Special Series with Umberto Fedeli: Session Three

Adam Kaufman: Hi I’m Adam Kaufman and you’re listening to the Up2 podcast. Today we’ve invited successful business owner and power broker Umberto Fedeli back into the Up2 studio for the third and final episode of our special mini series. Umberto is the chairman and CEO of The Fedeli Group and is also quite active in charitable pursuits. As a veteran of nearly 40 years in business, philanthropy, and politics, Umberto today shares advice about investing and living a balanced life. We’re glad to have you back Umberto.

Umberto Fedeli: My pleasure Adam.

Adam Kaufman: What time did you wake up today?

Umberto Fedeli: Which time?

Adam Kaufman: For good. What time did you get out of bed?

Umberto Fedeli: The first time was 2:30 and I said, “This is too early.” I took something that helped me go back to sleep a little bit so I slept in to I think 4:30 today.

Adam Kaufman: Did you get your workout in?

Umberto Fedeli: Got my workout in, 90 minutes today.

Adam Kaufman: Awesome so it’s like 3 o’clock now. So this is like the end of your day. This is almost like midnight for you.

Umberto Fedeli: No it’s starting second shift.

Adam Kaufman: Well I’m so thrilled we’re doing this again this will be our third episode of this mini series and I wanted to start off with something I’ve noticed about you. You always seem to be looking to improve your own learning. Where are you growing right now? What’s your growing edge? What are you most intrigued by? Trying to learn more about?

Umberto Fedeli: Well Adam I really think, I wrote a piece once talking about being a peak performer and I think there’s—

Adam Kaufman: A peak performer?

Umberto Fedeli: Yeah I think there’s about six, seven, eight things in your life that you need to constantly try to improve upon. We’re a work in progress and we’re never going to be perfect because we’re human. And so to me I make a list of these things and try to improve your family life, try to improve your faith life, try to improve your health, try to improve business, investments, you know community.

Adam Kaufman: So how are you doing all those things? Well I need improvement in all of them because I fall short but I try to constantly have something that The Fedeli Group calls the three commitments. And we ask you to be number one proactive instead of reactive. Number two we ask you to be committed to lifelong learning. Learning in your community, your business, your industry, your country, your city, your community, your profession, your heritage, every aspect of your life. And then we ask you to be cooperative, collegial, congenial, and collegial, with your colleagues.

Adam Kaufman: Good alliteration. But seriously like that number two is what I was getting at. I can see that tenant of your employee group also in you. You are committed to lifelong learning. That’s evident to me.

Umberto Fedeli: We try because think about it. You don’t want to be 30 years down the road and you’re basically doing the same thing the same way and you haven’t progressed. So we want to improve in every aspect of our life when we can. We’re going to have shortcomings and we’re going to have mistakes.

Adam Kaufman: Absolutely. But that’s the humble you as well. We all know that there’s no finish line in these categories and you’re continuing to try to move forward.

Umberto Fedeli: Progress not perfection.

Adam Kaufman: Right. Right. And one of the items that you briefly touched on in a prior discussion I’d like to drill down a little bit specifically around rational targeting. You have a thesis about rational targeting and I’d love for you to share with us.

Umberto Fedeli: I think I learned the hard way Adam that if you figure out what you’re really really good at and what you really really like to do and if you concentrate on what you’re good at and what you like to do you tend to do it much better because now you’re in your zone, you’re in your element. And so you find people who actually love what they do that they’re hard to compete with because other people are working at it and they’re just doing what they love to do so if you find out what you’re good at and what you like to do that’s what I call rational targeting. And so even that concept for instance at the Cleveland Clinic. As a board member as a director and chairman of Government Committee relations, what does a clinic do really really well? What do they like do? And then we would look at relationship mapping and say where are there pockets or departments or areas or agencies that are looking for that. So if they do heart really well or they do research in burns or wounds or healing and so that rational targeting could be used in politics in business and investments. So Warren Buffett talks about, in investments for instance, that one of the great baseball players would look at a strike zone and break it down into 72 segments.

Adam Kaufman: Wow 72.

Umberto Fedeli: And said you need to find your strike zone. Where’s that strike zone that you’re really good at? So even in life where is that strike zone where you’re really in your element. And then when you go swing the bat with Ted Williams in your strike zone you have the highest batting averages ever. That same concept.

Adam Kaufman: So the rational targeting in this instance it’s the entity or you targeting or focusing on something that is a strength of yours.

Umberto Fedeli: Strength of yours, a passion of yours, an area that you just enjoy, like, good at.

Adam Kaufman: So that actually reminds me of Marcus Buckingham. Have you read any of his books?

Umberto Fedeli: Yes.

Adam Kaufman: Discover Your Strengths.

Umberto Fedeli: Yes.

Adam Kaufman: That was really instrumental for me in my own career. His definition of a strength isn’t something we’re good at. It’s something that makes us feel good while we’re doing it. And that’s kind of what you just said. So if we can get that rumble in our belly when we’re doing something that is a strength in his mind.

Umberto Fedeli: It is, and even going back to Warren Buffett. So he was speaking at the clinic and a young man that was in college said, “Mr. Buffett if you had to give me one piece of advice, just one, since you were the most successful business people in the world, what would that be?” He said, “Find out what you love to do, what you’re really good at and pursue that because you’ll do way better.” It’s not something really taught when you’re a child or in grade school or high school or even college. You just kind of go and do things that you think you’re supposed to do or that you think that you like but you don’t necessarily know and many people never find it. About half of the people in our country are doing things that really not good at. Maybe they want to be a quarterback but they can run but they can’t throw.

Adam Kaufman: And even we as parents we can, although well-intentioned, kind of feed the wrong thinking on this. So if one of our children comes home with three A’s, three B’s, and a C. What do we spend the most time talking about.

Umberto Fedeli: A C.

Adam Kaufman: Yeah. And Marcus Buckingham would say that’s wrong. We should turbo charge the A’s we should of course deal with the C but we should really accelerate the A’s. That’s the rational targeting so to speak.

Umberto Fedeli: It is. But on the other hand sometimes you’re also pushing our children too hard and we’re doing what father Spitzer would say level 2 comparison game and he’ll say that’s a road to hell because what you’re doing is you’re pushing people to constantly achieve ego oriented, run faster, succeed more, do this better and at some point you have to say Adam life’s about contribution, not a comparison.

Adam Kaufman: Not comparison right. I’m in a lot of airports and I see so many books about happiness. I on the other hand think happiness is fleeting. Rather than pursuing happiness, I think we should pursue meaning and finding meaning in our lives. Do you think happiness and meaning are synonyms or are they different?

Umberto Fedeli: I think they’re interrelated so if you go back to Aristotle the great Italian philosopher.

Adam Kaufman: Laughing

Umberto Fedeli: You’re laughing. No he wasn’t Italian. They say he was Greek. I think he was Italian. But Aristotle said what most people really yearning for in life is to be happy. So a lot of their decisions are this will make me happy if I get married, if I have this career, if I buy this car, if I buy this suit. And so they’re trying to be happy. And so what is happiness? What is it? And a gentleman who was nominated for a Nobel Peace Prize wrote me a letter when I was in my 20s and he said something, he took care of 50,000 children. And he said something to me in a letter that I never forgot. And I’ve used it and I’ve always given him credit. He said to me in the letter and he was in his late 80s he said, “I think I’ve finally figured out what the secret of happiness in life is.” He said to me Berto, “In life the secret of happiness is to love and the essence of love is to serve.” So the secret of happiness is to love. So love is that special word. And I’ve shared with brother Stuart that what’s missing the world more than anything else is that word love, if there is more love in the world we’d have a lot less problems and people would be happier. When you look at the love of a mother and a child or two buddies or you know somebody that’s been—

Adam Kaufman: Lifelong friends.

Umberto Fedeli: Friends, an aunt, an uncle, godfather, when you just see that special bond—

Adam Kaufman: Infantry men who served together.

Umberto Fedeli: That fondness, that respect, that admiration, where they just are comfortable with who they are. And there’s that special feeling of love for now but I’ve met grandfather seven times one more on the way. That’s pretty happiness right, that’s love.

Adam Kaufman: The fellow who wrote you that who was nominated you I’d like to give him credit to be able to tell us who that was?

Umberto Fedeli: Yeah. His name is Monsignor Carroll-Abbing and he was an Irish priest that was in the war and happened to be visiting from Ireland in Italy. And a little boy’s family got killed and he took this little boy in. And then took in another child, and he took in another child and ended up with about fifty thousand children that he helped. It was called Boys’ Town of Italy and it happened to be located in Italy and he happened to be Irish and I had the opportunity of hosting him for lunch a number of times and I visited Boys’ Town where he took care of it and it was all about tough love. He would teach them to work, he would teach him discipline, and these are people that were children whose parents had died in all walks of life, all cultures, all nationalities. And he’d also had say something in an Irish brogue and then he would do it in Italian but he would say he would look up at the stars, he goes, “For every tear you wipe off a child’s face, is a star you light up in the sky.” And this guy was all about taking curing these children who had lost their family members, right. And so sometimes you get wisdom— I remember listening to a commencement address from Lou Holtz.

Adam Kaufman: Notre Dame football coach, legendary.

Umberto Fedeli: He was talking at Franciscan University and the average student probably that was graduating was 21 or 22. He looked at them and said, “I’ve been 22. You haven’t been 78.” And there’s a certain amount of wisdom that people that have lived longer lives have that you can’t have at 22.

Adam Kaufman: Undoubtedly yep. Back to the happiness question, and I feel like happiness is fleeting, happiness can be fleeting. So your colleague who helped those 50,000 children he probably always wasn’t happy in the moment when he was dealing with these sad kids but he had meaning, it gave him meaning.

Umberto Fedeli: Yes.

Adam Kaufman: And so for me meaning is that is the pursuit that really can be most fulfilling. Victor Franco’s famous book—

Umberto Fedeli: Man’s search for meaning.

Adam Kaufman: Yeah exactly. Surviving at the concentration camp. Like that to me. That’s what, back to your other comment, that’s the type of thing our kids should be reading in schools I think.

Umberto Fedeli: Well that is purpose. And so Simon Civic talks a lot about your “why” discovering your why, your purpose and if people discover their why, why am I doing this. Well then they tend to find more meaning in their life. Find more fulfillment in their life.

Adam Kaufman: We’re going to talk more about your investing strategies. Someone close to me suggested I ask you this question. I thought it was a good one, do you think morality and capitalism can co-exist?

Umberto Fedeli: Absolutely.

Adam Kaufman: Talk about that.

Umberto Fedeli: Well there are times maybe things get compromised. But why can’t you be…

Adam Kaufman: You said absolutely right away you’ve been asked that before maybe.

Umberto Fedeli: Oh many times. I think you know—

Adam Kaufman: Very unoriginal question by me.

Umberto Fedeli: Well no it’s not that, it’s the world can be ruthless. Business can be ruthless. Politics can be ruthless. Family members can be ruthless but it’s all in how you do things. It’s all on how you do business. It’s all in how you treat people even the great Saint John Paul wrote a whole piece about capitalism. And the bottom line is when I got done reading it I didn’t know if was Ronald Reagan or was Pope John Paul. He said it all depends on how you treated your people.

Umberto Fedeli: Yeah we have free will but if you treated your people well you treat them with dignity treat him with respect and you’re fair. I’ve seen business people take advantage when someone is down and out and they leverage it. I think it’s immoral to do that. Others think it’s just business. There are certain cultures where lying and cheating is just how you do business. There’s other places but we say that’s wrong. And so I think what happens is if you can be selective of who you do business with. It’s always about the who, who you marry, who you trust, who you do business with. If who isn’t right, the what doesn’t matter, right? It’s so important. And now as you get bigger you get less selective. But if you run a closely held business or a smaller business you can be selective of who you do business with, customers, who you hire. You want people who share your vision, share your meaning, share your “why”, you’ll attract employees who feel that way, attract customers who believe in that. And so finding your purpose of life is so important.

Adam Kaufman: If you think about it we in America we spend a lot of time thinking about or pursuing money. I think we’re all guilty of that at different levels but we’re not supposed to let it drive us. So how much do you kind of put a governor around yourself like do you ever feel like you’re going too hard towards the creature comforts and the accumulation of stuff?

Umberto Fedeli: Yeah I think it happens to all of us because we’re human.

Adam Kaufman: Right.

Umberto Fedeli: Money is a funny thing because it may be one of the commodities that somebody who’s got 75 billion dollars. They’re still trying to make more money. It’s like how what you possibly do.

Adam Kaufman: Right.

Umberto Fedeli: I think what happens is it’s even scripture talks about it isn’t money it’s the love of money.

Adam Kaufman: That’s only idolatry.

Umberto Fedeli: Yeah. And so what happens is I think we need to have balance in our life, and by nature I’m not balanced so we have to put certain you call governors, or certain checks and balances. And what starts to happen is that… That’s why as you get older purpose you know people that are living meaningful lives. They found communities where people lived long. They’re looking at the food, and they’re looking at the diet and they find out they felt part of a community. And how important these relationships were. And on someone’s deathbed the word relationship comes up more than anything else.

Adam Kaufman: Of course.

Umberto Fedeli: Money doesn’t come up too much on someone’s deathbed.

Adam Kaufman: In my old work at Health Network I used to envy these very successful CEOs who asked us to help them with some medical matter and wrongly I would desire their life and their lifestyle. But once I got closer with them they were often broken inside. They had problems with their marriages or their children. Distance between themselves and their children and the pursuit of money really didn’t serve them well as they reflected back. Often this is like a 75 year old person I was talking to, has everything money could buy but they wanted to go back in time and do it differently. It really has resonated with me.

Umberto Fedeli: I think I had that same experience many times meeting somebody older and maybe super successful in one aspect of their life and then maybe other aspects of their life were not as successful and so trying to find balance and working towards that, and be a peak performer trying to find purposeful work, purposeful relationships.

Adam Kaufman: Work that gives you meaning.

Umberto Fedeli: Work that gives you meaning, or even Novak wrote a book that business can be a calling.

Adam Kaufman: Michael Novak, great author.

Umberto Fedeli: Right. But even Mother Teresa said you know we can all do ordinary things in an extraordinary way. That’s the summary of Jim Collins’s last book Great by Choice. These were ordinary businesses that did things in a extraordinary way. And so it’s how you do things and you can touch people’s lives in so many ways and you don’t have to wait to you’re super rich or super successful or super famous or influential. You have that opportunity to do that every day and sometimes we’re always looking down the road. We’re looking out and we’re forgetting the next deal, the next opportunity. You’re always looking for whatever. And then once someone achieves what they thought they wanted they almost feel anticlimactic and said, “That’s all there is?”

Adam Kaufman: That’s the happiness is fleeting comment that I made earlier but now that we’ve established that morality and capitalism can coexist. Now that we’ve established that we’re good people and we don’t suffer from too much idolatry. Let’s talk about money a little bit. Can we do that?

Umberto Fedeli: Sure.

Adam Kaufman: OK. So we’ve spent a lot of time in the last couple of episodes discussing your theories on publicly traded companies, buying stocks. I’d like to talk more now about banks. You like investing in banks. I think they’re like regional banks usually. Why do you like investing in banks?

Umberto Fedeli: Well when I was in my early 20s I’d lost all my money doing something called option that was just pure gambling it’s not investing and then I did something called margin where I borrowed money from the bank and then gave that to the broker and it was all borrowed and then the market crashed. First investment that I did that worked out was a bank that we invested in and it worked. And because it worked I said, “Oh I like this.” And I started to learn a bit but I like investing in things I understand and in the last 10 years we’ve invested in about 140 banks. I don’t know how many in the last—

Adam Kaufman: 140 banks?

Umberto Fedeli: We have a little fun now with a couple of great partners Marty Adams and Marty started with two branches in Salineville, Ohio and built that up to 18 billion of assets and twelve years ago sold the bank for three point five billion. So we now invest in community banks. Think about America, banking almost represents what’s great about America. So if you go to Canada, our neighbor, they have five or six banks. You go to Germany or if you go to Italy or most places have a handful of banks. We still have 5,500. It wasn’t that many years back we had 17,000. And so we now look to buy banks that we think are trading significantly below their intrinsic transaction value, what they’re worth on a sale. Only when we can clearly identify multiple buyers that we think would be interested in the banks and understanding the catalysts that create that value.

Adam Kaufman: You identify the buyers before you invest.

Umberto Fedeli: We identify banks that are desirable by a number of people. Why? Supply and demand. If nobody wants your home but if you have five people that want your house chances are your price will go up. So it’s not necessarily knowing for sure who’s going to buy it but you’re buying banks that are desirable by multiple buyers. We like to buy them at deep value where we’re buying them below what they’re already worth. Price to book, price to earnings.

Adam Kaufman: And you do this through a fund? That you’ve already raised money for.

Umberto Fedeli: Yes and but we also do it personally when it doesn’t compete with the fund. And I like looking at other sophisticated bank investors because that inherently puts more pressure on the board and management because when they’re asking you questions you know they know what they’re talking about.

Adam Kaufman: It’s funny you watch the big sophisticated bankers because others watch you’re investing in banks. When you take a position now it’s in the newspaper, so others are watching you to. You’re on the other side of that equation.

Umberto Fedeli: Well I’m just a peasant kid but we’re buying little banks now. So we’re buying little banks. You know it could be in the private equity fund where we’re buying private banks it could be three hundred million, five hundred million of assets. When you think of banks locally like Key Corp who’s got a terrific leader in Beth Mooney there are well over 100 billion of assets, we’re not buying banks that side. We’re buying we’re buying small banks. We’re buying community banks. We’re buying banks— It’s the backbone of America as well. Now I had someone the other day say, “Well aren’t you worried about some of the disruptors?” and I said, “Like who?” And they mentioned four of them. I said, “Yes and I own all four of those stocks.” So that’s the other segment.

Adam Kaufman: Right. So a lot of fintech companies that are changing the way traditional banking occurs.

Umberto Fedeli: There’s no question but it’s still hard to compete with just the old fashioned relationships right.

Adam Kaufman: It definitely is. What did we learn from the recession in the U.S? It wasn’t solely about banking but a lot of it seemed to be around the banking industry. 2007, 2008, 2009.

Umberto Fedeli: If you study that the book Big Short, or the movie Big Short and so if you really think what happened is I got a call one day from somebody and at the time—

Adam Kaufman: Do you believe that that theory is what caused the recession mostly is these that it was the mortgage swaps?

Umberto Fedeli: It was a big part of it. It’s as simple as this. They were loaning money to people who could not afford to buy the home and it became less of a down payment. It had less of a ratio of income. And what started to happen— And part of it was also political pressure.

Adam Kaufman: Right. It was politically correct to loan to certain demographic groups.

Umberto Fedeli: But think about this. I get a call from a guy and I think it was Pope Benedict who wrote in a cyclical. But he was writing about what happened in the recession. So this reporter calls me from some national or international source to say I’d like your comment about what Pope Benedict recently wrote and I said, “Well I’m not a theologian and I haven’t read it yet.” There’s an article in The Journal back then I wasn’t reading it on an iPad today and I could read it very early.

Adam Kaufman: The Wall Street Journal you’r talking about.

Umberto Fedeli: Yes. And I read that earlier and read Barron’s early in morning and I said, “Alright let me read it, I’ll get back to you.” He says, “Well. Can I just put you on hold?” And I said, “If you don’t mind waiting but I gotta read it.” They said, “What do you think?” I said, “Oh I agree with the Holy Father.” He said what’s that, “He said this was a moral crisis. I wouldn’t loan money to you if you can’t afford the payment. And you didn’t have a down payment. And I would say listen you don’t have enough money down, you don’t earn enough money.” Right. And so they were loaning money out because they didn’t care because they were selling the mortgages and those people were selling the mortgages. And what happened is if you treat that person like they were your friend and your neighbor then it was a moral crisis as much as it was a financial crisis.

Adam Kaufman: Back to our freewill commentary.

Umberto Fedeli: Yes.

Adam Kaufman: Can capitalism and morality coexist?

Umberto Fedeli: It can. And so now the question is do you blame those who wanted the American dream and wanted a home. They just want what everybody else wants. I would say they were part of the blame because you also have to have the ability to afford something, on the other hand the people that knew what they were doing, they didn’t care and they had no money down. He didn’t have an income. If you missed one payment you couldn’t— Your wife didn’t work, you didn’t work, you might lose the house because they were selling the mortgages.

Adam Kaufman: Right.

Umberto Fedeli: We had a local bank that was making a billion a year in subprime business, OK? But they were using outside brokers. They weren’t doing their own underwriting. It’s classic Big Short. It’s almost unbelievable what happened.

Adam Kaufman: Well you’re clearly passionate about banks. Are there any other industries right now that you’re beginning to delve into and try to learn more about? Is there something captivating you beyond banks?

Umberto Fedeli: Well there’s no question that we’ve been fascinated about these cloud based disruptors, these fast growth companies that are going to change the world. The future, Amazon’s future, Facebook’s future, Google’s.

Adam Kaufman: Salesforce.

Umberto Fedeli: Salesforce, PayPal.

Adam Kaufman: Microsoft is making so much money now in cloud based work.

Umberto Fedeli: Microsoft, Service Now. We have about 27 positions in these. We studied the most successful companies and said alright, in the most successful companies that really succeeded, let’s see what existed. It’s like studying Covey Seven Habits of Successful People.

Adam Kaufman: Right.

Umberto Fedeli: It’s saying, all right forget about what I think. Forget about my opinion, let’s study what factors existed where there was incredible success and take those factors and say, “OK how do we apply those forward?” Now it’s easier looking backwards, than going forward and trying to take these factors that we found and see what goes forward because sometimes the disruptors get disrupted.

Adam Kaufman: It’s like going to confession as you’ve said.

Umberto Fedeli: Exactly it’s like going to confession but—

Adam Kaufman: You look backwards and then learn from it for going forwards.

Umberto Fedeli: But predicting the future of how things are going to happen, I don’t know, I still have a hard time understanding the concept of driverless cars.

Adam Kaufman: I’ve talked to you about autonomy. It’s gonna be big my friend.

Umberto Fedeli: It’s going to be big and we just invested in a company with a super smart young man in the Silicon Valley that does you know like robots for offices as A.I. learning. I don’t understand it all but here’s what I do understand. When I call information and my kids say you look something up online. It’s not a person, that’s a computer that comes online. And so what’s going to happen is there’s going to be more robots, computers, automation to do things with less people. Now I feel like I’m watching The Jetsons back when I was a kid.

Adam Kaufman: Laughter That’s right. I’ve just loved though how you’re always learning. I can see it just the way you live your life and the things you write about in your columns. Recently Fay Vincent who was the baseball commissioner. I guess he’s sick now but in the Wall Street Journal he wrote this spectacular piece on the importance of learning and the youthful process of learning. Now that he’s 81 but being able to learn like a child again and I have not stopped rereading this piece and I just feel like you live that too and you’re you’re not, ghank God sick, but you’re always learning you’re never satisfied with what you know. Do you have some favorite things you seem to often draw from?

Umberto Fedeli: One I just gave you that when Monsignor Carroll-Abbing wrote the secret of happiness and the whole idea of love and—

Adam Kaufman: The letter he wrote you?

Umberto Fedeli: When he wrote me that letter. I must have sat there like hyper focused and read it. I don’t know. Over and over and over he just hit me at a certain time and I’ve used it so many times because certain things hit your different times different ways.

Adam Kaufman: Absolutely strikes a chord in the moment.

Umberto Fedeli: And you know and and it’s sometimes also how we learn. It’s like you go to church and read the same scripture passage and all of a sudden it’ll hit you a different way at a different time—

Adam Kaufman: Depending on where are you in your own life.

Umberto Fedeli: What’s going on in… But the whole idea of continually trying to learn and improve I think is part of our life journey.

Adam Kaufman: Who do you look up to?

Umberto Fedeli: In different areas different people. So if you look at people who have lived extraordinary lives, you’d have to talk about Mother Teresa and John Paul. You know when you look at the type of people, lives they live. But you know an event we just had at our house a few weeks back with a living saint Father Hagan who has thousands of children in Haiti that we did with Governor DeWine, that was year 20. Here’s a guy that was the chaplain at Princeton and takes over the poverty task obedience and takes care of children and half these children die before they are five. And they live in horrible poverty. And he lives with them.

Adam Kaufman: He’s dedicated his life to living among them.

Umberto Fedeli: Yeah. I look at people like that and I admire what they do and I feel terrible because I just don’t feel that I could do what they do and I feel that I’m living this American dream and we have all these nice things and the way we live in our country, we don’t have all that suffering so when people are helping people like that or even nurses.

Adam Kaufman: Yeah less famous people who are doing the quiet important work.

Umberto Fedeli: The nurses or people that work at hospice centers or nursing homes, you know people that are working, people that are sick or hurt or dying or teachers. There’s a lot of unsung heroes. There’s a lot of wonderful people in our world.

Adam Kaufman: Do you ever think about who might be looking up to you?

Umberto Fedeli: Probably not too many right.

Adam Kaufman: That’s not true. I mean you’re in the public eye and not only your employee base. I’ve gotten to know some of them and they all look up to you but, do you spend much time thinking about your own legacy?

Umberto Fedeli: Well as you get older you start thinking about it more and hopefully you got a long time to improve that legacy. And I think as you get older I think one of the things is meaningful work, meaningful life. Ray Dalio talks about that. I think purpose becomes more important. I think there’s a lot of things you do in your younger just to do them. And then as you get older you’re saying, "Why am I doing this?

Adam Kaufman: Do you think ever about how you behave in terms of people watching you like for instance is anger ever justified?

Umberto Fedeli: Well yes it can be justified. But anything out of context doesn’t really look very good.

Adam Kaufman: The optics aren’t good. Right?

Umberto Fedeli: Not at the time. At the time if people knew the whole thing. So if you see someone react in a fit of anger but you knew that it just stopped somebody trying to hurt a child you’d understand it. If you just saw somebody angry not knowing what happened. So out of context sometimes things look a little—

Adam Kaufman: Around the office environment if a co-worker treats one bad maybe something else is going on in his or her life that affects their mood that day.

Umberto Fedeli: There’s no there’s no question. But you know it’s still important to treat people with respect, with dignity.

Adam Kaufman: The way you want to be treated.

Umberto Fedeli: Kindness. You know everybody is someone’s child, someone’s father, someone’s brother, someone’s daughter.

Adam Kaufman: Am I allowed to bring up when you went and visited your first bosses home after their first day?

Umberto Fedeli: We can’t talk about that even. He wasn’t. This was one of our first bosses. He wasn’t too nice to a bunch of people and he and I had a little little conversation. So we had to make a little adjustment of how he treated people.

Adam Kaufman: I call that a review of expectations.

Umberto Fedeli: Review of expectations. I told Mikey that occasionally in my life I’ve given people what I call courtesies. There’s certain things you just you know like at some point I was never very good at dealing with people that are bullies to try to take advantage of somebody. At some point someone needs to pull somebody aside and say you know beating up on somebody and being cruel to somebody and being mean spirited to somebody, and humiliating somebody is wrong and I don’t think you should do that. And sometimes somebody from the outside has to take that. It’s wrong. No one has a right to be nasty and mean and treat people with terrible anger and screaming and yelling and being abusive. Bullying is a terrible thing.

Adam Kaufman: Back to how people watch you and read about the moves you make in banking and so forth. Have you ever thought about publishing your own newsletter? I know we’ve talked about newsletters you like to read or publications like The Motley Fool you turned to. Have you ever thought about creating your own subscription service of some kind with all the research you and your team?

Umberto Fedeli: We’ve thought about it. I know we have some people who help us write things and we publish little parts and things and sometimes we just haven’t taken the time to organize it.

Adam Kaufman: You do it all for free though I bet people would pay for your research.

Umberto Fedeli: Maybe a nickel or a dime or something, I don’t know.

Adam Kaufman: Maybe a quarter.

Umberto Fedeli: Maybe a quarter.

Adam Kaufman: I think that this age of digital audio content presents a lot of us with more opportunity to learn quicker. Do you think that your next 10 years of investing versus like the last 10 years, how is it going to change in this digital age? Stock Exchanges are merging, cryptocurrency is more prevalent. Have you thought at all about how the world of investing will change in the future?

Umberto Fedeli: I think it’s important. The reason I think investments are fascinating because it takes so many aspects of someone’s life. You have to understand politics, you have to understand what’s happening with people’s habits. You have to understand business, you have to understand psychology, sociology, how things are done. And I just think things are going to be… I’m not sure how they’re going to change exactly. Once you accept they’re going to change you can deal with it right.

Adam Kaufman: It’s not fighting the inevitable change, right.

Umberto Fedeli: Yeah I won’t fight it. But what’s not going to change his relationships. Certain people skills you know though that’s not going to go out of fashion. So I remind people that I have a hard time picking for instance, retail, what fashions are in. I said, “Is that a fashion or is that a trend? Is that a brand?” And I just remind them of leisure suits and they look at me. I said they’d like look at leisure suits go back to— People wouldn’t wear them today.

Adam Kaufman: Most of our podcast listeners won’t even know what a leisure suit is. I will, but I use this same topic to talk about Vans shoes. We have three teenage kids all three wear Vans. They were popular back when leisure suits were popular.

Umberto Fedeli: Right.

Adam Kaufman: And they remain popular today and I think they’re very basic somewhat ugly checkered shoes.

Umberto Fedeli: What about hair length? Now it’s okay to have short hair. A lot of guys shave it. But it wasn’t that many years ago where they had long hair.

Adam Kaufman: We have Michael Jordan to thank for that. He made no hair cool

Umberto Fedeli: Yeah. So I mean things do change—

Adam Kaufman: A good thing for me.

Umberto Fedeli: But things will happen faster. To me it’s fascinating right. Even though I don’t understand it all. I don’t know. One day I was going home and someone drove me and our gates were closed. I did not open the gate. Then it came to the garage door. I didn’t know what number to punch in and then the alarm was on. I didn’t know how to do that. And then I didn’t know how to turn on the TV. And I’m thinking that’s only to get into the house and I don’t even know what I was doing.

Umberto Fedeli: Yet you’re investing in Amazon and other AI companies.

Umberto Fedeli: Amazon I don’t unfortunately I missed that one. But we have Google, and we have Facebook, and we have PayPal, we have Visa and we have two payment companies in Brazil and Shopify and Service Now. It’s unbelievable.

Adam Kaufman: Shopify yep, right. Do you think that there are some industries, you mentioned the cloud computing, anything else that in the future we should all be thinking about as a new investment opportunity?

Umberto Fedeli: I think this whole A.I. learning and having kind of office robots or office computers, I think that whole area is going to grow. And I think it’s going to be the disruptors are going to disrupt and they’re going to be industries that are going to be disrupted. There are just certain industries that are going to have a hard time because the way things are done and there’s other industries that are going to be the beneficiary of those changes. So trying to understand the trends is also important. Now you get other people that tell you there’s certain things that never go out of fashion. You know someone said well community banks could be extinct at some point. I said, “All right. Well there’s still 5,500 banks and it’s possible that they’re going to go down to a thousand banks and there’s going to be consolidation and there’s going to be more payments through the Internet and there’s going to be more ways to do things through different currencies in different ways.” That’s true. But that’s why it’s important to constantly learn.

Adam Kaufman: Constantly learning back to our topic of the day right.

Umberto Fedeli: Don’t fight it. You know most people are worried about change. So once you accept a problem, you can deal with it. And in many times we’re fighting something and then once we accept it then we say OK we can deal with it.

Adam Kaufman: One of the things we haven’t yet talked about today but we have in the past is your multifaceted life, not just your business and investing pursuits but also your charitable pursuits and your civic engagement let alone your active family life. One of my mentors told me, “Don’t get so caught up in what we do because when we stop doing it then what are we going to be known for.” And I feel you have managed this well. You’re known for many different things not just your work life, not just the Fedeli Group with your name on the door. Was that intentional to like spread your wings into these different pursuits? Or did that just kind of happen? You got asked to do a favor and that led to politics or?

Umberto Fedeli: I think a lot of life is sometimes not as well planned out as somebody might think.

Adam Kaufman: Yeah. Probably true.

Umberto Fedeli: For instance I just left the meeting where we had a debrief of the children’s hospital and started planning our our big gala. You know my wife and I are blessed with five children and seven grandchildren and so far and God willing more. So to me, what’s more noble than taking care of a sick child, an ill child, someone who is suffering. And so when you look—

Adam Kaufman: How did you get into the children’s hospital? Let’s use that as an example. Was that by chance because a friend asked you to get involved? Or was that intentional?

Umberto Fedeli: What would happen is years ago Dr. Loop who’s now gone, had come up for lunch in our dining room and asked us—

Adam Kaufman: This is Fred Loup who is the CEO of the Cleveland Clinic?

Umberto Fedeli: Yes. And it was two CEOs and then Dr. Cosgrove took over and now Dr. Tommy Mihaljevic is the current CEO and they all are brilliant guys and very committed. And so I went on the board and I figured alright I want to get involved and I’d like children. And also at the time there wasn’t any board members that were really very active with the children’s hospitals so I tried to also get involved where not only am I passionate or I like things, but also where I think I can make a difference.

Adam Kaufman: Well that’s OK. So that was intentional you saw an opening there in the board kind of pursuits. Children’s.

Umberto Fedeli: And I just saw that I’d like children and I just saw that it was an area that a lot of the other members weren’t active with. And I said you know maybe if I get involved here I can make a difference, I can improve, I can contribute, I can expand, I can assist. It’s an area that I liked and an area that I saw where there was a need and I could make a difference. And so sometimes I don’t get involved in certain big things. It’s not because they’re bad but I don’t know how much I can move the dial. And so how much more impact am I going to have with a huge organization that’s being supported and so sometimes I like to find things that are just almost like finding a rare stock that maybe not everybody else in the world is following maybe something that isn’t as popular or something that isn’t as exposed.

Adam Kaufman: Is it a little bit like being a bigger fish in a smaller sea like the children’s hospital you can be the big fish not that you wanted to be big but you want to have an impact.

Umberto Fedeli: I think it is. I mean sometimes you have to say all right, am I doing this for ego or am I doing this because I think it’s it’s mission driven or I can make a difference. And sometimes you have to reflect. And so at the end of the day if you’re really making a difference and you’re improving someone’s life or helping out and the greater good is being accomplished then I think… And also you have to have an interest in that area right.

Adam Kaufman: Of course it’s got to be a passion of yours.

Umberto Fedeli: And so you have to have an interest. When you look at an innocent baby or a child suffering, it’s hard. Now on the other hand when you see people on the opposite extreme at a nursing home or an elderly that now—

Adam Kaufman: Or addicted patients.

Umberto Fedeli: Addicted and there’s other people. So there are so many needs and so many causes. If every person just got involved with one thing and you multiplied all the people they get involved at one thing or two things and then everybody can help out a little bit.

Adam Kaufman: That’s what I try to do. I try to match up people’s passions with needs I don’t try to sell every need to everybody.

Umberto Fedeli: It’s the rational targeting and relationship mapping.

Adam Kaufman: Yeah t hat’s right. Good, see I follow your lead. I met you fifteen years ago and now I’m trying to do what you taught me to do. What do you think this serving of others does for you? You’re serving others through the Children’s Hospital or through chairing the mayor’s campaign for re-election. What does that do for you?

Umberto Fedeli: I think what happens is when you really… You talked about Franco’s book Man’s Search for Meaning. think what happens is that you ultimately find out that you’re probably the happiest most satisfied when you really been able to do something for somebody else.

Adam Kaufman: Absolutley.

Umberto Fedeli: You know we’re human so we’re going to be selfish. But when you really look at that mother who takes care of that child or that person who helps that other person out, what ends up happening is you’re doing the greater good, you’re being that servant leader.

Adam Kaufman: It feels good.

Umberto Fedeli: But ultimately you feel better because you supported something or did something for somebody else that made a difference. And it was the right thing to do. And you also benefit by helping somebody else or doing something for someone else. Right. So it’s a learned behavior right. We have to practice it and do it.

Adam Kaufman: I call this relationship equity. You’re building equity in a relationship. You can make a withdrawal once in a while. I can ask you for a favor but I want to be more on the deposit side.

Umberto Fedeli: And especially when you can really do it, we don’t care about the equity you’re doing it because you say, “You know what? I’ve been so fortunate. What do I need if I can help somebody else out?” When you look at the philanthropy that Americans do.

Adam Kaufman: Highest per capita in the world.

Umberto Fedeli: It’s unbelievable. And the super wealthy once they have so much success they start thinking like they become so generous. Look at all these billionaires—

Adam Kaufman: Giving Pledge. Have you been asked to participate in the Giving Pledge?

Umberto Fedeli: No I haven’t been asked because those are for the real big guys.

Adam Kaufman: Bill Gates is going to call you pretty soon. Better watch your mobile phone.

Umberto Fedeli: Probably call other people before he called me. But the idea— Now I don’t like to be part of a crowd. So what Bill Gates does or what other guys do… To me it’s about becoming the best version of you.

Adam Kaufman: Absolutely. Not to compare right?

Umberto Fedeli: Because what happens is if Bill Gates is worth 100 billion and you’re not. Does that mean you shouldn’t try to do your own thing? I mean I mean you’re not— Is he more important than Adam Kaufman?

Adam Kaufman: Right. We try to talk to our children about the importance of philanthropy and doing for others. But we can only talk about it so effectively at the table. It was only once we took our kids to an inner city church that was doing certain activities outside the church hall for that underserved community. And they saw the needs there and then they decided to give their 25 dollars or their 14 dollars. It was like the experiential memory of being there that led to the inspiration for them to give. So yeah at whatever level that’s what creates the meaning.

Umberto Fedeli: Hey listen sometimes you just be nice to somebody right.

Adam Kaufman: Absolutely.

Umberto Fedeli: I won’t be home too late. Love you Papa. Okay Papa, love you. Say I love Papa. I love papa too. Love you. Bye bye. Bye.

Adam Kaufman: Wow. As Humberto hurries home to get to his adorable grandchildren I want to leave with you today. My big takeaways from our discussion. Number one: when we begin our career instead of just focusing on what we’re good at doing we should think about what makes us feel good while we’re doing it. Number two: Umberto is point that the secret of happiness is love and the essence of love is to serve others. Number three: each of us can do ordinary things in extraordinary ways. Number four: purpose and meaning become more important the order we get. Number five: we are often most satisfied when we serve others. I’m Adam Kaufman and I’d like to thank you for listening to part three of our special mini series with Umberto Fedeli. I sincerely hope you enjoyed today’s episode and I encourage you to subscribe to Up2 on your favorite podcast app or you can visit us at up2foundation.org. Up2 is a production of Evergreen Podcasts. A special thank you to our producer Bridget Coyne and our audio engineer Dave Douglas.

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