With more than 35 years of managerial experience and a most impressive resume, you would think that Phil Samper would be content to just sit back, relax and enjoy the fruits of his success. Well, think again.
After tenures as vice chairman of Eastman Kodak, chief executive of Sun Microsystems and chairman and chief executive officer of Cray Research, Samper joined forces with Rick Bolander, a veteran of the technology industry, to create Gabriel Venture Partners in 1999, and Samper started what could be called his second career: full-time venture capitalist.
Gabriel Venture Partners, based in Redwood Shores, Calif. and Tyson’s Corner, Va., was founded as a hands-on venture capital firm. Gabriel is comprised of seasoned and skilled professionals whose shared goal is to provide in-depth operating, technology and marketing experience that will maximize the value creation in their portfolio companies. The firm works with these companies from initial funding through every stage of their growth cycles.
The team at Gabriel includes Samper, Bolander, Senior Principal Charles Heller, and Principals Scott Chou and Mahesh Kanumury. Some of the firm’s portfolio companies include AccessLine Communications, GeoTouch.com, ITSquare.com, iTango Software, PlaceWare, SalesHound.com and VARStreet.com.
After an extensive professional life, you might wonder what inspired Samper to become a full-time VC. “I’ve done a lot in my life, been in many different roles and industries, and I have always enjoyed the thrill of the hunt,” says Samper. “I very much enjoy working with people and building and reshaping companies, so it’s just my way of life. I work because I enjoy it.”
Samper started wandering in and out of the venture capital market around 1992, working with several different VC firms. Initially he worked in the form of what would be referred to as a venture partner and then became somewhat of an “expert” who came in and helped the VC firms with their portfolio company situations. “Over time I just became more and more involved,” says Samper.
It was during this time that Samper crossed paths with Rick Bolander. “Actually Rick [Bolander] and I met each other at a Chicago-based venture firm, Apex Venture Partners, [where Bolander spent four years as a general partner]. I was helping out there and began the process of working with some of their portfolio companies, particularly the ones Rick was involved with,” Samper notes. “We ended up working together on some deals and then started doing deals together so we really got to know each other well.”
During those times together, Samper and Bolander started to discuss the value of operating experience vis-a-vis the VC world. “So often, individuals go into the VC world having never experienced the excitement and the stress of running companies,” says Samper. “In my case I have run a number of companies and number of start-ups and there’s no substitute for that kind of experience in my estimation.”
Samper and Bolander started talking in 1998 about putting a firm together.
“We both had some rather unusual thoughts regarding venture capital. One day we got out a clean piece of paper, put those thoughts down on paper and in effect, that was the genesis for what is today, Gabriel Venture Partners,” says Samper. “At that time we saw ourselves as a traditional VC firm, in the sense of being hands-on,” he says. Today the firm has five investment professionals, and Samper says the objective is always to keep a limit on the number of portfolio companies with whom one professional can work, which presently is six deals. “The proof is in the pudding – if you don’t have time to be hands-on then you are not fulfilling our objectives,” he says.
As Samper and his partner have brought on additional individuals to the firm, they have looked for people that not only had VC experience, but came from the operating world. Samper says, “the experience base of everyone provides a boost to the operating side of the business even though everyone at one time or another had been involved in venture capital. That’s how Rick and I structured the firm, and that’s the game plan we’ve been following.” He says they are pleased with the responses they’re getting from the portfolio companies. The firm is also seeing an increasing number of VC firms that want to work with them again because as Samper says, “they know we work a deal, we just don’t invest money, we build companies.”
As Gabriel moves out into the world of investing, it doesn’t bet on a probability curve, but does expect a company to be successful. “Right now, we have 12 investments, and our goal is that those 12 will be successful,” says Samper. “It’s not let’s attend a board meeting,’ it’s really working closely with the management team, and even mentoring the management in some cases, as well as helping with recruitment, financing and determining the strategic direction of the firm.”
Many of those that Samper has worked with say that he brings a quiet, calm confidence to the table, and that he’s balanced and grounded because, frankly, he has been through it all.
When asked about some of the highs and lows of his career, Samper says that he has honestly enjoyed every work assignment he’s had. “I enjoyed the experience at Kodak restructuring the company, working at Sun, Cray and some of the start-ups. From a highlight point of view, as I look back from operating perspective, I have been very fortunate in working with talented people and finding ways to get them to exceed there own expectations.” Samper says those experiences have been a tremendous help in the VC world, because most of the people he works with have never really been in an operating role and no one understands the complete elements of business. “That whole process has been terrific for me. I have been a general manager or a president or a CEO for most of my life, so I can say that I know the pain and stress of being a CEO,” he notes.
Samper has been quite fortunate to become actively involved in the VC world during one of the market’s more interesting periods. “Today’s market is very different than the market that existed a year ago. Certainly a year ago it was easier in the sense of taking companies public, often times without any idea whatsoever about profitability, and often times with business plans that today would make someone scratch their heads. I think that has completely changed,” Samper says.
In Gabriel’s case, the past few months have posed few problems. “We look upon this time as an advantage because we’re really designed more for this kind of climate, and we’re probably not as concerned regarding this because we have been there,” Samper says. “As I said I have been running companies that have been in this condition where it’s really, really tough. It’s tough to get money, it’s tough to get customers and it’s tough to find a path to profitability. Having been there, I have some idea, and I can draw on the past to find a solution.”
The portfolio companies in which Gabriel has invested in to date have not suffered the tremendous impact that has been seen in other parts of the technology world. While the firm has invested in the business-to-consumer space, its been very selective in investing in business-to-business. Samper says they really look for infrastructure plays and communication plays and look for ways that will enable the Internet rather than serve it.
Last year Gabriel Venture Partners raised its debut fund. The $100 million fund will be invested nationwide with a geographic focus on Silicon Valley and the Mid-Atlantic region. The fund, which is 50% invested and 70% committed, invests in seed- and early-stage investments. Deal sizes range from $500,000 to $7 million, with an average deal size of about $4 million.
For about 40% of the firm’s portfolio companies, Gabriel achieved a median five-fold increase in the last year. “Because we do represent a hands-on group able to assist portfolio companies, we have been successful in achieving going-in valuations that are quite attractive,” Samper says. “As a result again, we have not suffered the impact of the change in the marketplace whereas I think some of the prices paid and some of the values placed for companies a year ago would just not fly today. We have not faced that particular problem, and again it goes back to our basic philosophy of building companies.”
The firm is now fund raising for its second fund. “The private placement memos are going out, and we are targeting $300 million,” Samper says. “We had targeted our first fund at $75 million and capped at $100 million, but we were quite oversubscribed which makes it very nice going into the next fund because most of those people who were not able to get into the last fund are expressing a great deal of interest in getting into the coming fund,” he adds.
Most of Gabriel’s existing LPs, which include Bessemer Trust, General Motors-OnStar, MacArthur Foundation, Mellon Ventures Fund, Remington Investments, SunAmerica and William E. Simon & Sons, have expressed an interest in coming into the next fund and usually at a stepped up investment level, according to Samper. “We’re very pleased with the support we are getting from the existing LPs, and we feel very pleased about those that are expressing a interest in coming in,” notes Samper. “We have already received some commitments before we even sent out the private placement memos, so the demand level seems to be quite good.”
Samper says one of the well-know secrets of success is people. “The selection of the right people for companies is invaluable and the benefits of experience helps. There’s a strong correlation between your instincts and people because you’ve dealt with them in many different ways and in many different companies,” he notes.
Because of its founders’ corporate backgrounds, Gabriel has a good network of people in place, and that has only helped to open doors for its portfolio companies. “The network element of our group has been quite helpful in moving us along, so in my mind, all of this is what makes it so exciting,” says Samper. “I find venture capital absolutely fascinating, and one of the most challenging experiences I have had. At the same time, it’s one of the most rewarding experiences because the companies we are working with seem to coming along quite well.”
Education: MSM Management, Massachusetts Institute of Technology; Graduate BSFT, American Graduate School of International Management; BS Business Administration, University of California, Berkeley
Career Path: Vice Chairman and Executive Officer at Eastman Kodak Company 1986-1989; Chief Executive of Sun Microsystems Computer Corporation 1993-1994; and
Chief Executive Officer and Chairman of Cray Research Inc. 1994-1995.
Family: Wife, Gail; Children, Joaquin and Chris
Favorite Book: Men to Match my Mountains by Irving Stone
Currently Reading: The New, New Thing by Michael Lewis
Favorite Movie: Lawrence of Arabia
Favorite Travel Spot: London
Most Admired Historical Figure: Simon Bolivar
Favorite Quote: “Experience is the comb God gives us, after we have lost all of our hair,”-Winston Churchill
Investment Philosophy: The ultimate return to investors is cash on cash.