A conversation with the president

Few people know as much about the anatomy, physiology, evolution and basic chemistry of Ludwig Cancer Research as Ed McDermott, president and CEO of the Ludwig Institute for Cancer Research. Ed has had a hand in the financing and functioning of the Institute for more than three decades, having worked at a law firm that represented various legal interests of our founder, Daniel K. Ludwig, before joining the Ludwig organization in 1988. Though trained as a lawyer, he started out overseeing the sprawling businesses—from tanker ships to international oil and gas interests to commercial real estate—that initially financed Ludwig’s research. He very quickly became involved in the Institute itself after he was named secretary to Ludwig’s Board of Directors in 1989 and then president of the organization in 1995.

We spoke with Ed about his youth, his mentors, teachers and formative experiences and his early years at Ludwig. We also asked him about his experience managing the operations of the Institute, the thinking that shaped its strategy—and his thoughts about its future. We enjoyed the conversation immensely and are sure you will as well.

Where were you born and raised?

I was born in a town of about 60,000 in the Midwest—Dubuque, Iowa—on the Mississippi River, and I lived there till I was 12 years old, when our family moved to Washington, D.C. At that time, my father joined the John F. Kennedy White House, where he was on the National Security Council, head of what would be called the Federal Emergency Management Agency and part of the representation to NATO. He served in the White House until 1964, and we remained in the Washington, D.C., metropolitan area. So, I went to high school in D.C., went away for college and law school and then returned to start my law career.

Where were you educated?

In Iowa, I went to a Catholic grade school through sixth grade. And when we moved to Washington, I attended a Jesuit high school. Upon graduation I attended Colgate University in upstate New York and then Duke Law School.

Which of your teachers influenced you the most?

Among them was Sister Valerian, a young Dominican nun, who was my sixth grade teacher. She taught me to always do more, go beyond the limits of an assignment. When we moved, my sister, brothers and I had these little books, keepsakes, in which our friends wrote us notes. I still remember Sister Valerian’s message in my book, which was two words: “Will it.” That really stuck with me.

What inspired you to study law?

I had an obvious interest because that was my father’s profession. I was interested in politics, and I spent two summers being a summer page in the U. S. Senate—one of the people who run around delivering messages to and from senators. Those were formative years, as it was during the start of the Vietnam War and the protests. I was there for the vote on the ‘64 Civil Rights Act and ‘65 Voting Rights Act. In those days, when Senators filibustered they had to stand and talk the whole time. That tended to discourage frequent use of the procedure. I think we need to go back to that. There were these filibusters by Senator Ernest Gruening from Alaska, and a Senator Wayne Morse from Oregon who early on opposed the war in Vietnam. And we’d sit there all night and serve them coffee. Seeing the process led to my majoring in political science in college, which contributed to my fascination with the law.

What did you do after law school?

I came back from North Carolina and joined a law firm in Washington, D.C., where I became a partner. I practiced there for 14 years, and that’s where I became acquainted with the Ludwig organization. I focused on commercial transactions, mergers and acquisitions, as well as administrative law—representing clients before administrative agencies.

How did you get involved with the Ludwig Institute?

I joined the organization in July 1988. Mr. Ludwig had been a client of the firm for some years, particularly for his shipping activities. He also owned financial institutions operating in five Western states. In the early 1980s, I started to represent him in those interests and, ultimately, joined the boards of those financial institutions. Mr. Ludwig, who was born in 1897, was well on by then and had delegated overall management responsibility to a good friend of his by the name of Jim Kerr, who lived in La Jolla, California. In 1988, I had closed a deal for the Ludwig organization in Hawaii and Jim asked me to stop in California on my way back to DC. When we met, he said to me, ‘I want you to come and work with me.’ And I said, ‘Well, I’m very, very flattered, but I’m not really interested in being in-house counsel.’ And he said, ‘No, I want you to come on the business side.’ And I thought to myself, ‘he must not know me very well.’ Initially my engagement was with Mr. Ludwig’s commercial entities, not the Ludwig Institute, but Jim quickly introduced me to the Institute and gave me responsibilities with that as well.

Tell us about the “business side.” What was its relationship to the Ludwig Institute?

At this time, the Ludwig Institute sat at the pinnacle of a pyramid, which was a vast commercial enterprise. It wholly owned a range of companies that were run below the Institute level by Jim Kerr. I joined initially as a senior officer of the tank ship company. We had a fleet of super tankers, and we had oil and gas exploration interests in Indonesia and the North Sea. We had 50% ownership of 3 million square feet of commercial office space in Manhattan. At their peak Mr. Ludwig’s businesses were of unbelievable scale, employing some 35,000 people.

How did your role then evolve over time?

I joined in July of 1988, and I think I attended my first Ludwig Institute Board meeting in September of the same year. I became president of Universe Tankships Inc. in 1991 and had responsibilities with National Bulk Carriers as well. I learned more from Jim in about six or seven years than I did from anybody else in my lifetime. He could see around corners; he saw a problem coming that you didn’t even have a hint was there. And he was very demanding. I think I must have given him six letters of resignation because I felt I had so disappointed him in things.

Did you work closely with Lloyd Old?

Lloyd had initially been an advisor to Mr. Ludwig on the formation of the Institute. Jim brought him on as scientific director right around the same time I came aboard. Lloyd and I worked closely together for his entire time here.

Can you tell us a little about your move into the Ludwig Institute and your role?

It was really Lloyd Old who got me more and more involved in the intricacies of the Institute. I became secretary to the Board in 1989. I was general counsel for a time, and then became president in 1995. At that time, we had 10 Branches, and all the staff at those Branches were Ludwig employees. So, we had to be aware of the labor and social rules in each country in which the Branches operated. There was a lot more nuance to the management of the Branches those days. Lloyd had a vision, and I was there to help implement it.

What was the Institute like at the time?

Ludwig’s operations were expanding through the nineties. One of the great attributes of the Ludwig Institute is how it takes on responsibility for the full continuum of discovery. And at the time, that led us to start our own clinical trials program, to build our own GMP manufacturing facilities because the pharmaceutical companies wouldn’t produce the small, pilot grade quantities of agents that we needed. No other academic institution had these capabilities. We also brought the management of clinical trials in house because although there were commercial contract research organizations, they didn’t have the expertise in immunology that we required. We disbanded the production facilities when circumstances changed, and you could go out and commission small lots commercially. Similarly, with the clinical trials group, it’s now possible to harness the immunology expertise we need commercially rather than having to support it internally.

Which of the decisions you’ve made have been most rewarding to you?

When I first joined, the Ludwig Institute sat at the top of a formidable commercial pyramid. After the Exxon Valdez disaster in Alaska in the late 1980s, the U.S. Congress passed a law that essentially exposed everyone in the chain of transportation of oil to unlimited liability. Our ships were chartered out to major oil companies, but when I saw news clips of people with towels dabbing rocks on the coast that were slick with oil from the spill, I realized that as fiduciaries, we could not continue to operate in this manner. It took a great deal of confidence on Jim Kerr’s part to dismantle Mr. Ludwig’s commercial empire, but that’s what we did. Converting and diversifying the asset base to a much more conventional endowment structure and composition was a very important moment for the Institute’s future, though that was not immediately apparent. On August 1st, 1990, we deposited $500 million in sales proceeds with two groups of asset managers, and in the first month we lost $50 million because, on August 3rd, Iraq invaded Kuwait. Reporting at the first Board meeting on how we’d diversified to lower the Institute’s risk profile was less than convincing.

Then again, on the financial side, at the beginning we had outsourced the management of the LICR Fund assets to consultants, but I was never particularly satisfied with what we were getting as a result. When I became president of the Institute and the Fund, we started to develop in-house capabilities for managing our financial assets. Our performance went from matching peers to progressively doing much better than them, and that continues.

And on the Institute side?

A real point of pride for the Institute was, again, embracing and demonstrating the capability to handle the full discovery spectrum from lab to early clinical trials. Another was our restructuring in the 2011-2012 period, when we consolidated from 10 Branches to three. The effects of the recession of 2008 on our asset base were very distressing. But they forced us to really consider how sustainable the 10 Branch structure was and the way we were organized. It was very administratively top heavy. Due to audit requirements, you needed checks and balances, so you needed an administrative team of a certain number at each Branch, whether you had five staff members or 50. In addition, team science was becoming more and more what we thought needed to be done, so we wanted more critical mass. For example, a million dollars for a piece of equipment wasn’t outrageous, but you wanted it someplace where it was going to be used 24/7, not three days a week. I think focusing on three core sites, though initially painful—we had great scientists at these other sites—was imperative for the long term.

Has the pandemic affected how we think about collaboration?

Clearly the pandemic demonstrated that we could effectively maintain activities virtually. The experience caused many people to look at how much time was spent traveling or commuting and realize how unproductive that use of time can be. By the same token, now that we can meet together, I sense a level of resistance sometimes to having an in-person meeting as opposed to a virtual meeting. That’s particularly the case when travel is involved. And I think the one thing that I’ve really missed through the pandemic and working virtually is the personal interactions.

I think those are very important. I mean, people talk about water cooler conversations. For example, with our Board, important conversations often happen over breakfast or dinner or during breaks in one-on-one conversations, rather than at the formal meeting. So, the tension of what can be done best virtually and what really is best done in interpersonal meetings is going to be something that has to be worked out. I think the hybrid in-office model that we have in New York is an effective accommodation.

What are your hobbies or other avocational interests?

I run, I cycle, I boat, I ski, I play squash. But I’m not a golfer. I try to be active, as most of my work life is pretty sedentary. I enjoy reading, I enjoy history—especially political history—more than fiction.

Is there anything else you like to say that we haven’t touched on here?

One of the things I would like our staff members to always remember is that the asset base that supports Ludwig was built with the sweat and blood of thousands of people. It didn’t just didn’t arrive here from nowhere. It is Mr. Ludwig’s legacy, but it’s also the legacy of the many thousands of people who worked at his companies over the decades. We owe it to them as much as we owe it to Mr. Ludwig to produce.