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A Golf Fanatic

Herb Kohler has turned his passion for golf into a major business from Wisconsin to St Andrews
Jeff Williams
From the Print Edition:
Ernie Els, November/December 2012

On the 18th green of the Old Course at St Andrews on a lovely July evening, Herb Kohler watches his close friend Mori Hosseini drop a 30-foot putt for all the money.

“Take that, Herb Kohler!” Hosseini shouts.

Kohler gives him a look, then starts to laugh that deep throaty laugh of his. The onlookers gathered at the fence behind the green—the continual gallery at the home of golf—applaud vigorously and Hosseini acknowledges them.

In that little tableau, there is much to be said about Herb V. Kohler, his passion for golf, his passion for life and even his business. What could be better than playing the game in St Andrews, playing with good friends and surrounding yourself with successful aspects of your business enterprise?

“He’s a very interesting, successful, creative and complicated guy,” says M.G. Orender, part of that day’s foursome, a close friend and a former president of the PGA of America. “He can have a somewhat gruff way about him, but he has a huge heart.

In the short time he’s been involved in golf, he’s had a huge impact, not just putting on major championships, but serving on boards and donating time and money. He’s made some substantial financial contributions. He’s been involved in amateur golf, pro golf, the superintendents, First Tee, environmental stuff. He does it quietly. He does it for the love of the game.” It was a love that was a longtime coming, a love that, like the rest of his life, he embraces fully. For Kohler, there is no other way to live.

As chairman of the Kohler Company, the family business established by his grandfather in 1873, Kohler has built a multi-billion-dollar enterprise beyond the plumbing products that established the business. Kohler is into kitchens, furniture, small engines and generators, stone and tile. Kohler products are produced on four continents and have found their way into millions of American homes and businesses, and the Kohler name might be the first one you encounter each morning.

Then, there is golf. The Kohler Company owns the Blackwolf Run and Whistling Straits complexes in the Kohler, Wisconsin area, a family town established by his grandfather.

When Kohler got a chance to get a foothold in St Andrews, Scotland, a place he dearly loves, he bought the Old Course Hotel, just outside the ropes of the 17th hole of the Old Course, in 2004. That property includes the Dukes Course just outside of town. Then he took over a failing condominium project at Hamilton Hall, now called Hamilton Grand, the red-stone building right across Golf Place from the 18th green of the Old Course. “They are both iconic,” says Kohler, who is a member of the R&A. “There are no two locations in golf that are comparable.”

It is through golf that Kohler expanded his vast personal vista. “I discovered the integrity of the game, the physical aspects of it, the mental aspects,” Kohler says, tucking into his eggs and bacon in a private room of his Old Course Hotel. “I needed something to wrench me out of my work, and golf turned out to be it. There were also high values to it, something  that is at the core of our company. There is self discipline required, integrity required. Getting involved has led to some of my best friendships I have today.”

For decades golf was a big part of the American corporate milieu, but not for Herb Kohler. His focus was on expanding the Kohler brand, in making it a household name for something other than commodes, and entering into related businesses. All this would be done with a creative flair, creativity being at the forefront of Kohler’s business and personal philosophies. He had this idea about turning the old employee dormitory, the building that housed artisans his grandfather had brought over from Europe, into a luxury hotel, the American Club. It was a decision that had direct bearing into Herb Kohler’s foray into golf.

“My whole golf experience took place without any vision at all,” says Kohler. “I had an old bag that was my father’s with some wooden shafted clubs and I might play a couple of times a year. It was the hotel, the American Club that got me into it. I had a vision for the American Club as a high-quality resort and, of course ,we could show off our products there. But it was the guests who questioned why there wasn’t a high-quality golf course to go with it. We opened the hotel in 1981.

“We had a vice president of business development who was a 3 handicapper and he was my guiding light. Once I got involved in building a course, I figured I had better find out what the game was about.”

After a characteristically thorough screening process, Kohler chose Pete Dye as his golf course architect to build the Blackwolf Run project. Dye’s knowledge of the game impressed Kohler, as did his views on the aesthetics of a golf course. Kohler,
after careful consideration, was never afraid to take a chance and gave Dye as much of a free reign as he was ever likely to give anyone. Dye’s courses are challenging, and Jeff Cheney thinks he knows why that appealed to Kohler. Cheney, the Kohler Company’s CFO and a 3 handicap, is one of Kohler’s frequent playing partners.

“When it comes to his golf courses, [Herb] says that people like to ride a roller coaster, ride something that scares them a bit,” says Cheney. “These courses aren’t easy, but they are playable for most people, and memorable, which is what Herb wants.”

“Dad and Herb are renaissance men with a fantastic eye for design detail,” says Perry Dye, Pete’s eldest son and a designer himself. “They’ve had their run-ins over things, of course, but they always come to an agreement on what’s the best thing for a course or a tournament course. They are great friends who are only separated by a couple of billion dollars.”

Dye went on to design four courses for Kohler, who from the outset wanted them to host major championships. “If we were getting involved, we had to get involved in a big way,” says Kohler. “It’s the way we do things.”

Blackwolf Run has been the site of two U.S. Women’s Opens and two PGA Tour events. Whistling Straits has hosted two PGA Championships and a U.S. Senior Open. The Straits course will host the 2015 PGA and the 2020 Ryder Cup matches. He is particularly proud of the fact that Old Course Hotel was the host hotel of the 2010 British Open, and a month later his American Club was the host hotel of the PGA Championship.

“We have the ability to manage hotels and events to the highest standard. The highest standard,” Kohler says with emphasis. “And when we do that within the brightest spotlight on that championship, which in turn that shines the spotlight on all our businesses directly and indirectly. When we put our brand out front like that, it has a significant impact over time, without question.”

For someone who rebelled as a youth, who was intent at one point not to have anything to do with his family company, the long journey to the chairman’s office preceded the smallest seed of interest in the game. He virtually never played and only did so with his father’s wooden-shafted clubs. He attended the toney Choate private school in Wallingford, Connecticut, then went to Yale where he was rather unsure of what he wanted from an Ivy League education.

“At the end of my freshman year the dean of my class called me in and said your grades are good but I don’t see a sense of purpose,” Kohler says. “I said ‘Yeah, I don’t either.’ He said ‘If I you want to take some time off, fulfill your military obligation and find something you are  passionate about, you could do that and your grades are good enough that you could get back in.’

“So I did a six-month stint in the Army at Fort Leonard Wood and Fort Chaffee. Then I went to Switzerland and lived with a family and studied math and physics in high German. All the lectures and the textbooks were in German. It was a struggle, but I got through it.”

When he returned to the states he decided he might like to be an actor so he went to Knox College in Galesburg, Illinois to major in theater.

“I became a poet, I edited a wild political newspaper on campus,” he says. “I was a pre-hippie, at the forefront of the hippie movement.”

At Knox College, he auditioned for a play and ended up with more than a role. “The upshot of my theatrical career is that I ran off with the director and married her six months later,” Kohler says, chuckling.

That would be his first wife Linda, with whom he would have four children. Once married,  he decided that poetry, political newspaper editing and acting weren’t going to pay the bills. He had to rethink what he had said to his father.

“I had told my father I would never take another penny of his money, the company money,” says Kohler. “Then I thought I had a wife now, I had better get my act together, so I went back to Yale and got a degree in business administration.”
That still didn’t bring him back to Kohler, not immediately.

“I was working somewhere else when my father called and asked me to come back to work at the company,” he says. “I said, ‘Are you kidding? I didn’t spend the last three years of my life preparing to work for you.’ But I thought about it, particularly the potential I thought the company had. So three days later I called him and said I’ll come back, but under no circumstances are you to have anything to do with my career. I want to go through all the normal channels, be subject to the same scrutiny that anyone would get. And he promised he would stay out of the way.”

So the scion of Herbert Kohler Sr., who had done laboring jobs in the company as a teenager, returned to Kohler and worked as research and development technician, a schedule coordinator, a warehouse supervisor.  “Others had the responsibility for promoting me,” he says.

Two years later his father died. After discussions with company executives, he became vice president of operations. Two years later he became executive vice president. In 1972 he became chairman and CEO.

It wouldn’t be until after he opened the first of his golf courses in 1988 that Kohler was bitten by the golf bug. In doing so, he also got bitten by the betting bug, playing for small stakes but negotiating like he was buying another business.

He recently retired after winning the Gnarly Balls title for an eighth time, a contest between other Kohler Company employees and local residents. The Gnarly Balls isn’t about scores, it’s about the money you win from betting. And the prize is a pair of rusted casting balls from a Kohler foundry connected by a rusting chain attached to a piece of Lake Michigan driftwood. The competition is so named because it takes place at the beginning and end of the Wisconsin golf season, in the gnarliest weather. Herb Kohler likes a challenge, and blustery winds, snow, sleet and the occasionally frozen fairway.

Kohler will say that his betting scheme is pretty simple. “I usually play a $10 Nassau, $2 skins and Honest John,” says Kohler, obscuring all the haggling over strokes given and received. It’s often the only topic at breakfast.

“I keep track of all the rounds and all the bets over time,” says Cheney. “He’s won a net $5,226 since this has all started. I’ve won $5,108. We play for a lot more playing gin on the plane traveling to play golf than we do in the actual golf.”

“Herb is a keen, voracious negotiator of a bet,” says Orender. “Negotiating a bet with myself and Mori, it’s really a battle. He’d rather beat Mori for 10 bucks than buy another company. When they first met, Herb was probably a solid 15 handicap and Mori was in the high 20s. Now because Herb is dealing with some health issues [sore hip and foot], Mori is giving him shots. They will go through this big argument deciding on strokes before the round, and they keep arguing about it for half the round. If Mori got two dollars off of Herb, it would make him happy. They will spend 25 grand to take a private plane somewhere to play golf for five bucks.”

For Hosseini, a very successful Florida developer who is president of ICI Homes, the relationship with Kohler is about two good buddies having a blast, whether it’s on the private jet or at a street kiosk. “His humility, down-to-earth, one-of-the-guys type attitude is what attracted me to him,” says Hosseini. “That made us become good friends . . . We are happy to get a hot dog on the street, or eat in the finest French restaurant in the country. As long as we have a good time, that’s what it’s all about.”

In a hard hat, reflective vest and protective gloves, Kohler led a party that included Hosseini, Orender, Nathaniel Crosby (son of Bing) and others on a tour of his Hamilton Grand project, where condominiums will be on offer both freehold and leasehold. With his wife Natalie they looked closely at all the details. Standing on the curb outside he made a point to the architect and construction people that the outside lighting of the building should match that of the Royal and Ancient Clubhouse of St Andrews on the other side of the street, just a flip wedge away. “The lighting needs to be of equal value between us and the R&A, even if we need to pay for their lighting,” says Kohler, who is an member of the R&A.

This is a project close to his heart. “It’s a true labor of love if there ever was one,” says Kohler, who will nonetheless be looking to turn a significant profit on the iconic structure.

As part of the trip to Scotland, Kohler made a last-minute decision to check out Donald Trump’s new course near Aberdeen. His group played nine holes and while they all considered it a fine piece of work by architect Martin Hawtree, Kohler would only proffer “I think there was too much bulldozer in the fairways. They are a little flat.”

His acquisition of the Old Course Hotel and Dukes Course in 2004 came by, what seems in hindsight, divine intervention. It was a curious thing.

“In August, we had the PGA Championship [at Whistling Straits],” he says. “There was an American who lived in Paris visiting his relatives in Chicago. He had an extra day and he drove up here on Wednesday. He toured Whistling Straits, went through our hotel, drove back to Chicago and flew back to Paris. A couple of days later he sent me an e-mail. I didn’t know this person. The upshot is that he was a member of a management buyout group that was trying to buy the Old Course Hotel from a Japanese owner. They had been working at it for about nine months and still hadn’t gathered enough equity. So he asked if I would be interested.

“I had been there a half dozen times, so I knew about it. I knew its level of quality. And it happened it matched closely what we were doing here at the American Club. I told him when we participate in something, we have to have controlling interest because we maintain a certain level of quality in everything we do. I thought that would kill it. They still invited us in. We negotiated with the managing director and 40 days later, from the day I got that first e-mail, we owned the hotel.

It was at St Andrews last year that Kohler scored his first hole in one, on the 11th of the Old Course. But an event that morning not only caused him to nearly miss his tee time, it put his life in danger. He had noticed that a sign across the road from the Dukes Course was askew so he parked at the entrance and walked across the street to fix it.

“There was this hedge right behind it,” he recounted. “I took a step toward the hedge to get a better angle to turn the sign and fell into a five-foot deep trench with about two feet of water in it. I had put my hand out to reduce the impact and sprained my left wrist. Here I am lying in this ditch and nobody knew where I was. Nobody could see me.

“The walls of the ditch were slick with mud. I was about to drown in there. It was all I could do to keep my nose up out of the water. I finally got an elbow under me, to lift myself up some, then got a knee under me and was able to reach up and grab hold of some grasses, plants that were overhanging, and pull myself up. I was completed covered in mud. And I was an hour away from my tee time.

“When I get to the hotel and walk through the lobby, no one recognizes me. When I got into the room I walked straight into the shower without taking any of my clothes off. I got to the course five minutes before my tee time and I wasn’t even sure I could play with the sprained wrist.

“We got to the 11th hole and it was very dark, overcast. I said ‘Kohler, if you have one shot in your body, this has got to be it.’ The pin was directly behind the right bunker. I used a six iron, made myself stay down the line with the swing, and I didn’t yank it left. It hit about five yards short of the green, it rolled over a large hummock and disappeared, then it suddenly appeared again moving to the right and kerplunk, right in the hole.”

In his foursome was PGA Tour commissioner Tim Finchem, who had a painting done of the scene to present to Kohler. “It’s a hole where you have all these people crossing and the group that was behind us came up on the tee and saw it,” says Finchem. “The whole scene was quite striking.”

Finchem, who has dealt with corporate America at the highest levels, finds Kohler  unique. “You can have a meeting and he appears to be asleep for all of it, then he opens his eyes and remembers everything and asks you a tough question,” says Finchem.

Everyone who works for Kohler will say he is a taskmaster, one driven to make everything his company does of high quality and best value. Steve Friedlander worked as director of golf at Kohler until he moved on to Pelican Hill in California. His eight-year relationship with Kohler was memorable.

“If there was a true golf fanatic, Herb is one of those people,” says Friedlander. “He takes that passion for the game to the nth degree to create these properties at Kohler and in St Andrews . . . He wants to know things about all the operations and what the people are doing. He probably called me four, five times a week to discuss something, whether it was something about his courses or something he saw somewhere else that could be applied to his courses.”

Such personal involvement could have a downside. “When you work for him, you needed to be in touch with his vision,” Friedlander says. “And he has tremendous vision with a lot of details. He’s not vague about things . . . It was fun to travel with him at times, and sometimes not so fun. Herb has no off switch. No matter whether you were playing golf, eating dinner, in the clubhouse after a round, he was always asking you to evaluate things. The only time you were off is when he went to sleep on the plane.”

When Kohler hired Barry Deach from the PGA of America to be his tournament director, Deach knew there would be challenges. “You are on call all the time,” he said. “He has the unique ability to hone in on the simplest of details and the most important of details and get the  right decision made. If you have 10 hours to think about something and he has 10 minutes and he outthinks you, you will have an issue. People who work for him have to like being challenged.”

That isn’t to say that Kohler doesn’t enjoy pleasures that are directly connected to the business world. He is a breeder of Morgan horses and drives teams of them in competition. He loves fine food and wine. He enjoys cigars, though says he doesn’t smoke a lot.

“It’s not a regular diet,” he says. “I like the Partagás 8-9-8. I probably smoke five a week. I remember vividly that my father would have an unlit one in his mouth. He was told not to smoke, so he would walk around with one between his teeth all day and eventually it would fall down to a right angle. I enjoy one after a long day.”

So would that mean he has a smoking room in his house?

“No, no, no, no, my lovely bride would not have anything to do with me if I did something like that,” he says with yet another chuckle.

Nathaniel Crosby, the 1981 U.S. Amateur champion who has become of friend of Kohler’s, sums up the man this way:
“He has an affable personality, so likeable. He’s the perfect guy to cultivate relationships. He’s smart and charismatic. He treats me at eye level. He’s doesn’t treat me like I have this, you have that. “He just loves life, loves to be teased, loves a small wager.

Herb loves to collect friends who are meaningful and eclectic.

Herb is very adept, I think, at identifying people who are trying to suck up to him. He has terrific instincts for people.
It’s very clear the guy is about having fun and enjoying life.”

Jeff Williams is a contributing editor of Cigar Aficionado.

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