Alan Patricof, the Legendary Venture CapitalistSA

Alan Patricof finished his short business trip to Japan today and returned to the U.S. Although he was only here three days, the time was well spent.

Alan and I—we're on a first name basis—first met in April 1998. At that time, his company, Patricof, was looking for development opportunities in Asia and was seeking a partner in Japan. GLOBIS was on his list as a candidate, so we flew over to New York to make a presentation in person. We've been partners ever since. It's been five years since we started working together, yet it's been an intense relationship. (Please see my column, November 8, 1998, "The Essence of Negotiation") (Japanese)

A lot has happened during these five years. We've had many heated discussions; I've experienced indignation and complained to other partners. Yet, to be absolutely frank, over these last five years, our trust in each other has not flagged even once. Alan once kindly said, "Over these five years, I have never doubted Yoshi (this is what people call me in English)." Alan is a partner in the real sense of the word; we can say anything to each other at any time.

His trip to Japan on this occasion provided a great opportunity for having a dialogue. Whenever he visits Japan, I try as much as I can to create opportunities for GLOBIS students to hear him speak. For this most recent occasion, I departed somewhat from earlier plans. I decided to divide his presentation into two parts. First, Alan would give a speech, and then he and I would hold a dialogue. GLOBIS classrooms were already booked for classes, so I rented a classroom at Marunouchi Building and invited GLOBIS students and other interested people, making it open to other participants. Many people at the front line of venture capital in Japan turned up.

After Mr. Kariyazono concluded his opening remarks, Alan stepped up to speak. As I listened, I began to mull over the questions I would ask him. I had referred to this second portion as a dialogue, but in fact I was only thinking about what questions I would ask. This was also a great opportunity for me to learn from Alan, and I wanted to take in as much as possible, so I guess my desire to ask a lot of questions is somewhat understandable.

Alan started up a venture capital fund when he was 34, and he is now 68. He has spent exactly half his life in venture capital. What a fantastic chance to ask a legendary venture capitalist frank questions. I have always have had opportunities to pose questions to him, but I'm often a little shy, and there are always more things I want to ask him. Now, with an audience present, I could questions to my heart's content.

At last he finished speaking and we moved into the discussion period. Here's what I asked him.

"What is the difference between a good venture capitalist and a bad one?"

"Please give an example of when you were wrong. What caused you to fail?"

"What creates a successful venture capital investment?"

I asked a number of other questions, but what most fascinates me is the area of instinct.

Alan has always said that in terms of the elements behind a successful venture capitalist, after you have polished all your skills to the ultimate degree, the vital factor for integrating all abilities is instinct. That instinct should play such a vital role is a harsh reality. That is, no matter how hard you work, you cannot become a good venture capitalist without sound instincts. To be a good venture capitalist, you must do everything you can do to sharpen your instincts. But can you really do anything to improve your instincts?

I asked this question to Alan: "If instinct is the root cause of success, what can anyone do to acquire good instincts?"

His reply touched on all sorts of things. "First, you have to be curious and adopt the attitude that you can learn from everything. You have to learn from failure and success and keep on thinking during times of trial and error. You need to be in contact with a variety of situations. Above all, find a good mentor and learn as an apprentice."

As I listened to what he was saying, I thought about my own brief career as a venture capitalist. I also started a venture capital fund at the age of 34. This was back in 1996. Alan's first fund had been small, as had ours. We operated our fund with the absolute determination not to lose a single yen that investors had placed in our care. We did everything we could, but I was never sure whether our approach on investment was right on target. That's when I encountered Alan and formed our partnership.

Since entering into a partnership with Alan, we have focused intensely on absorbing the Western investment method. This has meant sometimes spending up to half a year overseas. At first, we spent time learning all the methods while at the same time seeking to improve them. We are now developing methods specifically for our situation, tailored to Japan; but we are eternally grateful to Alan for everything he has taught us. Thanks to him, both our Number 1 and Number 2 Funds are doing well in the midst of the prevailing difficult economic conditions.

Alan would deny it, but at 68, retirement is surely just around the corner. Until then, we intend to learn and absorb as much as we can from him. We certainly learned a lot during this visit to Japan. As for me, I'm not just learning about being a venture capitalist, but about being an individual. He is teaching me about life almost as a father, including lifestyle, philosophy, worldview, and his Jewish business methodology. I am really very thankful.

Even if the business relationship between Apax and GLOBIS should come to an end, the excellent personal relationship that Alan and I share will certainly continue, and for this I am very grateful.

I intend to write another column concerning learning in addition to this column.

Mr. Yoshito Hori established GLOBIS Management School in 1992 and GLOBIS Capital Partners in 1996. In 2003, GLOBIS started its original MBA program which, in 2006, received accreditation from the Japanese Ministry of Education and gained “university” status. GLOBIS started a part-time MBA program in English in 2009 and a full-time MBA program in English in 2012.

A Harvard MBA graduate and former Sumitomo Corporation employee, Mr. Hori founded the Entrepreneurs’ Organization (EO) Japan Chapter in 1995 and became the first board member from Asia in charge of Asia Pacific region in 1996. He also served on the World Economic Forum (WEF)’s New Asian Leaders Executive Committee and Global Agenda Council on New Models of Leadership, as well as the Harvard Business School Alumni Board from 2005 to 2008. Currently, Mr. Hori is a board member of the Keizai Doyukai (Japan Association of Corporate Executives), and serves as co-chair of WEF’s Global Growth Companies.

In 2008, he launched the G1 Summit – a Japanese version of the WEF’s annual Davos forum. This led to the foundation of G1 Summit Institute in 2013, which Mr. Hori serves as Representative Director.

Just days after a huge earthquake struck northeast Japan in March 2011, Mr. Hori launched Project KIBOW to support the rebuilding of the disaster-affected areas. The following year Project KIBOW was incorporated as the KIBOW Foundation, which Mr. Hori serves as Representative Director.

An avid enthusiast of the Japanese game Go since age 40, Mr. Hori has been Director of the Nihon Ki-in (Japan Go Association) since June 2013.

Since October 2013, Mr. Hori has hosted a weekly TV program in Japan called Nippon Mirai Kaigi (Japan Future Conference). He has authored several books including Visionary Leaders who Create and Innovate Societies, Six Dimensions of Life, and My Personal Mission Statement.

Mr. Hori received his BS in Engineering from Kyoto University and his MBA from Harvard Business School.

He is an avid swimmer and enjoys spending time with his family, especially his five sons.

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