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JAN 24, 2007

Round-the-World Business Trip 2007. No. 2: Ceremony Honoring Alan Patricof

By Yoshito Hori

Having said goodbye to the Wharton students who had come all the way from Philadelphia, I headed to the reception for Alan Patricof. After telling the cab driver my destination, I started recalling my relationship with Alan while viewing the New York cityscape.

Alan is the founder of Apax.

NOTE: For more about Alan, see my posting, “Alan Patricof, the Legendary Venture Capitalist.”

Alan had been a negotiating partner in the joint venture that gave GLOBIS the chance to take its first major step. It may actually be more accurate to refer to him as my boss rather than my partner, since he is thirty years older than me.

Alan was a venture capitalist before the term “venture capital” was invented, making him something of a legend in the industry. Starting from an initial fund of 300 million yen, Apax now manages funds at the scale of two trillion yen.

In the years after I set up GLOBIS, there was no one I looked up to as a boss figure, although there was an external director who was like a mentor to me. Until then, I acted on my own beliefs, completely trusting my own instincts, so to speak. This all changed, however, once we set up the joint venture with Apax. All of a sudden everything—every decision from investments to employment, annual salary revisions and promotions—needed Alan’s approval before it could go ahead. I had to constantly update Alan on the situation and gain his approval.

With the difference in time and distance between Tokyo and New York, all this reporting and decision making had to take place through late night and early morning email and videoconferences.

Alan was very much the boss, always relaying to me orders, instructions and advice. Sometimes I disagreed, and there were times when we locked horns over the telephone or videoconference call. I’m pretty sure these encounters played a big role in raising the level of my English skills 🙂

In the course of our work together over the years, we really began to understand each other and I learned a lot from him. I deeply respected his wealth of experience, his way of thinking, his determination and his global perspective, and I liked his straightforward way of talking. On his part, Alan would say kind things about me to investors, like, “Yoshi never lets me down; I have complete faith in him,” although I bet he was just being polite.

As Alan’s impending retirement approached, I figured the joint venture fund with Apax should be dissolved and we would set up an independent GLOBIS fund. Of course, the main reason GLOBIS decided to go it alone was the difference in our directions—Apax favored a buyout, while GLOBIS wanted to become an independent venture capital fund—but it was also true that working with Apax held little appeal for me without Alan.

Eight full years had passed since Apax and GLOBIS first entered into the joint venture contract on January 14, 1999. Alan had turned 72 and had already retired from Apax. By this point, the disagreements that had come up during our videoconferences had already become a thing of the past.

Alan continued to be an active venture capitalist even after turning 72. He created a new venture capital fund called Greycroft, and has started investing in early stage startups. I cannot help but feel deep respect for his ongoing entrepreneurship.

As usual, after confirming my schedule in New York, I contacted Alan to arrange having dinner together, and he replied that the suggested date was the same day as the reception in his honor.

Well that sparked my curiosity. “Would you mind if I came along?” I asked Alan, knowing the answer was bound to be no; but Alan replied, “Yes, of course.”

So there I was, in a taxi on the way to his reception. The taxi pulled up in front of the Rubin Museum of Art on 17th Street, which had been built two or three years ago specifically to house a Himalayan art collection.

Hiring out an entire museum for a party is not at all unusual in the United States. As I made my way through the reception area, I realized the party had already started and everyone was chatting with a glass of wine. Many were younger than I had expected. I spotted Alan in the crowd, walked over to shake his hand and offered my congratulations. Alan received my greeting in stride, and rambled on from one topic to another covering a wide range of issues.

First, Alan introduced me to the various people nearby, and after doing so, perhaps to mask his discomfort about being honored, he began asking such questions as, “I wonder why are there so many Asians here,” and, “What exactly does this organization do, anyway?” I felt a little overwhelmed, and after once again paying my respects to Alan and everyone around him, I pretended to go get a glass of wine, and slipped away.

I, too, was curious about what exactly this organization did, and what precisely this award was for, and why the people there were so young; so I decided to investigate on my own.

Picking up a glass of red wine, I started talking to an attractive Asian woman who was standing close by. We had quite a conversation, and I learned the following.

It turned out the organizer of the event was an NPO called Echoing Green, which had been set up 20 years ago by a venture capital group named General Atlantic. Echoing Green primarily provided financial support to NPOs in their first few years as startups, that is, Echoing Green supported other NPOs through a venture capital approach. It was an NPO that helped other NPOs.

It turned out that, despite its 20-year history, Echoing Green was still not very widely recognized, and so it established the award to bolster its public profile. The name of the award is the “Be Bold Award,” and apparently it was intended to encourage more people to participate in volunteer activities by recognizing those who have bravely contributed to NPO activities.

Alan was among the first to receive this award along with two others (a CNN anchorwoman and someone who had founded an NPO concerned with education in the U.S.). Many of you are no doubt wondering why on earth Mr. Alan Patricof, a venture capitalist, would be receiving this award. The reason became clear during speeches by the presenter and Alan as he accepted the award.

When the time came for Alan to receive the award, he stepped onto the stage wearing a well-worn suit. After he was given the crystal shield, he grasped the microphone in his right hand and began to speak, nonchalantly swinging the shield in his left. He certainly had his own style, not one that I could emulate. 🙂 The gist of Alan’s speech is summarized below.

Alan currently divides his working time as follows:

70% Business
20% Volunteer
10% Political Activities

Alan’s volunteer activities primarily involved attempting to set up new industries in Africa by introducing a venture capital approach. This is a term I made up myself, but it is surely something akin to “micro investment.” While the Bangladeshi economist Muhammad Yunus won the Nobel Prize last year for inventing micro finance, Alan created micro investment.

In addition to his work as a venture capitalist, for several years Alan has been traveling four to five times a year to Nigeria, Kenya, and the Republic of Mali in an effort to rescue Africa from poverty through his micro investment plan. Alan’s activities are not about donations; he is planting the roots of industry.

In terms of Alan’s political activities, he has been a major supporter of the Democratic Party. I’ll only mention this in passing, but Alan first noticed Bill Clinton as governor of Arkansas, and he has supported Bill and Hillary Clinton ever since. It has been said that Alan had relatively free access to the White House during President Clinton’s term of office. Needless to say, he is still an enthusiastic supporter, and as Hillary Clinton’s chief financial adviser, he’s in charge of all financial matters. At the reception, Alan proclaimed, “Hillary is about to declare her candidacy for president.” (Author’s note: the following day, Hillary Clinton did indeed announce she would run for president).

On Fridays, Alan retreats with his family to his luxurious suburban villa in the South Hamptons and stays there until Sunday night. I heard he often holds fund-raising parties there for Senator Clinton.

I seem to have been strongly influenced by Alan. My plan to build a mountain retreat in Karuizawa was very much inspired by Alan’s house in the South Hamptons.

And I, too, have recently become very much involved in political activities. I am currently serving as the head of the support committee for two candidates for whom I have particularly high expectations (Hironari Seko and Yasutoshi Nishimura), while also engaging in NPO activities by starting up the YES! Project. While the Japanese tend to shy away from actively participating in politics, such involvement is encouraged as a civic duty in the U.S.

For some time Alan had been asking me, “Why don’t you get involved in political activities?” Overall, he was saying that is important for business people and the public in general to actively participate in politics with a sense of making a difference in their country and the world.

His attitude even goes as far as to suggest that if we are indifferent towards politics, if we do not get involved, democracy cannot really exist. Those in positions of responsibility should feel a sense of duty toward their community (in the case of Japanese people, Japan and Asia, as well as the earth). This is precisely why I am trying to encourage as many people as possible to get interested in politics through the YES! Project.

Incidentally, Ronald Cohen, a partner of Apax Europe, is involved in reconciliation efforts in the Middle East, and apparently sometimes even accompanies British Prime Minister Tony Blair on trips to the region. World-class businessmen are proactively involved in politics.

Yet Alan was not receiving this award because of his 10% involvement in political activities, but to honor his 20% involvement in volunteer activities. It was a very memorable moment when Alan asked everyone in the audience, “What are you doing to better the world?” It was hard to imagine the “strictly business” Alan of old asking such a question.

A few minutes later, Alan’s speech drew to a close. I exchanged business cards with the attractive Asian woman who was standing next to me, and said good bye. She was a very intelligent woman who worked at the Federal Reserve Bank, and as a fellow of Echoing Green, she volunteers to support the activities of this NPO.

After Alan had greeted a number of the organizers, he and I left for a nearby Italian restaurant. There, as master and apprentice—no, what I might now call a special friendship—we enjoyed a late dinner together.

After returning to my hotel by taxi, Alan and I parted company. Despite the chilly evening air of New York, I was aware of a warm spot in my heart. I went to my room, packed my suitcase and began to prepare for my next destination, Boston.

January 24, 2007
Written in my hotel in London

Yoshito Hori