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A CONVERSATION WITH...Lance Morgan

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Lance Morgan is the president and CEO of Ho-Chunk Inc., the economic
development arm of the Winnebago Tribe of Nebraska.

To say Ho-Chunk Inc. is a success in just 11 years would be an
understatement. Under Ho-Chunk Inc. and Morgan, there are 12 successful
businesses that together generate more than $100 million in annual revenues
and employ 520 people. Ho-Chunk Inc. started with $9 million in seed money.

Morgan was raised in Omaha, Neb., and on the Winnebago Reservation, where
he attended elementary school. After graduating from high school in Omaha,
he attended the University of Nebraska and earned a degree in economics.
Then Morgan headed east to Harvard, where he earned a degree in law. He
worked as a member of the prestigious law firm Dorsey and Whitney in
Minneapolis for two years before returning to the reservation to create
Ho-Chunk Inc.

Morgan, recently appointed as a member of the Consumer Advisory Council of
the Federal Reserve Bank, is nationally known in Indian country and in
economic circles outside Indian country.

Morgan is a family man: his wife, Erin, is the manager of AllNative.com. He
has three children, daughters Emma, 7, and Alaina, 5; and a newborn son,
Garret, 6 weeks.

The following interview provides insight into him and the methods he used
to create success for Ho-Chunk Inc.

Indian Country Today: What do you think of as your greatest success, and
how do you see it?

Lance Morgan: I think: building an organization that is lasting. I mean, on
reservations with tribal environments, things kind of come and go. And the
corporate entity we built has kind of evolved and learned and has laid down
strong roots; and I think it will survive beyond me.

And when you have that kind of organization you can impact a lot of
people's lives and impact a community in a broad way. So if I had to think
about a greatest success, we are still here doing the same thing we started
off doing -- that's harder than you think in Indian country.

ICT: How did you manage to be so successful in Indian country: was the
tribe a help or a hindrance?

Morgan: The tribe is ultimately responsible. They went along with Ho-Chunk
Inc. because they believed in diversification. I'm not sure they had a
complete understanding of how it was going to go and what we were going to
do. I think that they trusted me at the time, and along the way the tribe
has been incredibly helpful.

We've also had political issues that have been difficult and troubling;
that comes from being in a tribal environment. We used the tribe's
advantages to a great degree to help create our success. Tribal people
offer a unique perspective, and also they can be tough employees.

So really you have kind of a mixed bag. On the whole, a tribal entity has
positives, as long as they have a system that allows you to take advantage
of positives. I think that's what makes us unique; we have a pretty clearly
defined separation of business and politics. The tribe agreed to that and
they are largely responsible for it, and they have maintained it to a large
extent.

I think that you could have a wonderful structure, but you have to have a
tribal government leadership that buys into it. If they don't in the end,
in a battle between a corporate entity or business or government entity,
the government could always win.

I think you have to have a government that knows its strengths and
weaknesses; you can have the best plan on paper, have the smartest people,
but if your government doesn't back the separation and long-term thinking
then you don't have much of a chance of doing much at all.

Ho-Chunk kind of evolved. The tribe had a gaming operation. It was doing
well enough. And Ho-Chunk Inc. kind of evolved. At first we were looked at
as kind of a side show of sorts. Now we've gotten to the point where it is
larger than the tribe combined and the eye is casting toward us.

And so the test of the future will be, will government maintain what
they've been doing that allows us to be successful? That's staying out, and
making sure the corporate entity is not politicized. That's actually a
battle that is a constant issue as we grow.

If I had to pick one thing: Make sure government maintains its focus.

ICT: Can a tribal-based business mix or merge with mainstream business, and
what are the difficulties?

Morgan: We have two kinds of businesses -- generally ones that focus on the
reservation, whether it's selling inexpensive gas; and we have other
businesses where reservation business is extra, for example our housing
manufacturing company. Obviously we are owned by a tribe, [and] when tribes
are buying houses it gives us an advantage, but [we] couldn't rely on
tribal business solely. We look at tribal business as extra. They don't
think of themselves as a tribal housing manufacturing company; they think
of themselves as a housing manufacturing company that really likes to sell
to tribes when they can. It's extra and supplemental.

Sometimes [there 's] an election, and [the tribe] won't buy from you anymore
or they don't [want] you buying from them. Or sometimes there's a new
lawyer with a different opinion, [and] business just stops. It happens all
the time.

Or there is some rationale for not buying from this tribe or another.
Tribes are much tougher customers than you think. It's interesting because
there is so much talk about tribes doing business with each [other]. I
think there is a lot more of that going [on] as we build confidence in our
own skill sets. But it's still a very difficult and fickle market to really
focus on.

I don't know anyone who has really done a super job of selling across the
board to tribes, and maintaining those relationships.

ICT: You started Ho-Chunk Inc. with an investment from the tribe. Where
should the capital come from to start businesses like that?

Morgan: What our tribe did was to put 20 percent of casino profits for a
couple of years and put it directly into an account that board of directors
of Ho-Chunk Inc. controlled.

Ho-Chunk started with $9 million, so we had quite a nest egg to get going.
We thought we would get more; the tribe had financial problems with the
casino and cut it off.

We had a community forum on the money the tribe has made. Of all the big
things to spend money on, some money [was] spent on government and
salaries, next largest was spent on per cap, next largest on a long-term
investment fund, and the fourth largest was Ho-Chunk Inc.

Of all those, investment funds are down a little, per cap money is gone,
tribal government money is spent. We are the only thing that has grown from
a $9 million investment, $43 million in assets and $100 million plus in
revenue and 520 jobs.

ICT: How would a tribe without possible casino revenues capitalize such a
venture?

Morgan: It could happen in any number of ways -- maybe have a natural
resource; they could leverage venture capital; bring in a partner; [or a]
combination of government loans and grants.

To me it is not as important where you get the capital; what is more
important is [that you] set up a structure that allows for capital flow. I
think that that's the big mistake tribes make: they don't put enough time
[into] setting up a system that will allow something to evolve.

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What you really need is a system that allows people to learn and evolve and
tap into as many funding sources as possible. I think that our model going
right now with the corporate and nonprofit cooperation is a pretty good
example of how these things can happen together.

Time needs to be put into a system not the project; the project will emerge
if the system is sound.

ICT: What was your worst mistake or failure?

Morgan: We have a theory on a mistake -- Live to learn from it. We've never
bet the company on any one project. We've never put ourselves in a position
[where] if we didn't understand something or didn't do something, the
company wouldn't go down. We try to limit the amount of capital we put into
some of these projects -- try to limit our risks.

I don't think in terms of business mistakes. I think in terms of things I
should have thought of sooner.

I look back at my 11 years here, and I wish I would have thought of some
things sooner. It would have helped me earlier.

Most errors are errors of omission, things I should have done.

ICT: Is Indian preference a positive or a hindrance to doing business?

Morgan: Indian preference is a positive; it is part of our mission and part
of what we do.

Native preference is the reason we exist. We have two missions -- create
long-term self-sufficiency for the tribe, and [create] job opportunities.

We recently came to [a] conclusion that we may have gone too far. Not in
terms of Native preference; we can do better on that. We have just as many
non-Indian as Indian employees today. What's happened [is], we've gone [in]
the other direction. If a non-Indian makes an Indian joke, they would get
into trouble. If an Indian makes a white joke, everybody laughs.

I think we've gotten a little power; we've created an environment that is
not fair for everyone. I don't want to recreate a model where one side
dominates the other. We've been on the wrong side of that equation for a
long time and we didn't like it, and it wasn't right; and I don't think it
is right for us to do, either. It's tearing apart our organization at some
level.

We didn't care before because we had Native preference and we were the
tribe. I realize if we are to be a successful entity, all of our employees
need to be equal and equally motivated and feel good about their job.

Of all the things in business you have to fight, if you can take this out
of the equation it is going to help.

The tribe has more jobs than working-age people. And many people don't have
skill sets to work in that job. And we, by definition, need non-Indians
working for us and we have to create an environment that is comfortable for
them.

ICT: Do you have a hero or someone you looked up to?

Morgan: I never had a business hero. I had my father and my grandfather,
who did everything they could and worked as hard as possible. My
grandfather was missing an arm and he was a heavy equipment operator. He
provided for eight kids.

My father worked from sunup to sundown. He never made a pile of money, but
he was there every day. He would always say things like, "Get an
education." He doesn't necessarily understand what I do or how I function
within it. But the work ethic and the example, I think, of why you did it,
why you get up every day and do that -- because you have family and you
have responsibility and those things -- carry over in my mindset.

I used to view myself as kind of a rogue, doing my thing and making it
happen. Now I view myself in a position, I don't know, almost honored, and
with that comes a lot of responsibility.

If I would have to look back and see where my mindset was shaped, it was in
watching my father and grandfather in hard jobs that didn't pay a lot but
provided a living, every day.

I had a thirst for knowledge; [my] parents said, "We don't have a lot" and
"Education is the equalizer." They would say, "They can take a lot away
from you, but they cannot take your brains; and if you work hard you will
succeed."

I had no encouragement to be a lawyer or go to Harvard; it was to do your
best. It is clear to me that you could make your own way if you worked hard
enough.

I could do it roofing houses, which is a tough way to go. I always joke,
I'm a better roofer than a lawyer. I'm far more technically skilled as a
roofer.

ICT: What is next for Lance Morgan?

Morgan: I don't feel like I'm done here, but in some ways I feel like I'm
ready to move on, too. The tribe is nice to me, they let me dabble. I spent
[a] vacation teaching a short class at Arizona State Law School. They let
me take some time off working at BIA working on economic development. I do
a little consulting.

I would like to write a book if ever I got the time; I don't have [any] at
the moment.

If had to pick, I would stay here, push it as hard as I can for another
five years, find my replacement and maybe ease back in some other things.
The pace I work at is torrid, I have a tendency to go home for dinner and
work until 11 at night. I work on Saturday and Sunday. It's not strange to
get an e-mail from me late Sunday evening with a set of instructions for
Monday. I don't now how long I could keep that up.

ICT: What would the book be about?

Morgan: I think it would be called "Thoughts on Tribal Economic
Development."

I have lots of ideas and thoughts that I think are compelling. I don't
think there is a book at all on this subject. If there was a book on
economic development, a how-to, I think I would have read it. The stuff
that I have seen is OK. I think I have a perspective from living in the
trenches for so long. I think I could help some people, you know, skip some
of the mistakes.

I think that's the purpose of education.