From the Family Business to an Industry Leader, Wally Brown's Career is All About Growth

By Jay Hipps, Hacienda Network Staff Writer

Look over the scope of Wally Brown's career and you'll find one major theme: growth. Brown has shown skills as a builder throughout his career in insurance, and the path he has taken is all his own.

A native of Oakland, he graduated from Bishop O'Dowd High School before moving on to Santa Clara University. His major in economics was chosen not due to an overarching career plan but for a simpler reason. "When I was at Santa Clara, one of the best teachers I had and one of the best classes I took was economics," he says. "I liked it so I took that as a major."

Faced with the likelihood of being sent to Viet Nam, Brown had also enrolled in ROTC at the South Bay university, eventually beginning his tour in the Army as a second lieutenant in the infantry in South Korea in late 1967, where he had responsibility for 30 men as a platoon leader. He finished his tour of duty as a first lieutenant stationed at the Oakland Army Base before beginning his career in insurance.

"My decision to come to work in this family business was (based on the fact that) I had never interviewed for a job," he says. "It was the path of least resistance - I didn't have to interview, I just came in."

In retrospect, Brown says it was one of two important instances in his life when he made "the right decision for the wrong reasons." "When I went to work in this family business, I took a cut in pay from what I was making in the Army, and I probably could have gone to work for a bigger company at a higher starting salary. But looking back, I see where that afforded me growth opportunities that I never would have had if I had gone to work for a big company somewhere. I wouldn't have had the chance to build something the way I was able to build this company."

Learning the business was a difficult process, due in part to the fact that the family business consisted of a grand total of four people.

"I didn't know anything about insurance and because there were only four people, I had to learn how to do everything," he recalls. "At first, I was totally useless in the office. I still remember the most significant thing I did my first day at work was empty the wastepaper baskets - that was my sole contribution. They really didn't need me; the only reason I went into that was it was owned by my grandfather and my mother and father. So I came into the agency, learned as quickly as I could, and then proceeded to build the business."

During that time, his parents divorced, dividing the business into pieces at the same time. Now partnered with his mother, Brown continued growing the business until, in 1987, they were approached by a couple of publicly-held brokers with buyout offers. "We had about $3 million in income then and we had about 25 people. One of the offers we received was from Arthur J. Gallagher out of Chicago. Gallagher was a fairly significant broker in the Midwest but really had very little presence on the West Coast or the East Coast. Their strategy was to gain a foothold on the West Coast and the East Coast by going out and buying brokers rather than starting up offices."

Once again, Brown will tell you, he made the right decision for the wrong reasons. "The reason I sold to Gallagher was that they offered me the most money. The reality is the amount of money in stock that I got when I sold my business was nothing compared to what it turned out to be because the big boon for me was the growth in the stock price. The stock that I was given as a result of selling my business probably went up 800 percent, where some of the other people that I talked to went out of business - they don't exist at all anymore - or their stock didn't have near the performance that Gallagher did. I shudder to think what might have happened if someone else had offered me a little more money."

Aside from the economic rewards of the transaction, Brown is pleased with the decision to merge his business with Gallagher. "As I look at the marketplace, there is nobody else I would rather have become part of. They're good, honest people, they have a great business model, and I've benefited from not only the success in my office, but I've also benefited significantly from the appreciation of stock that everybody in the company has contributed to."

Like any good manager, Brown recognizes the value of his team. Between 1987 and now, Brown's staff in Pleasanton and two satellite offices in San Jose and Fresno have grown from about 25 people in 1987 to almost 100 people and from revenues of about $3 million to revenues of about $24 million. "During that term of growth, we were consistently recognized as one of the highest performing offices in the Gallagher organization. Every year, they give out awards for sales people, people who have achieved certain levels of success - and the premier award in that meeting is the manager of the year award. During my tenure with Gallagher, from 1987 to today, I am the only person in the company who has won that award three times."

Despite the individual awards, the key to Brown's success may be his ability to recognizing and appreciate the contributions of everyone in the company, something that was honed in his early days in the family firm.

"I understand the accounting process because I've done it," he says. "I understand what the claims people do because I've done it. We have sales people, I've obviously done that job. We have people that work internally to support the sales people by doing administrative work. When there were four of us, I did that administrative work so I understand what they do. Now, they do it more efficiently and they have tools that I didn't have, but because I started out in a small firm I've done virtually every job in the office. I think people who experience that not only have a better understanding of what the people below them do, they have more empathy in terms of what the challenges of their jobs are.

"In our business, to really accomplish things, you have to be able to effectively manage people. People are a resource. If you owned a manufacturing plant, you'd have equipment that produced a product. We don't - we have computers and stuff but what produces our product is people. What separates the really successful operations in our business from the unsuccessful ones is how productive your people can be and how productive you can make your people. So I think understanding what they do and how they do it and what their challenges are has helped me, because I've done all that stuff at one point in my career."

If Brown's career is any indication, it seems that recognizing the value of people is a growth industry.

Also in this issue...