Forwardly Inc (FORW)

[TheFinalCD]

GRDO's Peter Kirsch "The Man Behind The Man"


http://www.washingtonpost.com/wp-dyn/content/article/2008/08/24/AR2008082401858.html






Peter Kirsch, left, with Stephanie Weir, accounting manager at the Office of James V. Kimsey. Weir was recruited from Legg Mason's wealth management division to help follow the money.

Brie Hytovitz takes a phone call for Kirsch. She is also the first person to greet visitors such as Ted Turner or Ted Leonsis at James Kimsey's office. Hytovitz was hired from Neiman Marcus.

In a rare moment when he's not on the phone, Kirsch, 45, relaxes momentarily in his Washington office overlooking the White House.


By Thomas Heath
Washington Post Staff Writer
Monday, August 25, 2008

It's early on a spring morning and Peter Kirsch is busily overseeing the fast-moving life of AOL founder James V. Kimsey. Seemingly everything that touches the mogul finds its way to Kirsch's desk in his ninth-floor penthouse office overlooking the White House, from philanthropy to investments, from politics to friendships to the management of the sprawling Kimsey household.

As chief of staff in the Office of James V. Kimsey, Kirsch is a quiet force on the local scene.

He arrives at the office at 7:30 a.m. to prepare for another day of controlled chaos. At 9 a.m., he gets his daily briefing. Office accounting manager Stephanie Weir reports nothing amiss in Kimsey's balance of payments big and small, be it DirecTV or NetJets, Burning Tree Country Club or Nationals baseball tickets, American Express (Black Card) or a utility bill.

Next up is receptionist Brie Hytovitz, the first person to greet office visitors, whether they be Ted Turner or Ted Leonsis. When the Potomac Conservancy wants to have a fundraiser at the Kimsey estate, Hytovitz makes sure the tent company, caterer and parking valet are there. She has recently been putting the final touches on Kimsey's next monthly "boys' lunch" with friends, scheduled for Oceanair, a seafood restaurant in downtown D.C.

On it goes, as the meeting melts into the day. Pinning Kirsch down on the phone or in person takes effort. He jumps from one call to another, holding discussions with Hytovitz and a visitor at the same time, while an entrepreneur who needs cash cools his heels in the conference room. One minute Kirsch is on the phone with a big hedge fund manager, the next he is sweeping down the elevator to attend his son's sporting event.

Kimsey's family office and many others like it were once the province of a rarefied few with names such as Rockefeller, Phipps and Kennedy. But with the huge growth in wealth over the past decade, family offices have become an essential arm of the newly rich.

"Family offices are a relatively new phenomenon," Kimsey said. "There weren't many models where you could go to do this. I did it intuitively. I have four people [in the office] and five people at the house, and I don't even have a job. Why it takes that many people to sustain me is hard to explain. They have been with me for a long time, which makes things run smoothly because they know my habits and predilections."

A recent survey by the Family Wealth Alliance listed 83 multifamily office firms with $334 billion under management, compared with 63 firms advising on $169 billion five years ago. The number of ultra-high net worth households in the United States, defined as those with a net worth of $5 million or more, rose to a record 1.16 million in 2007, up from 210,000 in 1997, according to Chicago-based Spectrem Group. There are now 9.2 million U.S. households worth $1 million or more, not including the value of their primary residence, according to Spectrem.

Between 2,500 and 3,000 family offices operate in the United States with thousands more existing informally inside privately controlled businesses, according to John Benevides, president of the Family Office Exchange, which advises exceptionally wealthy families. Benevides said the market is unquestionably one that continues to grow.

"Family offices come in all different kinds of sizes, shapes and flavors," said Thomas R. Livergood, chief executive and co-founder of the Family Wealth Alliance, which helps wealthy families find qualified family offices to manage their affairs. "It's usually dictated by what a family wants and the skill set they need to run their office."

Kirsch, 45, runs Kimsey's office in a collegial, peripatetic fashion. On this day, he devotes a couple of hours to Kimsey's current passion, the International Commission on Missing Persons, which consumes vast amounts of Kimsey's time and fortune. ICMP, which has taken Kirsch and his boss to Bosnia, Iraq and Afghanistan, identifies victims of mass atrocities around the globe.

Today it takes Kirsch to Pentagon City, where he meets with a State Department representative. He gets lost on the way, which takes a slew of cellphone calls to fix. Later in the day, he will visit Rep. Jim Moran (D-Va.) on Capitol Hill to ask for more money to search for graves

Before lunch at the Metropolitan Club with an aspiring District of Columbia politician who wants Kimsey's blessing -- and his money -- Kirsch tends to his boss's portfolio. There is an hour-long phone call with investment adviser Fiduciary Trust Co.

"We're going to move some money from domestic-oriented stocks into a high global value fund to take advantage of the emerging market and foreign stock boom," Kirsch said.

The office reflects the diversity of the day. Sport jackets and ties are draped over a chair. Kirsch yells to no one in particular that Kimsey's four to-die-for seats for that day's Nationals game are available. The "in box" at the corner of Kirsch's desk includes a quarterly report dated March 31, 2008, from Fiduciary Trust, a FedEx package from the Council on Foreign Relations, a report titled "Iraq Weekly Status" and something from the Rumsfeld Foundation, as in the former defense secretary Donald Rumsfeld.

A table is covered with pamphlets representing dozens of investment pitches. There is a Merrill Lynch prospectus. One envelope titled Novus Energy Partners, is a growth equity fund in new energy headed by former Virginia governor Mark Warner.

Bookshelves contain titles such as "Wealth in Families," "Bailouts or Bail Ins" and "World Capital Markets."

Between calls and cups of coffee, Kirsch eyeballs stocks that Kimsey holds, including Capital One, Time Warner and the Joseph E. Robert trust, a real estate investment company. Capital One and Robert's company, JER Investors Trust, have been hammered in the current stock market but Time Warner has held up over the past year.

"I just watch these stocks so I can have a smart answer when Jim comes back from lunch. If he asks, 'What's TW [TimeWarner] doing,' I will have an answer,' " he said.

Kirsch throws on a tie for lunch while placing a call to Kimsey's McLean home, where chauffeurs, housekeepers, cooks and engineers tend to the owner's life. After years of personally managing the household staff and refereeing disputes, Kirsch has finally cobbled together a team that runs on its own. "It's down to one phone call a day over there to make sure things are running smoothly," he says.

When construction of Kimsey's huge estate bogged down and expenses were piling up, Kirsch got involved. He cut costs, like substituting concrete for black marble in the garage. He trouble-shoots other things, too, advising Kimsey's foundation and schmoozing politicians.

Family offices are essentially support systems that smooth life's edges for the wealthy. Some offices are structured like Kimsey's and some are tucked away in a corner at a law office or an accounting firm. Some patriarchs keep the family office and its investments as an arm of their bank or construction company.

One major development in the growth of family offices is the emergence of multifamily offices. Some offices manage just one family, like Kimsey's. Others, such as the Bessemer Trust, Rockefeller and Co. and GenSpring Family Office, offer their services to multiple families who may have enough resources that they need help managing, but are not rich enough to afford a personal staff that can cost millions per year. Bessemer Trust requires that clients have assets of at least $10 million that can be invested.

"Most of your family offices are focused on the whole financial picture," said John Devine, chairman of the mid-Atlantic region for GenSpring, which services families worth more than $25 million.

Kimsey hired Kirsch, a Marquette University graduate, in August 2000 to help coordinate his fast-growing fortune and do some estate planning.

"It's fairly logical," Kimsey said. "If you drop dead some day, you don't want to leave a mess for them to deal with."

Kirsch's first hire was Nancy Merritt, a former staffer on Capitol Hill. Her mission was to get Kimsey's daily schedule under control. Kimsey calls Merritt "my nanny."

"She organizes my romantic life," said Kimsey, who is 68, divorced and the father of three men. "My girlfriends think I'm a much more sensitive, caring guy since Nancy has been with me."

Weir was recruited from the wealth management division at Legg Mason to help follow the money. Hytovitz, the receptionist, was hired from Neiman Marcus because of her easy way with customers. She was the final touch.

The staff allows Kirsch to concentrate on being business adviser, problem solver and gatekeeper.

Kirsch says "no" so often that the staff calls him "Dr. No." "My first rule is not to lose money. Most investors who want money come right to me. You've got to have someone who is your conscience here . . . a contrarian view."

Kimsey's fortune was minted during America Online's glory days in the late 1990s, but he also hit a home run as a founding board member in Capital One, the McLean credit card giant. His investments range from Alan Patricof's venture capital fund Greycroft Partners to Ramsey Asset Management, run by Russ Ramsey, a co-founder of Friedman Billings Ramsey Group. Kimsey invested heavily in friend Joe Robert's real estate and financial companies.

Kirsch also runs a venture capital arm inside the office. He and Kimsey have put money into Sentrillion, a border security company run by Rick Kay. Kimsey also has money in ObjectVideo, a second security company run by Raul Fernandez. Both Kay and Fernandez made fortunes in the late-1990s tech boom and now are part owners in the Washington Capitals and Verizon Center. Kimsey has money sprinkled in dozens of small companies. Kirsch is also excited about a big bet on XTone, a Herndon start-up that accesses the Internet through voice recognition.

Not every investment works. Kirsch makes a call to unwind Kimsey's interest in a small entertainment company in New York that is not progressing as hoped. Another company that Kirsch and Kimsey hoped to take public has sputtered.

"The highs are probably higher than most," Kirsch said. "I work 25 feet from the founder of AOL. I get to deal with high-energy and high-level people. The hardest part is juggling all the balls."