriters of the 1920s and the 1930s – he chronicled Babe Ruth and Lou Gehrig – well, he was a graduate of Vanderbilt. He was Phi Beta Kappa from Vanderbilt. When I graduated from Vanderbilt, as I came across the stage, the chancellor handed me my diploma and he said, “I want to say that Gene Vaughan is the best sports writer that Vanderbilt has produced since Grantland Rice.” Well, the chancellor could have kept his paper! That thrilled me to death. I was offered the Bashful Banner. The dean of Southern Sports Writers at that time was a man named Freddy Russell. Freddy Russell invited me down to his office and offered me a job writing for him. I probably would be a sportswriter to this day because that was the finest offer one could receive except that I had these 3 years of active duty to serve. Now, in addition to that, I went on what they called cruises each of the summers and two of those were cruises. My first summer between freshman and sophomore year, I was on the Battleship Missouri, 2,000 midshipmen, and the commandant, midshipmen commandant, was Ross Perot. I met him very early on because in an agrarian society, back in those days, they did not fly things in and so, I did not have much _____ around. So when I went on this cruise on Friday, they would serve fried shrimp. Gosh, I had really not had that before. So I ate a lot of it and I was just really sick and missed my watch. I went up to mast before Captain Perot and he asked for my story and I told him, “I really do not know what happened but I ate shrimp and I got deathly ill.” He said, “Well, I don’t believe it. Five demerits.” Well, 3 weeks later . . . and I stayed away from eating fried shrimp. They had fish the next Friday. Three Fridays later, I just walked through the mess deck and I smelled all this fried shrimp and I got sick again. Missed ____, back up the mast and midshipman Captain Perot says, “All right, what is your story this time?” “Well, I just walked through the mess decks and I got sick.” “I don’t believe it. Ten demerits!” Well, all of this leaps forward a number of years but now I am in Houston and I am president of the Harvard Business School Club. Somebody has arranged for this man who has made a fortune to speak to us. So, it was at the Houston Club and Ross Perot walked in and he says, “I don’t remember your name but I still don’t believe it!” Now, that was 25 years later, something like that. But don’t let anybody ever tell you that Ross Perot is not one really sharp man. I am sorry he got the image he did in the presidential election but anybody that ever served under Ross Perot knows what a great leader he is. So my time at Vanderbilt between . . . once I got past my first year, then I got settled in and I was involved in a number of things then and loved my Vanderbilt years.
The third summer, I went on a cruise on a destroyer and that is where I really developed a love for the small ship navy. But I skipped the second summer because that was what introduced me to Texas. That summer was a combination of air training and marine training including air lift from Kingsville to Quantico, Virginia. I came in . . . they paid $9 travel per diem and I was traveling from Tennessee down to Kingsville, and I decided I could save that money by hitchhiking and I did. I got picked up down the road here and I literally . . . I really ought not to acknowledge this but I am literally somebody that came in to Houston riding on a truckload of watermelons! I got on down to Kingsville and gosh, I had never seen such flat land in my life. You could see a rattlesnake on its belly a mile away. The air training, I loved it. I also loved Texas girls. The one night there, they had a dance and they put wax on the tennis court. And so, we danced. It was wonderful meeting Texas girls. For us, tennis players, from then on . . . can you imagine . . . from then on, they could not get that wax up and the wax would melt and you would try to play tennis on a waxed court. My introduction to Texas was really a great one.
Vanderbilt was terrific. I guess, one of the most marvelous things that has ever happened to me because in 1972, at age 39, I received a call inviting me to become a trustee of Vanderbilt University. From 1972 to now, 2010, I have been a trustee of Vanderbilt University which is just one of . . . you asked me how I felt at Vanderbilt. Well, it changed my life. That’s all. It did give me or ingrained in me a curiosity which I think is one of the best qualities I could wish for anybody. It lengthened my horizons enormously. I just had a really good growing up.
DG: I have to ask – you describe a very happy, small town existence and a happy family life. I understand how once you get to Vanderbilt, the broader horizons you are exposed to would make you want to go on from there but was it a difficult decision to leave your small comfort zone and family to go to Vanderbilt when you could have chosen other schools? What was it in you that made you want to go bigger rather than staying in the comfort of a small town?
GV: Somewhere in me, it must have been ingrained. That is a really good question and I said I liked the Destroyer duty (?). I enjoyed being on the Missouri with Ross Perot with 2000 other midshipmen. But that experience was also to put us in position to select where we wanted to serve in the navy our 3 years. And the first choice was Navy Air. _____ in Texas had really been marvelous. But that is when I found out . . . in football, I kind of became locally famous for my punt returns because I would always catch them dead on the run, and people would remark . . . my teammates would remark because I would make a last minute dash. How else would you do it because I went for it as soon as I saw the ball? Well, when I applied for Navy Air, that is when they found out that I had my _____ and I could not serve in the Navy Air. So it had not been a choice of style that I caught those punts at the last minute. I wanted the small ship Navy.
Let me back up a minute because I left out the part . . . I was the first grandchild on the maternal side and it was a sizeable family and a great uncle of mine was a prominent doctor in Memphis. So you can see what is coming. I was programmed from the time I entered the world to be a doctor. I went to Vanderbilt, basically premed, major in history with premed, and during my midshipmen days on the ships and then again when I was serving duty in the active Navy, I spent my spare time reading Gray’s Anatomy and around the sick bay to try to learn and practice what I could. The Navy really . . . again, in a lucky way and a lot of lucky people . . . I would have made an absolutely dreadful doctor. I might have managed the bedside manner but I even hate to give blood myself. I mean, the blood runs the wrong way. My last year . . . by that time, I had taken, I guess, the normal route but I had been antisubmarine warfare and had my sonar gang, about 9 or 10, and then evolved up to be in charge of the deck, deck apes, as they were called. That was about 100. And then, in my last year of the Navy, I was gunnery officer. Now I had everything under me, between 200-300 people. And besides that, I was Officer of the Deck Underway. I had a ship under my command for 4 hours at a time on the med watch. By that time, even the captain had gone back part of the way. So I was Senior Officer Afloat. Man, what that does to your insides. And somewhere along the way, I got the idea that I liked ordering people around. If this is what business people did, then man, that is a pretty good life! I made up resumes. The first year in the Navy, I was on the Destroyer again, had 4 months in the med with summer school and the gunnery school in Newport. I got introduced to that part of the country. Then, next year, I had the good fortune to be ordered to put a ship in command from ground up in Charleston ______. And so, that is when I got a taste of creating something new. There are all kinds of rivalries on an old ship. Engineering is against Operations and Operations against Gunnery and all the way around. These have been groomed for years and years. You go on a new ship and it is absolutely wonderful. You are all pulling together and you have great morale. And then, we went out to the north, Atlantic, and bobbing around 30 days at a time on station. We were part of the early warning defense line. The super constellations were flying over us. That was the early warning, the DEW line, the distance early warning. Now, that plays in again later in my life. But all of this, I think . . . I came back and told my grandmother that I did not want to go to med school. I just nearly broke her heart. She asked me to try again. I did. I went to summer school at Northwestern but I had interviewed a number of places and IBM did not have room for me because I was coming out right after all the graduates. But they called me one day at Northwestern and said they had an opening for me in St. Louis, that they needed to know the next day. I went over and I found the bursar and they said that was the last day that I could leave and get half of my tuition back. I took that as Gideon’s wool and I never looked back. I made that decision, went into IBM, loved IBM, and decided that I loved it so well and I looked around and I saw all these MBAs, so I decided that I would go back and get my MBA and come back just so I could be a better employee. I was in EDP sales for IBM. IBM was God Almighty in those days. This was the greatest thing one could be. I could not understand . . . I kept arguing with them . . . “Well, I am coming back. I am just going to be better for IBM.” Well, they knew what they were talking about because I was lucky enough to get a scholarship to Harvard Business School. This was J. Spencer Love who was the head of Burlington Industries. He was a southern boy and he gave each year a Love Fellow for somebody that showed promise of leadership. I did not have an obligation to come back south but there was the hope that I would come back south. Well, Harvard Business School, again, it was just like being a freshman at Vanderbilt only far worse. There were 600 in the class, 100 in each section. You looked around and you could not see anybody there that you thought knew less than you did. It is not like college off to a slow start. Three days into it, you are hopelessly under water. Again, I had one of these lucky breaks because I had every intention of going back to IBM in St. Louis and I wanted a summer job. It is so cold and miserable in Boston in the winter time. I wanted to see what it was like in the summer. I was dating a girl who had a roommate who was the secretary to the president of Putnam Management Company, Mutual Funds. She got me an interview with the president which incidentally I just received a call from today, of all synchronicities – he just called me and said he would like to reminisce. He gave me the first summer internship that Putnam ever gave. That summer, I did some special projects for George Putnam, Jr. I worked right outside the office of Walter Cabot who later became the treasurer of Harvard and famous for investment management and I fell in love with it. That very first summer, I got to sit in on all the trustee meetings and that was . . . Dean Stanley Teele of Harvard Business School and the dean of MIT’s business school. I just fell in love with it. And so, when Putnam offered me a job, I did not even ask them how much pay. A heck of an analyst I’d make! I will never make that mistake again. They did pay me the average starting salary for the Harvard Business School which, you might be interested to know, was $7,500. That is what got me to Boston and that is what got me into the investment business. So, you can see, it was a combination of a certain amount of determination, tenacity, but my story is a story of just incredible pieces of good fortune along the way and very far from . . . take luck out of my life and I would be a sorry little guy!
DG: Well, there also appears to be a fair share of talent. That was 1964 when you went to work for Putnam?
GV: 1960, the summer. So, I started with them in 1961.
DG: Now, I read in preparing for the interview that you pioneered regional institutional research while you were at Putnam.
GV: That, again, a form of luck because, yes, I was unmarried at that time and Putnam hired me to be research analyst. Putnam was the top mutual fund but they were small in those days. When I joined them, they had less than $1 billion in the management. But, you know, just a tremendous . . . they were wonderful money managers. Putnam growth fund was number one in the country. They gave me the job of just being in the saddle all the time going all over the country doing research. One of the things I discovered while doing that research was that there was no research out in the regions. Now, Donaldson, Lufkin & Jenrette started in 1959 or 1960. Putnam was their first institutional client. All 3 of them would come in to Putnam. Before that, research was mostly statistical, very shallow stuff. DLJ turned that into 40-page theses, just truly in-depth research and they were quickly emulated by Faulkner Dawkins, Baker Weeks and a few others but they were all in New York. So I loved what I was doing, loved Boston, loved New England, Cape Cod. I married a wonderful young lady from Shreveport, Louisiana. We had met earlier at a wedding but she came to work for a professor at Harvard.
We met on Valentine’s Day. I have to divert a little bit to tell you this story. I had gone back home the previous Christmas and I had a date. We met my roommate at Vanderbilt and his wife. Susan and I had met at their wedding briefly but it had been kind of a fleeting . . . and so, right in front of my date that I had over at dinner, ______ kept saying, “Gene, I want you to look up Susan Westbrook when you get back to Boston. Now, you promise me that?” Well, kind of to shut her up, I promised her I would but, you know. A promise is a promise . . . it arrived at Valentine’s Day and I had not kept my promise. Oh, my goodness! Well, John Kenneth Galbraith was giving a lecture at Harvard that night – “The Great Economist.” So, how can I kill 2 birds with 1 stone? I called up Susan to ask her to go to that. Susan was not in so I talked to her roommate. Well, this was really a _____ and I will never be forgiven for this – so I ask her roommate! So when we came back from the John Kenneth Galbraith lecture, there was Susan. It was not the girl that I had remembered at all from the wedding. There was this really good-looking . . . you know, every wedding has some girl that they try to put you up with. Well, that was the person that I thought was Susan Westbrook. That was not Susan Westbrook at all. Well, this was Valentine’s Day. I do not know what happened to the roommate but I just remember Susan and I . . . I remember I just looked at Susan for about an hour. I remember her telling me that she was leaving the country and leaving Boston on April 14. So I nearly flunked out of the Harvard Business School. So we did later on marry. ___ I had married a southerner and it became evident during our first year I was there working for Putnam is that while she loved Boston and everything about it, too, that we were going to have babies – those babies were going to be born in the south. So now, I had the need for getting back south and putting a pretty face on it. But as it happens, I had had a really great idea. In Boston, Harvard Business School graduates are a dime a dozen. Professionally trained money managers and analysts are prevalent. That is the home of money management, Boston is. I had the great idea that there was no institutional depth of research done anywhere in the United States except right there in the east. And I figured out that this would best be done in Atlanta, Dallas, or Houston. Well, by chance, the Financial Analysts Federation was an organization I later became chairman of, was meeting in Houston. I came down and in the course of that conference, met, because it was the Houston people that were running it, and I really liked Houston. It was held out at the Shamrock, in that wonderful . . . I still run into people around the country these days that are all white-haired like me but everybody will hearken back to the swimming pool with the power boat pulling 3 skiers abreast and everybody was there. I think it was the most successful conference ever. Well, I got back to Boston and Phil Neuhaus of Underwood Neuhaus which is the famous . . . it was founded in 1907 – a very high-grade investment banking . . . called me and asked me if I would meet for lunch in Boston at the St. Regis. So we went down and that lunch turned into all afternoon. They wanted me to come down and just be head of research, but what the Neuhaus’ had in mind was by doing retail research for their brokers. I did not have any interest in doing that but I came up with this idea of an institutional research group. That was really . . . I give credit to Phil and Joe Neuhaus and Mr. Underwood, Milton Underwood, because I think it was not clear to them just what all of this entailed, but they liked the idea. So in August of 1964, Susan and I moved down here and over the next 6 years, I hired, I think, in all – we had 9 research analysts, 8 of whom were Harvard Business School graduates, we had a sales team of 5 people, as I tell my son who went to Princeton – I think the salesmen were Princeton people and the rest of us were business school people. But it really did work. We started selling our in-depth research. We did the seminal research on the offshore industry, J. Ray McDermott, and that is when Southeastern Drilling was not SEDCO, it was Southeastern Drilling, and a man named George Bush was head of Zapata and a man named Clements was head of Southeastern Drilling; later governor and later president. And we just took the investment lid off that whole industry and discovered brought many to what is now Radio Shack, was Tandy then, and we did the seminal research on Tandy and many companies like that. We would hold conferences down here for institutional analysts and it was a big success. That is what all of that was leading to. You asked me what I am – I am an entrepreneur.
I never got to Atlanta or Dallas because Houston was everything that I dreamed of. It was so open and it was so entrepreneurial, and this was my ultimate . . . this big idea was what got me started but what I wanted ultimately was to run my own company. So I filled notebooks . . . up on our third floor, there still are just boxes and notebooks I filled, research. I would go to conferences and I would always book in to spend the night after because then after a 2-3 day conference was over, my mind would just be whirling with ideas and I would write in notebooks for as long as I could stay awake which was sometimes all night long. And so, some of these were investment ideas but some of these were also ideas on how to run a company or how to create a company. In 1970, the dream came true. We started Vaughan Nelson as a joint venture with a Boston company. Ben Love loaned the money for half of it and the Boston company, we went . . . it was in a bear market when Underwood Neuhaus was the idea of losing the overhead of several analysts. That was not an altogether bad thing at all and we had a very amicable parting and we are very good friends. But that is how I came to Houston and that is how I owned the company of Vaughan, Nelson Investment Management or as it was called earlier, Vaughan, Nelson and Boston, the Boston being with the Boston company.
DG: As a financial analyst, you have been recognized and honored frequently. I want to focus though now on your civic involvement. Start wherever you like but I want to make sure we talk about the Center for Houston’s Future.
GV: All right. Well, I realized kind of somewhere along the way that I had done . . . I have always believed in the . . . and I grew up in my home of giving to the community. That is part of a small town to begin with. You help your neighbors. You do not put labels on it. You aren’t a community spirited person, you are just a neighborly person, and like most people and families in Brownsville, my family were very neighborly people. So I did not realize that this was being instilled in me but it was. And so, along the way, I felt that anything that helped my family, I really felt an obligation to go back to it. This was just kind of a natural thing that happened and I realized sort of after a number of years, though I had done a number of things nationally, but I really had not done a whole lot to help right here what had given me most of all – Houston. Now, I mentioned earlier that I was asked to be a trustee of Vanderbilt. I mean, asked me to be . . . gosh, that was the greatest gift imaginable. And so, I had headed national living endowment drives and I had just done a lot for that. In my profession, I was astounded to receive a call not too long after I . . . Vaughan Nelson, because I had been active in the Financial Analysts Federation during that 6 years at Underwood Neuhaus and really, it started at Putnam. But they called me and asked me if I would go on the board of the Financial Analysts Federation. And then, I was chairman of it in 1973 and 1974, which you might recognize also were the worst bear markets we had until the recent one. That had been a very strenuous 2 years and it also happened that the group tried to put the profession under state regulation which would have been disastrous and I had at that time, lead the fight against state regulation. So I really felt I had . . . and I had done some other things that tended to be national. I was in the barber shop. Leo Linbeck was there and we were talking. This is Leo Linbeck, Jr. I admired him very much, liked him. He knew that I was a trustee of Vanderbilt and he knew that I was a trustee at St. John’s School where our children were going. He kind of cocked his head and said, “Gene” . . . by this time, I was on my way out the door, he said, “How would you like to get involved in Houston?” I said, “Well, frankly, Leo, I would love it.” I kind of leaned forward a couple, three times. I felt like there must be something wrong with me because I had not been picked up. He said, “All right.” Well, 2 days later, Charles Duncan called me. Charles was the incoming chairman of the Greater Houston Partnership. Charles, as you might remember back then, was very active with Ross Perot, the same Ross Perot in education state-wide. So Charles said, “I feel kind of peculiar. The Greater Houston Partnership is not doing anything in education.” He said, “Gene, Leo tells me your background. Would you create an education committee for the Greater Houston Partnership?” Would I! I did not know specifically about HISD and all this but I did . . . from St. John’s trustee and Vanderbilt and all I did know and did create . . . really, we had an excellent committee – some people that now are dead – were involved in that. In addition to the committee, I created a . . . it seemed to me we had all these groups out here that were involved in education in various ways and a lot of duplication, just overlap everywhere and nobody kind of knew what each other was doing. So, I created – I forget what I called it now but it was put . . . and I asked Marc Shapiro. Now, that is not the Marc Shapiro you know now. I think he was executive vice-president of Texas Commerce Bank at that time. I remember the Boy Scouts were represented by Ernie Cockrell and we had all these groups and they would come together and part of it was just telling each other what they did and they found out ways that they could work together. So that part was successful and we really got this thing going. The next year, they created the standing committee, Standing Education Committee of the Greater Houston Partnership which I became chairman of and they asked me to go on the board of the Greater Houston partnership. That was in 1990 and I did a number of things. I headed their fund drive, I headed something with an innocuous title of the emerging issues committee. Emerging issues? Well, did studies. Now it was Leo’s turn. I got him to head a subcommittee. One of the things we studied was creating a metropolitan area. Can you imagine the idea of putting the county and the city together? Well, we did a really terrific study on that which got shoved before it was tried and intermodal transportation. It was really hard going because you ask people . . . people work all day, then come in at 4 o’clock and you ask them to think way out there and it is just asking too much of the mind to switch gears. So we did a lot of tremendous . . .
One of the other things that I did on that was, young Paul Hobby . . . I think it was really his first major engagement with the city was to work on the diversity part of it. Now this was in 1990, or no, this was a little bit after 1990 but it was in the early 1990s. And we even worked on venture capital based here. Rodney Margolis and several people on that. I was chairman of that committee for 2 years. We did a tremendous amount of excellent work and then it just did not go anywhere. So now, we go to 1999. Ned Holmes called me one day and he said, “Gene, I am the incoming chairman of the Greater Houston Partnership. We have this good name over here that we are doing nothing with. Would you become the chairman of the Center for Houston’s Future and take it where it needs to be for Houston?” Period. Ned does not waste a lot of words but I will tell you, that was just like a dream come true for me. Houston had been so good to my family. My firm had prospered and just to give you the kind of city . . . in Boston, we loved it and I was there under the auspices of Putnam and this was Lymons, the Cabots, and they were so wonderful but you went outside . . . Susan and I love the symphony . . . you had to be invited to be a “friend” of the symphony! Moved to Houston. We were part of everything. Just immediately. I was president of the Houston Society of Financial Analysts either 2 or 3 years after arriving. In our church. This is unbelievable, as I look back. We did not have a relative in the city. Actually, when we moved here, we did not know but 2 people. They were 2 people that were in my class at the Harvard Business School. I did not know of a soul. I don’t believe it can happen in any other big city in America – we were invited to join the Houston Country Club in 1968. Arrived in 1964 and invited to join a club 4 years later. And everything was like that. So would I chair the Center for Houston’s future? I had all these ideas going in my mind and I had had this taste with emerging issues that is part of the Greater Houston Partnership – there was only so far you could go because people were busy looking after the things that were already on top of us. I will not go into the whole thing but what I started on immediately was believe that what Houston needed very badly was more people helping civically; that it had always been a tradition in Houston the business community with deep civic involvement. At that time, this was 1999, this was, as we were in the Brown Administration and not a whole lot was happening. A lot of things were not happening in Houston. I had the idea that with term limitations, under the best of circumstances, in any 20 year period, 2 decades, you were going to have a minimum of 4 mayors. So you would have no continuity at all. So I reasoned that the good management of the city was going to depend on having strong continuity of civic leadership. So idea of creating leadership forums or leadership workshops at that time, and we did. We put together a group of 36 people and we got a nice sum of money, $150,000 from the Houston Endowment, to do this experimental. I went around personally to most of these people asking them if they would commit – the time is basically 2 long weekends – and we got Joe Jaworski. I remember meeting with Joe and I said, “Joe, this really ought to be something right down your alley. You put together the American Leadership forums, they are in 29 different cities now so you believe in civic leadership and, for goodness sakes, this is your hometown.” I got Joe to participate in that. So with him, we had our first one and his people facilitated it and the first session almost sunk. It did not go well at all. I will never forget, a young African American partner at Baker Botts stood up towards the end and he said, “Well, I have not been impressed by everything this weekend but I do believe that we all share the same beliefs and hopes,” and by that narrow . . . everybody agreed that they would come back for the second weekend. That second weekend, it caught fire and it has been going ever since. It was in the second weekend that somebody coined the expression “deepen the bench and widen the circle of civic leaders” and that is what we have done. This has now been going – this is the 10th year of it and we now have 529 graduates of the leadership forum. Almost half are non-Anglos and one-third are females. As wonderful as Lamar 8F was, to contrast this with Lamar 8F -- all Anglos, all males except when Oveta Culp Hobby was there. They did wonderful work but that could not exist today nor should it exist today but we now have ever year about another 70 people join this and they go in to the boards and committees all over the city.
Now, the second thing we did . . . I believe devoutly in strategic planning. When John Mendelsohn came to Houston in 1996, M.D. Anderson, the first thing he required was a strong strategic plan. And then, another strong strategic plan. And it went from being an excellent cancer center to being the greatest in the world as we know. Houston civically has not been strong on strategic planning. What we have been incredible on are projects. Boy, you get some people together who believe something ought to be done, whether it is the Ship Channel or whether it is the Texas Medical Center or Bush International or whatever it is, it will get done. The idea of thinking strategically about what we need in the future and working towards that had not been a strong suit and so that became our second goal. On these leadership forums, on the first long weekend, come in on Thursday evening and leave late Saturday afternoon, the first weekend is spent in total emersion in the issues and the facts of the Houston region. Everybody in fish bowls. We will have 4 or 5 experts in swivel chairs in the center, circle of people, 35 people around them, and they will talk to each other for about the first 45 minutes with everybody else listening in. And then, they turn their chairs around and they start down a course with the participants. It is a marvelous, wonderful transmission method. So people come out of that first weekend knowing more than 99% of our citizens about the facts and the issues of the region. Go on learning journeys in the month in between, they will decide on something ____ and then they come back for that final long weekend. O.K., what are you going to do about it? And that is what they start on then and hopefully, in most cases, it does last the rest of their lives.
The Center for Houston’s future has really been a wonderful success. We are now doing the most important project we have ever done. It is over the horizon thinking. If what makes the Center for Houston’s Future different from every other organization is its over the horizon thinking. It is identifying what is not visible now – both the problems that are not fully visible yet and the opportunities that are not visible. That is why we’ve got the Greater Houston Partnership and many other organizations that are doing marvelous jobs of working on what is already identified. But we are the only one that is going over the horizon. Now, we are almost halfway through scenario planning 25-30 years out. John Hoffmeister is the chairman of it. James Calloway is the co-chairman of it. This is the head of Shell until recently and just marvelously intelligent, forward thinking people and we identified a group of about 35 people. We engaged the best scenario planner in the world, a lady out of London named Barbara Heinson who has done scenario planning who has done scenario planning all over the world. And so, for about a year and a half, she is leading this group. Now, scenarios – nobody can predict accurately, with any accuracy, the future, and we certainly . . . but we are developing scenarios into the future. Scenarios are stories told forward, as you know, and at the end of this, and I think in every major area affecting Houston from energy to education, we will have come up with 3 or 4 scenarios, one of which will be the most likely scenario and others. One will be a scenario you really do not want to happen and that is as important as the most likely scenario because now you know what you are guarding against. But after completion of this, we will put this in the hands of the various groups, the corporations, the businesses, the Greater Houston Partnership, although that is a whole another program on how to get this disseminated and work towards these, but this will be the most important thinking of the future affecting Houston of anything that has ever been done. We have a great board. John Mendelsohn was our first director. John Mendelsohn is still a director.
Houston is just . . . it depends on people . . . it does not make any difference where you grab hold, it makes all the difference that you do grab hold somewhere. And so, from St. John’s, that led to the experience of a few years later and I became to believe devoutly in the importance of early childhood education. In 1986, I became chairman of a study group to create an early childhood school. We did it at First Presbyterian Church. We got it launched by 1989 and I was the first chairman of it and it is a Presbyterian school now which now has 540 students in it. And so, I have been involved in many parts of education, as you can tell in the city. Another thing that I just happen to believe in is in the importance of bringing speakers into Houston for us to be exposed to top ideas. So I have been both president and chairman of the Houston Forum. I went through the chairs with George Rupp, the president of Rice back then. I have been the president and chairman of the Houston Club Distinguished Speakers series for about 20 years and have just brought in . . . Charles Foster and I do that. You know Charles, the great immigration lawyer? And it just happens to be something that we think is a contribution to Houston that we enjoy doing together. And then, more recently, I am on the executive committee of the World Affairs Council of Houston which just brings a continuous flow almost weekly of speakers from around the world in.
Four years ago, I had the misfortune to have a herniated disk and the first operation did not go well and I had to have an identical operation one week later which got infected and I ended up 15 days in the hospital and almost 1-1/2 years totally out of commission. I was in bed for most of that time so painful I could not even get in bed or out of bed. I would have to be lifted. And so much high powered Cipro and high powered stuff like that that I ended up with what is called tinnitus. Right now, I am hearing half of Niagara and a forest of cicadas in my ears. I can hardly hear my own self talk because it is so loud. So I became really familiar with medicine and our medical center. I also like to think that it goes back to my wonderful Ma-maw who was so disappointed I did not go to med school. I am on the board of the University of Texas Health Science Center which you know is Texas Medical School, Dental School, Nursing School, Molecular Medicine and on, and I am currently chairman of that board. This gives me enormous satisfaction and fulfillment, too. I really do think that this is one of Houston’s areas of . . . it is already great but the potential there . . . there SI a lot of destructive competition in the world’s largest medical center. With a few changes, important changes, difficult changes, we can become the world’s greatest medical center. And with Dr. Larry Kaiser who is on the board of the Greater Houston Partnership and other people, we really are working hard to make this a greater medical center as well as . . . just this last week, the Regents approved changing the name to UT Health, instead of that mouthful University of Texas Health Science Center that you can hardly struggle out with. Thank you for asking. I certainly got way off track because I have so much enthusiasm for Houston, gratitude for Houston that you ask one question and you get about 80 answers.
DG: No, sir, you can’t get off track because it is your track. You have known a lot of important people, you have known a lot of people we probably have never heard of, you described yourself as lucky – who inspired you in your time in Houston? Who had an influence on you?
GV: I am really glad you asked me that because one is Dr. John W. Gardner. I read his books on leadership, on self morale. He came to Houston to speak when I was chairman of the Houston Forum and I will never forget, he said to an overflow audience of 1,100 people at the Hyatt Regency ballroom, he says, “You can’t build a city and leave it standing like the Pharaohs did the pyramids. It has to be built and rebuilt, recreated in each generation by believing, caring men and women.” And then he ended, “It is now our turn. Now, try that. Shake off it is now our turn.” We became friends on that trip. We communicated for the rest of his life. Sir John Templeton was my hero in my profession but locally, Paul Howell. Paul Howell made a speech and I was just in the audience a number of years ago which he said, “You live in this city. You reap the benefits of this city. Your family does. You must give back to this city. Why don’t you?” Well, try answering that. Paul, I later got to know him personally. And then, Ben Love. How could you be in the presence of Ben Love and not . . . he is so inspiring. I have been lucky to live with my heroes, too, because I have peers and contemporaries that I dearly enjoy and am inspired by. I think Houston accumulates. It is a magnet for these kinds of people that have great spirits and, I guess the word is build beyond thyself. That is in the foreword to our form that we founded in 1970 – commit to something and build beyond yourself is what I believe in and I think it is what many or most Houstonians believe in.
DG: Let me ask you in closing, I think you have alluded to it in our conversation but if Houston has a discernible spirit, how would you describe it in a few sentences? What is the spirit of Houston to you?
GV: Oh, I am sure the same song of how many people you have interviewed – it’s got to be without any doubt, Houston is the most open, welcoming, big city in the world. I cannot say it is more so than my little 7,000 Brownsville, Tennessee, but it has the same spirit of welcome and gathering in everyone that my small hometown did, and entrepreneurial. My saying is that it is the opposite of that “New York, New York,” – if you can’t do it in Houston, Texas, you are hopeless anywhere else! It is a great place to live and be in business and bring up a family, and then do your best to get that family to stay here, and that is one reason I am so proud of and excited about Center for Houston’s Future because that is for our children and our grandchildren and their children. That is who we are doing all of this thinking for, to make this a city where our great grandchildren but everybody else’s, everybody that moves in here, for them to feel devoutly that this is their city and that it is the greatest city of opportunity and enterprise to live in of any place they could possibly be.
DG: Thank you very much for your time, sir.
GV: Thank you.