#316 - John Goff - Founder @ Goff Capital Partners

Chris Powers: John, welcome to the show today.

John Goff: Good to be here

Chris Powers: I've been excited to do this for many years. An excellent place to start would be something that we share in common. You told me the other day I suffered from ADHD, which you tend to find in entrepreneurs, but can you expand on why you thought that might be something we could discuss?

John Goff: Yeah, I did as a young kid, but I had it, and Later in life, as I went through, you know, various medical treatments and examinations, it was something that was p, but it became an issue for me when I went to the University of Texas, and I was studying electrical engineering.

You know, there was a lot of studying involved. I signed up for way too many hours, and I just became overwhelmed with the workload. I wasn't able to keep up at first, but one thing I did was build my stereo from scratch, and I love music. So I hooked up the stereo to some decent headphones at the time, nothing like what I have on today, but they were pretty good. I started listening to classical music as well as a particular artist named Leo Khaki, who seldom sang, but he played a 12-string guitar. He was amazing and listening to that music. I could dial into whatever I was studying, and it was miraculous.

And so I suddenly became great at studying, and I could condense it into a short period by simply listening to music on these headphones. It took everything in the outside world away, and I could focus.

Chris Powers: Do you still do that today?

John Goff: I do it occasionally but don't necessarily wear the headphones.

I'll have the music and background on, but it calms me down. And it enables me to focus on one thing at a time and not jump around.

Chris Powers: We'll pick up on that later because you manage a lot. And so we can talk about how you prioritize; you left UT and were in accounting.

And in today's world, accounting has always been something everybody's like. I don't want to study accounting, but the numbers don't lie; they are the business language. Today, kids want to major in all these crazy things, but accounting seems always to be what I do when I listen to many investors or read about them; accounting plays a background.

Can you explain how accounting has impacted your career and why you chose it early on?

John Goff: I chose it because I was going through an internship program with Dow Chemical while studying electrical engineering, and they desperately needed engineers. There was a shortage at the time.

And so I knew I would have a job there and loved electrical engineering. There were no girls, and you know that nothing is wrong with this. Still, there were few people I had a lot in common with on a social level, so in my third summer of interning with Dow, I interfaced with the business people at a chemical plant in Brazil; I didn't get to go to Brazil. Still, I was in Freeport, Texas, interfacing at a table like this. And there were all these business people on one side and all these engineers on the other. And I quickly realized I was on the wrong side of the table.

So, I went back to school, and I changed my major. I had to cram all my electrical engineering, physics, and crazy math courses into my electives. And I got through accounting. I graduated one semester late but did some summer school, but I got through it. It was a remarkable degree, but it was tough. Even back then, that was the number one accounting program in the nation and still is.

I thrived in it, learned a heck of a lot, in the application of accounting and business is just, it's an everyday thing, and I would, you know, fast-forwarding in my career, I would attribute that training to Richard Rainwater who saw something in me, and this guy can rip apart a financial statement because I've seen him do it as well as anybody, and that's what I need.

Chris Powers: That is a perfect lead into where I want to spend some time because there have been bits and clips of you talking about Rainwater, and I reached out to many people and asked, what can I speak to John about? And a lot of it was like, let's talk about how Rainwater influenced your life. An excellent place to start would be to tell me a little about Richard. Why was he so great?

John Goff: Just a fantastic man, straightforward yet complicated, and I stumbled into Richard while working out; after hours, we worked out at the same time at the City Club here in Fort Worth, and we became somewhat friendly just talking while working out, and then he decided he wanted me to do some actual work for him.

I was at the time, Pete Marwick, now KPMG, and KPMG had the Bass account, which was a significant relationship for the firm. Richard was chief investment officer at the Bass family at the time, and he asked the firm to assign me to him. And so I got to sit in his office for days, weeks, hours, at a time; it was just a fantastic experience, and anything you need to do, I would do, whether analyzing a financial statement or helping him with his finances, et cetera.

And then, when he left the basses in 1986, he, in early 87, called me and said, I want you to join me, so I did.

Chris Powers: And what was the culture like in those early days? Because you've heard about it, maybe Trammel Crow or all these descendants of Trammel have gone on to do great things. You now hear that with, you know, the tiger cubs, but Rainwater now is proving, I mean, it's in hindsight that you find out this is true, but you look all around the country, and he put out some incredible business people, or at least he was linked to them.

John Goff: It was a very unique place. It was akin to a pickup basketball game. Every day was different. You never knew who was going to come into the office. One day, it might be Michael Milken. The next day, it was, you know, Eisner who was running Disney, or you just, you never knew.

And within the office. We were significant and had all this capital. We didn't. It was not all that big. There were relationships where there was capital, right? But when Richard left the basses, best I recall, he had 50 or 60 million. It was a lot of money.

But not billions. There were only a few of us and very few people. The ability to hang around this great mind was genuinely unique. And so there were a lot of businesses that begin within that, those four walls. I remember when I was there, we had Rick Scott creating, you know, a big major healthcare company that became the largest healthcare company in the world. You had Ken Hirsch starting natural gas partners, and you had Mort Meyerson, who had sold EDS to General Motors and had left and was looking to do his next big thing; George W. Bush sat in my office for weeks while we worked on putting the ranger deal together.

It was before he was even governor. When he came in one day and said, I'm going to run for governor, I said, you can't do that, George; you're too much of a smartass. And he said, no, I toned that down. But anyway, it was just an incredible place with all this talent coming through the doors. And I was very fortunate to be there.

Chris Powers: Was he a great investor, or was he amazing at spotting talent and giving them the backing they needed to exploit the skills that they had, or both?

John Goff: I would say both. Richard had an excellent investing mind colossal picture. He always told me that he said, John, get your ideas off the paper's front page, not the business section. It was back in the day when we read newspapers. I still do, and that was, you know, that's what he looked for trends. He looked for contrarian plays, things where everyone was exiting, and that's where he found a way to enter, you know, so in the late eighties, it was the oil and gas industry in the early nineties, I decided to focus on real estate, you know, there was all very much contrarian. Still, he was also incredibly good at attracting great talent.

During that same period, Eddie Lampert left Goldman Sachs and started his hedge fund in our offices. So it was just this amalgamation of incredible talent, and he was very good at attracting that talent but never paid him.

Chris Powers: But how did he attract that? There had to have been a magnet to it. Is it like what?

Why did everybody that was so great want to be in that office? Is it because it was like a super team in the NBA that everybody just wanted to be there once you have Lebrun and a few people on the team? Or was it something about him that was pulling people in?

John Goff: He was a terrific cheerleader; the energy and enthusiasm he brought to the table every day was contagious.

And I learned from that. I tended to be much more introverted, but what did Richard see in me? I'm unsure, but he saw something more significant than I saw. And he believed in me, and he just let me run. And it was that way with everyone there. He gave them a lot of rope. He never told anyone what to do.

Never, I don't know that I ever heard Richard say, do this.

Chris Powers: How did you know? How did people know? So you take a typical company, maybe focused on one thing, making iced tea. You could measure their job better. Are you doing a good job or not? But I picture these absolute stone-cold killers all over the office.

How did people know if they were doing a good job? Is it because they were on to a great business idea, and it was starting to form? Because I talked to Willkie in that episode, I asked him what it was like to work around you. And he said John never really did the same. He never told me what to do, and he was okay if years went by and an idea didn't percolate.

But you have the sense that somebody's doing a good job. How did you know you were doing, or how did anybody in the office know they were doing an excellent job for Richard?

John Goff: He through results. He was impatient in specific ways but very patient in others, and he would help raise capital.

That is one area where he could attract capital to a great idea. So, if he saw a great idea, traction, and results, he could help that entrepreneur or business person attract the capital to grow that business. So that was an essential part of his success. And I got there was no better cheerleader on the planet.

He would say things about me or others that were a stretch of the truth, but Richard could pull that off because he was so playful in discussing things. People gave him a lot of latitude in that discussion, and they never took everything he said literally.

Chris Powers: That patient part, I was talking to a guy who I know you probably know in town, but they have a big family office.

And I asked him, I said, what made that guy so great? And I'll tell you at lunch. It was, and he said when everybody else wants to sell the company or ditch it, his patience to stick with it has created a lot of success. Most people can't think that long, and it sounds like that's the same with Richard.

We're getting closer to Crescent starting, but there was something that we talked about that was interesting. You and I have spoken about raising capital and how it's gotten more arduous, and there are gatekeepers and consultants. And you told me a story about JP Morgan having an office at Rainwater's office and how things worked in the eighties and nineties.

It is fascinating for people to know. Can you describe that situation and how it worked?

John Goff: Yeah, this all goes back to that creativity, playfulness, and light-heartedness that Richard had. We, it was a banker's trust at the time. It was a big lender to buyouts, and, you know, they were on the cutting edge of financing and corporate transactions back then.

And we liked a particular banker there, and he was in our office a lot. And then one day, Richard just playfully said, Hey, Chuck, open an office here in our office because you're always here. You can have this office. Right next to John. And so Chuck called headquarters, and at the time, you know, the banking regulations, et cetera, were a little different than they are today.

And lo and behold, the office with us. So we had a bank within our offices, and the bank got to look at everything we did. I did some of it, but the bank could pick and choose. So it was just a crazy place, you know, that was very organic, it was net, you never knew what was going to happen from day to day or who might be in the office.

Chris Powers: And you could come out of a meeting with an idea and walk into his office and say, we might need some capital for this, and that's how capital formation might get started.

John Goff: Yeah, to segue to Crescent, the origin of the idea that I had dates back to Roger Staubach coming into the office in the late eighties, and Roger was in trouble.

He had invested in many real estate deals, and they had yet to work out, but no real estate deals that had the origin in the eighties worked out. And Roger was trying to figure out how to get out of it. And Richard said, well, I'm not going to give you any capital, but I will assign John to you to see if he can help you through it.

So Roger was Gosh, you know, I idolized the guy, and it was amazing to be with him, and so I spent time helping him unravel from these bad real estate deals. And he did so in stellar fashion and was so professional through that process. However, I identified that Roger had this tenant representation business, the only one in that industry.

He had kindly, in a way, created it. And I said, Roger, you can open any door in corporate America, other than maybe Washington DC, only the redskins at the time. Which ironically became his largest office and one of the most profitable, but business is doing well.

It would help if you never did another real estate investment. You should focus on tenant rep; we would love to buy part of that business. So we purchased 20 percent of the company. I went on the board, and we paid a million bucks for 20 percent of the company. It was doing 5 million in revenue and a million in cash flow, so we spent five million, and it ended up that 1 million became worth close to 80 million bucks over time.

When I returned to Richard and told him we would invest in this, he asked why we were messing with something so small. The reason was that I didn't when I started with Richard; I didn't have a lot of money, so it was something I could own a meaningful part of, and I loved Roger, and to this day, we're best friends. He ultimately sold that business for over 700 million to Jones Lang LaSalle.

But more importantly, what I got out of it was this incredible insight as to where companies were moving and why they were moving there. So day we see it in spades today, but back then, there was a lot of migration into the most overbuilt part of the United States, which was right here in our backyard.

So I thought, wow, there are only a few exciting things to do in the corporate buyout world at the time or buying distressed debt other than real estate. So I went to Richard with a yellow pad and one sheet of paper and had an idea sketched out. And I said I wanted to create a real estate company.

And this was over lunch, just the two of us sitting in a conference room. And Richard said, I love it, but you got to put up your entire net worth, and I'll allocate. You know, a certain amount of capital. So that was how Crescent was born.

Chris Powers: What was on that piece of paper?

John Goff: Well, the number one asset on the, I had a list from the top down to the support.

I wanted down the number one asset was the Crescent in Dallas. Somebody had completed it in 1986. Carolyn Rose hunted, you know, a fantastic job of building an iconic support. To this day, the state still gets some of the highest rents. But it needed to be more leveraged and put together before it's time.

It was not vacant at the time, but I thought if any buildings were going to get settled, it was this one. And so we bought it by buying the debt. So there was over half a billion invested in it. We purchased the debt piece by piece over a long period. Richard got very nervous with me along the way, and we had a lot of late-night calls that were nerve-wracking.

I wouldn't sleep for days, but we bought it for 172 million, and that was the, you know, the cornerstone of the company that I then took public in 1994.

Chris Powers: Okay, real quick. You said you were buying debt piece by piece, so it wasn't just one lender. How does that work where you're buying it piece by piece?

John Goff: Yeah, as I recall, there were like 12 lenders in the credit, and there was a guarantee by Mrs. Hunt on, like, 150 million of the debt. So that complicated things; the banks relied on that guarantee to get repaid. The debt amount in total, as I recall, was 375 million, and she had a lot of equity in it, but the equity was at that time gone.

So I was able to create a partnership with her to allow her to buy out of her guarantee and get equity part of the equity as we contributed it to the public company, and that became what she ended up doing well, which was beautiful. You know, we didn't want, didn't wish ill will on her, cause she had built a great asset.

But anyway, we bought those banks out piece by piece, and it was. It could be more straightforward. And yeah, when I initially called all the banks and said, Hey, I'm here. I'd love to buy your debt. They all told me to go away. We have a guarantee. But what happened was that 1st Republic Bank was the lead lender.

They failed, and so suddenly the FDIC was in the lead bank role, and they just, so now you had a ship without a rudder. And so I started getting calls from the banks. Are you still interested? We may want to sell. And I was able to buy him out over it. It took a couple of years.

Chris Powers: Well, did the company not start, though, as a public company, you eventually went public, or did it start day one as a general end?

John Goff: No, it was a private. It was impossible to find the capital. I somehow scratched and clawed and found it, but it was tough.

Chris Powers: Okay. I will return to the yellow pad for a second, plan one by the Crescent. What else was, what was after that by more iconic assets like the Crescent, or was there more to the plan?

John Goff: Yeah, it was just a list of the top assets in the state. So, it is primarily based right here in the Metroplex. So, you know, Trammell Cross Center, Fountain Place, and ultimately we acquire those assets.

Chris Powers: The thesis was by the best-located office buildings in the best markets we can.

John Goff: Yeah, it was my feeling. Everything theoretically is for sale, right? Because everything at that moment in time was over-leveraged. So there was going to be stress about whether or not we would be able to buy it or if the ownership was strong enough to recapitalize it; we'll see. But there's an opportunity to accept virtually every great asset in the state.

And so we were able to accumulate some, you know, beautiful assets. In 1994, Merrill Lynch took us public and teeny tiny in today's terms, but at that time, it was the largest re-IPO in history.

Chris Powers: Why did you want to go public?

John Goff: Access to capital?

Chris Powers: Okay. You had more ideas than you had capital.

John Goff: Right, it was tough to find the capital. It was hard to find the people to even work for me because you had all these bodies washed up on the beach from the eighties, and they're like; I'm not going back into real estate. I just got toasted. You know, I had to file personal bankruptcy. There were all kinds of stories.

So it took a lot of work to even assemble the talent.

Chris Powers: We're going to talk about how your career has progressed and a lot of the similarities you said, but you said something when you were saying the Crescent, you said, I knew it was a building that was quality and that would lease. And that same thesis applies to some things you're doing today.

But how did you know at the time? What do you know that other people don't know about assets like these and why they lease??

John Goff: I didn't have any particular expertise. Uniquely, I had a short stint in Houston working for Kenneth Schnitzer, one of the largest developers in that region, if not the country.

And so, I had a short background in real estate. Then, I had this incredible insight hanging around Roger and his team of people recruiting and negotiating leases, drafting companies, and negotiating leases in our backyard. So I had it, it's not a complicated business, you know, what building is, you know, a good location when you see it.

Almost anybody can, you know, great amenities when you see them, great architecture when you see it, and you combine all those things, and you've probably got a good asset you want to own at the right price.

Chris Powers: Okay. So you go public in 94, and you keep accumulating. Let's talk about 2007.

Did you know you wanted to sell, or did Morgan Stanley send an email? How did this whole thing start to build? Was it quick? Did it build over time?

John Goff: Well, first of all, we had an exciting yet complex portfolio; we had a bit of a unique structure in the REIT sector that, you know, I would say we had a hall pass to buy a lot of different types of assets.

So we had, you know, an interest in the largest cold storage business in North America. At one point, we were in behavioral healthcare, owning facilities for the most prominent behavioral healthcare company. We owned office properties. We owned hospitality assets. We hold part of Canyon Ranch.

So we had this disparate collection of significant assets, but it was a wide variety. So, there were only a few natural buyers for a company like that. Wall Street preferred highly focused portfolios, which differed from what we were. And that was not our, that wasn't my upbringing with Richard.

So, we tended to buy what we thought was cheap then. I was at a Morgan Stanley conference in late 2006, and at the time, I was getting offers on so many of our assets at prices that made no sense to me, and at the same time, I wasn't finding anything interesting to invest in.

Everything seemed overpriced. I can't say I was smart enough to see what would happen in 2007, but things felt wrong. And I have my entire net worth on the line, and I thought, this is a time. We need to think about selling this company, and I was at this Morgan Stanley conference. They liked our team, they really liked our collection of assets, and I started talking to them, and then that led ultimately to them making an offer, and that was very important that they had, you know, a massive business in what was called MESREF, Morgan Stanley Real Estate Funds.

They managed tens of billions of dollars. And so the offer came in ultimately from MESREF. But it was a fund to set up; it had yet to lift. And I said I can't take that to my board. I've got to have a Morgan Stanley corporate guarantee. And they said we've never given that over a long period.

I don't remember, but after a month of negotiating, I ultimately got a Morgan Stanley corporate guarantee. Thank goodness, because that's who bought the company. They did not get their fundraised. So Morgan Stanley corporate had to close the deal on August 3rd, 2007. So, it took a lot of work to convince the board back in early 2007 to sell the company.

They said, look, you're doing a great job. The company's growing; keep doing it. And I said, I'm telling you, we need to take this offer. It is just in my gut; this is the right thing to do. Ultimately, I traded in the most recent option or compensation plan I'd put up with; I said, look, I'll put that back on the table.

You take it back. I mean this. We need solid company. And that triggered the board. To realize I meant business and that we needed to do this. And so, you know, we got consensus to sell it.

Chris Powers: I don't know what the question is, but something's coming to me is you sit on boards now you've built this great company, did everything right, but still had a board that, at first glance, didn't agree with you is the answer.

Suppose a CEO is in that position. It's the passion. You say it in the way you back it up, or how do you get that message across when you're so profoundly convicted and up against a board that didn't feel on it quite yet?

John Goff: if you have alignment with the shareholders, which I did, I had a lot of alignment, that's first and foremost. The proper collection of board members will see that they will vote with that knowledge and that backdrop, but compensation plans can skew that thinking. And in this case, we had just been awarded a new project.

And it was almost, you know, I could if I put myself in their shoes, I thought they're thinking, you just got this plan. You want to trigger it and monetize it. And it was worth a lot—tens of millions of dollars. And I said I put all that back because you can take it back. It is the right thing to do.

Chris Powers: When were you at that conference?

John Goff: I don't remember the exact day, but it was late 2006.

Chris Powers: Okay. So it took about a year.

John Goff: Late 2006, maybe it was early 2007, but the natural heat of the discussion started in March. And if you remember, the equity office sold somewhere there, which was a big trade. And then we were the last big trade that got done.

 Chris Powers: Was there anything looking back on that trade that you would have done differently in hindsight? Any lessons learned?

John Goff: No.

Chris Powers: You do it the same way again. And there was a question that came in, and it was something to the degree of would you and Crescent have been better had you never sold Morgan and just held on all along?

John Goff: No, it was the right decision. And I want to say one thing. It's Morgan Stanley; it wasn't like they ultimately overpaid. These were brilliant people. And to this day, they're friends of mine. They were brilliant, and they had a great business. They built a terrific company. It wasn't that they overpaid.

It was all a function of timing. And it was a function of being over-leveraged. These people put up about a billion one of equity in a six-and-a-half billion dollar acquisition. And I said you can only run a real estate business with that leverage. You guys do what you want, but you need something else. It just can't stand the test of time.

And it didn't, so shortly after that, they ran into trouble, and in 2009, I was able to repurchase the company in partnership with the lender that had lent $3.7 billion, which was Barclays Bank.

Chris Powers: What is the appropriate amount of leverage to run a real estate company?

John Goff: Depends on the asset, depends on the cash flow characteristics of the purchase, but generally speaking, it's probably 50%.

It's just a rough rule of thumb, but that's all a timing function. The asset category, apartments, has shown they can stay the test of time, perhaps industrial. And so, can you pooch the leverage up and make it work? Sure, the office business got to keep it reasonably low levered, hospitality, relatively low levered.

Chris Powers: You built this company; you sold it in 2007, so I'm doing quick math. You started in the eighties, though, right? It went public in 94, so let's call it 20 years.

John Goff: We started it in the early nineties. And went public in 94, really bought, you know, the critical assets. The Crescent ultimately closed by buying all the banks, another podcast.

Chris Powers: Okay. So yeah, that is a whole other podcast, okay. What was it like waking up the day after you sold this company that you'd been building for 20 years? Do you still have to work on the business or advise it? Or were you given carte blanche to go start doing other things?

John Goff: Well, the one thing I told Morgan Stanley, they wanted me to run the company afterward, and they tried to roll up a lot of their North American operations underneath it. Cause we had an excellent team, great team. And I said, look, I will consider doing that, but not until a day after closing because I've got to be in that boardroom to get this deal done.

And I don't want to be conflicted about negotiating a deal for myself. So there, I said, there will be no discussions about that. But the day after, the week after, let's call it, we cut a deal for me to run the company, and I did that for a couple of months. But honestly, it was a square peg-round hole.

They had this massive organization. They send all these asset managers in there to support and help you. And it was a lot of newly minted MBAs, you know, I say this affectionately, but, you know, suspenders cuff links at the time. And, you know, they're 20 years younger. And I finally just said, timeout, I flew up to New York.

These were friends of mine. And I said, look, you guys are paying me a fortune. I'm running a post office. You know, I have to answer to a lot of people. And it would help if you listened to what I'm telling you. You have to sell things as fast as humanly possible. And you don't need me to do this.

So I stepped aside, I said, I'll tear the agreement up. You don't owe me a nickel, and I'm just going to go gin up my family office, which I did.

Chris Powers: All right, 08 comes and goes. We know that story. Let's tell the story of just repurchasing it, though. Did this take a year? Were you sitting on a beach somewhere and got your phone ring? How did this start?

John Goff: Well, Before we go into that story real quick, back when I was running Crescent, there was a point in time in 97. When Richard came to me, he said, John, I want you back to help run Rainwater Inc. I want you back in.

Let's find the next big thing. And Richard said you've done a great job with the company. The stock was at an all-time high. We had raised a lot of capital. We just closed a 750 million capital raise, which was one of the largest ever in the free sector, and so I did that, and we turned it over to the number 2 guy.

Chris Powers: Turn Crescent over to.

John Goff: Yeah. And I stayed on the board, but during that period, this was during, immediately what happened is we ran into the, you know, the Asian financial crisis, and then the Russian ruble crisis, long term capital, failed if you remember. All of a sudden, the debt markets were in disarray.

So it was a big contrarian bet. Let's go by debt. And so I did it with Crescent, but Crescent didn't have the right team. So I created another group, and that team is with me still today and is part of Crescent, which I'll get to. Still, I made a business that ultimately became the largest buyer of B pieces in the CNBS Sector, and it did well.

We bought a lot of debt at the right time, paid a decent price, and made great returns. So far, when I go back to late 2007, I've got this excellent debt team, and suddenly, the debt markets are looking interesting again to participate in. So, we quickly became large buyers of distressed real estate debt. I did some exciting transactions in that period, so I had the family office. I got this elegant, intelligent debt-buying business with some brilliant people.

And we did some exciting transactions. And then, I got a call in 2009 from Barclays Bank. And they said, do you have an interest in repurchasing Crescent? We may get the keys back, and I said, sure, but you won't like the price. So, I met with them. We put together a complete, what I call an operator's manual of what you would do with the company.

Every asset by asset. If we were to own it, I went through that with the company, and they said, you know, splendid book—love to have it. There's no way we're selling you the company for the number you gave. And I said, great. We'll take the book because that will be your operating manual when you get it back and tell you that's what you do.

And my team was furious with me for doing that. The company said, why did you give them that? And I said I don't know. It just felt like the right thing to do. That book went to London to one of the senior people who liked the number two or three guy in the bank. He called me one day and said, Hey, John, I want to meet you.

I read this book. It's fantastic and friendly to share with us, and I want to meet you. So I said, sure. So we met the next day in New York or a few days later and, within 24 hours, cut a deal to partner. He said I don't want to sell the company to you. I want to partner with you. And it was one of their most significant distressed loans in the bank.

And Barclays is a big bank. We hit it off, did a deal within 24 hours, and partnered and bought the company. And it was, it was funny in that discussion, they had just bought Lehman Brothers, and the meetings were all held in the Lehman, the brand new Lehman headquarters. And it was just a fantastic time.

I had you didn't know how to value assets at that moment. It was impossible to love a real estate asset. We were guessing, but we structured a deal I felt would work. And anyway, this gentleman, he was brilliant. And had a lot of seniority and could make calls on the flash in the meeting.

He said something. It would help if you were more comfortable with the deal. And I said I'm not for one reason. I told the issue that I faced when we sold the company to Morgan Stanley was that suddenly, I thought I was going to continue to be able to run things, and all of a sudden, I had all these people interfering with decision-making, and that's not my style.

I don't need a job. I don't want a job. And the gentleman said, Oh, that's easy. He said we'll have a five-member board. You get three seats. I get to; you can do whatever you want. And it was a great decision. This guy trusted me for whatever reason, and it worked out well. Ultimately, we gave Barclays all their original loans back plus interest and a profit.

Chris Powers: That's awesome. And you had a pathway to buy it all out and own it eventually, correct? Once you get them paid off. We're going to take advantage of this owner manual. We don't have to make the whole podcast about what was in it, but you guys essentially went through every asset and said, here's what your problems are.

And here's what we do to fix them, and if you took leverage out of it, which was the problem, it was eating up all the cash. If you took that out of it, what else might you have said that said, this is how we can get this going again?

John Goff: Yeah, it was more asset by asset. Do you hold it?

Do you renovate? Did you return it? Do you sell it? It was when you might do that and precisely what needs to be done.

Chris Powers: So you make this deal, the book comes back. Could you give it to the team? And those are the marching orders.

John Goff: Yeah, we, we resurrected the team. We did a little clean-up of the organization.

I brought in many of the younger up-and-coming talent that had left when we sold Crescent. Brought everyone said, I mean, to the person when I called them and said, Hey, you want to come back? I've got the company around, everyone. I said, do we're in? Tell me when to show up. And it was so we had a great team into this day.

We still have a lot of that talent in the company. We also have a lot of new young talent, which is vibrant and terrific.

Chris Powers: You're starting to know as we progress through the story, the blending of you and Richard Rainwater is beginning to get closer—so Richard's great at spotting talent and spinning up teams.

You just said that you went and got it. And we can talk about your other businesses because it's going to, by the end of this episode, people will have a full view of this. But when you have an idea, how do you assemble that team? Do you already know the person that you want to run distressed debt?

Do you call a head hunter and say, give me the best person you've ever known? How do teams spin up that you're comfortable with and ideas you still need to play in?

John Goff: More often than not, a person shows up with a great idea, and I like and connect with the person, and I think I ripped that page out of Richard's playbook.

That's how he operated, so it works more than some other way. I mean, you interviewed Wilkie Collier; Wilkie was in my office, a young guy, right out of school, didn't know anything. Ultimately, he was genuinely interested in the energy sector, so I said get after it, learn it, and introduce him to some people I knew.

And he spent a lot of time, and ultimately, we built an energy investment around Wilkie.

Chris Powers: All right. I think let's; unless there's anything else we're going to talk about Crescent's particular in those days, I think before we talk about the Crescent that we have today, it would be necessary to hear how you're viewing today's real estate market.

You could take that however you want. We can talk about it broadly. We can talk about just what you infuse in. What's going on right now? Besides the obvious that rates are through the roof, we can discuss that.

John Goff: Yeah. Wow. Where do I take that? I can go in a lot of different directions here.

I mean, first of all, I think the Fed is pushing on a string, there's 7 trillion of programs, three different programs that, you know, from the so-called Inflation Reduction Act and a whole host of other programs that the federal government is spending money on mountains of cash like we've never seen before.

And best I can account for the 7 trillion they've announced, they've probably spent about two and a half. And it's built to say that it has yet to create inflation, ignoring the elephant in the room. It has made a big part of this inflation, and the Fed adjusting interest rates will not squash the power of that 7 trillion coming at us.

We're seeing it spent. I mean, it's everywhere. Its bridges and roads need to be more efficiently used and will create inflation, and it is. So the Fed can't do anything to combat that.

Chris Powers: I don't mean to interrupt, but is that because one, it's a lot, and then the government pays the most for their services.

So it is just inflationary, just on what the government can pay for.

John Goff: Yeah. And they're crowding out the private sector, so it's a real issue and politically driven. And generally, you can take any economic problem. We have and trace it back to some political thing.

The whole real estate collapsed in the late eighties and early nineties. You can trace it back to tax policy, the ability to write off without investing equal capital.

Chris Powers: So I interrupted you. I'm sorry. Okay. So we talked about, we're talking about the market.

So you're talking about inflation. What else is going on in the market?

John Goff: Yeah. So, in the real estate market. We've got a lot going on, really like never before. The migration I talked about in the 90s pales in comparison to what's going on now. So you've got a massive migration of our population and the usage of real estate.

So if we're sitting here in this hotbed of migration here in the state of Texas, other states are, you know, facing similar economic booms as a result of this in migration, so real estate is, I wouldn't touch real estate in San Francisco. I would feel like something other than real estate in Los Angeles.

I wouldn't touch real estate in Manhattan. Not right now. There's an exciting opportunity to invest in these markets, which we're doing, where people are moving to, not from. It's all a function of government policy. You know, they're moving to states that are business-friendly.

And, you know, it's having a profound effect, so not all markets are created as equal as they ever were; there's more disparity in markets as I've never seen more difference in assets. For example, taking the office business is as bifurcated as I've ever seen it.

There are office properties I would not touch at any price. I don't know what happens to them. We will put rocket engines on some of these downtown buildings and get Elon to shoot them into space. There's a lot of talk about turning everything into apartments, and there will be those opportunities.

And I hope there are more than there are. That opportunity is overdone, but it would be wonderful if we could do it because the country has a housing shortage. But there are a lot of properties that need to have the right amenities. They need the correct location.

They need to design in a way that allows companies to attract and retain talent. Everything now in real estate demand in the office sector is all about attracting and retaining talent. So where do you do that? Well, very few older buildings do that most young, talented people want to be in the newest product.

They want to be in something other than tall cylinders. They want it. They like being a little more spread out; the Crescent is a unique example of an older building that still works amazingly. And so we still get, you know, some of the highest rents, and it's full, but it's spread out, got lots of amenities, easy to get in and out of plentiful parking, excellent location within the city.

But you can go right across Woodall Rogers into downtown and their buildings. I wonder if they'll ever lease, and look; there are examples of developers doing brilliant things and retrofitting, and that's great. And there's going to be those opportunities. But for the most part, that sector has a real disparity.

So we're focused on a real opportunity. That's highly contrarian. But focus on the office sector, but at the very high end, the best, the newest, the highest quality where people want to be because attracting and retaining talent is everything. And you can almost, this is an overstatement, but you can't pay enough rent for that.

Our little building here in Fort Worth is 170,000 square feet. You're going in there. Why are you going in there? It's the best. It's the best, and we're charging rents that are, I probably shouldn't be telling my customer this, but I mean, we're charging, you know, you're in the business, but we're charging rents that are almost two times anything else in the city.

Chris Powers: You can go downtown, and they can't give it to you, or you can go to your building, and you're paying double, if not triple, where you were in your last building, and you're happy with it.

John Goff: And we're full. And by the way, it's not that we're profiting from it. It requires that rent get an acceptable return given the current debt and construction costs.

It takes that rent. So it's a 50 to 60 dollar per square foot rent to justify high-quality new construction.

Chris Powers: And I won't spoil it here, and I don't think I'm saying anything that's not, but you might be one of them, only maybe not the only, but office developers in the country that might have a building in the queue that might already have a pretty good pre-lease to it. It's not even out of the ground yet.

John Goff: We're not. I hope that's the case. We're indeed working on it. That's an excellent sub-market. Fort Worth is an exciting market on the verge of highly significant growth, But I hope we do it correctly.

Chris Powers: We're going to talk about that; I said there's one thing that I think we need to touch on because we share this opinion, and you've said it and others speaking, but we're talking about people going to an office, the best office. The narrative I've been hearing is, let's everybody work from your bedroom, hoodie, and socks and pretend you're working.

Why do you believe that's probably not the future, or at least for the businesses that might be the best that comes out of COVID or whatever we're in?

John Goff: Certain businesses may be able to operate that way, but I will tell you this: I learned to use Teams and Zoom and all these different, different packages, you know, during the Covid period.

In our companies, we learned to use that and effectively process things and keep businesses running. But only some great new business ideas came off a Zoom call in our companies, not 1. We process things, we move businesses along, and we make decisions. But we didn't devise great ideas that all happened spontaneously to face interacting, scribbling on whiteboards, and that's how we work.

And most businesses work that way. So I'm finding more and more companies and working hard to get there, getting the key people back together. And chair competitive pressure will force that to happen at some level. I'm not saying there hasn't been a sustainable or sustaining work-from-home thing, or, you know, four days a week or three days.

I don't know; I don't think it will be as profound as everyone says. It's human nature. You want to be; you want to interact. And that's how energy, enthusiasm, collaboration, and all these things are the genesis of great businesses.

Chris Powers: We have yet to talk about the young people, how they get mentorship, and how they grow up in a business.

I can't imagine your first day after college. Your first day at work is in your bedroom. And you'll start seeing that in the results. You have two friends that maybe left college; one went to work for an in-office, and one didn't, and five years later, they're wondering why one's somewhere in the world, and another maybe isn't.

Working from home will prove that the level of mentorship, just learning people skills and vocabulary and nuance, and how to have those whiteboard sessions seems cliche, but it's true. It works.

John Goff: I think so, too, and look, I have fun. I mean, I don't need to work anymore. I'm 68 years old. But I have fun. I get energy. By being in that office with all this youth and vigor and, you know, hungry people, I love it. I thrive off that. It keeps me alive.

Chris Powers: Contrarian words come up a bunch, and you just said there's just some buildings that I don't know at any price you could buy. That's an interesting statement.

I think, you know, you talk to some people, it's worth negative cause you have to demolish the building if you want to get back to the land, you don't have anything more to add to that, that even at zero dots, like what will happen? I mean, there are thousands, I mean, of these buildings.

John Goff: But yeah, I've seen some turned into storage centers that were, you know, they housed workers not that long ago, and now they store people's excess furniture and mattresses. And who knows what? That is something other than an exciting opportunity as a real estate investor trying to retrofit things.

Would I retrofit a tower that could readily adapt to an apartment? Sure, I would look at that, but those opportunities overstate because even in that sector, people want amenities and, you know, the right light they want. So, the sheer depth of office buildings often doesn't equate to a light field.

Apartment that would be something most people would want to live in. So there will be a lot of buildings that they will have to demolish. It's going to be a lot of that. I also think about all these darn parking garages.

And I hate building parking garages. It's a necessary evil. Whenever we do a project, I know you face the same thing. We're thinking about how we will retrofit this space when, in 10 to 20 years, it probably will not make a lot of sense. They're not going to be as necessary as they are today.

I've often considered the cost of building a parking space; you can underwrite for 10 to 20 years. An Uber receipt to send those people to and from the office, and you come out ahead as a landlord, then building the darn space, particularly if I have to go down subterranean.

Chris Powers: So it's city requires it's we won't, we won't go into city code because that's a whole different pod. We could have like ten podcasts out of this one. Okay, on the class double an office opportunity. That's sunbelt markets pro-growth markets. I will ask one question. What would you need to see to, and maybe it's just, look, I got plenty to say grace over in the markets that we're in, but, to go back into New York, LA, San Francisco, is it a change in government?

Is it a policy change? Is that like the thing, or is there something that you would need to see to go? I will put dollars to work in these markets.

John Goff: Policy and government.

Chris Powers: Okay, are you going to be building these buildings? Are you going to be buying and just going all out and making these knockout buildings?

John Goff: Primarily buying, and I, look, it's going to be a limited time in a limited number. We have, again, our yellow pad, a modern-day yellow pad, a list of what we are willing to own and where, and it's a relatively short list, and it doesn't encompass, you know, every brand new building.

It's a select few and select markets. Highly focused strategy, and it's, this opportunity is around only a short time, and look, we're not going to be stealing them. It isn't the early nineties. Yeah, the early nineties. It is a different opportunity, but we can make beautiful buys.

Chris Powers: Okay, to the extent you can talk, why did you raise your last few vehicles in a GP fund format? I've been the beneficiary of learning more about how it is over. We're looking at doing one ourselves, but you've done one, you did a second one, and it's been all the rage around town.

But why was this the format for you?

John Goff: Fundamentally, I don't want to be sitting on 2, 3, 4, 5 billion and having to put it to work because that causes us to make bad decisions. We want to stay fundamentally contrarian and opportunistic, and it's hard to do that with a mountain of money staring you in the face and a significant institution wanting you to put it to work.

Number two. When you raise money like that, you tend to get pigeonholed. These giant institutions want you to stay in a particular lane, sector, or geographic focus. That's not what we do; we find areas that are, you know, we think a contrarian or have the wind at their back, and that's where we want to go in those places change. They're only sometimes. It's not always the same place. So we need flexibility, and the GP fund gives us high flexibility, and it doesn't put capital burning a hole in our pocket that we must put to work.

Chris Powers: Okay, let's talk about oil and gas briefly; you've gone on the record and said you think it's the trade of a lifetime. I spoke to a friend the other day and said that in the environment we're in today, in certain parts of the world, you could tell people you own a porn company, and they would like you more than if you told them you owned an oil company.

And you've said this might be one of the most significant trade opportunities you've ever seen. Please set up what is happening from your view of how the landscape looks and why we might be in that period.

John Goff: First, you can usually find beautiful opportunities where you see a lot of government policy causing irrational behavior.

And in the case of the energy sector, it's there in spades, the whole, I don't want to get into climate thesis, because look, I think we all need to be doing the right things for our environment, totally on board with that. But how we're going about this energy transition makes zero sense, and it's filled with politicians.

And politics is not based on fact or science or math. And I'm all about that. So it's a shame that the opportunity is as ample as it is, but it's here and staring us in the face, and I love investing in it. We started in it about 2015, and we own virtually; we had no exposure to the injury energy sector at that moment in time.

And it became very oversold and overleveraged; there were too many companies and too much GNA. And so it was an exciting time to enter the sector. So we started making investments. We did that public through public securities. We bought distressed debt. We bought equities, both high-quality equities as well as distressed equities. And that led to one significant transitional trade for us: unwavering energy, where we became the largest shareholder in the largest unsecured bondholder; everyone thought the company would go out of business. We met with the management team. We flew around the country, looked at every asset, and said they won't go out of business. These guys are going to do what they said, and they did. The stock went from 1 to its sale to summer X for 36, and unsecured debt traded from 30 cents to par.

And it was, you know, it was an excellent investment, led by, you know, a great management team, small, but for us, it was meaningful. And then that led to another asset, which is now the company I'm chairman of, Crescent Energy, which was a merger of a small public company. We were interested in contangoing with all of KKR's energy assets under Independence Energy.

It was an extraordinary meeting with them or a wonderful dinner where they said, we want to name it after your legacy at Crescent Real Estate because it had an excellent track record as a public company. Let's call it Crescent Energy. So that's where a lot of our focus on investing in oil and gas is, and I'm super excited about it, but getting back to the thesis, we have yet to reach peak demand.

We're far from peak demand, and you can look at four different population groups on the planet with roughly a billion people. You've got China, India, Southeast Asia, and now Africa. Each of those consumes far less oil per capita than we do in the U. S. and Europe, but they're all growing in that usage.

We are far from reaching peak demand, so we're foolish to say where you know; I keep reading these reports. They need to be corrected, and it takes little time. It only takes a little research. It doesn't take much reading to read the natural science of what's going on, and looking at the math of world population and coming to that conclusion; it's not hard to think we're going to make this magical transition in a period, whether it's 2030 or 2050, depending on what politician you want to talk to, is nonsense and, it's not only nonsense, it's dangerous because all we're doing is we're substituting one form of mining with another and the disruption after all the science and technology put into oil and gas drilling, which has become pretty darn efficient and effective and our modern-day engines can burn with, you know, a lot less pollution and carbon emissions than ever before.

There needs to be a thoughtful overall approach because the mining that will have to end to get all the minerals to create all the batteries is mind-boggling. And then you look at the disruption of the environment of windmills, and you know, I got to my ranch here west of town, and I look out on the horizon.

All I see is windmills. It's so disruptive and sad. Sadly, we're going down that path without going to the appropriate scientific and, again, just simple math and seeing that there's a much more thoughtful way to create an energy transition. But out of all that, that's another podcast, and number four, I'll read a lot about it, and I'm very passionate about it.

But out of all that, there's a beautiful time to invest. Oil and gas, and it's right now.

Chris Powers: How do you see more capital coming in? Is this like shell entities being created so you can get in without telling anybody you're in, or what will happen?

Cause the choke-off of capital is also part of this thesis. There's just no money in it like there used to be.

John Goff: It's a real issue, and you know, we're designing Crescent Energy to not depend on the banks because the banks are going out the exit door, so we're focused on being an unsecured borrower in the bond markets. We want to get to an investment-grade credit rating quickly, so we're building a solid balance sheet to do that, and we'll be there in short order. Still, we've already tapped into the unsecured markets meaningfully, and we're not dependent on the banks because you can't be. What's going to happen is we'll see at some point.

I'm still determining when we'll see significant pricing spikes, and it will force politicians to address it and create a mechanism for lenders and investors to get back into it. I mean, you're already seeing, you know, like entities like BlackRock who just made, you know, in my opinion, boneheaded, political decisions that may have had nothing to do with intelligent investing say, you know, we're getting totally out of oil and gas.

All of a sudden, you know, you have states say, well, we're withdrawing our money. So, I think you have to look at capital flows ultimately, and those will force decisions to allow capital back into the industry, you know, the state of Texas and other states who have vested interest in oil and gas, say, well, if you're going to put a big X on that industry. We won't let you manage any of our capital that will influence them to make a different decision.

Chris Powers: The thing I think again, this is, that would be podcast number four, the thing that irritates me, and I could go on and on, you know, you get a group like black rock that's invested in America preaching one message to us, but they're putting money in China and China's spinning up a coal factory every four or five days.

John Goff: For everyone, we shut down. They open seven days.

Chris Powers: When you talk to people, it's like America doesn't just have the space above it. And that's what we control. We're one globe with one climate for the most part. And so for every, you know, gas stove, we shut down in California. There are six coal plants; it's mind-boggling to me.

What gets me the most is that the capital in these companies is also in the companies doing the exact opposite across the world.

John Goff: I would love to ask some of these investors. Have you ever flown over a mine in the Congo? It only takes a little research to see the damage it's creating to our environment of massively increasing, you know, the mining capacity to create Tesla batteries.

Chris Powers: You just talked about getting a corporate rating. My question is, what does the market need to understand about Crescent that you know?

John Goff: the most significant headwind we've had is our partnership with KKR. I've done much business with KKR. I greatly respect them, and there has been a way the company is skillfully technically managed via this management agreement with KKR. Okay, that has been a difficult thing to explain and sell through. The reality is that we looked at this intensely to make the trade that was an essential part of the trade. First of all, KKR has zero interest in selling its shares. They're in this for the long term because they have difficulty. They won't be able to raise any other capital for future funds for oil and gas investing.

Part of our agreement is that all new oil and gas deals that come to them go to our company. So we have the benefit of that deal flood, which is unique; in addition, we have the power of all that talent in smarts and expertise within their organization, you know, it's right at our fingertips, and that's very powerful.

The market likes having all the management within the company and, you know, complete clarity on what they pay to every person. And that's nice. But the reality is the overall g and a of our company, which incorporates in that fee, is right in line with what the industry pays if you have all the people inside the company.

I have access to better expertise than most companies of our size. And I'm paying a market rate for it. I like it. I love the structure, but it will take time for the market to get comfortable. We also needed more trading volume in the stock. So, until recently, we only traded 4 million worth of stock a day. I mean, less than 5 million bucks. It was tiny so that it could be more efficient to deal with. That's changing. And we have specific plans to change that over time. So, as we have more trading volume, it will attract more institutional interest.

And once you attract institutional interest, we're going to be trading at a more, You know, a market rate multiple, and I'm looking forward to that day, but it's our stock being. The stock is. Incredibly cheap right now, I'm not interested in trading on. It is a long-term vehicle for me.

It is where I want all my energy investing focused, and I'm having fun working with the team. We have a great team. David Rocket is a brilliant guy with great experience and a terrific team. He's a good leader, a good investor, good instincts. So, I'm excited about it.

Chris Powers: Okay. Canyon ranch, this, you know, we just got off of oil and gas, which is, we called it maybe a trade of a lifetime, but in some of our conversations, you think this one might be one of the most meaningful deals you ever do, not just maybe profitably, but just, it's kind of what people need. So we've talked about the office.

We've talked about oil and gas. We'll get to crypto. If anybody is listening, this has yet to make sense; we do many things here at Crescent. I'm saying we, but Canyon Ranch, let's talk about this because it's become a massive part of your life. And you're just getting started with it. There was some big news announced in the last few months.

John Goff: Well, the investment of the Canyon Ranch goes way back to 97. Richard went there. Rainwater, as a guest, he calls me; I was running Crescent at the time. He said, John, you got to come to this place. It's amazing. It'll change your life. And so come out here. I want to figure out how we buy it.

So I went out, and long story short, I loved it as well. It was an adult camp, and I enjoyed working out. I enjoy trying to stay fit. You know, I, and particularly at that point in my life, I was, you know, really, really into it. And I was skiing a lot. We ended up investing, but it wasn't until recently that I gained complete control of the company in the last few years.

So now we own 100%. We hold this in our family office. It's a significant investment for us; we have a new CEO, Mark Rivers, who I'm very fired up about. a brilliant guy, incredibly energetic, and has excellent ideas. And we're, you match him in this legacy team that we have with all this talent. And now the capital we've negotiated with our partner, Vici, V I C I, a public company, New York Stock Exchange.

Fifty billion plus read run by Ed Petoniak, and Ed is a terrific guy. He understands this brand as well as anybody. He's personally spent much time with his team at our locations, and I was just with him in Vegas, where we have operated the largest spa in the world, 130,000 square feet in the Venetian, which is a fantastic place. We have over 100 treatment rooms. We were with him and his team, and we were talking about, you know, where we're going to take the company, but basically, they're giving us the capital to become an asset-light business. So we no longer have to own the resorts. They'll hold them. They'll lease them to us.

It will free up capital for us to invest not only in the properties to make them better, fresher, newer, and cutting edge but also enable us to expand and buy new resorts. So, we focus on taking the two wellsprings, Tucson and Lenox. We're going to be doing significant upgrades there.

We have a smaller version of Canyon Ranch in Woodside, California, and then we're opening up our first urban club. We will do urban clubs throughout the country, but the first one's here in Fort Worth because it's our home court. And we're going to get the recipe. The next one will be in Houston, then probably Austin and we'll expand from there.

We're doing a new resort in Austin. Vici is giving us the capital to do that. It's underway. It'll open in 2025; I am super excited about this. This brand has been vibrant and profitable for years but is now more relevant than ever. It's exciting to be back in. I don't remember the exact year, but it was after Eisner exited Disney.

I knew Michael through Richard. Michael called me, and he said, John, you're an investor in Canyon Ranch. And I said, yeah, through Crescent, you know, we own a minority interest. And he said, well, I've done a survey of emotional brands, and he said, interesting that he's Disney's number one passionate brand in the world.

He said one of the other highest-rated emotional brands came out to be Canyon Ranch. He goes, I want to see it. I want to understand it. I spent time with Michael Eisner because he was focusing on how he could invest in the business. We didn't end up doing a deal, but it was interesting that a guy of that ilk, you know, identified this as a brand he might want to invest in and Disney itself.

It even looked at investing in Canyon Ranch. So it's this incredible brand. It's more relevant than ever because there's more and more focus on living healthier longer. And we're on the cutting edge of that. And we have permission to be, you know, much more significant, broader brands.

That's one of the most exciting investment opportunities that I've seen.

Chris Powers: You can take this however you want. When we had lunch a couple of months ago, I thought I was saving this for what it's like to own a company and be a true entrepreneur. You own a business in the hospitality. People have their hands on you.

It was the antithesis of COVID. You woke up in March 2020 or late March 2020. And you probably had a business that was the one they wanted to shut down the most. Can you walk anybody through what it's like to own a company like that? After 40 years of business, what was that experience like for you?

John Goff: It was frightening. That's as scared as I've ever been in my business career, more scared than having securities on deposit at Bear Stearns in 2008 and 2007. Fortunately, it wasn't very comforting, and I went into that period with a fair amount of liquidity, but I was.

You know, calculating. How many months or years can I continue to keep these teams going? The talent in Canyon Ranch, I mean, I couldn't let these people go. Can't just say, Hey, I'll see you in 3 years when we get through this. They'll find something else to do.

So, I had to retain the talent. So we just had to pay the price and buckle down.

Chris Powers: And did you wake up? What was that? What was your 60, 90 days? The first 60, 90 were the most traumatic because then we started, it was like late May, early June was like, okay, you can see where this is heading.

We kept telling, like, two more weeks and that. Yeah, it was on for a while, but at least by May, things had softened. Can you give insight into what the first 60 days look like for you? Were you reading? Were you on the phone a lot? Were you calm? What did it look like?

John Goff: I was on the phone constantly? I'd wake up incredibly early. I developed a routine. I would sit in my office at home and, you know, fire up the computer and download. You see, I went to all my touchpoints to get data. I'm a data nerd; I'd have CNBC on I have, you know, other broadcasts on. I was consuming as much as possible to establish a decision-making framework.

I also spent a lot of time talking to other people. Jerry Jones is, You know, a close friend. I remember having very gritty discussions with him about, you know, what is he doing in his business? What are we doing? I remember talking to Bob Rowling, who owned, you know, lots of hotels through Omni, just a variety of other business owners.

I would collaborate talking to Henry Kravis: what are you doing with all these different businesses? And, you know, here's what I'm experiencing. What are, it was just a fretful, challenging time. And then the biggest unknown is, you know, what is the government going to do? What you knew they were going to do something big, and it's just, but that's, there's going to be impacts to that that could be negative.

And, you know, trillions and trillions of dollars later, here we are with, you know, a mountain of debt and no conceivable way to pay it back.

Chris Powers: You think the world has changed?

John Goff: Behavior has changed at some level that will stick with us; there will always be that thought in your head. Well, we got through that one. What might the next one be? So, behavior will change, but I do see much normality, you know, back in the market.

Travel habits and things are back to normal, which is great to see, but yeah, you know, we've changed at some level. We've all seen something now that we're that is, you know, awoken us to something that we don't control.

Chris Powers: All right. The place that will bring it home is in our backyard, and we could go on and on.

It could be podcast five about why it's a great city. You spent a lot of your career doing things outside of the town. And if there's a trend that I'm picking up on, you might finish your job having a component of your business here in your backyard. You said earlier. The colossal opportunity here, but there's also some butts but challenges.

So, describe what the challenge is or what the opportunity is. And then some of the challenges. And then, I want to discuss what folks my age and people in the community can do to help rally the city forward.

John Goff: Well, look, I love the city. I moved here. I didn't grow up here.

I moved here in 1981, driving a U-Haul truck from Houston with all my possessions. I had no net worth, and I lived over in Wedgwood, a Baltimore, you know, a little house, fixed it up, and didn't know that many people here, but I had a job at, you know, a great accounting firm at Pete Marwick and kind of a way I went.

I owe the city a lot because it has embraced me. It's enabled me to start and grow several businesses here; I've relocated businesses here. So, I love the city and the city is grown up. You know, I've grown up alongside the city in a way. It's in a very healthy way.

There's a lot of new bright blood in the city, which is great to see, a lot of new businesses coming in. But it was interesting when I was, you know, in the thick of Covid, you talk about that March period. Then, I got the call from then-mayor Price to co-chair this Fort Worth now to help us get through the pandemic and, most importantly, help us get stronger economically on the other side.

Well, I naively said, yes, I didn't already have enough to do, but I took the job seriously and, you know, I. I did a lot of studying on the city and tried to look at it objectively. What do we need to do to emerge more powerful? And the one thing I realized was very evident.

We were the largest city in the U. S., the 13th largest at the time, with no tier-one research university within our confines. We have some great universities. TCU, Texas Wesleyan, UNT, but we need that tier one research university got UT Arlington close by in Arlington, but it's away. It's not in the city and, you know, I had this idea of approaching A and M who I'd met.

Bobby Adia, who was running the law school and doing a great job with the law school, went to him and, you know, we concocted this idea of building a more extensive campus and approached John Sharp and the leadership at A and M. And lo and behold, here we are. We're going to have this tier-one research university.

It's going to grow. It's going to this is going to be a game-changer for the city. Most people need to realize how big this can be.

Chris Powers: Why?

John Goff: I just went on a tour of several, and I'm not about to say we're going to be the size and scope of this, but I just went and looked at M. I. T., and I took a delegation of city county people as well as A. N. M., and we looked at M. I. T., we looked at Penn, and we looked at research-oriented campuses that they had created, and it's fantastic, you know, what they're doing in those locations, so we're trying to look at best in class, and we're not about to say we're going to be that big to start, but we got to start somewhere.

Right? So, the components that A and M bring into the city will blend with many Corporate entities in particular areas—the defense industry, Lockheed, Bell helicopter, transportation, Burlington, and Northern American airlines. There's a lot of interaction between engineering and science programs and what those, what they need.

Creating graduates here right in the Metroplex is fantastic. They are allowing students out of Fort Worth who may need more money or the willingness to go to college station to get a degree. They can go right here and get a degree. That's going to have a meaningful impact on the city. We're already bringing new businesses in as a result of this.

One of them is 1 of our investments, a company called Probably Monsters. It's a crazy name but an exciting business in Seattle. But it is a game design company. So, they design video games. Um, hundreds of millions of dollars of capital. It is not a small business.

And they've already relocated part of their operation to downtown near the campus. They desperately need graduates, and the visualization program at A and M. will be plug-and-play there. You can create the graduates that monsters require, and doing business here for them is also cheaper.

It's easier for retention, et cetera. Seattle's a tough place to do business stuff. I'm very excited about what this is going to do. I'm overanswering your question, and I'm going down, you know, the specific example here, but that's very important.

I'm very competitive, and I will always remember one of our meetings in Fort Worth. Now, I had a bunch of different committees led by other, you know, intelligent business people in the. And I was sitting in on one committee meeting, and there was somebody, but I don't, I don't remember who it was, but they commented, well, we don't have a tier one research university, and we never will.

Fort Worth never will, and I was like, bullshit, we're going to make this happen. And so, it will be here, and that campus will be, if we look out 20, 30 years, a lot bigger than 2 or 3, 4 buildings. It's going to be much bigger than that. I have a meeting with him this afternoon.

Chris Powers: I love it. We need help; we can talk about bringing businesses in. I want to get your opinion. I have not found you speak about this, or you have, but I haven't read it. We have this thing North of downtown. It's like 200 acres. It's called Panther Island.

And when you usually pick up the paper about Fort Worth, like every three or four years, it's like this positive article about how we're about to do it all. And then there's like an article about how we need more funding, and then we're going to do it all, do more budget, do it all.

We're 20 years late and a couple of billion over budget. I'm just going to call it like it is. Still, you have thought about this, whether it's you taking it on or somebody taking it on, in your opinion, what needs to happen to either make it what it needs to be or just let the dream go and sell it off to developers and let it develop because it's an iconic piece of land that needs something to happen.

And I would be remiss if you didn't tell me you hadn't thought about it once or twice.

John Goff: I'm not proud of this as an American, but I will say it. There's enough money sloshing around in all this 7 trillion that Panther Island gets done.

Does it get done as initially envisioned? Maybe not, but it will get done at some level. And we do need some level of flood control. So there's a legitimacy backdrop to whether or not it needed to be this expensive. I won't opine on that, so Panther Island gets done, and it can be an excellent development opportunity.

And it will be, but my pet project is A & M, which has a much more profound impact on the city and its shape. Companies come and go, you know, we saw that they can come and go with XTO, Exxon, Pier 1.

Universities stay, thrive, and create energy, and A&M is excellent at that because they're so engineering-focused and application-focused; it's a perfect marriage for the city. I don't want to get back on that, but I think that Trump's Panther Island is important from a developer perspective, retail, housing, and commercial future office; we got to have A and M we got to have it thriving to create that demand.

Chris Powers: You're creating that demand in the culture district where Crescent is currently developing. You talk about that South of the downtown area where you have Omni doing phase 2 Texas A and M coming in. I keep hearing about Hill doing something. If we're looking 5-10 years out, the South of downtown is about to become a remarkable place in the town. Is that fair?

John Goff: It absolutely will be, you know, and it's so ironic because if you go back to Taylor Sheridan's, what is it? 1883, the opening scenes. That's where they took place. That was hell's half an acre. Was that, was that land? So, I don't remember how many bars were in hell's half acre, but it was something like 30, 40, 50 bars, you know, within a few block area.

And, you know, whore houses and all that, you know, it was a very, very seedy area, and it's just so ironic that now that can become, you know, perhaps one of the most vibrant parts of the city.

Chris Powers: Is there anything else about the city that comes to mind? We've talked about what you've done there.

We've talked about some regions of town, but is there something else? We may need that. You're very optimistic about it. And then, I want to talk about some of the challenges you put on our plate to try and help solve.

John Goff: Yeah, look, I'm very optimistic about everything that, you know, Ross Pro has done up north.

You know, the positioning of Burlington Northern up there and a lot of the technology going on. That's huge; we also have companies here that we sometimes forget about, you know, it's like Alcon; David Endicott was incredibly helpful on my committee. And then the recruitment of A and M will be blended there, but that's the world's number one eye care company. And they're right here. People forget about it. They are in a part of town. You don't go to a lot, so there are a lot of businesses here that people need to remember. The biggest concern I have is, you know, I travel a lot. So I'm flying in and out. I see this housing sea when you pass out over North Fort Worth and West Fort Worth.

I also see a need for more parks and cool places for people to recreate and, you know, gather together. And I worry about us not becoming another example of urban, suburban sprawl. I worry about that. We've got to be smart about it. Mayor Parker talked about that in her recent State of the City.

And we did an excellent job of addressing it, but we got to keep at it. That's important, and if you want to attract great companies, you've got to offer those. And then the whole educational system here is broken and needs fixing.

Chris Powers: Is it broken everywhere, or is it more to Fort Worth and a more dire situation?

John Goff: It's broken a lot of places, but, you know, I want to see, well, I want to see it fixed everywhere, but I would love to see Fort Worth set. I go back; I'm a total product of a public education. I've never gone to a private school in my life. And I had an excellent education. By going to UT, I was very well educated by a public school system.

When I add up the total tuition, because I've done this, that I have paid, it's less than a thousand dollars. This guy is fantastic and not the most intelligent, but I got a pretty good education, and I hope we can provide that for him. You know, anybody that wants it.

Chris Powers: And maybe this is podcast number seven, but how much do you think the lack that what's going on in public education has to do with we still teach kids, in most respects, the way we have for a very, very long time, and the world has changed dramatically the last 20 years with resources online.

YouTube free courses. You could Rarely go to school. And I'm not saying this isn't don't go to school, but you could get very educated, never walking into a school. If you tried, how much of that do you see as the problem, or is that a problem?

John Goff: Well, I'm not the expert here, but my gut tells me that we're getting carried away with some of that, and we need to go back to just a lot of fundamentals or contact, you know, we're teaching math in ways that don't. It doesn't work and makes sense, and some of the original ways were pretty darn good. Can we use technology to make it more efficient, faster, and with less personality interaction?

And, you know, that needs to be done. And there are some excellent examples of that. Some of which we've looked at investing in; along the way, there's certainly a lot to do in the education space.

Chris Powers: All right. If you could, you're still getting started in some ways.

I know you have a lot of energy, but looking back, if there was something that you wish you had spent more time doing and something you wish you had spent less time doing, what would those be?

John Goff: Well, the one thing that I'm thoroughly enjoying is, and I'm not directly answering your question, but I want to bring this up because it's essential to me.

I have a rule in my family that anybody who wants to come and work in 1 of our family-related businesses is welcome. However, they need to bring something to the table. So they must have gone out and done something on their own and created expertise that they then brought to the table.

We're not there to train them from the ground up. And my two sons, Travis and Christopher, are doing that now. So Travis is running the family office. Christopher is very engaged at Crescent and has gone from the investing side to, just recently, the capital market side and is head of capital markets.

And I love that. It is so much fun to watch both thrive and take over; both kids do a much better job than I've ever thought of doing, and I'm proud of that. I'm just, I'm proud of them. I love working with them. It's just so much fun. It's energizing; I would let Christopher be the younger.

And so, you know, he's on his track. I have been slow to let Travis let things loose to him. I should have probably done things sooner, but I'm, you know, reaping those rewards of, of time and, just energy by seeing him, you know, thrive and take things over and, you know, have a little different perspective and, certainly much more contemporary at it than I am.

So I love that. Having that engagement, you know, is super important to me and something I'm enjoying, but that's a good rule that we have. It would have been as effective if kids had just come out of school. Travis spent time on Wall Street.

Christopher spent a lot of time in New York working. And, it's, you know, that's valuable. They have brought a lot to the table.

Chris Powers: And they're just getting started. It's been great to get to know them too. I look forward to learning and doing something with them one day. That's super cool.

John Goff: You get to do that. I learn a lot every day from them. They speak a different language.

Chris Powers: I can't imagine the following language coming up. I mean, the young ones. All right, that's a great way to end this conversation. You get to work with your family, do what you love to do, and you've had a remarkable career.

Thanks for joining me today.

John Goff: Thank you. I enjoyed it.