Executive Q & A: Michael Garvey

Since launching Saltchuk in 1982 by putting together a group of investors to acquire Totem Ocean Trailer Express (TOTE), a Seattle-based shipping company, Mike Garvey has built a portfolio of 22 businesses—in everything from air cargo to trucking—that generated revenues of $2 billion in 2011.

Leslie Helm | February 2012 | FROM THE PRINT EDITION

Credit: Hayley Young

YOUTH: My dad was born and raised in Washington state. He was a longshoreman and a staunch union supporter. In the famous 1934 dock strike, the bloodiest strike on the West Coast, he was on the tough-guy squad that threw scabs off the ships. He got beat up. My mother’s father was a coal miner. So both my parents were quite suspicious of businesspeople. Anybody who wore a coat and a tie, except for a doctor or teacher, was suspect. But I’ve wanted to run my own business since I was 10 and I started a lawn mowing business. I liked the idea of not being controlled.

EARLY DAYS: In 1956, I skipped my prom and high school graduation to work in Alaska for the U.S. Smelting, Refining and Mining Co. It was a great adventure. Out of [University of Washington] law school, I started a law firm [Garvey Schubert Barer]. When I couldn’t find clients, I decided to start another business with some friends, buying and selling companies. Our first investment was Ste. Michelle Winery. We had no money so it was a highly leveraged transaction. Our investment in K2 didn’t work out so well. That’s when I started Saltchuk with several others with the idea of investing for the long term.

SALTCHUK: We employ about 7,000 people. Our [Lake Union] headquarters only has 14 or 15 people because we are really just a gatherer and allocator of capital. We make good decisions about where to invest money and we find really good people to run our businesses. We set high expectations for our managers—we expect them to perform in the top quartile of their industry—but then we let them operate independently.

VALUE ADDED: One way we add value as shareholders is by having a long-term commitment to the business. Everyone knows how disruptive it is when [investors] flip a business. If you ask employees to commit their careers to your company and you as an owner can’t reciprocate by being there in the good times and bad, that’s bad for morale. If we buy a good company, we will reinvest in it. It’s a virtuous cycle.

RETURN: We focus on niches [such as the maritime industry] that we are familiar with and that have steady growth over the long term. We might make less than other companies in good years, but we lose less in bad years. In the late 1990s, our returns