A native Canuck and NYC-based general partner with Technology Crossover Ventures, a Silicon Valley VC fund that manages $7.8 billion
Isn’t investing in tech always risky, since more than 90 per cent of start-ups fail?
Our firm definitely is not early-stage venture capital. We’re past the start-up risk. We look for market leaders in global technologies, because the lion’s share of gains usually accrue to the No. 1 and No. 2 players. Most of the time, we buy 20 per cent to 30 per cent of a company, go on the board and try to help it grow. The VC model is to invest in 15 start-ups. Eight or nine will fail, three or four may do okay, and you hope there’s one or two Googles. Most of our individual investments have made money.
What was your best investment?
One of the best was FXall, a platform that allows institutions to trade foreign currency online. Ten years ago, they would have to phone six or seven banks and get quotes. We invested in 2006, held it and took it public in January, 2012. But we didn’t sell in the IPO – we often don’t, because an IPO typically isn’t a price-optimizing event. Last July, we sold it to Thomson Reuters for $22 a share, 40 per cent over its market price at the time. We more than doubled our money.
What was your worst investment?
My personal worst was R.J. O’Brien, a commodity futures merchant in Chicago. It was June, 2007, the top of the market, so we paid a big price. And we put leverage on it – about $200-million – which is something we typically don’t do. We’re not expecting our original investment back. The big lesson here is that you can always live another day if you don’t use leverage.
Is tech a highly personality-driven business, and does that add to the risk?
One of the best parts of my job is meeting entrepreneurs, and they’re in every city across North America. They’re all incredibly passionate, but it doesn’t mean that they’ll be able to manage a $10-billion company. We never go into a situation thinking we have to switch out the team, but sometimes you get there.
What’s the biggest opportunity today?
You hear the buzzwords “big data.” This is what’s happening: The proliferation of enormous amounts of data is going to run unabated for the foreseeable future. There are strategically offensive ways to use that data – understanding your customers and your partners. And there is a defensive element – more regulation and compliance is being embedded in technology, and that will continue.