Richard Vague on Finance, PA Banking Leadership & Economic Outlook

In this insightful episode of Uncorked, we sit down with Richard Vague, a visionary entrepreneur, economist, and philanthropist whose journey from humble beginnings to building financial empires is nothing short of remarkable. As the Secretary of Banking and Securities of Pennsylvania from 2020 to 2023, Richard played a pivotal role in shaping financial policies and guiding the state through economic challenges.

Richard shares his story of perseverance, starting from his early days putting himself through college and his unexpected entry into the banking industry. Discover how his innovative thinking propelled him from a marketing role at a small bank to founding major financial institutions like First USA, Juniper Bank, and Energy Plus.

We explore Richard’s groundbreaking use of Affinity Marketing in the credit card industry, his pioneering venture into the deregulated energy market with Energy Plus, and his approach to building successful companies through strategic partnerships.

Richard also provides valuable insights on the current state of the U.S. economy, discussing why he believes the economy is more resilient and innovative than ever. He touches on his experience as Chairman of Pennsylvania’s Largest Pension Fund, his tenure as Secretary of Banking and Securities, and his views on the challenges and opportunities that lie ahead.

Additionally, we dive into his passion for philanthropy, his journey into venture capital with Gabriel Investments, and his ongoing commitment to mentoring young entrepreneurs. From his passion for leadership to his pursuit of new challenges well into his 60s, Richard’s story is a testament to lifelong curiosity and drive.

The Roots of Economic Inequality

The top 10% of the country holds 65% of all the stocks and real estate in the country. The bottom 60%, the middle class, only holds 14%. They looked for someone who would stand up to the man. In 1828, they finally found that leader who looked inward and westward, while the financial elite looked outward and across the ocean. It was globalists versus localists, the coast versus the interior. As asset prices rise, inequality invariably widens. It's the central fact driving inequality.

Early Life and Career Beginnings

Richard, I want to thank you so much for being with us tonight. I know it's late and we've had a long day, but your career is so spectacular. I don't think we can actually talk about everything you've done and continue to do in your career. It's absolutely amazing. I would love for you to tell our viewers a little bit about the very beginning because life just was not easy straight out of the gate.

First of all, let me say what an honor and privilege it is to be here with you. This is a spectacular podcast. You've said words that are far too kind about my career, but the beginning was a little bit on the rough side. I was putting myself through college and ran out of money about halfway through the process. I dropped out and got a job to try to earn enough money to get back in school. The job I got happened to be at a bank, and that bank launched my career into banking and everything else that followed.

I got a job as an account analysis clerk. I'm old enough to where that was really pre-computer. We would go around and get reports from various departments and build an analysis of the bank's customers. I parlayed that into writing policies and procedures for various departments of the bank. To my shock and surprise, about a week before I graduated with a degree in advertising, the president of the bank asked me if I'd take over the marketing department upon graduation. That really jet-propelled my career.

The Intersection of Art and Business

I had actually trained as an artist from the time I was three or four years old. Up until the time I was 18, I figured I was going to be an artist, a painter full-time. When I got to college, the only degree that I felt was practical was an advertising degree that would use my art. I thought of myself as a marketer. I didn't think of myself as an analyst at all, even though that's what my career has become. At the beginning, it was all about art, which has been a big advantage for me because I approach everything from the perspective of creativity and embrace creativity. That is important in managing a business and in doing an analysis.

Richard is talking about how he started as a marketer. Most people would not think that one of the lead economists anywhere would have started that way, but that way of thinking combines together. Richard is not just an economist and a marketer, but he is also an author, a philanthropist, and extremely active with important duties in the Commonwealth of Pennsylvania.

I have been very fortunate. I have the responsibility of being chairman of Pennsylvania's largest pension fund, PSERS, which is a great pleasure but a true responsibility. I started a new business after a series of other businesses, so I really have had great fortune in my career.

Innovation in Affinity Marketing

Let's not shortcut this. First USA gets bought by Bank One. You stay for two years, and then around 2000, you and your partner decide to start a bank called Juniper. You wind up selling that to Barclays, one of the larger credit card issuers. I want you to talk about affinity marketing and what that means in the credit card business. People don't realize when they take a credit card out of their wallet why it says United Airlines or MasterCard or Shopify.

It was a real dilemma. In our last credit card portfolio, we had 70 million customers, but when we started out, we had a few thousand. We were trying to figure out how to grow. Sending out a list saying, "Will you take our Visa card or will you take our MasterCard?" was not working. We were getting pitiful responses. Necessity is the mother of invention. At that point, we panicked and said, "How can we boost our response rates?" We did that by partnering with airlines and universities. Our business really became about getting partners to work with us. The response rates we would get from a marketing standpoint were 10 or 20 times higher than they would have been otherwise. It took creativity to solve what was a really desperate business problem.

Expanding into Energy Reselling

The brilliance of the whole thing is that they sell Juniper to Barclays, and he takes the same exact business model. Around 2005 or 2006, I walked into Richard's new office. There were four people sitting there, and the office was not much bigger than this little stage. He was using the same exact business model to resell electric.

That business was called Energy Plus, which grew to be one of the largest resellers in the Philadelphia region and was further acquired by NRG. We had kind of squeezed the life out of the credit card business as we competed with other folks. When we started, it cost $20 to acquire an account. When we finished, it cost $200 simply because we and others had increased our marketing so dramatically. After I exited that business, I looked around for a business that would use similar skills where competition wasn't that great. At just about that time, the electricity business was becoming deregulated. Utilities like Con Edison, PECO, and others were established in that business, and little startups like we became were competing against them. To be quite honest, we felt we could do very well competing against a stagy old utility. We took affinity marketing to United Airlines and Southwest Airlines and asked if they would give us their customer lists in exchange for giving customers a point for every dollar they paid on their utility bill. They all loved it. We grew from zero to $500 million in sales in a little over three years.

I remember we were having dinner at the Cadillac Grille at the Wells Fargo Center. You said you wanted to pick my brain on something. We were drinking some wine, which we should do now. This is a 1996 Chateau Latour. It is a spectacular wine. This wine probably just became drinkable in the last few years and will likely outlast us; it will be drinkable until about 2060. Let's take a sip. Incredible color. This is like liquid gold. Thank you for breaking it open for the occasion.

Anyway, we were sitting in the Cadillac Grille getting ready to watch the game. He asked me what I thought about this idea. I had to pinch myself because I knew absolutely nothing about electric outside of plugging something into an outlet. But I watched this thing unfold, and you hired thousands of people from the community. Then NRG buys the company, and here you are again. I asked Bill for advice because he is the most creative and successful entrepreneur I know. I'm always going to ask Bill for advice on things I do.

Economic Outlook and Published Works

You were wildly inspirational to me. You are on the board of the University of Pennsylvania and the Abramson Cancer Center, which does amazing work. We are so lucky to have those hospitals in our region. But it goes beyond that; you don't say no to a great cause. You are working for the state of Pennsylvania only because you really care. It didn't strike me as odd that you wrote your first book in 2015, The Next Economic Disaster. It was a fantastic book. Since then, you've written four more, with number six coming out in early 2026. These books are all about history and why our country has an amazing economy. We can debate whether the economy is good today, but for someone trying to make a living, they might say it's not. Give us your take on where we really are today in 2025. Is it doom and gloom, or are we in a great place?

The economy is now $29 trillion big. We're the largest economy in the world by far. There was a lot of talk about China overtaking us, but it looks like China is going the other direction instead. The level of innovation in our economy is at an all-time high with artificial intelligence and genetic engineering. I think the economy is poised to do tremendous things. We've had our moments over the last 50 years where that has not been true, but I think we're in a great place today. Costs were too high because of the pandemic and wars that drove up energy prices, but that's largely behind us. We are in the greatest country in the world and we should be optimistic.

Venture Capital and Philanthropy

Gabriel Investments is your venture capital firm. We had so much good fortune growing three businesses and exiting them. We got to a point where we didn't have to work for a while, and we felt we should give back within the entrepreneurial community. We put together a small venture capital fund and have given early-stage capital to over 40 businesses. It was our opportunity to take the mistakes we've made and the wisdom we've acquired and share that with young entrepreneurs. I think that's made a difference within Philadelphia.

Insights from the American Middle Class

In 2018, you wanted to figure out what it might be like to be President of the United States. You went on a road trip for almost a year. There is such acrimony in America's politics. You turn on the news and hear about all these terrible things we should be worried about. I wondered whether that was really how people felt. I got a professional organization to set up a series of focus groups for me across the country. We went to 15 different states and held professionally managed focus groups with middle-class voters from both parties. I handled these myself as the moderator because I didn't want someone not getting to the heart of the issue.

I didn't ask about political candidates or programs; I asked about their lives. What's it like for you to try to get a job? What is your healthcare like? How is your family doing? Are opioids affecting you? The shock to me was that we got the same answers whether we were talking to Democrats or Republicans, regardless of the state. All the issues boiled down to their daily financial lives—kitchen table issues. It was the cost of healthcare and trying to get training for a better-paying job. You could tell what really mattered by how animated they were in giving their answers. These issues were shared by Republicans, independents, and Democrats alike.

I had toyed with the idea of entering the presidential campaign, however quixotic that might be. But a local politician I had known for over 30 years entered the race, and his name was Joe Biden. Out of respect for him, we didn't take it much further. I would argue that the average middle-class person has been neglected by both parties. That is why folks go back and forth between Democrats and Republicans. They give one side a chance, they don't provide job training or affordable healthcare, so they give the other side a chance. I developed a level of understanding that people in high office don't always try to reach.

The President's Impact on the Economy

How much does the president really determine the economy? People vote based on their own economic experiences. Bread and eggs did cost a lot more. James Carville said in 1992, "It's the economy, stupid." A major recession under George H.W. Bush is the reason Bill Clinton got elected. What is going on in the economy impacts the President, but the reverse isn't as true as you might think. There isn't as much that a president can do to impact the economy; they tend to just be the beneficiary of what's going on. Joe Biden was impacted by inflation caused by Covid. He didn't cause Covid, nor was he really able to cure it, but he inherited the outcome.

Navigating Business Challenges and Policy

Of all the businesses you started, which was the most challenging? We started Widehall, and I think this new business is the most fun because we're dealing with Washington D.C. policy at a very substantive level with some of the smartest people in the world. The hardest business was the credit card business because we had to deal with every shock in the economy. If a recession came around, it was like the sky was falling. Running financial institutions was by far the hardest thing I did. I don't view Widehall as having no pressure, but I have such superb partners who have engendered success so quickly. We're dealing with things that matter immensely with brilliant people. To me, that's fun.

Core Leadership Qualities

Leadership is identifying an opportunity and finding the people to make it happen. You are a master at that. We look very hard for four qualities in individuals. We look for folks that get things done. Most people in the world don't get things done. You give this person something to do and you know they're going to do it.

Another is common sense and judgment about what's important. Some folks can look at a page of numbers and know which three are important, while another person will be lost forever in it. We also want folks that are collegial. There are a lot of very successful folks that are pricks. We just don't want those in our businesses. We look for folks that are unselfish and willing to go the second mile for the other person. The fourth quality is people that are straightforward and tell the truth. You can answer a question truthfully and still not convey what someone really needs to know. We want people who have the courage to be honest.

I remember when you sat at the same eight-by-eight cubicle as the lowest-level employee. We believe very strongly that we need to treat everybody the same, from the entry level to the executive. The minute we start paying too much attention to hierarchy, bad things start to happen. I want everybody to feel free to express ideas. That only happens when you have an open, collegial atmosphere where folks respect each other. I don't have an office; I have a desk in the open with the other employees because I want to convey that spirit.

Lessons from Sports and Talent Management

You're also an avid sports fan. We go to a lot of Philadelphia 76ers games. They're having a tough year. The folks I admire within the NBA right now is your friend Leon Rose with the New York Knicks. Unfortunately for us Philadelphia fans, they have built a hell of a franchise with folks that are fiercely competitive. That team is the most Philadelphia team ever, but it's in New York. It has Leon Rose from Cherry Hill, Temple University Law School. You've got Wes from Pennsauken as the vice president. You've got Villanova kids like Jalen Brunson, who was in Cherry Hill. Their superstar, Jalen Brunson, is so Philadelphia with the hustle and the guts.

It is a little hurtful that they could not be here. Sports are a great metaphor for other businesses. If you make wise choices about players and have the judgment to identify talent, you succeed. If we hire the wrong person, it could set our organization back by a year or two. The effort you put into hiring has to be the paramount effort within a company.

The worst mistake managers make is hanging on to people they should get rid of. Many people are afraid to pull the trigger because they don't want to admit they made a mistake. You've invested time and energy to recruit someone, often talking them into leaving a good job. When it's clear in a matter of months that they're not a fit, admitting that and terminating them is one of the most important and courageous things in business.

Personal Reflections and Future Drive

About 11 years ago, we were at a dinner party and you sat next to a beautiful young lady named Laura. You called me the next day and said you were taking her out. The day after that, while we were playing at Atlantic City Country Club, you told me you were marrying her. Laura was born and raised in Italy. Let's drink to her. This is Uccelliera Brunello di Montalcino 2015. Laura would love this; she is about as Italian as you can get. She knows a lot more about wine than I do.

Richard, I want to thank you. Your story is terrific and I'm thankful we were able to share it. What keeps driving you to do this? I can't imagine what I would do if I didn't have anything to do. There's so much that needs to be done in the world. Sitting home, twiddling my thumbs or playing golf all day, is just inconceivable to me. In this particular case, I saw an opening, a lucrative and beneficial opportunity, and I went after it. That's about as much fun as you can have. I've had more than my fair share of failures, but that helps you have successes too, and it makes them sweeter.

Richard, again, we both thank you. I'm Jerrold Colton, thanking our phenomenal guest, Richard Vague. Thanks for watching Uncorked.