July in April

Susan and I just returned from a much-anticipated dinner with five other friends, a.k.a. the "Gang of Seven," hosted by one of the other couples at their apartment. Most years, we get together as a group for the Fourth of July weekend, at the country place in Connecticut of one of the other couples. We discuss books and foreign policy, gossip a bit, and just enjoy each other's company. Good food and wine stimulate our conversation; long walks and rowing a boat on the lake stimulate our appetite and thirst. Upon parting tonight, we began formulating plans for our next get-together.

More Perfect Pitch

Former colleagues in various ventures have commented about Randy Jones's concept of perfect pitch. During my years at Harris & Harris Group alone, we invested in 84 ventures. In the successful ventures, the venture capitalists like Harris & Harris Group play a role, but the requisite perfect pitch for the business has to be within the management of the companies.

In my earliest venture-capital deals, not only would we start a company with our limited capital, but also I would serve as the CEO of that startup until I could recruit someone to run it who had what Randy might term perfect pitch for the business. Sometimes, the recruits came from non-obvious backgrounds: they were in the process of finding their perfect pitch.

Over a quarter of a century ago, prior to my days at Harris & Harris Group, my first venture-capital deal was Thoroughbred Equity Company (TECO). I started TECO as a joint venture with Fasig-Tipton, one of the two major thoroughbred-horse auction houses. We formed TECO to enable breeders of thoroughbreds to use their bloodstock as financial collateral. Up until the time I sold my interest to Fasig-Tipton for a high percentage return on my modest investment, TECO never had a loan loss. This impeccable record partially reflected my simple bonus policy: if there were any loss on a loan during the year, no one in the company would get a bonus at year end. But the people that I recruited to run the business were responsible for its success. First, I recruited Michael Lischin, a young lawyer from a small bank, with no horse-industry background, to run the business. Today, he is a successful thoroughbred breeder in New York.

Valuation of the collateral was a critical input into TECO's lending business. Rob Whiteley, a professor of psychology at Rutgers University who was passionate about thoroughbreds, a few of which he bred on his small New Jersey farm, was a friend of mine. In as radical a career gamble as I can recall, Rob started appraising thoroughbreds for Fasig-Tipton and TECO. Later, Carl Icahn wanted to enter the thoroughbred business and asked me to recommend someone to run the business for him. I recommended Rob, who was still relatively new to the thoroughbred business, on the basis of his brains and his unquestionable integrity. Rob built a successful breeding operation for Carl Icahn. Today, Rob has his own farm in Kentucky, where he is a prominent breeder respected not only for his business prowess, but also for his sterling character and universal kindness to others. Rob has perfect pitch for his business and for life.

Sacred Music Fifth in Debut

According to trainer Nicolas Clement's description of Sacred Music's race, she ran about as expected. (We will receive a video of the race later, but we were not able to view it on the internet.) Apparently, she broke somewhat slowly, was a bit shy with the other horses, then finished fairly well, beaten about four lengths by the winner, which had about a tw0-length margin over the second-place finisher. Assuming she comes back in good order, Nicolas expects her to benefit from the race.

Happy 99th Birthday, Dad!

As we were not able to travel to Ponte Vedra Beach, Florida, to celebrate my father's 99th birthday, I just wished him a happy birthday by telephone. Both he and my mother, who will turn 95 in July, are as sharp as ever-- which, believe me, is plenty sharp!

Sacred Music

Sacred Music is entered to make her debut this Sunday, April 5, in the 2nd race at the Parilly racecourse in Lyon. The race is called the Prix Louis Saulnier, with a purse of 14,000 Euros. It will be contested at 2,200 metres (1 3/8 miles) on turf and restricted to three-year-old fillies which have never won a race. Sacred Music drew the outside post position, number 11, and will be ridden by Jean-Michel Breaux. As nine of the other fillies have run previously, Sacred Music will be conceding experience to most of the field, and we should probably be happy if she shows promise and comes back sound. The French do a marvelous job of presenting their racing on the internet, and Susan and I are trying to figure out if we can watch the race live.

I walked about five miles today, mainly running errands, at a somewhat slower pace than I hope Sacred Music maintains on Sunday. One of my errands was to bring in for servicing the watch my mother gave me for my college graduation in 1964 (I skipped the ceremony to attend the Belmont Stakes). The Rolex representative reminded me somewhat sternly that I had not had it serviced since 1999. What really hurt my feelings was that he informed me that the servicing would take longer because the watch is now considered to be an antique. Does that say anything about the owner?

Neupogen and Neulasta

Biotechnology is a wonderful thing!  After two shots of Neupogen, in 48 hours, my white blood cell count went from 1.9 to 10.  So, after the six-day delay for various things, I get to have chemotherapy again today.  Henceforth, part of my regular protocol will be shots of Neulasta (at $5,000 a pop), a longer acting form of Neupogen.  Bone pain is a common side effect of Neupogen and Neulasta.  I did experience the bone pain, but it responded amazingly to Tylenol.

Perfect Pitch

Last Monday, Susan and I were dinner guests of neighbors, Connie and Randy Jones. Among other things, we discussed Randy's new book, The Richest Man in Town (published by Business Plus, a division of Hachette Publishing Company), which should be in the bookstores in a couple of weeks and, I think, can be ordered from Amazon now. In order to write this book, Randy interviewed the richest self-made person in each of the 100 largest cities and towns in the United States. Naturally, we asked whether Randy could discern any common traits in these people? One of the qualities that Randy noted was that these people all seem to have, like musicians for music, perfect pitch for their enterprises.

In thinking about it, my father has perfect pitch for architecture. He started practicing architecture in 1932, started his own practice in 1935, and retired in 1997. He certainly has other interests (for example, he played golf or hit golf balls practically every day), but he was content to go to his office on weekends to work on a project.

I'm not sure that I ever had perfect pitch for any of my businesses. I tended to see an opportunity, figure out what would be required to capitalize on the opportunity, and assemble the requisite people, capital, and other resources. These were not businesses for which I was particularly qualified or, in several instances, in which I was particularly interested. For example, Rick Childress and I started and managed a fund to invest in undervalued, publicly traded, industrial companies, and, later, a fund to invest in regional banks just before it became legal for banks to operate across state lines. Both funds were highly successful, and Rick and I had a lot of fun creating and managing them. But Rick had the perfect pitch for the research underlying these funds that made them special. When I saw that there was a shortage of property-and-casualty reinsurance capacity, I decided to start a new reinsurance company. ReCapital Corporation was successful, but I had no interest in the insurance industry, even though I served as chairman of the company. The people that I brought in to run the company, led by the late Don Chisolm and Jim Roberts, were the consummate professionals who had perfect pitch for reinsurance. As I noted in a recent post on BioVex, even though I am quite interested in nanotechnology, I regard the people that I brought into Harris & Harris Group as the ones with perfect pitch for venture capital based on deep scientific and technological understanding.

As for myself, I think the best that I could say is that I created opportunities for others who had perfect pitch for particular businesses. I'm not sure that counts!