Groundwork

Mabel Stratford Hancock, read the name on the gravestone that stood before Matthew Kelly.  The year was 1987, and at fourteen years old, Matt wasn’t quite sure why his father had paused the family’s road trip from their hometown of St. Louis, Missouri, and insisted that they stop to visit Green Mountain Cemetery in Sundance, Wyoming.  “I remember standing there with my father,” Matt recalls today.  “He said we wouldn’t be here if it wasn’t for what she did for my grandfather.  When he began to tell me Mabel’s story, I realized it was more than the stone and the ground that lay before me—it was the very foundation upon which the success of my family was built.”

Mabel was the daughter of a wealthy English absentee landlord of an estate in Dunmore, Ireland.  At the turn of the twentieth century, she was a young woman living on the estate for several years leading up to the Easter Rising of 1916, in which the Irish rebelled against the English.  Matt’s grandfather was the son of the Irish family that worked the estate, and through occasional contact, Mabel saw great potential in the boy and took an interest in teaching him to read.  These lessons came over the strong objections of Matt’s great grandfather, who was violently anti-British.  The lessons continued in secret, in the rafters of the barn and behind the haystacks. Through these lessons, Mabel showed Matt’s grandfather the value of an education and sparked in him the drive to better himself.

When the Irish rebellion began, Mabel left Ireland and settled in Sundance, Wyoming, where she lived the rest of her life.  She and Matt’s grandfather never lost touch, and she would send money back to the estate so he could invest in maintaining the graves of her ancestors who had lived and died there.  They both died within a year of each other in 1950.

“When I saw that gravestone and heard the story, I was most struck by the resounding merit of doing good works, even when you may not be alive to see the eventual outcomes,” Matt remarks today.  “Mabel had no idea how far-reaching her legacy would be.  Because she taught my grandfather how to read, he became a schoolteacher in his town and raised his own son to become a doctor who immigrated to the United States.  She didn’t know the groundwork she was laying with that one seemingly simple act of involvement in one person’s life.”

Beyond Mabel’s choice to take responsibility for another’s education, Matt was struck by his own responsibility to honor that legacy by making the most of life and reaching his full potential.  “I felt charged with carrying the mantle and making sure that all of her effort didn’t go to waste,” he says.  “It felt like my responsibility to do something significant with my life.  It gave me the feeling that I was part of something larger than myself—a feeling I was part of something meaningful, which a lot of people struggle to find, I think.  We need something that drives the competitive juices that evolution has given us.  Ensuring that my predecessors’ efforts weren’t in vain gave me real motivation to make sure I paid attention in school, and to make sure I didn’t disappoint all the people that were quietly watching and hoping that I would carry on what had come before me.”  Now a Managing Partner at The JBG Companies, an investment management firm, owner, and developer poised at the forefront of the Washington real estate market, Matt’s fierce desire to achieve success to honor the past lends an arc of meaning to his life’s pursuits that has guided him well.

The JBG Companies was founded in 1960 as a law firm, but the partnership soon began investing in real estate deals and eventually evolved its core business to include real estate in the Washington metropolitan area.  This continued through the mid-1990s, when JBG put together the first private equity fund for the purpose of investing in real estate in its market.  Now, fourteen years later, JBG is poised to raise its ninth fund.  “We’re a combination real estate investment firm and real estate services company,” Matt says.  “Development is our biggest component, which includes tearing down, redeveloping, and repositioning office, residential, hotel, and retail buildings.  We appeal to investors because we’re focused in one local market, and because we’re the only intermediary between our investors and real estate.”  Larger, more well-known funds, by contrast, invest in companies like JBG and bring along layers of extra fees.  Through its unique, no-nonsense model, JBG has earned the trust of large institutional investors, endowments, charitable foundations, and high net worth individuals.  It employs about 500 people who add value doing the work that requires its team’s active attention and pays real returns.

“For me, it’s a much more interesting way to invest because of the hands-on nature of what we do,” Matt explains.  “Prior to coming to JBG, I was an analyst at the bottom of the totem pole but saw how the business worked at a classic private equity investment firm called Thomas H. Lee Partners.  There, and at other firms like it, the model is to give money to smart management teams and let them create all the value.  Your job is to try to pick ‘em right.  If it doesn’t work out, you can’t just insert yourself and fix things—you have to find another team to insert and fix things because you did a poor job picking in the first place.  To me, that seemed like a very disconnected, removed way of investing, and that’s why we do it differently at JBG.  We aim for the best of both worlds, staying hands-on and entrepreneurial on deal-by-deal basis while maintaining the ability to invest in multiple transactions and deals.”

Matt’s hands-on, connected approach stems from his upbringing in St. Louis by parents who grew up poor and always wanted their children to appreciate the value of whatever they were able to achieve in life.  Although his parents were financially secure, they were careful about spending money and made sure their children appreciated the value of a roof over their heads and food on the table.  Instead of the typical beach vacations most of his friends’ families enjoyed, Matt’s parents opted to spend most of their family vacations on the road, piled into a van or station wagon, exploring America’s sights.  It was done in part to make sure their children grew up down to earth, but also to make sure they knew as much as possible about the country they lived in.  They were acutely aware of the messages their choices communicated to their children, from the way they traveled to the lifestyle they lived, and always made sure to do things for the right reasons.  Thanks to their many road trips the Kelly family grew up close-knit and well traveled, and Matt has now visited 49 of America’s 50 states.

Amidst the traveling that characterized his childhood, Matt developed a childhood lawn mowing business, complete with business cards.  Later, while attending college at Dartmouth, he got a job as a UPS driver during the holiday season.  “It was a month-long gig, and as a commercial driver, I was to drive out to businesses, factories, and warehouses to pick up shipments,” he remembers.  “It was a neat job, giving me the opportunity to work with a lot of Type A, driven, hardworking people who were career truck drivers.  I quickly realized that the only real difference between them and me was the luck of where we were born and what we were born into.  These guys were working their asses off and were as focused on details as I am in my job now, but they had finished high school at best, and so they didn’t have the benefit of education.  There aren’t a lot of UPS truck drivers at Dartmouth, so it was such a valuable experience for me to spend that kind of time with such capable people who lacked only luck in their lives but who had to work so hard just to make ends meet.”  Getting to know his fellow truck drivers confirmed for Matt what his father had always told him—that the blessings he was born with were a privilege that carried the responsibility to make the most of them.

But how best to do that?  Matt had always wanted to be a doctor like his father, but one summer, when they reviewed the course catalogue together, his dad remarked that he’d never heard someone so unenthusiastic about their career path.  It hadn’t occurred to Matt to ask himself whether he was really interested in medicine or not.  It wasn’t until, as a sophomore, he and his father went on a hunting trip in Wyoming that he found his answer.  “You can’t take me with you,” his father had said.  “One day, I’m going to die, and you’ll be left with the choices you’ve made.  If you do something because you think it’s what I want, or that it’s somehow connected to me, you’re not going to be happy.”  With that, he changed his major from Biology to History and Spanish.  “I waded into my new majors blindly, but I knew that because it was my own thing, I’d figure out where I wanted to go with it.  I’d heard the biggest complaint from people who had graduated from college and studied business or econ was that they didn’t spend more time in college studying liberal arts, so I took that advice.  You have your whole life to become an expert in business or economics, so why not take advantage of the opportunity to study something that you can’t easily do while you’re working all the time?”

Upon graduating from Dartmouth, he went to work at Goldman Sachs in New York City as an Analyst in their Leveraged Structured Finance Group.  “When I accepted the position, I didn’t know what those words meant,” he laughs now.  “Suffice it to say, I learned a lot there, and among the greatest lessons was that I didn’t like being on the outside.  As outsiders, we would advise corporate clients, who would then do whatever they wanted.  So it was a great learning experience, but not what I wanted to do.”

One such client was Thomas H. Lee Partners, where Matt worked after Goldman until 2000 when he joined the wife of a Thomas Lee associate at a tech start-up.  In that capacity, he served as the de facto CFO, developing software to augment established but outdated software in the radio and television ad sales industry.  “We failed miserably to raise money from venture capitalists, and instead found support from an angel investor, who invested some cash and some in-kind services from a market research and focus group testing business he owned,” Matt explains.  “We took exhaustive advantage of this for nine months as we came up with the right product.  In the end, because we never raised money at a high valuation, we were cheap for the next investor to buy.  One of Thomas H. Lee Partners’ portfolio companies acquired us for a relatively small sum that was significant to us, but small to them, and without any venture investors telling us the price wasn’t high enough, we accepted.”

While a great success, the experience taught Matt that he didn’t like putting all his eggs in one basket.  “It was fun, but it was also a high risk proposition,” he acknowledges.  “If it worked, it would be great, and if not, then that’s it.”  Having tried his hand at traditional financial jobs and a successful start-up, Matt decided to go to business school to figure out his next move, which led him to Harvard Business School.

Matt enrolled in 2002 and graduated in 2004.  During that time, he studied as many different businesses as he could, and found that he was particularly intrigued with real estate.  “It seemed to me that each and every real estate deal could be understood as its own hands-on entrepreneurial opportunity,” Matt explains.  “There was a lot of fragmentation, and the industry wasn’t dominated by certain players.  I liked the potential for investment upside in the private equity model, but I didn’t like the hands-off nature of picking a team, winding them up, and hoping for the best; I wanted to be in the trenches, doing things myself.”

When Matt joined JBG in 2004 as an Associate fresh out of business school, he originally thought the operation would be a great place to learn for a few years, but would ultimately prove too large an operation to satisfy his entrepreneurial tastes long term.  However, after attending conferences and other real estate industry events, he quickly noticed something interesting—a generational gap in the attendees that he sat square in the middle of.  “I think that, because of the crash in the late 1980s and early 90s and the length of that recovery, as well as the distraction of the dot-com boom in pulling people who might have gotten into real estate away from this industry, real estate really suffered a generational loss from about 1989 to 2003, when it started to become popular again,” he reasons.  “When put next to the promise of untold fortunes in the dot-com boom, real estate was not a sexy industry, but I was drawn to the idea of actually seeing the fruits of my labor rise from groundwork into the air in the form of transformative, lasting structures.  Combine that with the chance to remake how cities function and how people live, work, and play, and it appealed to me on so many levels.”

Thanks to this sequence of events, Matt found himself making his way in an industry that was long on mentors and people who wanted to see him succeed.  “When your boss is five to ten years older than you, there is a bit of competitive tension there,” he points out.  “But when your boss is twenty or thirty years older, he or she wants you to get up the curve as fast as possible so that you can lighten their load and either let them retire or work less.”  Matt certainly benefited from the luck of these demographics, but as Louis Pasteur said, serendipity favors the prepared mind.  Much more than luck, Matt’s passionate pursuit of success brought him to JBG and laid the groundwork for his future there.  He became an owner in 2007, and became a member of the firm’s five-person Executive Committee in 2008.  “Our leadership team has a great dynamic,” he remarks.  “A lot of deference is given to experience and to the notion that your returns are as much driven by the deals you do as by the deals you don’t do.  Some votes can be contentious, and we’ll have vehement business debates and sometimes arguments, but it almost never gets personal.  It all ends up on the table, and nothing is done without full awareness.”

As a leader, Matt emulates his parents’ philosophy of leading by example.  “People follow what you do much more than what you say,” he affirms.  “Even when I was an Associate right out of business school leading a team of Analysts working on a project, I would stay late if they had to stay late.  That motivates people a lot more than telling them they’ll get an extra five thousand dollars in their bonus.  It makes them want to do a good job for you because they can see you really care about them and are looking out for them.  I’ve been in their shoes and I know what it’s like to work extremely long hours for someone else.”

Matt also remembers well what it feels like to be in the shoes of young people entering the working world today, and to them, he highlights the importance of working with good people over the allure of working for a big-name company.  “It’s really hard to know what it is you want to do in life,” he relates.  “Colleges don’t really give you exposure to jobs.  They teach you how to learn and how to teach yourself things, but you have no idea what it’s like to be a money manager or an engineer when you’re in school.  With that in mind, my advice to young people is to try to work with good people wherever you go because you can learn from them.  You can take a job somewhere just because it has a good name or pursue a certain industry or sector just because it’s hot at the moment, but I think getting overly caught up in those things can be a waste of time.  Working with fundamentally good people, however, is never a waste of time.”

In striving to make the most of his time, Matt prioritizes helping others, just as Mabel made a point to help his grandfather all those years ago.  Beyond donating financially to various charities, he has been particularly involved in Ayuda, an organization launched almost four decades ago and named for the Spanish word for help.  Ayuda is a team of dedicated, socially conscious attorneys who help people who were brought to America against their will, either as victims of human trafficking or as the children of illegal immigrants. “Ayuda’s biggest constituency is domestic violence victims whose lives would be in jeopardy if they went back to their own country,” Matt explains.

Making the most of his time, as well, involves taking moments to consciously connect to the people around him, or to the memories of those that brought him here.  These moments are often spent with friends and family, deep in conversation around the fire pit in his own backyard.  “Much more valuable than where you go or what you do is who you spend your time with and how connected you are to people,” he avows.  “A lot of the memories we cherish most in life involve people and experiences we love.  For me, the biggest part of that is my wife Jessica and our kids.”

Matt’s wife shares his values and takes great care, as he does, to be vigilant in the things they communicate to their two young sons, Hancock (named for Mabel) and Angus (named for Matt’s mother’s side of the family).  “She’s an incredible partner,” he says.  “She does so much to keep the train running and does more to make sure we’re happy as a family than I even realize.  We’re both very Type A and detail-oriented, so when we’re too critical of situations we see around us, we keep each other in check and remind each other of how lucky we are.  I really value that.”

So far, Matt’s legacy has certainly been oriented toward honoring the past, making the most of the good will, drive, and sacrifices made by those that came before him so he could have the opportunities he has today.  Yet his life is lived just as much for the present, and for the future.  “I often read about people who’ve done a lot with their lives, and many of them didn’t really get going until after the age of 40,” he reflects.  “Having just turned 40, and with everything I’ve done so far, I ask myself, is it just groundwork for everything I’ll do next?  It not only makes what I’ve done so far seem relatively humdrum, but it also makes me wonder what else I might be able to do with the opportunities I’ve been given in my life.”  After all, in an ever-evolving world and for people always striving to achieve their full potential, isn’t each great accomplishment only
groundwork for the next?

‍