Linda Griego’s experiences in small business and politics have made her a proponent of entrepreneurship. Born in Tucumcari, N.M., Griego was the first in her family to graduate from high school or college. She has been a Capitol Hill staffer and deputy mayor to Tom Bradley. Her businesses have included a struggling chili shop and the thriving Engine Co. No. 28 restaurant downtown. Griego headed RLA, launched as Rebuild LA to revive the riot-torn Los Angeles economy, and is now interim chief executive of the Los Angeles Community Development Bank. Griego, 51, is a Los Angeles branch director for the Federal Reserve Bank of San Francisco and serves on the boards of Tokai Bank of California and Blockbuster Entertainment, among others. She was interviewed by Times staff writer Lee Romney.
Question: What made you decide to open your own business?
Answer: I was greatly influenced by my aunt and uncle who had a little corner grocery store in a pretty bad neighborhood. I was 11 years old and it was such a privilege being allowed to put price tags on cans. From there I worked in a bakery that became a family bakery. I wrapped bread and sliced thousands of hamburger buns. I was sometimes allowed to do the payroll. I also saw the downside, when my family took over and the price of sugar went through the sky and we were losing money. So when I opened the Chili Stop in the late 1970s, I knew how hard it would be. What came as a surprise was how many mistakes I made.
Q: What were your key mistakes?
A: Some I could absorb, like pricing wrong. Some were hiring mistakes. You don’t do things like check references because you so desperately need a Saturday off. I had 16 seats and a six-burner stove. The capacity was too low. My niece and I put the wood floor down. We painted. Walking away was painful. But I took the lessons to a different venture. When I opened the Chili Stop, my first day I made $9. You think to yourself, “I’m $15,000 in hock and I’ve got $9 to show for it.” You just want to cry. My first day at the Engine Co., it was closer to $10,000. But even there, the first two years there were a lot of sleepless nights.
Q: What was your experience trying to obtain financing?
A: Capital was not accessible to me. The location where I put my first little restaurant was my seventh choice. I had six landlords reject me because I didn’t have the guarantees that they wanted. I did try to get a loan when I was working on the Engine Co. I knew my only chance was through the SBA so I went through a bank and they gave me a stack of documents about 3 inches thick. I spent an hour looking at them and threw them away in the first trash can I found. Even if I did qualify, I would have started so undercapitalized as to probably ensure that I would fail. So I did it through a limited partnership and raised the money from the private sector.
Q: You’re managing general partner at the Engine Co. How have you managed to own a business without having to be there all the time?
A: In my first business, I worked seven days a week, 14 hours a day, and even if I took a day or two off, it was to do the books. At the Engine Co., from Day 1 I set it up so it was going to be a self-contained operation, where I put in the proper management with the know-how, and my job was the oversight. My general manager and his two assistant managers have been with me all 10 years. Those guys have helped me build that business.
Q: You became a critic of local government when you were creating Engine Co. No. 28. You needed 53 permits. Has government improved for small-business owners?
A: There is great improvement in the permitting structure. We’ve gone through a major recession. Initially it was, “We’ve got to raise the permit fees because we’re not getting as much revenue.” But you can only do that so much before businesses begin to drift to other cities or states. Also, there was a time when Los Angeles was enjoying a lot of growth from big developers. The little guy putting in a deli or a dry cleaner--they were an afterthought. I think that has changed nationwide. There’s a realization that the businesses creating the jobs are small. The big ones shed the jobs. But it’s the little ones who have five employees that are adding two, and there are hundreds of thousands of those.
Q: How did your paths of politics and entrepreneurship converge?
A: In high school I was in a program where you spent time at the state capitol. I loved that public spirit, so right out of high school I went to work for a congressman whose wife was my first-grade teacher. It was $400 a month, but I earned more than anyone in my family had ever earned. It was my way out of poverty. From there I went to work for California Sen. Alan Cranston. I probably would still be in government if I hadn’t taken an offer from the telephone company to run installation and repair crews. I climbed telephone poles, wore steel-toed shoes. It taught me management skills. I had guys who worked from 8 to 4. They’re union. It’s blue-collar. You’ve got to get them to put in overtime at the end of the day and it’s pouring rain and lightning and they’ve got to go up poles. It gave me the confidence that I could manage. Leaping from there into opening the Chili Stop combined the early family small-business experience, the public experience and the management skills.
Q: What did RLA teach you and the city about the city’s small-business base? The organization did the first real business survey of underserved areas.
A: We were able to show that while there are major issues to tackle, there’s also something to work with. Many low-income neighborhoods are located in industrial areas. The majority of the businesses had less than 50 employees, many of them were family-owned, many of them third generation. People no longer assume that there isn’t an economic base. Now the question is whether or not the financial institutions or a bank like the Community Development Bank can be a tool for them to grow, improve their wages. Now we’re working from data, not perception.
Q: What role can small business play in lifting up an area?
A: Small businesses that provide services to a neighborhood improve the quality of life. Their other role is providing jobs. The one thing that has always been lacking in underserved communities are retail services, where a lot of teenagers get their first jobs. You can’t expect that the industrial sector will pick up these kids, because they don’t work on part-time labor. What I tried to do at Rebuild LA was not just focus on manufacturing because those are high-paying upward mobility jobs. You also need to build that retail base.
Q: It’s been seven years since the riots. Now we’re in a flush economy, but certain parts of L.A. have not shared in that. Why has change been stubborn?
A: Something that’s been left to go down a certain path for three or four decades doesn’t turn itself around in half a decade. Everything’s gone to convenience of “big-box” retail. The older industrial neighborhoods of East L.A. and South-Central had the traditional Main Street retail approach. You take away those Main Streets and you end up with very long corridors with basically every other store shut down. A lot of these streets became secondary arteries to the freeways. Parking prohibitions in rush hour will put anyone in retailing out of business. You couple that with the cost of land to build any sizable retail center and it shouldn’t surprise anybody that it will take time to make those changes.
Linda Griego will give a keynote address at The Times’ Small Business Strategies Conference from 1:30 to 2:30 p.m. Sept. 25.