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Lesson #4: Cultivate Your Capital Connections
Throughout his lifetime, Gallo was a significant campaign contributor to both the Republican and Democratic parties in the U.S. Although he tended to give more to the Democrats, while Julio gave more to Republicans, Gallo made his contributions based on shrewd thinking about his own business needs.
Gallo learned early on the importance of having important connections, and specifically for him, political connections. As his wine empire continued to expand, Gallo was faced with a barrage of liquor regulations at all of the national, state, and county levels. He found that having friends in high places helped him get through many of those hurdles.
In 1978, Gallo made a campaign contribution to U.S. Senator Alan Cranston. Shortly after, Cranston was instrumental in pushing through an amendment in the Senate that was custom-tailored for the Gallo family; essentially, it allowed the family to spread inheritance tax payments out over several years. It was an amendment that would save Gallo millions of dollars and help protect his business for the generations of Gallo’s to come. “I look forward to [my grandchildren] coming into their winery,” he would say.
At the time, Kansas Senator Bob Dole called the act “the Gallo wine amendment” and criticized its biased nature. But in 1986, the tables were turned. Dole supported a second tax amendment that had also been lobbied for by Gallo. In return, he received a $20,000 campaign contribution. The amendment passed and since then, Gallo has been one of Dole’s biggest supporters. Indeed, over the years, it is estimated that Gallo has contributed over $381,000 to Dole and $900,000 to foundations with which he is associated.
A similar situation arose when Bill Clinton was the American president. After Gallo raised $100,000 in a single day for him, Clinton met with him privately to discuss Chilean wine imports. In the end, Congress delayed the planned increases in Chilean wine imports, and also increased funding for wine promotion programs. Gallo was given millions of dollars to promote his wine overseas.
It is not so much the money behind Gallo’s contributions that was significant. Rather, what is important is his understanding of how to develop connections of mutual benefit. He knew that in order to get the help he needed in getting ahead, he would have to help others in return. Gallo developed a network of influential people that he knew he might one day need to help his business along. And for as much as he took, he always remembered to give back.
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