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BizReport : Internet : May 10, 2001

Exclusive Interview with Mark Jensen, CFO, Redleaf

In this uncertain Internet economy, some people might say that leaving an established consulting firm to become a venture capitalist is, well… crazy. Mark Jensen disagrees. The former managing partner of Arthur Andersen's Silicon Valley office has joined tech venture-capital firm Redleaf as its chief financial officer, and he isn't looking back. In fact, Jensen says more investment opportunities exist today than during the height of the dot-com craze. He took time out of his first few weeks on the job to give BizReport his take on why technology is always a good place to invest-even if there's never a safe haven.

by Michael Grebb, Special Correspondent

MG: Why leave Arthur Andersen to become a VC?

MJ: I think Arthur Andersen is a great place. It's a great firm that will be around for a long, long time. So it really had nothing to do with that. But I was looking for a new challenge and some new things to do. I wanted to be a little more focused on a series of companies as opposed to broadly focused on an industry.

MG: But considering the brutal investing environment, didn't you hesitate?

MJ: Sure. (Laughs). You'd be an idiot if you didn't. But I think if you've been around for a while, you really start to understand that if you paid attention to what the market is doing and make all of your decisions on that basis, you're probably always going to come up short. The markets are always changing. The markets aren't stagnant. If they're not going up, they're going the other way. While certainly there was a pause, at some point you have to realize that if you're a participant in this industry, you're not an island. When the industry is going down, there's no safe place. It's just a matter of self-confidence that there's always another opportunity. You have to face it that way. My personal view is that you can't look at what you're doing and say, "Oh, this is a nice safe place." If that were true, we'd probably all be still wearing wooden shoes in Europe. Or if we were in the U.S., we'd all be huddled on the East Coast right now. No one would have settled the rest of the country.

MG: Are there advantages to the market being down? There seems to be less pressure for venture firms to sign deals and perhaps more time to conduct due diligence and work out business plans.

MJ: You also have to ask yourself the question, would you rather have invested in Internet stocks last year or this year. I think hindsight is a wonderful thing, but I don't think you should ever invest in something when it's at its peak, and most people do. I think a lot of things happen because a lot of people are following what other people are doing. But I believe the following: All business is changing. I think the Internet changes everything, but it's not going to change things overnight like everyone thought it would. I think that traditional businesses-just like non-traditional businesses-are going to be challenged by the future and the kinds of innovations that are coming. People talk about the tech sector being out of favor, but no company today can survive without innovation. If you look at all of the companies whose demise we've seen over the last four or five years, the common denominator was that they failed to innovate. They failed to reinvent themselves. They failed to embrace new technology and the change that was upon them. But more than ever, I think the opportunities that lie ahead of us in the tech sector are greater than they have ever been.

MG: What specifically makes you think that?

MJ: We've benefited many, many times before. Look at the early eighties… everyone was going, "Gee, this is great." The tech sector was going off the chart. The stocks were going through the roof. Then, four years later, everyone was being laid off, and the industry was in a recession. I still remember sitting around lunch tables and hearing people say, "Well, we'll never see those good times again." So I don't you think you can really look at it from the perspective that there's a right and a wrong time to do anything. You do things at a time that you think there's opportunity.

MG: How does Redleaf's approach differ from other VCs?

MJ: We're much more active in the individual companies. Redleaf is really much more of a venture firm that invests in seed and pre-seed stage investment. We take a large active economic and operating interest in the companies. People here tend to be more operational in their backgrounds. With our grid around the world, we're able to look at all of our investments and compare what we see in Silicon Valley and New York and London. That enables us to operate in a very unique fashion. This is the future. This is where venture capital is going. What makes us different is that Redleaf is focused on taking the venture capital model to the world as opposed to sitting on Sand Hill Road waiting for the world to come to it. And all of our operational experience brings a wealth of contacts that other venture capital firms have a hard time matching.

MG: What advice do you have for young entrepreneurs who face a far tougher VC environment now than even a year ago?

MJ: It's the same advice, and it was even true a couple of years ago when the money was easy: You have to be tenacious. You have to be willing to change. And you have to be willing to accept the feedback you're getting and change with it. I can think of very few companies in which the original business plan became the actual business model that the company followed. I think it speaks to the tenacity of an entrepreneur who simply will not let an idea go. The other piece of advice is that when you hear "no," go back and find out why. A lot of people tend to tear up the rejection letter and move on. You don't learn anything. I always tell everybody that the payback for having submitted a business plan to a venture capitalist is to make sure the venture capitalist tells you exactly why they weren't interested. You should make changes based on that. The last advice is to seek professional help. The money is easy, but people who bring networks and strategies to the company are a lot harder. I would almost seek that over money.

Tags: Redleaf

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