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Career Success
AUG 19, 2003

Alan Patricof, Legendary Venture Capitalist

By Yoshito Hori
Copyright GLOBIS

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 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. We’ve been partners ever since.

A lot has happened during these last five years. We’ve had many heated discussions. I’ve experienced indignation and complained to other partners. Yet, to be absolutely frank, our trust in each other has not flagged even once. Alan once kindly said, “Over these five years, I have never doubted Yoshi.” Alan is a partner in the real sense of the word. We can say anything to each other at any time.

Whenever he visits Japan, I try 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 some opening remarks, Alan stepped up to speak. As I listened, I began to mull over the questions I would ask. I had referred to this second portion as a dialogue, but this was a great opportunity for me to learn from Alan, and I wanted to take in as much as possible.

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 had many opportunities to speak with him, but I’m often a little shy, and there are always more things I want to ask. Now, with an audience present, I could question to my heart’s content.

When he finished speaking, we moved into the discussion. 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. 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 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, 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.