When J. David Gladstone died tragically one hot weekend in June 1971, he left behind about $8 million in assets, basically the value of his equity in the ambitious unfinished shopping mall he was developing at the time in Southern California.
In his will, Gladstone—David, to his friends and close associates—named three trustees, individuals who exemplified the root of the word “trust” in his mind. They shared his passion and vision and something else that has been critical in the sustainable success of the Gladstone Institutes: a penchant for taking calculated risks with the expectation of reward, which can be (and has been) different things. A new kind of research institute. An ambitious state-of-the-art building in Mission Bay. A biomedical breakthrough. A groundbreaking cure.
“Bold risks have always been in the DNA of Gladstone,” says current Gladstone Trustee Andy Garb, who began his association with the organization in 1981 as legal counsel to the trustees before becoming one in 2004. “The founding trustees made amazing decisions for the future of Gladstone.”
For many years, J. David Gladstone had been a risk-taker, pioneering a new trend in commercial real estate, development of the indoor, air-conditioned shopping mall. It made him a wealthy and influential man. When he selected trustees to manage his estate, it might have been a good idea to add in his will, “and don’t be afraid to take chances.” But it was unnecessary.
Relying on his own keen business instincts, Gladstone chose three people who have established an institutional inclination to consider the risk and make a bold decision at the crucial moment.
Two of them were lawyers. Richard Brawerman, a powerful presence at 6-foot-4 and a former ambulance company commander in Patton’s army during World War II, was executor of Gladstone’s estate. And Richard Jones, a humble but savvy leader and competitive sailor, was Gladstone’s real estate lawyer, and probably knew Gladstone better than anyone. The third trustee was David Orgell, a convivial and prominent Beverly Hills jeweler and businessman, and Gladstone’s cousin.
“These three men had tremendous vision,” says Robert Mahley, MD, PhD, who became the founding president of the Gladstone Institutes 40 years ago, after an earnest recruitment effort. “What really sold me were the trustees. They wanted to do something new and they wanted to do something different.”
But long before any of that could happen, before the trustees had even heard of Robert Mahley, back on their first day of work as trustees in 1971 in fact, they had to figure out what to do with the estate that was suddenly entrusted to them. Dick Jones, who served 46 years as a trustee (retiring in June 2017), remembers it well.
“David died over the weekend and I found out about it on Monday—it was a pretty big shock,” says Jones, who canceled a planned business trip to Oklahoma City and rushed over to see Dick Brawerman. They had to talk about the Northridge Fashion Center, the major shopping mall that Gladstone was developing at the time of his death. Brawerman seemed certain of what had to be done, but he trusted Jones’s opinion and real estate experience.
“We decided that the best thing was to finish Northridge,” Jones recalls. “It was a pretty big task.”
This being part of Gladstone’s estate, and not the trust, the final decision fell on Brawerman, who never hesitated once Jones agreed to serve as president of Gladstone’s real estate operations and other business ventures, or, “the corporation,” as Jones says.
“And it was a courageous decision, because it put the estate at risk,” Jones says. “There was still a lot of construction to be done. But the potential rewards were fantastic, so we decided to go ahead.”
“Basically, David’s assets was the equity in Northridge, which didn’t really have a value because it wasn’t finished yet,” says Jones. “But looking ahead, the trustees could see the potential. We thought it would be better to develop the value.”
They were right. Jones put his law practice on hold for a year or two and assumed leadership of one shopping center that Gladstone owned while working diligently to finance, build, and lease Northridge, which became a big moneymaker, multiplying the $8 million estate several times over.
“The trustees took a huge risk,” says Garb. “Instead of selling it or taking in a joint venture partner, they decided to complete construction, to lease it out, and actually operate it—which they did for years. And because of the dramatic appreciation in real estate values and the success of this project, it created the financial basis for what we know as Gladstone today.”
Those early years, before an actual research institute existed, have contributed dramatically to Gladstone’s long-term financial health. In addition to having funded important biomedical research over the past 40 years, through good times and bad, the $8 million has evolved into total assets of about $350 million (including an endowment that stands at approximately $175 million) as of 2019.
In his will, Gladstone directed the trustees to use his estate as funding for scholarships to support medical students interested in vascular research, but that was about it. The trustees were two lawyers and a silver merchant; what did they know about research? The answer is nothing.
The original plan, as stated by Gladstone in his will, “$2,500 per student, for deserving medical students,” according to Jones, the last of the original trio of trustees—Orgell died in 1987, Brawerman in 2009. But the trustees all agreed that the plan didn’t go far enough.
“We didn’t touch the scientific issues for several years, not until we had the financial plan worked out,” says Jones. “But the next step was to form an advisory group of scientists around the country that could advise us on what to do. As trustees, we didn’t know anything about scientific research. All we knew was, we were sitting on potentially a lot of money, and we’d better figure out how to use it.”
So they listened to their scientific advisors and used their own business instincts to make another bold decision: Instead of scholarships, they’d revise the trust to support something new, a medical research organization. But there were no models for what they had in mind.
“In fact, they were blazing a trail,” Mahley says. “They were setting the scope for how new biomedical research could be undertaken in an independent way.”
The trustees took their idea to court. Mainly, they relied on Brawerman’s expertise in probate law to help them convince the court that their plan would satisfy the estate’s charitable requirement, bearing more fruit in the long run. “We said the potential is too great to leave the will the way it is,” says Jones. The court agreed.
Then the trustees made another bold move. Knowing their research institute in utero would need affiliation with a research university and unable to reach an equitable agreement with the universities in Los Angeles (where all the trustees lived), they sought a foothold up the coast, where, through an agreement with UC San Francisco (UCSF), the Gladstone Institutes was founded and headquartered at San Francisco General Hospital.
But, even though the trustees had linked Gladstone with a world-class university, “we were administratively independent,” Mahley says. “That was the way it was set from the beginning with the trustees. In fact, they demanded that level of independence because they did not want a bureaucracy to run this organization and to direct the science.”
As a result of the risks taken and the decisions made by the trustees over 40 years ago, there is now a degree of stability at Gladstone that allows its scientists to take measured chances that doesn’t happen in other hubs.
Mahley says, “Universities do not have this level of stability because the scientists, by and large, do not have access to stable funding. It’s almost year-to-year, or grant cycle to grant cycle. But there is more stability at Gladstone, and this gives the scientists a degree of independence and flexibility to undertake more difficult and higher risk biomedical research projects.”
Since Mahley arrived and the Gladstone Institutes were officially launched in 1979, risk has embedded itself into the culture, encouraged by the trustees.
“This willingness to allow people to follow wherever the science would lead,” describes Mahley. “In fact, we had the expectation that our scientists would undertake risk, that they would be willing to go out on a limb and we supported that, with the understanding that with risk, they may fail.”
But if you encourage risk, if you exemplify entrepreneurial chutzpah, you have to expect some failure, and Mahley credits the trustees with understanding that this isn’t a bad thing. “Failure is good as long as you learn from it,” he says.
Because eventually, it leads to discovery, which leads to scientific breakthroughs, which leads to medical breakthroughs. Science is an exercise in patience. These trustees, these men of law and commerce who knew nothing about science, knew that.
David Orgell died after a heart attack while on a trip to Italy in September 1987, leaving Dick Jones and Dick Brawerman with the difficult task of recruiting a new trustee. Orgell, the organization’s only familial link to J. David Gladstone, was a very influential businessman in Southern California and, according to Jones, a great salesman who played an important role in selling Mahley on the institute. More important to Jones and Brawerman though, they had lost a friend.
“He was a very nice guy, very humorous,” Jones recalled. “And his store was world class. As a matter of fact, I was in there one day to pick him up and he was busy talking to some customer. He motioned me to come over and said, ‘I’d like to introduce you to the president of Philip Morris.’ He was also very good friends with Ronald Reagan for years, and he bought a lot of the silver for the White House, and he dined at the White House several times. He was a character.”
They took a year, considered several people, and hit pay-dirt in 1988 with the addition of Al Dorman to the trustees. Here was a man whose career had been centered around science and engineering. And he had something else that Jones and Brawerman didn’t have: big-time management experience. He’d been the founding chairman and CEO of AECOM Technology Corp., a multi-faceted, multi-national architectural, engineering, construction, operations, and management firm, now with 90,000 employees in over 100 countries. He also possessed a doctor of science degree and had been a trustee or board member for four universitites.
According to Dorman, becoming a trustee was an accident of luck.
His daughter had gone to high school with Brawerman’s daughter, and the two dads hit it off. Brawerman introduced him to Jones, but according to Dorman, “Dick Brawerman was a very powerful individual—when he decided I ought to be a trustee, I was a trustee. That’s the way it happened.”
That may be the case, but Jones had been impressed with Dorman from earlier experience. “His firm had designed the remodel for the original institute, and they did a good job,” says Jones. “It’s very hard to work with the limitation of existing space.”
Of course, it was only a temporary job. Gladstone had been located in an old hospital building since it was launched in 1979 as a research institute dedicated to cardiovascular disease research. But the focus had expanded (requiring more bold decisions from the trustees, and the addition of more risk-taking researchers).
In 1991, Gladstone added virology and immunology to its research mission, to address the HIV/AIDS crisis. And in 1998, Gladstone added a third institute, centered on the brain and treatments for neurological illnesses, such as Alzheimer’s disease.
Physical space was running out. They needed a bigger home. Leadership had to make a decision, and Mahley had an idea—a risky idea, naturally, which sat well with the trustees.
“Bob had the vision of moving to Mission Bay,” remembers Dorman. “And of course, that was an expensive thing for us to do. So the trustees had to figure out how to do the financing. We interviewed bond companies, we developed the financing plan. We worked on the design of the building itself.”
Mission Bay had been an area filled with parking lots and warehouses and railroad yards. It had been considered too isolated just a few years ago. But with Mahley serving on a Mission Bay implementation committee, UCSF ultimately decided to develop a campus there. It certainly didn’t hurt that, at one early meeting of the committee, Mahley declared, “although I don't have the authority to say so, I have every expectation that Gladstone will be the second research building at Mission Bay, and that we will be a part of the creation of Mission Bay.”
“Like any innovative organization, you need to take risks—at Gladstone, we’re in the process of doing things that haven’t been done before”
“The trustees bought that vision obviously, but it was a tremendous risk for them,” Mahley adds. “It was easy for me to say, but it was a risk for them because they had never put money in bricks and mortar. All the funding had gone to the science.”
Dorman was Gladstone’s ace in the hole. When original plans for the building got a cold response from the trustees, Dorman spent 6 months redrawing the design and improving the architecture, according to Jones. “Al went over the designs sheet by sheet and made a lot of corrections—a tremendous effort. The work he did on this building probably saved us immeasurable millions of dollars in construction costs.”
In a meeting room on the ground floor of that building, 15 years after it opened, the three current Gladstone trustees have gathered to consider the past four decades and the road ahead. The original trustees are no longer among them; Brawerman passed away over 30 years ago, and both Jones and Dorman have retired as trustees. This is an entirely different board, still three trustees, but none of them ever met J. David Gladstone.
Still, there is a sense of continuity here, the mission pretty much the same, only a lot bigger.
The three current trustees—Garb, Bill Price, and Nick Simon—have a larger organization entrusted to their care and expertise. A science organization that grew out of the bold imaginations of three different trustees nearly 50 years ago, when there were zero employees and no real idea of what to do next, now has more than 450 people (including a Nobel Prize winner), and four research institutes (the Gladstone Institute of Data Science and Biotechnology was added in February 2018).
Garb has been affiliated with Gladstone since 1981, and knew all three original trustees. “It’s a different job now,” he says. “I give a lot of credit to my predecessor trustees, who brought me into the decision-making sessions in the last year or two before I joined. So I was really quite familiar, in a very hands-on way, with the trusteeship.”
It’s one area in which Gladstone has really worked to temper, or remove, the risk—bringing on new trustees. Since Orgell’s sudden death in 1987, the trustees have designated their own successors.
“I was a trustee in waiting for 9 years, until there was a vacancy,” says Garb, who replaced Brawerman in 2004, and is the third lawyer among the seven people who have served as Gladstone trustees.
Price is founder and CEO of Classic Wines, LLC, and an officer at Newbridge Investment Partners. He previously co-founded Texas Pacific Group, which had more than $30 billion assets under his management. Former chair of the Gladstone Foundation, Price was a trustee-in-waiting like Garb had been, then joined the trio when Dorman retired in 2016. He likes to think of the trustees as “three legs of a stool,” which have helped the organization become more agile in its approaches to management, to advancing research.
“We’re all incredibly charismatic, so we do have that in common,” Price quips. “We each bring very different things to the table, and that’s a strength. Nick Simon is a very successful investor in scientific ventures, has a good knowledge of the market, and a good knowledge of the science. Andy has been here for a long time. He knows the regulatory environment and the organizational structure, and brings a lot to the discussion from that standpoint. And I primarily come out of the financial world, and so my role is usually working on financial issues. The three of us together are much stronger than if we’d all three come from a single background.”
To which Garb adds, “Nick and Bill really bring an incredibly strong business background, and biology background, to the trusteeship. And as translational research, commercially sponsored research, and joint ventures with biotech and pharma have become a significant part of what we do, their skill sets are vitally important.”
Simon held leadership positions at biotech giant Genentech and the healthcare venture capital firm MPM Capital before becoming managing director of Clarus, a leading global investment firm dedicated to life sciences that he helped start. The firm was recently acquired and is now Blackstone Life Sciences, where Simon is senior managing director. He has more than three decades of operation and investment experience in biopharma, which means this is a person who has spent his career invested in the concept of risk, which translates well to his role as a Gladstone trustee.
“Like any innovative organization, you need to take risks—at Gladstone, we’re in the process of doing things that haven’t been done before,” says Simon, the most recent trustee to join after Jones retired in 2017. “So our job as trustees is to be able to provide the financial resources and make decisions based on the information we have, often without a lot of certainty.”
He adds, “I think that same sort of mentality has been adopted by the entire Gladstone institution; taking risks to try to make innovative breakthroughs that would have a big impact on humankind.”