LP Newsmaker: There’s Something About Harry –

If you’ve never eaten at Il Fornaio, ask Harry Turner what’s good. He should have the menu down pat after so many power lunches over the years. Bruschetta al Pomodoro, Insalata di Spanaci, Turtei con Aragosta. If that makes your mouth water, you ought to ask Turner for a translation.

For Turner, knowing where to eat is an important part of the job. When he was building the Stanford University endowment’s $8 billion private equity practice, he did so many deals over lunches that he lost count. After a short sabbatical, Turner is back in a new office a block from University Ave. and steps away from Il Fornaio as head of the West Coast presence for Park Street Capital, the new fund-of-funds that spun out of Boston-based brokerage Tucker Anthony.

Now that Turner is back in the saddle, he’s back on the lunch circuit. He talks to a new person every day and he tries to get out and meet three people a week in their office or over some antipasti.

Turner says he’s always receptive to meeting new people, so maybe some of those VCs who think they’ll have the nerve to go fundraising in the next several months should tap him on the shoulder if the catch him dining alone.

If you happen to get an invite, consider breaking any prior engagement. Park Street spun out with $800 million under management in five funds, and it tacks on another fund-of-funds almost yearly. The firm invests about half its money in domestic venture funds and the other half in buyout vehicles.

Turner leans more toward the venture side of the business, and his relationships on the West Coast are a little stronger. “I’m getting lots of referrals to upcoming groups that are recognized in the venture community but haven’t been recognized by the institutional investors,” Turner says. “I believe I’ve got an inside track on reviewing some of the really good partnerships that have established track records and are also relatively small in size.”

Just because he’s a friendly guy who will take a phone call, that doesn’t make him a pushover. “Harry will have done his homework,” says Lyn Hutton, vice-president and chief financial officer of the John D. & Catherine T. MacArthur Foundation.

When he gets interested in an investor he hasn’t met, Turner hops on the phone and takes advantage of his network. “I talk to his peers,” Turner says. “I talk to the CEOs and the entrepreneurs in whom that venture capitalist invested. I talk with other LPs who have invested in that person’s partnership, and I talk to the VC myself.”

Hutton, who has known Turner since the late-1970s, says that “Harry’s the person who will always ask the difficult and sometimes nettlesome question.” She adds, “But, he always does it with a smile.”

Sallie Shuping Russell, a former endowment manager like Turner who has since become a general partner at Intersouth Partners, says that as personable as Turner is he’s also very quantitative. He drills into portfolios, modeling returns, analyzing standard deviations and figuring tracking errors. He wants to know what really influenced the portfolio’s returns.

“He would understand poor returns if they were appropriate for the sector your investing in,” Shuping Russell says. “He also knows how to pull apart a portfolio to know if there’s just one or two companies that are propping up the mass of the returns.”

Georganne Perkins, who succeeded Turner as director of private equity investments at Stanford Management Co., says that Turner analyzes individual companies in a buyout portfolio to figure out how much of the performance came from market factors, such as leverage or multiple expansion in the sector vs. real growth.

Turner prefers to invest in smaller funds. “I think large fund size tends to dilute the quality of the performance,” he says. “It’s really got to be measured in terms of a few hundred million dollars.”

For a metric on fund size, he compares capital per partner to the fund’s stated investment focus. If you divide a $1 billion fund by six partners, “you get really big numbers of capital per partner … and you basically have too much money to apply to deals that necessarily must start out small.”

Shuping Russell says Turner uses his analytical skills or his people skills depending on the needs of the item at hand, and sometimes the secret to choosing a good investment is just gut feeling. Even in this environment, Turner says he expects the VCs that he will continue to support to remain wholeheartedly committed to their portfolio companies and their investors.

“By wholeheartedly, I mean with their whole selves in the tradition of venture capital,” Turner says. “I can tell from talking to CEOs and even individuals. I can just pick up on who’s effectively staying the course. I expect candor and integrity to basic values.”

That’s where the all-important lunch meeting comes into play. For the all the numbers and financial modeling, the key to this imperfect business sometimes comes down to qualitative human interaction, which is something Turner looks forward to.

He’s a friendly guy, dropping in a little dry humor here and there. He’s even been a politician, serving 10 years as a board member of the Mid-Peninsula Regional Open Space District, an independent government entity that purchases greenbelt preserves in the Bay Area. Politics shouldn’t be too much of a surprise for a guy like Turner. After all, VC is still a relationship business, and that hasn’t changed over the last 20 years since Hutton met Turner.

“I got to know Harry, because I was new to endowment management, and I went on a mission to see how other universities did there’s,” Hutton says. “Harry and Rod Adams [Stanford’s late treasurer] kind of opened their doors and said: This is who we are, and this is what we do.’ They were great coaches.”

Turner enjoys being a coach to institutional investors and helping people develop their careers. He encourages his younger peers to find mentors in the business. In fact, he says that aspiring VCs and investors should make that mentoring a defined part of a working relationship.

“It’s a relationship that you’ve agreed will happen, and they will focus on you and help you in your professional development,” he says. “Find an organization that will give you demanding, mission-critical responsibilities and focused mentoring. And when your growth slows, find a way to resume it, going to a new organization if you must.”

Turner practices what he preaches when he encourages others to strive to stimulate their professional development. He regularly meets with other institutional investors to share ideas on the business. “You never quit learning in this business, and you’ll always have to make sure you’re doing a lot of sanity checking,” he says.

Maybe that sanity checking happens over a little antipasti at Il Fiornaio, but don’t think Turner is worried about putting on the pounds. In 1977, he ran the Boston Marathon in 3 1/2 hours. And he has jumped into the race the last five years and paced a friend the last 10 miles to the finish.

Now, with his Park Street connection, he’ll have more people in Boston with whom he can share a recovery meal the next day.

Park Street Capital Quick Facts
  • Founded: in 1997 as Tucker Anthony Private Equity Capital. Became Park Street in March 2002.
  • Managing Director: Bob Segel.
  • Directors: Dorr Begnal, John Brooke, Kristine Dailey, Harry Turner.
  • Funds under management: Tucker Anthony Private Equity Fund LP $113M, Tucker Anthony Private Equity Fund II LP $165M, Tucker Anthony Private Equity Fund III LP $300M, Tucker Anthony Private Equity Fund IV LP $100M, Tucker Anthony Private Equity Technology Fund LP $45.2M.
  • Sample of Limited Partners: Heinz Foundation, State Teachers Retirement System of Ohio, Boston Foundation, Washington & Lee University.
  • Representative investments: Declines to name.
  • Focus: Balanced between venture capital and buyout and balanced among industry sectors.

HARRY TURNER

Director, Park Street Capital

Education: B.S., M.S. in Electrical Engineering, M.B.A. in 1968 all from Stanford University.

Work History: After financial positions at two tech companies, Turner joined Stanford University’s small endowment management staff in 1974. He joined a team working with the vice president of finance to develop a multi-asset investment strategy. In 1989, he began a term as the university’s interim treasurer, making proposals to reorganize the investment organization. As a result of those proposals, he got the call in 1991 to co-found the Stanford Management Co. and develop its professional private equity team. In October 2000, he resigned from Stanford, briefly helping develop an investment strategy for Legacy Venture Capital, a fund-of-funds organized to donate its proceeds to charity. In 2001, he became a partner in the predecessor organization to Park Street Capital.

Biggest Accomplishment: In the mid-1980s, he helped pioneer venture capital as an appropriate asset class for institutional investors. During his tenure at Stanford Management Co., the endowment grew from $3 billion to $9 billion, including $3 billion contributed by his private equity projects.

Biggest Mistake: Not recognizing several outstanding investment opportunities.

Personal: Born in Visalia, Calif., he’s a fourth-generation Californian. He’s married with two daughters. In 1992, Turner joined a struggling Peninsula Habitat for Humanity chapter and charged it with a strategic vision to grow its construction rate from one home per year to 10. The chapter has since completed 80 homes and hired a permanent executive director.

Did You Know? He enjoys ballroom dancing with his wife and attending costume parties with historical themes. In April, he put the two together when he and his wife attended a ball in San Francisco in honor of a courtesan from “Gone With the Wind.”

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