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THE LUNCH

Jeff Mallett: A dot-com mogul's sporting life Add to ...

Jeff Mallett's first gig in technology was hawking fax machines and other digital telephone equipment. His father and stepmother had quit their jobs at government-owned BC Tel and started their own company, Island Pacific Telephone.

It was the mid-1980s and Mr. Mallett was in his early 20s. He had a natural gift for gab – a decade later, when he became a top executive at Yahoo Inc., a colleague nicknamed him Sparky. But the skilled talker was a bit of a nerd, too. He'd cart a fax machine to customers for demonstrations, and was able to sell the technical details in a clear way to convince customers to buy.

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“I remember lugging around – I mean, frickin', those things weighed 35 pounds,” Mr. Mallett says over halibut and chips on a wooden pier on Victoria's Inner Harbour.

“I really got into product. I would study the heck out of it. It wasn't just sweet-talking.”

His dad wanted him to take over Island Pacific but Mr. Mallett had bigger ideas. He felt the lure of Silicon Valley, after going to college and university in the San Francisco area, and marrying a local girl. “Victoria seemed too small.”

Success in California came quickly, first in word-processing software, before he landed at a tiny company called Yahoo, in October, 1995. Mr. Mallett was 31 and hired as its 11th employee. As the No. 2 executive – president and chief operating officer – he helped lead it through the first Internet bubble, from an initial public offering in 1996, to $1.1-billion (U.S.) in revenue and profit of $71-million in 2000, to his departure in 2002, after being passed over for the CEO job.

Along the way, according to securities filings for 1996 through 2001, Mr. Mallett cashed in $150-million of stock options – and at the peak at the bubble in 2000 was worth a reported $800-million, on paper.

He socked most of his money away but set aside 20 per cent – tens of millions – for a front-row seat in sports: His biggest investment is an ownership stake in baseball's San Francisco Giants, the team's stadium and downtown real estate, and its regional sports cable TV operation. More recently, he bought a minority piece of the Vancouver Whitecaps of Major League Soccer.

But it was in Victoria that he found a promising Canadian technology startup, Indochino Apparel Inc., a Vancouver and Shanghai-based online seller of custom-made suits. Mr. Mallett, 47, says he likes to keep a hand in fledging tech plays “so I'm not just telling Yahoo stories. They're good – but they're getting old.”

Victoria has a hold on Mr. Mallett. On the harbour, eating fish and chips at Red Fish Blue Fish, Mr. Mallett is accompanied by his 17-year-old daughter Victoria, named after the city in which her father spent his teenage and some early adult years.

They've come to the city for the annual presentation of an entrepreneurial award, which was first bestowed on Mr. Mallett in 2004, and then named after him by the University of Victoria, which Mr. Mallett attended for just one year.

It was in 2008, at the entrepreneurial awards, that Mr. Mallett was introduced to Kyle Vucko, an Indochino co-founder with Heikal Gani. Mr. Mallett saw promise, put up $175,000 in seed financing, and became chairman. The company raised $4-million last year, led by Madrona Venture Group, an early investor in Amazon.com.

Indochino predicts it can more than double its revenue in 2012 to nearly $20-million. Mr. Mallett says the company could be worth about $50-million if reaches its goal. Competition, however, is growing, including from the likes of upscale U.S. retailer Nordstrom Inc., which is investing heavily in digital and mobile, and experimenting with custom suits.

Mr. Mallett likens Indochino's challenge to that of Yahoo, which Mr. Mallett remembers as being just three or four months ahead of its competitors. “It can be a huge advantage if you don't make the wrong turn,” Mr. Mallett says.

As chairman, Mr. Mallett also brings advice on letting go. At Yahoo, founders Jerry Yang and David Filo handed executive control to CEO Tim Koogle, and Mr. Mallett, very early. Then Mr. Mallett let go and left when he didn't win the CEO's job. Indochino may be at an inflection point this year, says Mr. Mallett, and he has counselled the young co-founders to be ready to cede some control.

“You don't have to always be The Guy,” Mr. Mallett says.

After Yahoo, it took Mr. Mallett a couple of years to adjust to “I'm just Jeff, the guy.” It was, he says, “a big change for me.”

The field of play, Mr. Mallett's first love, filled some time: He traded watching the ups and downs of Yahoo shares for tallying wins and losses. With his Yahoo money, he started Mallett Sports and Entertainment LLC.

His first move was his best. The San Francisco Giants, owned by a group of individuals, were looking for new cash from someone younger, with management savvy and tech credibility, and in 2002 welcomed Mr. Mallett and put him on their eight-person executive committee. The team, which reached the World Series that year, and won in 2010, also owns a valuable regional sports cable television broadcaster land around its stadium that is slated to become a $1.6-billion sports-and-entertainment district.

In soccer, his record is mixed. In May, Women's Professional Soccer, in which he invested some money with basketball superstar Steve Nash, shut down. Over in England, Mr. Mallett has a minority stake in Derby County Football Club. The team plays in the tier below the English Premier League and finished 12th of 24 sides in the season recently ended.

Back in Vancouver, Mr. Mallett also has a minority stake in the Whitecaps, now in their second Major League Soccer season after a dead-last finish in their expansion campaign. The team doesn't yet make money, but it is now winning, ranked seventh of 19 teams this season.

Mr. Mallett also puts in a lot of hours for the league itself. Major League Soccer juggled its assets several months ago, creating a new company to house its media business and some merchandise. And the league brought in a private-equity player, Providence Equity Partners LLC, which injected upward of $200-million.

Mr. Mallett and three other league team owners will help oversee the new entity, with one goal to make soccer's broadcast rights more valuable.

“I always try to be the little guy,” says the buoyant 5-foot-5 executive of how he parlayed his money into an array of sports investments. “I usually am the smallest dollars in, but the biggest sweat. I'm a sweat-equity guy.”

Not entirely unlike selling fax machines in the mid-1980s.

“It's like back to the Island Pacific days in Victoria. I'm the one who loves the details, and reads the details, and cares about the details.”

CURRICULUM VITAE

  

BEGINNINGS

Born Aug. 7, 1964 in North

Vancouver.

Spent teenage years in Victoria, playing high-level soccer.

Spent one year at University of Victoria, completed a business administration degree at Santa Rosa Junior College near San Francisco, attended but did not finish his studies at San Francisco State University.

HOME LIFE

Lives south of San Francisco.

Married for 26 years to Claire.

Two daughters: 17-year-old Victoria and 15-year-old Amber.

Currently selling his 25-acre Napa Valley estate, which has a nine-hole golf course. Listed at $17.5-million (U.S.).

CAREER (Part 1)

Sold home insurance during high school.

In his early 20s, worked as a salesman for parents' startup telephone equipment vendor.

Helped found a word-processing software company, which sold for $20-million in 1992.

Joined startup Yahoo Inc. in October, 1995, as its No. 2 executive and 11th employee.

CAREER (Part 2)

Left Yahoo in 2002 after being passed over for the CEO job.

Invested part of his personal fortune in sports, starting with a stake in the San Francisco Giants. Subsequent investments included a minority piece of the Vancouver Whitecaps in Major League Soccer.

Investor in and chairman of

Indochino Apparel Inc., an online seller of men's custom-made suits.

 

PASSIONS

Daily swims.

Has vacation home in Hawaii near Yahoo co-founder Jerry Yang.

Enjoys mountain biking but doesn't chase extremes.

A skilled soccer player as a youth. Played in the Canadian university championship in 1982, losing to McGill 1-0. Went to Santa Rosa on a soccer scholarship. Played at San Francisco State but a broken left heel ended his soccer life.

 

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