The Interview: VC Giant and Celtics Co-Owner Steve Pagliuca

Photo by Simon Dawson/Bloomberg/Getty Images

What do you get the man who has everything? Well, if it’s Boston-based VC giant Steve Pagliuca, it’s either an Impossible Whopper or an Italian soccer team. Already the cochairman of Bain Capital and a co-owner of the Boston Celtics, Pagliuca recently acquired a stake in Atalanta, a Serie A football club in Bergamo, Italy. We recently sat down with the Duke grad and HBS alum, who’s since grown Bain Capital into a powerhouse with $160 billion under management, to talk hoops, TD Garden snacks, and a little bit of business.

First and foremost, why buy an Italian football team?

That’s a great question. My grandfather and father wanted me to be a CPA, because they thought the only people employed during the Depression were CPAs and lawyers. I didn’t really want to, but I listened to them. So I got an accounting degree at Duke, and then, to my chagrin, I learned I didn’t just have to pass a test; I had to work three years in an accounting firm. I applied to eight, and I asked each of them if they’d send me overseas for some period of time, and then I’d take a job back in the U.S. wherever they needed me. KPMG said we’ll send you to Holland for three months, and I ended up working there for about three years. I became a big soccer fan, because the Dutch had a great team. Anyway, at Bain, we look at a lot of different opportunities. The family that owns Atalanta wanted to get some liquidity but also stay involved in the business, which was a perfect fit, because they’ve done a fantastic job running it. So I thought it would be a lot of fun and a good investment.

Why an Italian team, as opposed to, say, the New England Revolution?

My grandfather and grandmother came from Italy as immigrants in 1921. He was a shoemaker. He actually didn’t speak English. Every Sunday, my grandmother would make amazing Italian food. So I kind of grew up in an Italian family environment. And when this opportunity came up, it felt kind of like coming home. Secondly, they’re kind of the Celtics of Europe. They’re team-oriented. They treat their players very well. I felt very comfortable with their approach, and they wanted us to be a partner because we can help globalize the business.

Greatest basketball player who ever lived?

I’d have to say Michael Jordan. Maybe Bill Russell, as well, because you have to account for different eras, but probably those two.

What was your first big score as an investor?

One of the first investments I ever made was into a company, small at the time, called the Gartner Group. They were selling basically advice and data on how to buy computer systems and software. It was owned by Saatchi & Saatchi, an advertising firm, and they were having issues, so they decided to sell. We brought in a CEO named Manny Fernandez and turned it around. And it went public. I’m still on the board today, and the company is valued at, I think, around $20 billion, so it’s grown from that small company to now the leading provider of software/hardware information globally.

Who’s the person you admire the most?

I think my mother. She was a singer, a really good singer. She did some things on Broadway, and she met my father before he went off to World War II. She continued her singing career to some extent, but she had three kids. And then she got her college degree, going to night school at Fairleigh Dickinson University when I was growing up. She was always very positive, and the odd thing is that she ended up getting a degree in teaching, and to my chagrin, she ended up teaching my seventh- or eighth-grade class, when I was 13 years old, which, at the time, was highly embarrassing. She passed away three or four years ago, but she had an amazing life and was just a wonderful human being.

Do you think we’re headed for a recession?

It’s hard to say. The economy is really chugging along. We’re basically at full employment, by most measures. Until recently, we’ve had pretty low energy costs. People have savings rates as high as they’ve ever been. So there’s a lot of pent-up demand for entertainment and travel, things we haven’t done in a few years. And interest rates are very low. Even with the slight increase, they’re still historically low. So there are not that many negative signs, in terms of the real performance of the economy. Companies’ values are at an all-time high, and we may have seen those come down a little bit in the past few months, with the stock market pulling back, but that correction was probably well deserved. So it doesn’t appear that there’s a recession on the horizon. Now, things that could change that might be an increased Ukraine war dynamic, where oil prices continue to rise and the supply chains are disrupted. We might get some inflation and some pullback in global trade, so there are definitely some things to watch out for there, including the situation with China. But I don’t see a recession in the near term, with all the positive economic performance.

Despite losing in the Final Four, is Duke the best college basketball program ever?

Yes. That’s a very simple question to answer. I’ve got a long history with Duke. I played freshman ball there, and I was the worst player on the worst team in the past 50 years. But I was on that bench.

You tried to get Coach K [Duke’s newly retired head basketball coach, Mike Krzyzewski] to come to the Celtics, didn’t you?

Yeah, when we first bought the team, I called him for advice, and then I kind of broached the subject of would he ever consider going into the pros. I think the year before, he had been heavily recruited by the Lakers, and he turned down a large offer, but I thought he might like Boston. But he had decided that for him and his family, back in 2004, it was better to stay at Duke, and he was just fully committed to the program. We felt the same way about Brad Stevens, three or four years after seeing him coach in the 2010 NCAA championship.

What’s your biggest indulgence?

I think an Impossible Whopper with cheese—no mayonnaise and no tomato—and a shake.

How about your favorite TD Garden snack? What do you eat when you go to a game?

Unfortunately, my favorite food is pizza, and every game, they make fresh pizza. I’m trying to wean myself off it, but I’m going tonight and I’m not eating all day so that I can get my pizza.

Best restaurant near there for a before- or after-game meal?

I would say Strega, in the North End. It’s just really authentic, fantastic Italian food.

So where do you go to unwind?

We have a home in Narragansett, Rhode Island, and it’s right near the beach. It’s just a fantastic place for all the kids and grandkids to come down and spend time. It’s some of the warmest water in New England, because the Gulf Stream kind of comes in because of the Long Island Sound. The water actually gets up to 76 degrees sometimes in August. That’s balmy for New England. We’re right between the Narrow River and the beach, and there’s great boogie boarding and surfing. There are some beautiful golf courses around there. So we have a lot of fun.

Do you think investing and sports call for similar skill sets?

Yes, the basic skill sets are the same. You need to get an A-plus management team, and you need to use data, and make data-driven, rational decisions.

Let’s talk the most beloved Celtics figure in history—Red Auerbach.

Red Auerbach was so deeply invested in the team until the day he passed away. I was able to speak at his funeral, which was one of the greatest honors of my life. He loved to talk basketball, and we had him up as much as he would possibly come in. He actually attended a couple of my son’s Duke games, too.

What was the worst mistake of your career?

I’m kind of like Forrest Gump: I’ve been lucky in my career. But I think the worst one was early on. At Bain & Company we were fanatical about customer service. We had a particularly tough client, and the CFO was very hard on one of our people and said he wanted somebody different. I thought the person was good, but I said, “Okay—it’s tough to fight that war.” And I shifted the person off to another team. I didn’t realize at the time that it had a bad effect on him. I thought I was doing a good thing, because it was going to be a tough client situation. But looking back, I probably should have stood up to the CFO and said, “Let’s give this person a shot.” And the person turned out to be very successful and became the chairman of a major bank. So I learned that sometimes, the client’s not right, and you’ve got to stand up for your people. I’ve tried not to make that mistake again. That was about 30 years ago.

Best Celtics swag you have?

Oh, my goodness, I have everything Celtics. I would say that the best swag I have is a picture of myself and Doc Rivers, when he came over and hugged me after they dumped Gatorade on him at the 2008 championship. It was red Gatorade, and his white shirt was pink. He gave me a big hug, and I got Gatorade all over me as well, but it was a great moment, because it’s really hard to be a coach in the NBA. It’s a grind, and I was very happy to see Doc win that championship.

What’s the biggest merchandise moneymaker for the Celtics?

You know, we split revenue equally on merchandise in the NBA. So everything that’s sold, we get one-30th of. Right now, probably the biggest seller is the Jayson Tatum jersey. Previously it had been the Paul Pierce jersey.

Do you ever bet on sports?

Rarely. While we were in Atlanta, I bet the Atlanta Hawks’ owner that we would beat them when they came to Boston because when we were in Atlanta, we lost. And then we went double or nothing in Boston, and I won.

Who’s the last person who said no to you?

Probably the last person who said no to me was Danny Ainge. I asked him to try and stay longer with the Celtics, and he said he needed a break after almost 20 years.

How can we make corporate America a better corporate citizen?

Consumers have to vote with their feet, and I think younger people are. The current generation has shown more concern about the environment, and social justice, and all the things we need to solve. I think it’s starting to happen. The generation we’re hiring at Bain Capital is very committed to making positive change. They’re worried about global warming, and about equality, and social justice, and education. And I think that really starts from the bottom up. And the government just really hasn’t made the progress I think people want, so corporations have become very important in creating public/private partnerships.

Is there one investment opportunity that you missed out on?

I definitely missed out on Bitcoin. I’ve been studying it since 2009, when a friend of mine came to me and said you really ought to invest a good portion of your savings in Bitcoin, because it’s going to be the next gold or monetary system thing. And I’ve looked at it every year, but I don’t beat myself up about it too much. The big question is whether it will gain acceptance. Will it become digital gold? Gold doesn’t have any intrinsic value, but it’s been a medium of exchange forever. So I can see how digital currency will become part of the economy. It hasn’t happened yet, but it’s certainly looking like it’s trending that way.

How much money is too much money?

I honestly have never measured anything by money. What we try to do is make businesses better—help them expand their market share, expand their global reach, and make better products for consumers. And when you do those things, which is a lot of fun, and you’re successful, there are financial rewards. But the financial rewards are a product of doing good work in anything, including winning a championship or building a great team. It’s a byproduct.

Photo via Bob Eastman/Getty Images

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