Irwin Jacobs: The Eternal Opportunist

To reach Irwin Jacobs’ command post halfway up the IDS tower in downtown Minneapolis, you move through a series of elegant, high-ceilinged chambers hung with large, colorful paintings, pass several workstations staffed by busy assistants, and proceed along a short corridor lined with framed photographs, newspaper and magazine clippings, awards, and other testimony to a rich and productive life. When you finally reach Jacobs—one of the last of a breed of high-flying, hard-charging tycoons who have lately been eclipsed by pretenders such as Bernie Madoff and Tom Petters—you won’t find him in his office, but seated instead at a large round table tending a thick stack of documents, a sheaf of old-fashioned call-back slips, and a telephone.

“I don’t think I’ve spent 30 minutes back there in the last year,” says Jacobs, nodding toward the darkened office behind him. “It’s easier to communicate out here than from behind a desk.”

Not that communication has ever been a problem for the voluble Jacobs. Nor has he been a hard man to find of late. When flood-ravaged Iowans needed sandbags last summer, Jacobs appeared on local television, describing the shipment of millions of empty polypropylene sacks from one of his companies in the Twin Cities. When his brother, Shelly, a well-known restaurateur, died in July, Irwin was the family spokesperson quoted in the papers. In September, he stood beside T. Boone Pickens, the legendary Texas oilman, at a Minneapolis news conference announcing a wind power joint venture. When the media needed a man-bites-dog story to counter the awful economic news, the Star Tribune and The Wall Street Journal highlighted Jacobs’ flourishing liquidation business, which buys and sells the merchandise of desperate manufacturers and failing retailers at a discount. Finally, this past January, when Carl Pohlad died at the age of 93, Jacobs—Pohlad’s friend, confidant, and business partner—provided reporters with his heartfelt reminiscences.

“It’s been an unusual year,” Jacobs concedes with a sigh.

In a community famously thin on charisma, Jacobs is charismatic. With Curt Carlson, Jeno Paulucci, and Carl Pohlad out of the game, Jacobs is one of the Twin Cities’ few remaining old-style wheeler-dealers, men who defined an era with their boldness, acumen, and ability to acquire—legally—awe-inspiring wealth. Jacobs is, and has been for almost 40 years, one of the Twin Cities’ most intriguing characters—and, paradoxically, one of its least socially assertive. His dizzyingly diverse, often below-the-radar enterprises and investments no longer include a big-league sports franchise (during the 1980s, he and Pohlad held a majority position in the Minnesota Vikings), and memories of his days as a controversial corporate raider have faded with other icons of the Reagan age. He does not star in television commercials, appear on party pages, or shill for political candidates. When he is spotted away from his IDS sanctum, odds are it’s while shopping with his wife at Costco or catching a movie with a gaggle of his kids and grandkids.

If, like Leonard Zelig, Jacobs has seemed ubiquitous lately, he will never be mistaken for Woody Allen’s cinematic nebbish. At 67, he looks at least 10 years younger than he is. He’s a husky six-foot-three, sports a year-round tan befitting a boat builder, and favors pricey-looking open-neck shirts and casual slacks even during business hours. He wears his wavy, still mostly dark hair long and swept back behind the ears, looking more like a buccaneer than a businessman. He walks and talks fast, often with an air of having several things simultaneously on his mind—which, of course, he does.

Mark Jacobs, his son and partner, says, “He’s like a kid on the playground. He still wants to play all day and not miss out on any of the action.”

“Action” is an apt word for Jacobs and always has been. This is a man, after all, who’s been involved in money-making ventures—adventures may be a better term—since he was a child. Sitting at his worktable six decades later, he happily remembers those early days working for his father, a Russian immigrant who owned and operated Northwestern Bag and Burlap Company on North Third Street in Minneapolis, buying and recycling sacks for grain and feed mills throughout the Upper Midwest.

“In the summer I’d go with Dad all the time,” Jacobs recalls. “He worked so hard to make a living for the family.” Besides Irwin, there were two older sisters and younger brother Sheldon. “We’d pick up a load of gunny sacks and come home so dirty we could scrape the dirt off our arms with a knife.” By the time he was 12, he says, he was calling on his father’s accounts with his own truck and driver. “I didn’t have a driver’s license, but my dad gave me his checkbook. I used to sign his name—Samuel Jacobs—on the checks. Everybody knew me because I’d been out there with him since I was 5.”

Irwin graduated from North High, then spent exactly three days at the University of Minnesota. He was “a born peddler,” he says—a kid obsessed with the “art of the deal” and determined to complete his education on the street. In his early 20s, he was also a husband and the father of a growing family—he and his wife, Alexandra Jacobs (née Light), would have five children in eight years.

In early 1965, floods were predicted for large swatches of the Midwest. Despite his father’s misgivings, Jacobs, armed with data he’d gathered during a visit to the state climatologist, hired a plane and dropped in on city officials along the floodplain, signing them up and guaranteeing a price for the burlap sacks then used to make sandbags. In Minneapolis Jacobs ordered tens of thousands of the empty sacks from a manufacturer in North Carolina, then waited for the rivers to climb their banks. “We had so many gunny sacks in our building there was no room to walk,” he says. “Dad was a nervous wreck. He said, ‘Son, we’re going to go broke if this doesn’t work.’ I said, ‘Dad, you gotta have faith.’ ”

Young Jacobs was having sleepless nights over the gambit himself. Finally, Mankato called and asked for as many bags as he could deliver—immediately. “I had one guy who could drive a semitrailer truck,” Jacobs says. “But I went out and rented two eighteen-wheelers, loaded them with bags—about 50,000 bags to a truck—and left at 10 o’clock that night. I told the other driver, ‘Don’t let me out of your sight!’ because I’d never driven a semi in my life and couldn’t turn a corner.” Two hours later, Jacobs and his helper were unloading the bags in Mankato. “We were hungry and scared, and the river was rising.” But the mission had been accomplished. Over the next several weeks, Jacobs’ wager with the weather continued to pay off for both the company and the endangered communities, and his success supplying sacks along the Mississippi and its tributaries led to similar deals with the Canadian government. By that time, Jacobs was essentially running the business, though he was not yet 25.

The sandbag story contains several key pieces of Jacobs’ lifetime narrative, including the importance of family, a reliance on self-confidence and intuition, a willingness to make educated yet risky bets, and an uncanny instinct for the moment to act. The next relevant chapter of that narrative comprises his purchase, in 1975, of the Grain Belt Brewery in Northeast Minneapolis, his eventual sale of the Grain Belt brand to G. Heileman, and his sale of the historic building and grounds to the city of Minneapolis, for a cumulative profit of roughly $10 million. Though some people questioned his intent to run the brewery long term (he still insists that was his plan), his was suddenly a known name beyond the family business.

In 1976, Jacobs drew the attention of the larger world when he came out of nowhere—that’s Minneapolis as viewed from New York City—to buy the receivables of W.T. Grant, a bankrupt national dime-store chain. The Wall Street Journal would dub the upstart “dealster” from flyover land “Irv the Liquidator,” which did not bother Jacobs a bit. “We made a killing,” he says of the Grant deal. “I think we paid $44 million, then got our money back in 72 days and made a ton of money on it after that.”

That “we” included, significantly, Carl Pohlad, who would prove to be the second essential older man in Jacobs’ tale and, in Jacobs’ words, a “surrogate father” following Samuel Jacobs’ death in 1980. Pohlad, whose holdings at the time included Marquette Bank, had lent Irwin Jacobs—after the latter’s 15-minute straight-talk appeal—$4.5 million for the Grain Belt purchase. Beginning with the Grant deal, Pohlad was Jacobs’ partner, not his banker—and, quickly, a whole lot more. Jacobs says, “I told him, ‘I’m ready to go make something happen out there,’ and Carl said, ‘Whatever you want to do, go out and do it.’ And he meant it. We’d have lunch and I’d say, ‘Carl, I’m going to buy as much Disney [stock] as I can,’ and he’d say, ‘You’re not going to do it without me.’ One day I called him at home and said, ‘Carl, I just bought 51 percent of the Vikings.’ He said, ‘Well, what about me?’ I said, ‘Well, we can be partners if you want.’ And he said, ‘I’m in.’ ”

They were, on the face of it, an odd couple. Jacobs, a talkative, not especially religious Jew and immigrant peddler’s protégé, was almost 30 years younger than Pohlad, a taciturn practicing Catholic who’d boxed, sold cars, and made his own circuitous way to the big money. Yet despite the almost comical contrast in provenance and plumage, Pohlad and Jacobs were birds of a feather. They shared the white-knuckle thrill of high-stakes financial adventure and a cold killer’s instincts when hammering out a deal.

Though not unexpected, Pohlad’s death, according to several persons who know Jacobs well, affected Jacobs at least as deeply as anything else during the craziness of the past year—including his laying off of 2,000 employees (out of a total workforce of 5,500) at his billion-dollar corporate flagship Genmar boat business and his brother’s tragic suicide.

In fact, by his own admission, the past year’s setbacks and losses, along with the overall instability of the economy, have rattled Jacobs’ worldview the way few things have in his eventful career.

“Personally, I feel more vulnerable than I used to,” he says. “Not because I don’t have the confidence I’ve always had, but because I can’t predict what’s going to happen. It gives you an insecure feeling when you create budgets and have to change them two or three times a year. I’ve never done that before. You say this is the bottom, and all of a sudden you’re under the bottom. I don’t care how much money you have—if you’re in business today, you’re vulnerable.”

Though Jacobs is talking about the foundering economy, it’s difficult to believe his personal losses are not part of his unaccustomed uneasiness, because—and this is another important component of his story—his business and family life are inextricably entwined.

At the moment, two of his kids and a pair of his sons-in-law are active in Jacobs’ enterprises. His only son, Mark, is president of Watkins Inc., the 140-year-old Winona–based manufacturer of personal care and household products that Irwin Jacobs plucked out of bankruptcy in 1978 and this year will do more than $100 million in sales. A Brown University grad and sometime actor who’s had small roles in Goodfellas and other films, Mark wore lederhosen and sold souvenirs at Grain Belt when he was a teen, and says he can’t remember not being involved in his father’s businesses. Daughter Melinda’s husband, Howard Grodnick, runs Jacobs Trading, whose liquidation business, according to Irwin, is up 100 percent over last year. Another daughter, Trisha Blake, runs FLW Outdoors, which stages hugely popular televised fishing tournaments that Time magazine describes as “NASCAR on the water.” (Jacobs conceived the tourneys to help sell boats, but says the program has since become a “serious operation” in its own right, with tie-ins to Wal-Mart, Procter & Gamble, and other major sponsors.) Trisha’s husband, Robert Blake, is a Genmar executive.

“When we were kids,” says Melinda, an energetic local blogger and lively media presence, “we all helped out with liquidations and stuff.”

“My children are very much part of my world,” Jacobs says. “They’ve all been very successful.” He pauses and offers a rueful smile. “And here I am, running our boat business—our largest business—and laying people off. We’ve had slowdowns in the past where we’ve laid people off and then brought them back. But this is different, and it’s caused me heartache because I know I’m hurting people’s lives. My family knows it concerns me.” The recent deaths of his brother and Pohlad have deepened and extended the concern. “No question,” he says, “it’s been an emotional time.”

Jacobs is reluctant to talk about his brother’s death. He and Shelly, who was three years his junior, had once been very close but grew apart in later years—they were “two very different people,” he says. Shelly was outgoing and social, though he never married and had no children. He dabbled in show business and relished the attention that comes with running popular dining spots (Shelly’s Woodroast restaurants in the Twin Cities). Despite many friends and reportedly no small amount of financial help from his brother, Shelly’s careers eventually fizzled.

“I was closer to Carl than I was to my brother,” Jacobs says. “Carl was somebody I looked up to the way you look up to a parent.”

Jacobs and his wife called on Pohlad for the last time about two weeks before he died. “Carl was in his chair,” Jacobs says. “He was in pain. He had arthritis in his legs that was just awful. For years it was that way, but he’d never complain. That last time, my wife sat on one side of him and I sat on the other. We held his hands. I’d always kiss Carl when I saw him—when I saw him and then when I left, particularly in the last several years. I wanted him to know the affection I felt toward him. Anyway, that day he said to me, ‘Come here.’ I thought he wanted me to kiss him. But when he pulled me close, he said, ‘I got another deal for us. Right after the first of the year. We’ll do one more.’ I said, ‘Whatever you say, Carl.’

“Of course there was not another deal. He was fading fast and he knew it. He just wanted to talk that way, because it excited him. He wanted to feel some of that old excitement.”

In good times and bad, the thrill of a deal never seems to get old for Jacobs either. His recent association with T. Boone Pickens might have conjured up images from their days terrorizing the boardrooms of underperforming publicly held companies 30 years ago, but the two erstwhile “gunslingers” have been talking about nothing more lethal than harnessed wind power and other alternative energy initiatives.

For the 80-year-old Pickens, the wind power plan has had the come-to-Jesus ring of the recently converted, albeit one who believes he’ll profit mightily from his new religion. For Jacobs, the joint venture seems to represent yet another opportunity in a career that’s included boat manufacturing, real estate, printing, trucking, storage, finance, pro football, discount stores, liquidation, recycling, beer, vanilla extract, and gunny sacks. And, as is usually the case, there’s a link between the new Jacobs business and an existing one: The cutting-edge, computer-driven VEC (Virtual Engineered Composites) Technology used to mold hulls for Genmar’s watercraft would be adapted to form the fiberglass blades for windmills.

Since announcing the venture last September, Pickens—in the face of the subsequent economic tsunami—has scaled back his investment significantly, but, in late March, Jacobs said the arrangement would go forward. Whatever else it means, the Pickens deal signaled Jacobs’ determination to stay in the game—indeed, to get involved in new games—despite his retirement-ready age. Of course, any conversation with the man lasting longer than a couple of minutes is likely to assure you that, though older as well as wiser, Jacobs is as tough and combative as ever.

He is contemptuous of Wall Street and bad actors such as Madoff and Petters. “I haven’t bought a stock in six years,” he says. “I was screwed by Wall Street and said, ‘Never again.’ Now I thank God every day that I’m not a part of it anymore. Believe me, I was once a very sizable trader in the market. In the 1980s—I’m not kidding—I paid as much as $10 million just in commissions a year. Every day I was trading millions of shares of this and that, and putting the money I made into our businesses. Now I consider Wall Street the most fraudulent institution in the world. It’s just outrageous what those people have done in the last several years.”

Jacobs says he had nothing to do with Madoff, but had a run-in with Petters, the Wayzata businessman currently in jail awaiting trial for allegedly running a Ponzi scheme that bilked investors out of $3.5 billion. “Petters bought our retail stores 10 or 12 years ago,” he says. “Jacobs Trading had a bunch of them—World’s Best Deals they were called—and I wanted to get out of the retail business. I called Petters because he had retail stores selling close-outs. He came to see me the next day. I told him, ‘Just take over the leases and buy the inventory at cost.’ He said, ‘Fine, but I don’t have all the money to do it with.’ I said, ‘I’ll carry you. Give me something down.’ He gave me a million or a half-million, I don’t remember, and I gave him 18 months to pay off the balance, three or four million.”

Petters was always late with the interest payments, Jacobs says, and after 18 months claimed he didn’t have the money to complete the deal. “He came to me one day and asked for more time,” Jacobs says. “I said, ‘No, I’ve carried you longer than your mother. We’re done. You pay or I take [the inventory] back and put you in bankruptcy.’ Then he said, ‘I’ll tell you what you do. Make out an invoice to me for twice what I owe you. I’ve got this lender who will give me 50 percent of whatever I buy.’ I said, ‘What are you talking about? You want me to create a fraudulent invoice?’ And he said, ‘Well, it’s not your problem, it’s my problem.’ I said, ‘Get your ass out of my office.’ ”

After that, recalls Jacobs, “I said to my son-in-law, ‘One of three things is going to happen: [Petters] is going to file for bankruptcy, be indicted, or commit suicide. There’s no way some funny games aren’t going on here.’ He went from not paying me to buying Fingerhut. It didn’t make sense.”

Oddly—then again, maybe not—Jacobs insists he’s optimistic despite today’s perilous business environment, the deaths and downturn, and his self-described feeling of vulnerability. “I’ve always been the type of person who, in good times and bad, asks, ‘How can we capitalize on the situation?’ ” he says. “Everything I’ve ever owned I bought in trouble, and everything I’ve sold I sold when it was good. I would call myself an opportunist and not be embarrassed.”

“Dad’s been humbled by the events of the past year,” Melinda Jacobs says, “but he’s fearless. He’s never believed in setting goals. It’s like, ‘You set a goal, you reach it, then what?’ He believes in being constantly challenged. He’s in good health and doesn’t see retirement as an option. I just wish he’d slow down and smell the roses. But I’m afraid he won’t.”

Irwin Jacobs, according to his kids, has never been one to take his work home. Business and family may be inseparable, but there’s always been a wall between the office and the house. “It’s not easy for him to relax,” says Mark. “His passion is his work. But he always goes home for dinner.” Alexandra, with whom Irwin will celebrate their 48th wedding anniversary in August, has her own career—she’s a successful sculptor and painter whose large, bright portraits and landscapes enliven the walls of her husband’s headquarters and have been purchased by the likes of Oprah Winfrey and Quincy Jones. Reports that Irwin sends Alexandra roses every week are not true, he says. “But we’ll go to Sam’s Club or Costco and buy fresh flowers. We have our own greenhouse, too. She does love flowers.”

The couple’s second child, Sheila, now in her early 40s, has cerebral palsy, lives with a full-time attendant in the small group home Jacobs built for her, and, at her parents’ insistence, spends every weekend with her family. “She’s our angel,” Jacobs says. “We pretty much dedicate our weekends to her.”

For a few years during the 1980s, Forbes ranked Jacobs among America’s 400 richest Americans. No longer on that list, he won’t divulge his current worth. But, as the old line goes, the money is only for keeping score. For Jacobs, it’s always been the game that counts.

Eager to get back to business at the big round table that’s his playground, Jacobs sums it up like this: “I have to tell you, there’s never been a day in my life, whatever I’ve done, that I wasn’t proud of what I did and I didn’t give 100 percent. I’ve always felt that if I didn’t do that I wouldn’t succeed, and I always wanted to succeed. Now people say, ‘Enough already!’ But I still don’t see it that way.”