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A conversation with Jack Stephens.

A Conversation with Jack Stephens

It's Memorial Day, the day before the primary elections. Scores of men and women who are running for office, and hundreds of men and women who believe in them, are pounding on doors and harrassing shoppers and papering the landscape with flyers and cards and bumperstickers.

There are no yardsigns planted in front of the big house along the crest of Pulaski Heights, no clues--other than the size of the residence --to the politics of the occupants, or their occupation. The doorbell rings only once, Jackson T. Stephens is wearing a pink golf shirt, neutral slacks, black loafers. And a disarming smile that says 'Catch me if you can.'

It comes to you then--the thread that runs through all the clips you'd read the night before, preparing for a conversation about business in Arkansas that he's agreed to, a conversation you hope may wander to other subjects, especially him; the thread that's apparent in all the quotes attributed to him: that Jack Stephens has never been interviewed. He has been questioned, and has answered some of the questions, and his words have been recorded and printed within quotation marks. But he has never been interviewed.

You follow him through the foyer and, bearing left, through the dining room and a breakfast room and a kitchen and a butler's pantry, then out a side door, past four zoned air conditioning units struggling to cool the house against a fierce morning sun, and then down a long flagstone walk to a guest house--"the best investment I've made around here."

He brings coffee into the living room, where sunlight filtered by correct curtains illuminates antiques and Oriental art arranged by Ward Jackson of New York. He settles into a soft chair and puts his feet on a hammock.

These Arkansas-based companies that have done so well--what have they got in common?

"You get into the old cliches--single-mindedness, devoted people, all of the sophisticated management tools. The key now--they're first generation owners and managers. The interesting thing is how they'll make the transition."

General transition?

"Yeah. You look at the great old companies --the further they get from the founders' philosophy, the more trouble they get into. A lot of them don't even exist any more.

"Now, Dillard's--look at their growth. It's been since those kids started coming of age. He's got to be proud of them."

Jack Stephens tears the cellophane from a fresh package of cigarettes. It's time for a confession, of sorts, as if something in his world is slightly amiss, something that only now seems remarkable.

"You know, I really don't know Bill Dillard."

You don't?


I mean, you see one another--dinners, functions ...

"Oh, yeah. Well, anyway, it's obvious he has excellent management. Looks to me the transition is in place. And with the trouble his competitors are in, the doors are wide open."

Is Wal-Mart too big?

"No. It doesn't matter how big you are if you stayed focused. That's been the key to their success--providing products at the cheapest price to their customers. Sears, K-Mart --they thought diversification was the answer. They diluted their management, their capitol."

Diversification was a catchword a few years ago.

"Well, by definition, diversification means you don't see enough future in what you're doing to occupy your time and capitol. So I've become a little suspicious of ..."


"You seldom see them announce a big diversification program. That's too obvious.

"Coca-Cola. They diversified. Now, they're trying to get back to selling Cokes, having at last seen the value in being Coca-Cola. Now, if you're a dying business, like tobacco --everybody knows tobacco is a slow growth or no growth business. In that case, I understand diversifying.

"Sears, some of the oil companies, some of the car companies--they seem to have repaired themselves--got back some of the leadership ability at the management level. Some of the early technological leaders such as IBM are having trouble maintaining their lead."

Is that because there's not a Watson at the top?

"No. Management is super, super smart. I just read an article by Tom Watson. He says it's getting harder and harder to manage. The best hardware doesn't do anything without the appropriate softwear. That's where their competitors have made inroads."

There is the sound of a door. Mary Anne Stephens, not wearing red, walks into the room, and the effect on Jack Stephens, maybe a billionaire, is profound. He is on his feet in the flash of an eye. His bassett eyes sparkle. Such an unabashed sap is he for her that you get the idea that, if she were to ask him for Spanish lessions, he'd just keep smiling that smitten schoolboy smile and send the Falcon to fetch Placido Domingo. And Julio for a backup.

"I'll be in Fort Smith tonight," she tells him, "I'm gonna work the polls tomorrow."

"Be careful now," he tells her. They smooch for a moment. Smooch, as in little kissys. Hand squeezes. She touches his cheek.

It occurs that the polite thing is to cough or something to remind them you're in the room. But they break it off soon enough.

And since you assume Mrs. Stephens isn't off to campaign for the Sebastian county judge, you go for the opening: Tommy Robinson --why?

What you get is The Wave. It is not an exaggerated gesture, just a break of his wrist, fingers extended. At the intersection of Capitol and Scott Streets, associates get The Wave when they bring him an idea he doesn't like. To people with notebooks and pencils. The Wave means no comment, and don't bother to keep bringing it up.

So, literally, back to business.

Are Arkansas companies still a good deal for the investor?

"Absolutely. I'd like to see a mutual fund organized to invest in Arkansas companies."

Are you trying to float a balloon?

"Sure. Float it."



How would it ...

"I don't know. I just thought of it."

How ...

"You just register it. The managers could specify that twenty percent of the fund would go to venture capital, to help young companies that need capital."

Twenty percent?

"Well, depends on how big the fund gets. If you sold $100 million, then $10 million in venture capitol would be good. That's a lot of money."

The regulatory ...

"All you gotta do is specify in the prospectus what you're doing. If you get a bunch of young people enthusiastic about doing it--it wouldn't do me any good.

"Managing venture capital is one hell of a job--requires very skillful people."

The state ...

"Using tax money for venture capital is a stupid idea. State government can't possibly attract the caliber people you need. They're the most sought-after people in business."

Stephens Inc. has done nicely with venture projects.

"Our failures would outnumber the successes. But in overall return ..."


"Come here."


"I want to show you something."

He's out of his chair, walking toward a mahogany cabinet. "I want to show you something," he says again. Ledgers? Letters of agreement? Earnings reports?

He holds aloft a sterling silver trophy.

"You know, my partner and I won the team championship at Augusta this year. I'm really proud of that."

How good a job do you think the A.I.D.C. is doing?

"I'm not qualified to appraise what they're doing. My team's won the championship once in each of the last four decades."

Is the A.I.D.C. doing a good job?

"My partner this year was Hootie Johnson, from Columbia, South Carolina. Runs Banker's Trust."

Lunch comes. Light sandwiches, slaw, pickles, potato chips. Cake and ice cream.

You try again.

What if you did run the A.I.D.C.?

"I would encourage capital investment for small business. I'd give them the same break the state gave International Paper. We have the aircraft industry at Little Rock--one of the best industries in the state. Suppliers of clothing to Dillard's, Wal-Mart. Emphasize that. Coordinate job training, ask industries what they needed. Make damn sure the votechs provide it. And I would stop certificating kids through school. I asked a superintendent in the Delta what his dropout rate was. He told me four and a half percent. He didn't tell me twenty-four percent of his kids couldn't read or write. I had to find that out later."

Too many school districts?

"Hell, yes. Too many administrators."

You mentioned the Delta. Have you read the Delta Commission report?

"Another g----- study group. They're just now finding out there's something wrong with the Delta?"

Does the Delta have a better future?

"Not by government. The private sector can help. The government coming in is like the IRS coming to say, `I'm here to help you.'"

How would you design Arkansas's future?

"I think we need to decide what we want to be besides agriculture and pursue it with a high intensity. Getting branch plants is essential. But I'd much prefer emphasis on small to medium in-state business. That's where the growth comes from. I don't think the state offers enough incentives for our own people to grow."

The sound you hear is that of a man warming to his subject.

"The tax credit for I.P. was a boondoggle."


"Tax credits should go to local companies that will invest a hundred thousand dollars of their own capital. They bring in the jobs. I.P. didn't bring in any jobs."

The state says it saved jobs.

"I can't refute that. If the state got value received, it would get one hundred times that from small business.

"The only reason to give tax credits to business is if the state gets a bigger return. Then it's in the state's best interest. And it's best interest is with small business. Hell, that's where eighty percent of the growth is coming from. If (I.P.) was a good deal, then it would have been a hundred times better for small business. They're the ones that need it the most."

But--a boondoggle? Boondoggle?

He pauses.

I question whether it was a good deal.

He rolls the whole business over in his mind as he heads to the kitchen for more coffee. Suddenly, he stops and turns to face you, wearing a mule-eating-briars grin.

"Do you get the idea I'm a half-assed populist?"

Once back in his seat, he doesn't remain there long. Jack Stephens stands at the glass door leading to the deck of his guest house. Outside is a slope of barbered zoysia, and beyond that, a thicket of trees, and beyond that, the Arkansas River.

"It's gonna have to come from the young people. Warren, the Curt Bradbury's, Jimmy Moses's, Mark Grobmeyer. They're a bunch of people in their 30s and 40s who are beginning to move. Give me the people who do something, not pontificate.

"To do anything worthwhile, it takes so damn many people and so much effort. People have to be willing to forego personal credit for the good of the project. There are enough good people, but all it takes is one or two others to screw it up."

Some people think you ought to do more.

"What do you mean?"

They wonder why you don't just open a factory somewhere in Arkansas and hire a bunch of people. Or give away a lot more money.

"I don't know what they mean by that. They say--what now?"

Well ...

"I'd like to know what they mean by that."

Well, I guess they mean. `There's that son of a bitch Jack Stephens ...'

He is grinning ...

`... with all that f------ money ...'

... and now he is laughing, silently, but holding his sides ...

... and they wonder why he doesn't cut loose with some of it.

You have to figure this is the funniest thing anybody's said to him in years, so hard is he laughing. That changes. His mood changes. He grows quiet. Shakes his head. Annoyed.

"I really don't know what people look to me for. They really don't have any right to look to me."

He's out of his chair again, almost pacing. Frustrated. Why can't anyone understand?

"I'm the most impatient, discontented man with the status quo of anybody I know. I mean, g-------, why can't I get along with anybody? I'm a contrarian! The most contrary man I know.

Is it fun?

"Nah. It causes a lot of problems."

A few more questions; against most of them he invokes The Wave.

"And I didn't mean to say I was contrary. I said I'm a contrarian. The status quo's never good enough. I look outside this window to the Arkansas River--I never see enough g------barges out there."

His voice, which has dropped to a Marlboro mutter, starts to rise again. Would somebody please explain something to him?

"G----, don't you think I could go along and get along?"


"Why don't I?"

Okay, why don't you?

"I don't know. Why, I don't know. I wish I did. (A little wistful) Take that Little Rock cable tv deal. I made five different groups mad at me. They're still mad at me.

"Ten bucks on the Governor's race?"


"Tommy by fifty-seven percent."

Sheffield by one percent.

"You're not a very good gambler. You should have said Tommy by fifty-six percent.

"You know, it would be easier for me to be for Governor Clinton. Some of may business friends ought to take more of an interest in the political system."

For instance?

The Wave.

"That's their right. I don't like to criticize. But I'm not gonna listen to them bitch, either."

Somebody told me a story about you once.


He said you got to the office one morning when the weather was really crummy--ice and snow and stuff--and you noticed a bunch of your brokers weren't there, and this wasn't long after they'd been off duck hunting. And that when you asked where they were, one of your people said they were delayed because of the bad weather. I hear that irritated you.

"It pissed me off."

Are you sure you don't want to go ahead and put some of this other stuff you're sore about on the record?

"Yeah. But one day soon I'm going to."

Well then, what about this thing you're doing over in ...


It would make you look good.

"It would screw it up, and I'm having too much fun with it. No committees, no reports."

It's 2:30. (What is his time worth?) He's given off signals which suggest there is something else he wants to do with the rest of his holiday, signals sufficient in number that, in their aggregate, they can't be any longer politely ignored. He walks you out onto the little patio and looks around.


Yes, sir. Must be 95.

He looks at his watch. He gives you not The Wave, but a wave. As he turns to go back inside, where the telephones are, you imagine it must be about time for the Asian markets to open.

Then come his parting words.

"I'm gonna take a nap."
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Article Details
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Title Annotation:Arkansas Investor; Jackson T. Stephens
Author:Barnes, Steve
Publication:Arkansas Business
Article Type:interview
Date:Jul 30, 1990
Previous Article:Investing in the bond market.
Next Article:McClellan Manor sold.

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