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Billionaire Craig Hall Is On A Quest To Democratize Entrepreneurship

By Cheryl Hall The Dallas Morning News

WWR Article Summary (tl;dr) Billionaire Craig Halls' foundation is starting with $1 million to provide grants that will help nonprofits support worthy entrepreneurs who might be otherwise left out in the cold.

The Dallas Morning News

In 1968, an 18-year-old Craig Hall used $4,000 as a down payment on a small student rooming house in in his university hometown of Ann Arbor, Mich. -- his entire boyhood savings from mowing lawns, doing odd jobs and going door-to-door selling Cutco Knives.

Fifty years later, the founder of Dallas-based Hall Group is a billionaire several times over with vast holdings in commercial real estate, financial services, property management, California wineries and fine art.

His half-century of entrepreneurial exploits has included triumphs, disasters and rebounds.

To celebrate his 50th anniversary, Hall wants to help more people become entrepreneurs -- in a bigger variety of businesses than just technology.

"Most of my entrepreneurial life has been about surviving until you thrive," the 68-year-old says at Hall Group headquarters in the Arts District. "I always try to explain to young wannabe entrepreneurs that it's all about cash flow and staying alive."

Hall was dealt a near-death blow in the real estate and energy debacle of late 1980s. And he ultimately lost $500 million in an ill-fated bet on American Airlines stock before the giant carrier went bankrupt in 2011.

Which was worse?

"Watching yourself lose $50 million in a single stock in a single evening of overnight trading -- that's pretty intimidating," Hall says with a chuckle. "I can't say it was enjoyable losing huge sums of money, but it's OK to look back at it. It doesn't bother me. I'm just extremely grateful for the chance to play the game."

Hall got to know Roger Staubach in the '80s when they were on the opposite sides of real estate deals. Staubach represented tenants looking for bargains. Hall was struggling to fill his properties.

"A lot of people don't remember those times in the '80s," says the Hall-of-Fame quarterback and former executive chairman of JLL Americas. "Interest rates went up to 20 percent. We had a lot of overbuilding. It was a rough period. When I played football, I never quit no matter how tough the game was. Craig's the same way. He fought through it and has done great.

"He is the comeback kid."

Up, down and up again He and his wife, Kathryn Walt Hthousands thousand of acres in the Napa Valley, Sonoma and Mendocino wine country, where their vineyards produce some of the highest-rated wines in the world.

Hall Group is owned by Craig and Kathryn and their children and grandchildren -- with the slight exception of the wineries, which have outside investors. When the couple dies, most of their money will go to the Craig and Kathryn Hall Foundation.

"Growing up in a liberal Ann Arbor university town, I initially went into business thinking that it was somehow an evil, negative thing. But I've come to realize that entrepreneurs can do well for themselves and do good things for society," he says. "I firmly believe that."

Hall, who received the Horatio Alger Award in 2007, had a difficult childhood. He had epilepsy that was controlled with the antidepressant phenobarbital, but that made him slow-witted.

"I was the class dummy and borderline getting by. I was behind everyone in academics and sports," he told me in 2006. "Even after I got off the drug when I was 13, I still suffered from the fact that I never learned to read well."

But from a very early age, business was a meritocracy for him.

And politics fascinated him.

At 16, he was elected by his high school to be Ann Arbor's mayor for a day. His platform was housing -- a serious problem in this University of Michigan town.

"I figured out very quickly that you can't solve an issue like that in a single day," he says.

Two years later, the high school senior bought that small rooming house for $27,250, figuring he was going to be a "good-guy landlord."

It didn't quite work out as planned.

"If you can imagine, my job as the owner of the place was to clean the bathroom and the kitchen for these eight students. It was an experience."

He cashed out 2 1/2 years later for $49,000.

After that and until the real estate crash of the late 1980s, Hall bought property by forming limited partnerships.

His second deal used $3,000 as a downpayment raised by getting fellow students at the University of Michigan to invest $200 apiece for a house that was divided into three apartments

"I did a lot of things that were unimaginable to make a living and make ends meet," he recalls. "I managed property for someone who literally once a month would pull a gun on me and ask if I was stealing. I managed anything and everything that would pay me cash flow."

He also ventured into businesses well outside of real estate.

In 1977, he and his best friend launched a chain of health and racquetball clubs that became the largest in the country, having convinced Time Inc. to let them license the Sports Illustrated brand name.

In 1978, Hall put up $111,000 to start Independence Health Plan, the second for-profit HMO in the country.

"Can you imagine $111,000 being all the capital that you needed to start a health maintenance organization?" he says. "It actually worked. Made a lot of money. Went public. That was fun because my $111,000 turned into $35 million."

Different business Hall officially moved his company from a Detroit suburb to Dallas in 1981.

"At that point, we had just under 5,000 employees," he says. "We were much bigger than we are today. We were a totally different business."

At the height of the boom, Hall and his partnerships owned $3 billion in real estate. (It would be more than twice that in today's dollars.) He personally owned another billion dollars or so in other things, including an oil and gas company, two savings and loans and a 10 percent stake in the Dallas Cowboys.

The real estate, energy and S&L debacle put an abrupt and ugly end to that.

One night in early January 1986, Hall confirmed to our real estate editor Steve Brown that the Hall real estate partnerships had to renegotiate $500 million (about $1.13 billion today) in loans to stay afloat.

Brown and I (as The News' business editor) sat at my kitchen table and called in a story that literally stopped the presses because it signaled that Dallas' real estate orgy was over.

Hall liquidated $175 million in assets -- including his share of the Cowboys -- to shore up partnership loans, even though he wasn't personally on the hook for those mortgages.

The name of his third book published in 1990 was News of My Death was Greatly Exaggerated!

Mark Depker has ridden the financial rollercoaster with Hall for 48 years, starting out as a handyman and night watchman for one of Hall's apartment complexes in Ypsilanti, Mich., while going to college.

"I worked for free rent and beer money," says Depker, who retired as executive vice president two years ago but still sits on the Hall Group board and oversees the Halls' hotel in Napa.

As for the truly grim days of the late '80s and early '90s: "You know, it wasn't all roses with Craig. He drove the hell out of us," he says. "But as hard as we all were working, it gave us some comfort to know that Craig Hall was working even harder. The man was there seven days a week till midnight if that's what it took to figure out how to turn things around and save the company.

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