Campaigning for the presidency, Mitt Romney has pointed to his stint as the founder and manager of Bain Capital, a private equity firm, as proof he can rev up the US economy and create jobs at a faster clip than President Barack Obama. Last year, while stumping in Florida, Romney declared, "You'd have a president who has spent his life in business—small business, big business—and who knows something about how jobs are created and how we compete around the world." His campaign spokeswoman, Andrea Saul, has said that Romney's Bain days afford him more expertise than Obama to "focus on job creation and turn around our nation's faltering economy." Romney has even claimed that during his tenure at Bain, "we were able to help create over 100,000 jobs." In his acceptance speech at the Republican convention, Romney smacked Obama for having "almost no experience working in a business" and tied that to the sluggish recovery.
But at Bain, Romney's top priority wasn't to boost employment. As the Wall Street Journal recently noted, creating jobs "wasn't the aim of Bain or other private-equity firms, which measure success by returns produced for investors." And, the newspaper reported, Romney's 100,000-jobs claim is tough to evaluate.
Mother Jones has obtained a video from 1985 in which Romney, describing Bain's formation, showed how he viewed the firm's mission. He explained that its goal was to identify potential and hidden value in companies, buy significant stakes in these businesses, and then "harvest them at a significant profit" within five to eight years.
The video was included in a CD-ROM created in 1998 to mark the 25th anniversary of Bain & Company, the consulting firm that gave birth to Bain Capital. Here is the full clip, as it appeared on that CD-ROM (the editing occurred within the original):
TRANSCRIPT: Bain Capital is an investment partnership which was formed to invest in startup companies and ongoing companies, then to take an active hand in managing them and hopefully, five to eight years later, to harvest them at a significant profit…The fund was formed on September 30th of last year. It's been about 10 months then. It was formed with $37 million in invested cash. An additional $50 million or so of what I'll call a call pool, which is money that we can call upon if the deals are large enough that they require more than a $2 or $3 million dollar initial investment. Why in the world did Bain and Company get involved in this kind of a business? We're not particularly noted for having years and years of experience in financing. Three reasons. We recognized that we had the potential to develop a significant and proprietary flow of business opportunities. Secondly, we had concepts and experience which would allow us to identify potential value and hidden value in a particular investment candidate. And third, we had the consulting resources and management skills and management resources to become actively involved in the companies we invested in to help them realize their potential value.
The CD-ROM was a hip-hip-hooray for Bain & Company—in one video, an employee noted that the operating principle of the firm is "never lose sight of the fact that there is at least a 1 percent chance that you may not know the answer or the answer you have may be wrong"—and it was produced for distribution to the firm's employees and clients. The video did not note where Romney made these remarks about the origins of Bain Capital. But this short clip offers a glimpse of Romney when he was at the start of his private equity career and saw businesses as targets of opportunity that could be harvested for the benefit of his investors, not as long-term job creators or participants in a larger community. His remarks were hardly surprising, but they did encapsulate the mindset of get-in/get-out private equity deal makers.
The CD-ROM, which was given to Mother Jones by a former Bain & Company employee, also provides a look at the corporate culture of the consulting firm. Here's how Bainiacs poked fun at themselves, sketch-comedy-style:
And here's how the Bain & Company gang partied at annual meetings, where employees came together to form what was known as the "Bain Band" (note the easy transformation from "Jesus Is Just Alright" to "Working at Bain's Alright"):
The CD-ROM contained no footage of Romney singing or cutting up when he was a prominent player at the consulting shop, which was before Bill Bain, its founder, pushed Romney to leave Bain & Company to create and lead Bain Capital. There is only that one video of Romney discussing his private equity firm in its first months. In this clip, Romney mentioned that it would routinely take up to eight years to turn around a firm—though he now slams the president for failing to revive the entire US economy in half that time.