The principles of economics were too much for Jonathan J. Ledecky ’79 to handle his first year at Harvard: he had to withdraw from Ec10 after failing a first-semester midterm.
Twenty years later, “the king of the rollup” was laying down economic principles of his own.
The multimillionaire philanthropist first struck gold with the 1994 launch of U.S. Office Products—a company he financed on home credit card applications.
Based on the innovative philosophy of consolidating related small businesses to capitalize on economies of scale, the “rollup” company was netting $4 billion within three years and became the fastest company ever to hit the Fortune 500.
Ledecky has made headlines in national newspapers and magazines and spawned a spate of business school case studies, some documenting his successes, others his failures.
These successes have afforded Ledecky the opportunity to indulge his life-long love of sports. He has owned a minority share in the professional hockey and basketball franchises of Washington, D.C. and made plays for a few other professional sports teams, attempting to lure a baseball team to the nation’s capital.
But now Ledecky—worth $200 million in 1998, according to the Washington Post—has turned his attention to philanthropy. He heads an eponymous foundation and spends one day a week at a private boys’ middle school in New York City that he has helped finance.
The Class Secretary of the Class of 1979 says he is enjoying giving back. The unmarried entrepreneur says that through his involvement, his communities—Washington, D.C. and New York City—have become a kind of family to him.
“I try to take my capital and do well by doing good,” he says.
And for Ledecky, the path to his current success has been paved with vicissitudes—and Harvard graduates.
Since his undergraduate years, Ledecky has gone from Wall Street to Harvard Business School to a number of investment jobs. And at almost every turn, he has had Harvard support.
“Harvard has played this incredible role” in my life, Ledecky says. He says that as he used his Harvard ties to pull together U.S. Office Products, “I’m going, ‘I can’t believe this—here comes Harvard again.’”
After college, Ledecky first worked for Albert H. Gordon ’23, who is also a Crimson editor, at investment bank Kidder, Peabody & Co. on Wall Street. He later returned to Cambridge to attend the Business School, staying in Eliot House as the Master’s butler and a residential tutor. After graduating the Business School in 1983, Ledecky says he had offers from many investment banks but was interested in entrepreneurship instead.
“I had caught over the summer of 1982 the venture capital leverage buyout bug,” he says. “I was just smitten with this notion of buying companies versus being an investment banker.”
He then held a series of venture capital-type jobs, including a disastrous venture of his own called the Legacy Fund, which he started with Timothy R. Furey ’80 and on which he lost $250,000. He says Legacy has since become a well-known case study about how venture capitalists can be misled by company executives.
After a little over a decade of assorted business jobs and other ventures, Ledecky was laid off in 1994 from his business development job at Steelcase, an office furniture dealership, and decided to start a business of his own.
Ledecky says, after Steelcase, he wanted to combine the economies of scale represented by companies like Steelcase and Staples with Legacy’s philosophy of supporting small businesses. From this concept, U.S. Office Products was born.
With U.S. Office Products, Ledecky proposed to buy up a number of smaller office supply firms to leverage bulk purchasing for profit. He contacted 100 firms. Ninety-five said no, he recalls.
With five companies and $100 million in sales, Ledecky tried to secure financial backers to take the company public with a so-called “poof” Initial Public Offering, or IPO. But again, he faced rejection: the first 40 firms said no. When the 41st firm, Mabon Securities, finally agreed to back the company, Ledecky went to Fidelity Investments for financing.
There, like so many other times in his career, a Harvard connection advanced him the next step. At Fidelity, Ledecky says he met with William A. Danoff ’82, whose sister he had dated and whose father he had worked with. And because of this personal connection, Danoff advanced him $3 million.
Across the street from Fidelity, at Putnam Investments, he found another Harvard connection—and investor. There he met with star fullback James L. Callinan ’82, whose exploits he had written about in his Athletics Department job at Harvard. Recalling statistics from the football player’s undergraduate career, Ledecky convinced Callinan to match Danoff’s investment.
When Mabon went under within a month, Ledecky convinced Robert E. Grady ’79, also a Crimson editor and whom he knew from The Crimson sports cube, to convince his firm, Robertson Stevens, to back U.S. Office Products.
The rest is history—and history well-chronicled in the pages of business journals. His success led the Washington Post to nickname him “merger master,” and even Ledecky confirms he had the Midas’ touch.
“I am between 1995 and 1998 literally the golden boy of creative finance on Wall Street,” he says. “Everything’s turning to gold—it’s an amazing run.”
As U.S. Office Products began to decline by 1998, Ledecky split up the company and removed himself from an active role, moving onto other business pursuits with handsome profits.
He started a number of rollup companies, including U.S.A. Floral Products and Consolidated Capital. In the process, he drew some criticism—Forbes Magazine said “Ledecky spun an attractive yarn,” building companies on “glib gab”—from those who perceived Ledecky as making a quick fortune and then cutting and running.
Ledecky’s business practices have certainly been influential: he says they’ve inspired about five case studies—some successes, some failures—and he now regularly travels around the country to talk to business school students.
“I’ve had a track record not unlike that of a venture capitalist,” he says. “I’ve been a big risk taker, and I continue to take major risks.”
Mark D. Director ’80, a friend who helped Ledecky run U.S. Office Products, says the rollup was one of Ledecky’s most creative innovations.
“He was like the company: always on the go, always having a new idea, a new way of looking at things,” Director says.
While he championed rollups as an efficient structure at the time, Ledecky concedes that their time may have passed.
“Rollups was a phase, and it’s kind of faded away,” he says. “It’s not something the marketplace is doing much of anymore—its track record has been mixed at best.”
At the very least, the rollup phase is over for Ledecky. Instead, he’s turned his attention to philanthropy—and sports.
IN THE COMMUNITY
After finishing with U.S. Office Products, Ledecky founded the Ledecky Foundation, which, he says, has “become my life’s work and what I’m really proudest of.”
Through the foundation, Ledecky has become a prominent philanthropist in the Washington, D.C. area.
In his 25th reunion class report, Ledecky relates how he first became interested in philanthropy. The grandfather of Scott D. Malkin ’80, Ledecky’s upperclass roommate, told Ledecky as a first-year that he wished he had given away his money earlier, so he could see the fruits of his philanthropy. Ledecky writes that he has taken that advice to heart.
Giving away his money, Ledecky says, “is God’s work in a way for me. I think I went through a lot of good stuff, a lot of bad stuff. This last time through I really kind of found myself.”
Ledecky, who is single and has no family, has embraced his communities instead.
“The time that I have free, because I don’t have a family, I try to spend in the community,” he says. “The New York and Washington communities have become family.”
Director says Ledecky has always been involved in the community and committed to education.
“As long as I’ve known him, he’s certainly been active in nonprofit and charitable activities, giving of his own time, giving money when he had it,” Director says. “He feels pretty strongly that it’s important to give back to the communities that have given to him.”
Ledecky has also contributed to the Harvard community, funding the Berta Greenwald Ledecky journalism fellowships for Harvard undergraduates who write for Harvard Magazine.
And Ledecky has begun devoting personal time to his philanthropy, spending a day a week at the George Jackson Academy in New York, a private school that opened this fall and aims to educate low-income city children in a safe environment.
James Turner, the school’s headmaster, says that Ledecky has been “unbelievably amazing” in supporting the school, both financially—Ledecky, along with William H. Binnie ’79, backs the school—and personally, by spending one day a week there.
Turner, who says he and Ledecky have become friends through this partnership, says Ledecky’s passion for the children shines through his work at the academy.
“He has a commitment to children,” Turner says. “He always wants to chat with the children and wants to know how they’re doing—he actually takes an interest in the kids.”
Ledecky says he loves his time at the academy, calling it the “most important thing in my life.”
“I see myself in these kids, and I see the hope and promise in these kids,” he says.
Ledecky’s other love is sports, which he says is also “ a way to build community.”
He was part-owner of the NHL’s Washington Capitals from and the NBA’s Washington Wizards from 1999 to 2001, which he called “the most fun I had” as a result of his financial success. Recruiting Michael Jordan to make a comeback and co-own the Wizards was a real thrill, according to Ledecky.
He has also made failed bids for MLB’s Cincinnati Reds, the Oakland Athletics as well as the NHL’s Montreal Canadiens.
In making bids for professional sports teams, Ledecky has come a long way from his working class childhood. He was the son of a Czech immigrant who came in 1947 to study English at Rutgers. His father stayed in the United States, taking a job as a dishwasher at a Howard Johnson’s just off the New Jersey Turnpike. Meanwhile, amidst the political upheaval in Czechoslovakia, his uncle was thrown into work camp, and his grandfather was made a janitor.
Ledecky’s father strove to improve his children’s lot, and he urged them to take school seriously.
“His goal from the outset was to try to educate his kids and make sure they had a better life than he did,” he says. “There was a real emphasis from the outset on the value of an Ivy League education.”
Growing up in Brooklyn and Queens, Ledecky became a New York Yankees fan. He recalls his mother teaching him to love reading by giving him the biographies of famous baseball players.
In 1972, the Ledeckys moved to the affluent New York suburb of Greenwich, Conn. for Ledecky’s father’s job.
“It was the Beverly Hillbillies,” he jokes. “It was like I had been parachuted into a different world.”
He excelled in high school and was involved in a number of activities in the community.
For his high school journalism, Ledecky was awarded the Fred Russel-Grantland Rice Scholarship, a full ride to Vanderbilt University. While Ledecky was thrilled “because the finances were still tight,” he says his father was not.
“I don’t care if I have to go back to washing dishes—if you can get into Harvard or somewhere like it, you have to go there,” Ledecky recalls his father telling him.
At Harvard, Ledecky continued his extensive extracurricular involvement, comping the radio station—WHRB—and The Crimson both in his first semester. And although he made both, he had to withdraw from Ec10 as a result of his focus on extracurriculars.
“He was always involved in one project or another,” says Director. “It always seemed like he had something else going on in school. I think it was a little bit of everything.”
For The Crimson, Ledecky covered a range of sports, including crew, basketball, football, hockey and field hockey. He also had a column called “J.J.’s Journal.”
To fulfill his work-study requirement, Ledecky took on two jobs. He wrote profiles of Harvard varsity athletes for the Athletics Department, and he coordinated reunion housing for the Harvard Alumni Association.
He says both jobs were crucial for him later in life, helping forge Harvard connections and instilling in him a sense of lasting ties to the University.
In the classroom, Ledecky became interested in race relations. Although he concentrated in government, he forged close ties to professors in the African-American studies department.
Ledecky wrote his senior thesis on the relationship between black civil rights leaders and white businesspeople in 1960’s Atlanta. But even this academic interest traced back to extracurricular involvement, as it led him to work with then-Dean of Students Archie C. Epps on the Harvard Committee on Race Relations, which studied the state of interracial interaction on campus and intended to address the question of self-segregation.
Binnie recalls that while Ledecky was “very serious” in College, his energy—both then and now—spills over to those around him.
“His enthusiasm for life is infectious,” Binnie says.
Director says he and Ledecky’s other college friends joke that they will attend Ledecky’s marriage in a wheelchair, because Ledecky keeps so busy.”He’s a person who seems to care a great deal about family,” Director says. “He’s got a lot of affection toward my own children, toward the children of all of my roommates. It’s unfortunate that he has not yet found someone to settle down with and have his own family because I think he would enjoy that very much.”
Ledecky currently lives in John F. Kennedy’s former Georgetown townhouse, another deal brokered through Harvard connections.
In what free time remains, Ledecky says he runs marathons all over the world.
In the future, Ledecky says his three priorities will continue to be charitable giving and community involvement, business ventures and being active in the Harvard Alumni Association.
Ledecky says he plans to continue to live his life as he always has. Explaining one of his favorite “Ledecky’s laws,” he says, “If you’re willing to give another person credit, there’s no limit to what you can achieve. That’s how I try to live my life today.”
—Staff writer Stephen M. Marks can be reached at firstname.lastname@example.org.