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2013 Horatio Alger Award Winner

Richard H. Driehaus

Founder and Chairman
Driehaus Capital Management LLC

"Destiny is in your hands. You determine your success through your commitment, talent, and will."

Richard Driehaus was born in Chicago in 1942. His mother, Margaret, had three children, and was a good wife and loving homemaker. His father, Herman, was a mechanical engineer who designed coal-mining equipment. They lived in a third-floor apartment until 1948 when they moved to a bungalow in an Irish Catholic neighborhood on Chicago’s southwest side.

Richard’s parents were older than his friends’ parents. In fact, his father was 45 and had already had one heart attack when he married. When Richard was seven and in second grade, his father suffered a second heart attack.

“My father never fully recovered from this second attack,” says Richard. “My mother had to return to work as an executive secretary to support us. We qualified for some financial help from St. Vincent de Paul through our local church. With my father needing to go to a nursing home, his brother, Ade, paid for the years he was there so we didn’t have to commit him to a state institution.”

Richard describes both his parents as hard working. His mother was the second oldest of three children in her birth family. During the Depression, she was the only one with a job and had to support her family. His father had 24 patents in his name for which he received a nominal $1. Unfortunately, the severity of his heart attacks left him unable to work during Richard’s high school years. By the time his father was in his early sixties, he was suffering from dementia and Parkinson’s disease, and needed permanent nursing care.

At the age of 12, Richard began working as a newspaper boy for the Southtown Economist. It was about this time he realized his parents had limited financial resources. He began to think about the words from the sisters at his Catholic grammar school, who told him he was responsible for his own actions. To Richard, that meant the choice of his future career would be a determining factor in how well he would be able to provide for his future family. He knew he didn’t have the talent or interest in being a doctor or lawyer or accountant. He wanted a career that would allow him to earn a living with great potentia—where earnings were based on the successes he achieved for his clients.

He began investing in coins when he was 13, using money from his paper route to buy, and then sell, uncirculated coins and proof sets. One evening, he was looking through the Chicago Daily American paper when he discovered a page with corporate names and columns of numbers, showing both pluses and minuses. When he asked his father, he told him it was the New York Stock Exchange quotations.

Richard’s mother then called Uncle Ade who had investments in the market. He wrote a long letter about the stocks he had invested in and his experiences in the market. “I knew I’d found my future career,” says Richard. “It would be a way to earn money based on my commitment and performance. It was an industry that offered unlimited potential.”

Richard began reading about and following the market. His mother advised him to “investigate before you invest.” To learn more, Richard often went to the library to read various financial publications, such as Forbes, Financial World, the Magazine of Wall Street, Business Week and Fortune.

He was particularly struck by the quote always placed under the Forbes editorials. It said, “With all thy getting, get understanding.” Richard says, “It’s a quote I never forgot; a message I took to heart. I continued my research throughout my teens and began to understand more of the dynamics of the market based on stock fundamentals, technical information, and market movements.”

By the time he was 14, he had a little over $2,000 in liquid reserves from his paper route. He wanted to invest in the market. His mother took him to his uncle’s broker. He invested half his assets: 20 shares of Sperry Rand and 15 shares of Union Tank Car Company. One was growth oriented and the other dividend driven.

Richard became interested in small companies that had more potential for growth than larger, well- established ones. “I also looked at stocks that were trading well, growing faster and had improving prospects,” says Richard. “I realized early on what I wanted to do with my life. I was eager to start.”

Richard grew up in the Catholic faith. He attended St. Margaret of Scotland grammar school, where he was influenced by the sisters. He says, “I remember when I was in the fifth grade they asked me who was my role model. At the time, I thought about people in sports, politics, business, and other professions. No one stood out. I wanted to respond, but couldn’t. The sisters never ended up calling on me for an answer. Still, the question persisted in my mind. It was nearly 40 years later I realized my role models were Mom, Dad and the School Sisters of Notre Dame.”

When Richard was ready for high school, his mother insisted he go to St. Ignatius College Prep, where his older cousin attended. The school was 10 miles away. Richard took a one-hour bus trip to and from school each day. He got a job working on the docks of a wholesale grocery firm—earning $2.75 per hour—to save for college. He was still working there when he began junior college. Not long after transferring to DePaul University, where he majored in finance, he found his highest paying job yet—earning $4.50 per hour as a proofreader. He graduated from DePaul with a BS degree in 1965. He also earned his MBA at DePaul.

When it came time to start his career, Richard received rejection after rejection. He was told repeatedly there were no openings in finance and none anticipated. After trying conventional routes, he placed a classified ad in The Wall Street Journal for $52.75 to gain a potential employer’s attention. His idea worked! A one-man employment agency saw the ad and called several weeks later. Richard was hired by a small firm, Rothschild & Co., where he started at $450 a month. Three years later, in 1968, he joined a much larger firm, A.G. Becker. Within 18 months he became one of their youngest portfolio managers for their pension and profit-sharing plan. “That is where I got my first opportunity to manage money,” says Richard. “I was intuitive and driven. I had clear goals. I wanted to achieve. Years later, when I received my honorary doctorate degree, this quote struck me: ‘Intelligence without ambition is like a bird without wings.’”

Richard moved to a few smaller firms as director of research throughout the 1970s. In 1979, he started his own firm, Driehaus Securities Corporation LLC. His second company was formed in 1982, Driehaus Capital Management LLC, an investment advisory firm widely known for the growth style of momentum investing. The firm has more than $8 billion in assets under management. In 2000, Richard was featured in Barron’s on its “All- Century” team of the 25 individuals identified as the most influential within the mutual fund industry over the past 100 years.

Richard says, “I have been described as a self-made man. It’s important to note that I had wonderful mentors and supporters throughout my life. My parents were my first mentors. In particular, my father. He had desired to build a Queen Anne-style home on a 20- foot-wide lot in the Beverly neighborhood for his family. He was unable to accomplish this during his lifetime, due to circumstances beyond his control. This motivated me to choose the career I did. Looking back, I am grateful to him for the inspiration he provided me by what he wanted to do for his family.

“I admired my mother for her courage and fortitude in the face of adversity. After my father’s heart attacks and strokes, she became the sole supporter of her family for the second time in her life. She lovingly fulfilled her obligations and inspired me by her commitment to the family.

“Then there were the nuns who were my teachers. They taught me to be responsible for my own actions, to continue to learn, and to give back. This lesson has helped me find a balance between my dedication to work, enjoying the fruits of my efforts, and giving to charitable causes.

“I set my goals early. I worked to make them a reality. Henry Ford said, ‘Whether you think you can or you think you can’t, you’re right.”’

When talking with young people, Richard tells them they don’t have to have all the answers, but keep asking the questions. Be alert, aware and conscious of what your future career may be. “Think about your interests, your passions, the skills you enjoy using. Think also about the outcomes you desire from your profession. Is it power, fame, financial resources, respect, nonprofit involvement, or something else?

“Questioning opens new possibilities in our lives. It pushes us to grow and seek our full potential. So keep asking, testing, and thinking. Remember, you can always change your mind. Once you know what you want, the next question, and most difficult one, is how do you achieve it? Be creative. Learn about various fields. Look for opportunities during the process.

“It’s never too early to start thinking about what you want to do with your life. What industry, field or job interests you? What do you have a passion and talent for? I was one who had to think about this early on in grammar school. For me, the outcome I wanted was financial success. To be able to afford the house my dad couldn’t obtain for his family.”

Richard recalls a letter he wrote to his oldest daughter when she was researching colleges in high school. He told her to listen, learn, be curious, and take responsibility for her own actions. He adds, “Success is not just about grades and subjects. They are relevant, but more practical and satisfying when you have a better idea of what type of career you want. Remember, you also need talent, ability, and character to fulfill your goals.

“In his book How Children Succeed, author Paul Tough argues the qualities that matter most for success have more to do with character. This includes integrity, resiliency, perseverance, curiosity, conscientiousness, optimism, and self-control.”

Richard is a strong believer in doing what you have to do to achieve success. “You should learn both your current job and the position above yours. This helps prepare you for that next opportunity along your career path. These two quotes particularly resonate with me,” he says. “One is from Mark Twain, who said, ‘Opportunity is often lost because it is dressed in overalls and looks like work!’ The other is from Abraham Lincoln, who said, ‘Prepare yourself for your time and your time will come and the door will open.’

“There are no shortcuts to success. You have to be prepared for the opportunities that come your way and commit to making the most of each. To paraphrase Benjamin Disraeli, ‘Success is constancy to purpose.’”