On this week’s episode, Matt sits down with Quentin Smith, Jr. Quentin has over 40 years of experience providing management service to publicly and privately held businesses and is Chairman of the Board of Banner Health, and President of Cadre Business Advisors, LLC, a consulting firm that focuses on strategic planning, performance improvement and crisis management. This episode begins with a detailed description on Quentin’s life growing up in Gary, Indiana and his path in getting to where he is today. He specifically talks about the connections that he made throughout his life that propelled him forward in his career, even personal connections from college that later influenced his career. Quentin also discusses what it takes to be a good board member for corporate boards, the Fleischer Scholars Program at the Walton College, and Mort Fleischer and his concept of the mental balance sheet.
Episode Transcript
Quentin Smith 00:03
As a result, you know, he figured either I was just going to fold completely, or it
was going to make me like tungsten steel because he knew that the environment that
I was going to have to live in was going to be tough. It was going to be still prej-,
you know, a lot of prejudice. And you got to work harder than the next guy because
of the color of your skin.
Matt Waller 00:31
Excellence, professionalism, innovation and collegiality. These are the values the
Sam M. Walton College of Business explores in education, business and the lives of
people we meet every day, I'm Matt Waller, Dean of the Walton College and welcome
to the be epic podcast. I have with me today, Quentin Smith, Jr, Chairman of the Board
of Banner Health, and President of CADRE Business Advisors, LLC, a consulting firm
that focuses on strategic planning, performance improvement and crisis management.
Quentin has over 40 years of experience providing management service to publicly and
privately held businesses. And he is on the board of some very impressive companies,
one of which I tend to be pretty familiar with. He's on the board of Store Capital,
a publicly traded company, you might want to look up really interesting. There's,
it was started by a fellow by the name of Mort Fleischer, who has been involved with
the Walton College and the University of Arkansas. Mr. Smith is also on the board
of Orion Group Holdings, Arizona public service, and many other entities as well.
So Mr. Smith, thank you so much for joining us today. I really appreciate it.
Quentin Smith 02:04
It's my pleasure. Good to be here.
Matt Waller 02:06
You come from a really interesting background, as we talked about earlier. Your father
was one of the Tuskegee Airmen, airmen, which is amazing to know someone whose father
was one of the pilots for Tuskegee Airmen. And so you had an interesting father. And
I know you had a wonderful mother as well, based on what you told me. And you've had
an amazing career. So would you mind telling us a little bit about your background
and your your career?
Quentin Smith 02:42
Sure. And I think it's good for context for what I'm going to say in the questions
I'm going to answer. I didn't come from a family of wealth or anything like that.
I grew up in Gary, Indiana. And for those of you that don't know about, Gary, it's
not the best place on the face of the earth to be raised it was when I was growing
up as a kid. But it turned rapidly into the kind of type of city that was retreating
rather than then going forward. And I had the opportunity to just be like some of
my friends who are still in the same corner, you know, my age, no, no ambition, no,
no career path. But instead, because of both of my parents, I ended up on a different
track. My mother was a librarian. So I was a latchkey kid before the phrase was formed.
So when I got out of school, I would wait for her at her library, and I'd read everything
in there. So I became a reader out of boredom, and because of what she was doing,
my father-
Matt Waller 03:51
That probably gave you a huge advantage I would think?
Quentin Smith 03:55
It did because I couldn't talk to my friends about some of the things I read, because
they didn't know any of these books or authors. But as I got older, you know, having
that depth of experience, the reading has paid off in some regards and made me- I
think, more well rounded. But my dad was a school administrator started off as a Latin
and English teacher. So he was very insistent upon me understanding and being able
to speak the King's English. He thought that was very important. And when we would
miss miss-speak, at dinner he would correct us. So I learned how to make sure I spoke
well. And just a little fine point, because I know he's listening to this, even though
he passed away a few years ago. He was one of the original Tuskegee Airmen. There's
a big difference between the first 101 and the rest of the guys so I was gonna make
that point. But anyway, so so he taught me that education was the most important thing
I could have because once you have it, no one can take it from you. And if you get
the right kind of education, it can bode well for you for the rest of your life. So
I grew up in that kind of environment. But along the way, my friends that I was hanging
out with junior high school weren't the best characters in my father's mind. So he
sent me to military school. So I spent high school in military school, a place called
Howe Military just east of Notre Dame in Indiana. And that helped me become a stronger
person because out of 450 kids at that military school, there were eight that were
black, and I was the only one black in my class. And as a result of my the way my
father raised me when I graduated, I was president of the class, I was a top commanding
officer, in terms of awards. I was in the varsity club, was the editor of the paper.
It was, as my father would say, to A Boy Named Sue kind of situation for your students,
they won't know what Boy Named Sue means, but tell them look it up and find that that
that song, and they'll know what I mean. So he made sure that I was tough as nails.
And it's helped me in my career. So that's that's the background. And I went to Purdue
because it was right down to the I-65. Highway close by. And it was cheap it was $500
a year to go to Purdue in 1968. And it's not that anymore. And I started off in electrical
engineering. But 7:30am calculus classes made me think twice about that. So the counselor
said, I'll give you a hint, the engineers work for the business guys. So I switched
to the Krannert School of Business, and graduated a double major industrial management
computer science, and was recruited for my first job to Southern California Edison
in Santa Monica, California. So I went from West Lafayette to Santa Monica in about
six days. And the rest of it is pretty lengthy. But I ended up working in industry
for about eight years, figured out I'd be a pretty good management consultant. I like
the diversity of problems, you know pretty quick study. So I moved from Southern California
Edison to Hughes Aircraft, to Universal Studios, to Great Western savings to get a
broad spectrum of different industries. So I understood those. And then I started
my own company in 1983. And was started with a consulting firm and then bought a company
for about 35 million and tagged that on to that it was a data center processing company
for banks. So that in 92, tried to retire, didn't work. And we moved from LA to to
Scottsdale in 92, as well. So I've been here in Scottsdale since 92. been involved
in a lot of different things done some turnarounds of companies that are in bad shape
been on public boards, taken two or three companies public. Just a very fortunate
set of circumstances for me personally and professionally. And I've met some great
people along the way, one of them being the person that we have common denominator
in Mort Fleischer. So that's to, you can say that's my story. And I'm sticking to
it.
Matt Waller 08:33
Well, what a great story and you know, in, in starting your own company in 1983. So
39 years ago, almost 40 years ago.
Quentin Smith 08:49
Yea, 20, 32 [years].
Matt Waller 08:54
So, and then you eventually bought a company that was a data center processing company
for banks. And but what what made you- How did you find that deal that opportunity?
Quentin Smith 09:13
Well, two things that were important to do in that deal. The first one was there's
a there was a guy his name is Reginald Lewis. He wrote a book entitled "Why Should
White Guys Have All the Fun?". Reginald was the first black entrepreneur to do a leveraged
buyout in the 80s he bought Beatrice Foods for a billion dollars. He was one of my
fraternity brothers. I had a chance to meet him and he said, Quentin you- at some
point you need to own something, not just work for somebody, you need to own something.
So he introduced me to his banker who did that deal. And so put a pin in that as one
resource. The other resource is one of the companies that co-own, this data center
company that I bought was one of my clients in LA is called Coast Savings Bank. And
I made an offer to them to buy that data center company from him and the other banks
that owned it. And Reginald introduce me to his bankers, Drexel Burnham, they did
the financing, and we bought it for 35 million. That's how it- that's how it was done.
Matt Waller 10:29
Well, I remember back, you know, when I was a young, I was an undergraduate student
in business when Reginald made that deal with Beatrice-
Quentin Smith 10:44
Right.
Matt Waller 10:45
Which was really- and so it made the news I I was just newly reading the Wall Street
Journal back then. And I remember reading that, and if I remember correctly, he died
at a fairly young age, didn't he?
Quentin Smith 11:01
Yeah, he had brain cancer. He died at 50, I believe. But but he was able to touch
a lot of people like me along the way, and one of the people that that I've met along
about the same time as Reggie was Vernon Jordan. Vernon was an attorney but he was
a deal maker, rainmaker guy ended up becoming Bill Clinton's number one outside guy,
and Vernon told me, you need to figure out how to get on corporate boards, because
that's where the real power is. So between Vernon and Reggie, they were the like,
the keys for me to get at a young age an understanding of what is out there if you're
willing to apply yourself. So on one track, I started preparing myself to be a worthy
board candidate for a corporate board. And I've been on six public company boards
as a result of that, and a couple of private boards, and then with Reggie to be able
to have enough sense about what to pick as a target to buy, and being able to put
the financing together to buy it.
Matt Waller 12:09
Well, you know, it shows you how it's not, it's not enough to just know people. But
if you've got the capabilities, and you're willing to work hard, knowing people can
make a big difference, and-
Quentin Smith 12:23
Exactly.
Matt Waller 12:24
You know. And it's funny, you know, of course, you said it was your he was your fraternity
brother. That that's something people don't often realize that when you're in college,
a lot of the people that are your friends, there's a certain number of them that are
going to really do quite well and possibly help you in business later. You don't realize
it when you're rubbing shoulders with them, but but it happens.
Quentin Smith 12:56
Right. And while you're there, you're just trying to get get out of there in four
years, and get your get your your graduation over with. And that's all you're really
focused on, or maybe partying a little too hard, depending on what school you went
to. But what, you know, the whole objective is to get that I graduated from a college,
which gives you the ability to be credible to get a real job. So that that's where
I was focused. But then after you get out, you realize networking is extremely important.
If you looked at my personal balance sheet, this is what Mark talks about your personal
balance sheet, the biggest number on that balance sheet isn't the money I have in
the bank. It's the network of people that I know. And that trust me, and I trust them.
And that I can use I use don't mean that in a negative way, but use to leverage certain
outcomes, either for myself or for others, like they have done for me.
Matt Waller 13:54
You're right, Mort talks about that a lot. A great concept. And he also talks about,
you know, thinking of yourself as a missile-
Quentin Smith 14:10
Right, a guided missile right.
Matt Waller 14:12
A guided missile. And so you have to make course corrections as you're as you're going.
But you're going somewhere.
Quentin Smith 14:23
Yea you have to hit a target. Otherwise, there's what's the point, right? But even
though you have a target, as you were saying sometimes the wind blows a little differently
or, you know, some something goes wrong with one of the engines isn't firing, right?
And you have to make those course corrections. So it's yeah, that those are two really
good analogies that Mort has come up with
Matt Waller 14:44
He has and of course, he shares that with a lot of young people. Especially through
the Fleischer Scholars Program, which I know you're a board member of. Is that correct?
Trustee?
Quentin Smith 14:55
Yes. I enjoy that relationship immensely.
Matt Waller 15:00
Then you're also on the board of Store Capital, which is an amazing company. Would
you mind talking about Store Capital just a bit?
Quentin Smith 15:09
Sure. Store Capital is the third is kind of 3.0 for Mort, he started with a company
called FFCA, franchise, Finance Corporation of America, which was doing all the real
estate, and land, buildings and land financing for people that bought franchises.
So he would be the underwriter of that he would own the land and the buildings and
rent them back or lease them back to the person that owns the McDonald's or the KFC
or whatever. He sold that company to GE Capital 2001. He did another 2.0 of FFCA.
After that, with some partners that as Mort would say - that don't do well with partners.
And this was a case where it sounded good on paper, but it didn't work out. And he
moved on from that. And then in 2014, established Store Capital to do fundamentally
the same thing sale leaseback of corporate properties, but this time is bigger properties.
So companies that are middle market have big manufacturing buildings or distribution
centers, we would- those those companies have those buildings that they paid for,
and the value of those buildings just sit on their balance sheet as a number, that
cash is just a representation of the value. But for them to expand, you have two choices,
you can go to the bank and get more debt. Or you can do what we do for them at store,
which is we'll buy that building from you, pay you cash for it, and you become a tenant
of your own building, you pay us rent. So you get that cashed up to expand your business,
you stay put, you don't have to move. Business as usual from the day before you do
the deal with us to the day after. And you have the ability to expand without incurring
that kind of debt. So store was in is in that business, we have about 3000 properties
that are across the United States. As I said, we took Store public in 2014. And, and
most recently, because of its success, it's become a acquisition target. And the company
has an offer pending to buy it for $14 billion.
Matt Waller 17:30
Impressive. So you've been on the boards of quite a few firms. What does it take to
be a successful board member to really make a positive contribution?
Quentin Smith 17:43
Well, the first thing is having some expertise that if you are added to that board
will help the company be a better strategic thinker. And develop a strategic outlook
and execute on that and help the management team to be able to define that strategy
and to help them execute. But you have to as a board member, you have to understand
the fine line between governance, which is oversight. That's what boards do, and crossing
the line into operations trying to tell the CEO well, you need to do this. So you
have to manage that fine line, you can be helpful and instructive, and provide oversight,
but you have to be careful not to try to run the business. So experts- a certain expertise
that's added value, knowing where that line is. And making sure you understand what
the rules are about governance and what your responsibility- your fiduciary responsibilities
are so that you fulfill those and you don't run a file of the Securities and Exchange
Commission or any other regulators.
Matt Waller 18:53
If you wouldn't mind that would I'd like to go back to the Fleischer Scholars Program.
Quentin Smith 18:57
Sure.
Matt Waller 18:58
I really. I mean, I remember the first time Mort was telling me about it. I'm like,
yeah, he was telling me you know, your brains like a servo mechanism
Quentin Smith 19:08
Right-
Matt Waller 19:08
and all this kind of stuff. What are you talking about? The more he explained that,
the more I really liked it. And I thought what a great thing for students to learn,
especially, you know, when they're young, preferably before they get into college
even. And I remember when he told me about the mental- what did he call it, the mental
balance sheet. We mentioned that early- earlier. And he says and it's funny because
Mort thinks in terms of finance and economics so much doesn't he?
Quentin Smith 19:45
Right, right.
Matt Waller 19:48
I remember, I think one of the first times I talked to him about the store capital.
I said, how did you know this was an opportunity and he said, at a high level, there
was a, a market gap, there was, there was a need that wasn't being met, there was
a problem in the market. And I won't go into all that. But he said, we solved a problem
in the market.
Quentin Smith 20:17
That's absolutely right.
Matt Waller 20:18
You know, and he's so good at explaining things like that. But I remember, when he
was talking to me, and I thought, a mental balance sheet. So I thought, okay, a balance
sheet has assets, liabilities, those are very clear, and your, your net worth. And
he said, here's how I think about it. And you mentioned earlier, you know, there's
this empirical knowledge you have, that it's the sum of all of your experiences, and
your connections, your people you're connected to. And then you've got your intellectual
capital, which has to do with your academic and life experiences, you've got your
liabilities. And liabilities, things like things you don't know, connections, you
don't have and things that are missing, and then your moral compass. You know, he
said, those four things together, make up your mental balance sheet. And so, you know,
we had the students and these, by the way, for those listening that don't know, the
Fleischer Scholars Program is like a bridge program
Quentin Smith 21:33
Mhm
Matt Waller 21:33
For students that they go to before they go to college. And the students start thinking
through these things, what, what, what is my life experience? What do I want it to
be? Those kinds of things. And he talks about this thing called a three legged stool.
And, again, this was another thing where I'm like, what, what's a three legged stool
have to do with this? but but one of them has to do again, it ties back to some degree
to the, to the balance sheet, the mental balance sheet, but, you know, you've got
to the empiricism, you're the sum of all your personal experiences, meaning, empirical.
So as you go through time, you collect all of these experiences and connections, and
they empirically affect what you're prepared to do and your assets, kind of your,
like your assets. And, but your brain, he said, is like a servo mechanism. And so
you know, that you you're, it's kind of like a heat seeking missile, but you got to
know what your goals are.
Quentin Smith 22:45
Right.
Matt Waller 22:46
And then you're a missile. And you've got to seek out this target. And, but, you know,
and so you use all of this to create a mental roadmap, where you treat your brain
like a computer, and you know that everything you're doing is programming. And so
one thing I really liked about that is, and I really believe this, like, when you
were young, Quentin, and you were, and your mom was a librarian, and you were reading
all these, these books, you were affecting your brain, you were programming at some
degree, with a wide variety of knowledge. And really just the ability to read well,
I mean, reading well, helps you write well, and writing well, is very helpful in life.
But, but, you know, Mort's come up with these really interesting metaphors that instead
of using fancy, you know, psychological terms, he uses these simple metaphors that
anybody can understand. So that's what I really liked about it.
Quentin Smith 23:59
Well, yeah, I mean, you're actually right, Mort knows how to crystallize things. And,
for me, you know, it was different because there was no doubt I was going to college
from the time I was born, I was gonna go to college, there was my father probably
would have, you know, taken me out to a dessert just dropped me if I said I wasn't
gonna go to college. So that was a foregone conclusion. But the targets of the Fleischer
scholars are primarily those kids, where their parents have never been to college.
No one in their family has been to college, they might be the first generation to
go to college. So you got two things, you've got to deal with. One, you've got to
orient them to the fact that going to college is a worthwhile endeavor, and that it
will pay off if you subject yourself to going to college. And then once you get a
young person to understand that, the next thing that comes to the parents, and the
question is okay, that's great. You've now convinced my son or daughter, they should
go to college, well, how am I going to pay for that? So it's a tree that falls in
the woods with nobody around, it doesn't make a sound, because you've got to have
the two of those linked together to be able to get the parent and the kid to just
decide this is worthwhile, and Fleischer Scholars is that glue that helps parents
and the kids understand both sides of those equations. So one of the elements about
Fleischer that makes it even more different than it already is, in terms of getting
a young person to understand the mental balance sheet metaphor is that we have another
tool that helps crystallize all of the scholarship money that's floating around in
the air, how to find something for them. So they can finance going to school and have
even more than just tuition and books. And, and residence fees, but money leftover
to be able to put some on the kitchen table for their for their their family. So those
things combined makes Fleischer very unique, very powerful. And for people that get
it, it's paid off considerably. Some, some don't get it, and then the parents don't
get it. But for the ones that have and there have been quite a number. It's been very
effective.
Matt Waller 26:28
Well, Quentin, thank you so much for pouring into the Fleischer Scholars Program and
for serving as a trustee to advance it, I personally have witnessed the effects of
it on students. And our results have been really good in terms of, you know, the number
of students that go to school and then finish. So I'm very grateful for what you're
doing. With that. It's, it's really making a positive difference. And I know that,
you know, someone like you, you could do anything you want. You don't have to do this.
And same with Mort, he could just go off and do whatever he wants. But he's electing
to serve mankind, if you will, through through something like this.
Quentin Smith 27:25
And on top of that a lot of people are like Mort, that want to do good things. But
they want other people's money Mort has put his money where his mouth is, literally.
And I admire him for being that dedicated. And it will survive financially. It- through
his estate. And his estate has only one benefactor. And that's Fleischer Scholars.
So it's you know, he's an exceptional man. I've been like I said, the biggest thing
about balance sheet are people that I know and Mort's in the top three, other than
other my parents. He's in the top three.
Matt Waller 28:08
Wow.
Quentin Smith 28:09
I enjoyed working with him. And when it was time, when he asked me to to get involved
with Fleischer scholars, it wasn't, it wasn't there was no option. It was yes, sir.
I'll do whatever you want me to.
Matt Waller 28:22
Well, tell him I said hello. I really miss spending time with him. I haven't seen
him for a while. But-
Quentin Smith 28:29
Yeah, yeah he's enjoying life. And he and Donna are you know, traveling. He's my father
would do something else that was really, really good. He, this was back when he only
had an answering machine, right? And he would call me knowing that I was not going
to be home to answer the phone and he would leave a single message, which was a question.
When was the last time you smelled the roses? That's it. That was his way of saying
I know you're a hard worker. I know you get really into what you're doing. But you
got to take the time out. Smell the Roses, whatever, you're-
Matt Waller 29:07
That is good advice.
Quentin Smith 29:09
Yep.
Matt Waller 29:10
That is so good. You know, one time this was a quite a few years ago. One- I think
it was- so I've been here at the University of Arkansas for 28 years. And I've been
Dean for 8. But I remember one day I was- and I was a very hard working professor.
You know, I tried to I wanted to be the best teacher. I wanted to be the best researcher.
I was really ambitious. And I realized one day I looked out my window I thought this
is a beautiful campus here in the Ozarks, and I never think about it. I walk across
it, and my head's always on work, you know?
Quentin Smith 29:52
You're like this- the tunnel you just you know, like you don't see all of that right?
Matt Waller 29:57
So I got up and I took some time and I walked out on campus and I really enjoyed it
ever since then I, I do that periodically. It's- but to your father's advice is so
good. It's good for your mental health and just being able to enjoy life.
Quentin Smith 30:17
Yeah, another thing I told him I said, the older I get the smarter he gets. Because,
because I, you know, I, he and I were would do this when he was forming me, you know,
because it was it was pretty brutal given I'll give you all the examples if you got
a minute. So I was probably about eight, nine years old, and I was down at the local
YMCA and there was a flyer that says learn how to swim for $15. So I come home with
the flyer and I said, dad, I need 15 dollars, I'm going to learn how to swim. And
he goes, you know, you don't need $15 I said what was that it's not free. He said,
get your swim shorts on- get your swim shorts, come with me. So Gary, if you know
geography Gary's right at the bottom of Lake Michigan. Our house was probably eight
miles as the crow flies from Lake Michigan. Okay, so he piles me in the car takes
me out to the beach and Lake Michigan has me going a little restroom change clothes.
Now my dad- can't tell by looking at me- My mother was 5' 1" my father's 6' 3" to
4". Okay, so I'm right in the middle. So he picks me up over his head, walks all the
way out into Lake Michigan up to here and throws me and walks back.
Matt Waller 31:33
Oh my goodness.
Quentin Smith 31:34
So he goes back and he's sitting, reading a book. And about it felt like an hour later,
but a few minutes. I'm here I am- I'm back on the beach. And he goes, so how did you
get here? I said I guess I swam. He said I told you you didn't need that 15 dollars.
Matt Waller 31:56
Oh, my goodness.
Quentin Smith 31:57
That's the way he raised me. Okay. Fortunately, I was able to withstand that approach.
Because he I mean, I all the things I did at the military school. Just top of everything.
I'm given the president speech as a graduating class, I look in the audience. I see
my mother, my aunt, my brother and an empty seat. I figure oh my father's out having
a smoke or something. I finished, we graduate- graduate. I asked, where's Dad, he
didn't come. So two hours from Military School back to Gary, I'm just steamed coming
out of my- I get in the house. And I'm all in his face. And he says, when you do something
worth me showing up, let me know. That's the way I got raised.
Matt Waller 32:47
Whoa-
Quentin Smith 32:48
Yeah
Matt Waller 32:48
High standards.
Quentin Smith 32:49
I mean, he and as a result, you know, he figured either, I was just gonna fold completely,
or it was gonna make me like tungsten steel, because he knew that the environment
that I was going to have to live in, was going to be tough. It was going to be still
preJ-, you know, a lot of prejudice. And you've got to work harder than the next guy,
because of the color of your skin. And he would not let me leave the nest unless I
had that tungsten steel coating first. And it ser- it has served me well. He raised
my brother the same way. He didn't he didn't make it, he- it broke him. But for me
that that's what keeps you know, the- Dracula away. I mean, that's, that's that's
the skin I have around me from what he built around me to be able to, to give me that
tungsten. So very, very interesting background.
Matt Waller 33:50
Well, Quentin, congratulations on your tremendous career success. And thank you again
for what you're doing with Mort and and the Fleischer Scholars Program. It's needed
and making a positive difference in society. So thank you.
Quentin Smith 34:10
Well, in fact, even just one kid, we've done it done a lot, but we were doing it but
by the hundreds and hopefully get to the 1000s. And, and it's a bit it's one of the
best things I'm involved in as well as the hospital system. So I thank you for the
opportunity to talk and to make your acquaintance. I'm sure we will probably talk
again and maybe make a trip down with Mort to to the university and in the future.
Matt Waller 34:32
I would love that.
Quentin Smith 34:33
Okay, take care. Have a great week.
Matt Waller 34:37
On behalf of the Sam M. Walton College of Business, I want to thank everyone for spending
time with us for another engaging conversation. You can subscribe by going to your
favorite podcast service and searching. Be epic B E E P I C.
Matthew A. Waller is dean emeritus of the Sam M. Walton College of Business and professor of supply
chain management. His work as a professor, researcher, and consultant is synergistic,
blending academic research with practical insights from industry experience. This
continuous cycle of learning and application makes his work more effective, relevant,
and impactful.His goals include contributing to academia through high-quality research and publications,
cultivating the next generation of professionals through excellent teaching, and creating
value for the organizations he consults by optimizing their strategy and investments.
