My dear friend Frank is the guy who mentored me in the handling of private equity investment. He was a venture capitalist long before it was even known how cool it was to be a venture capitalist. Frank is a Marshall Scholar who attended the London School of Economics just when America was entering the 1960s. He did a stint in the Army like any good red-blooded American male did in those days, but luckily the Army seemed to recognize his strengths and did not send him into some mud puddle to crawl around, but put him into some Department of Defense work under then Secretary of Defense, Robert McNamara, doing various cerebral projects. That eventually led him to a civilian post in the Office of Economic Opportunity as President Lyndon Johnson began his war on poverty. Somehow that got him a secondment to the African Development Bank, probably because he had globalized his thinking more than the average young guy working in Washington D.C. in those days. What all of this led to was a guy who got to see lots of interesting aspects of a burgeoning and globalizing economic world that was rife with problems to solve and opportunities to seize. That led him to the doors of one of the original venture capital firms, The Sprout Group, where he honed his skills in deal-doing until he did what all VCs seem to eventually do, which is to find a horse they particularly like and then ride it out onto their own free range. Frank did that with a small specialty publishing company that he eventually sold to get his seed money to form his own venture company, called Cambridge Partners. He had been working in New York City, but his wife and kids settled in the Shenandoah Valley of Virginia, so Frank set up shop on the D.C. Beltway, before anyone really knew what that would become in a commercial sense. He tapped his old Department of Defense pals, many of whom had risen through the bureaucratic ranks and now had contacts worth developing in the arena of the vast array of technology being developed and spun out by DARPA,
DARPA stands for the Defense Advanced Research Projects Agency. It’s a research and development agency of the United States Department of Defense that manages high-risk, high-reward research projects aimed at developing breakthrough technologies for national security. Its mission is to prevent technological surprises from adversaries and create technological surprises for them. DARPA intentionally takes on projects that seem far-fetched or unlikely to succeed, but could be game-changing if they work. Those projects typically run 3-5 years with specific milestones and they connect basic science research with practical military applications. DARPA tends to work through contracts with universities, companies, and research institutions rather than having its own research facilities. That makes it perfect aw a place that spins off tremendous venture opportunities. Famous DARPA innovations that became civilian technologies include the Internet (ARPANET), which was originally developed in the late 1960s for military communication, GPS, our ubiquitous and useful every day, global positioning technology, the computer mouse and graphical user interface, voice recognition technology (laying the groundwork for Siri and Alexa), drone technology and even mRNA vaccine technology that proved crucial for COVID-19 vaccines. DARPA is currently focused on areas like Artificial Intelligence and machine learning (no surprise), hypersonic weapons, quantum computing, biotechnology (think Million Dollar Man), space technology, cybersecurity (badly needed), and autonomous systems (I guess to make everyone and everything irrelevant).
Frank’s biggest win out of DARPA (I have no idea how he got his hands on it or the circumstances of it all) was in the area of satellite technology. He funded a company called Dish Network, which you will recall was the major competitor of DirectTV. I can remember him traveling to China to observe a launch of a Dish satellite deployment, so all his international experience certainly served him well in that whole evolution.
When I met Frank, he was in his mid-50s, so very much at the peak of his VC prowess. I was busy being a global banker, so we had plenty to talk about, but came at business from very different perspectives. We both had lots of international experience, including in the far less traveled emerging markets. We both had lots of economics and finance in common. But his venture experience and my big banking experience were considerably different. I think it would be fair to say that from the earliest moments, I felt like he could easily have done the business I did, but that I was far from being able to do what he did. In fact, Frank, as I often have said, is perhaps the smartest guy (both in a business sense and a general knowledge sense) that I have ever met. Strangely enough, he is also very much a sturdy and tough bugger who could ski up a storm with the best of them (we actually met because we owned ski condos next to one another). As an example of the difference between us, I had made enough money to buy a ski condo at Deer Valley, but Frank had taken advantage of the development debacle created by the 1986 tax reforms that put many real estate developments on their ass. He had found a 12-unit condo in Deer Valley that had failed due to the tax environment changes and bought it on the cheap, finished the development, brought in investor friends and took the best unit for himself…more or less for free. That shows you the different commercial orientation Frank and I have as a starting point.
So, when I started getting weary of big banking, it was Frank who gave me the role model I needed and the pep talks I needed even more to venture forth into the venture world. I had dabbled in a number of angel investments by that time, but in 2000 I set up my own VC fund with several friends. Frank was a significant early investor and one of the proudest business achievement of my career was being able to give Frank an 8X+ return on his investment as our fund ultimately produced. Not all our joint investments were successful and there were even a few moments (mostly when Frank was distracted by other life events) when I felt I was more on top of our VC issues than Frank, but those were real exceptions.
Recently, Frank, who is getting on in years, has had some health issues. He also decided to make a new investment in a man who had been his ward in early life. Due to his age and circumstances, Frank has asked me to work with him on the investment, which he is making on behalf of his eight granddaughters (most of whom I know somewhat). He has asked me to carry the torch forward to fruition should he need to demure. I would do this for Frank for nothing, but he, being the commercially-minded VC that he is, has insisted that I have some upside skin in the game, so he has given me a carried interest to see things through along side him and beyond. Yesterday, I went to visit the new company and took my accountant along with me. Frank could not attend due to some medical tests. It felt wonderful to be helping Frank make yet another VC vision…one that he has a special and personal interest in…a potential reality. It’s great to see Frank engaged in the game he loves so well and plays so well. It’s great to be doing something with and for my greatest mentor and one of the brightest lights in the VC firmament. My only concern, which is highlighted to me every time I speak to Frank about what’s next to be done with the investment, is that I can somehow and somewhat match what he would bring to the table. They say the entrepreneurs are all about sweat equity…well, I feel that my role in trying to live up to Frank’s expectations and abilities are going to have me sweating equity until I bring this one home for him.