Succession is a major issue for many venture firms. Institutional investors, founders — even reporters — often get attached to senior members of a team, and when one of those individuals decides to hang up his or her cleats, it can be tricky for the rest of the partnership.
For its part, Emergence, a highly successful enterprise-focused venture firm, has been thinking about succession for at least the last decade, suggests Jason Green, who co-founded the outfit with Gordon Ritter and Brian Jacobs in the winter of 2002 and who says the team has long focused on hiring younger investors who can someday steward the firm.
That planning seems to be paying off. Emergence just yesterday revealed it has raised $950 million across two new funds, and the firm’s backers committed that capital despite that Green — who has enjoyed a high profile — let them know he’s ready to move on to new endeavors. We talked with Green about that decision, and how other firms might do a better job of handing over the reins. Our chat has been edited for length and clarity.
JG: Well, I’m not leaving; I would say I’m transitioning to a different role. I’m still on eight boards and going to be actively involved in mentoring. But it’s the kind of thing we planned when we started the firm. We wanted to build an enduring franchise and grow from within and ultimately have the founders kind of step aside and let the next generation take over.
Gordon is obviously still fully engaged, but it felt like the right time [for me to do this]. The firm is in such a great position, and for me personally, I’ve been doing this for 30 years and I’ve achieved a lot — probably more than I expected, frankly — and I’m interested in having an impact in some other ways going forward. [Editor’s note: The firm’s third cofounder, Jacobs, left several years ago to launch a seed-stage fund called Moai Capital.]
TC: What’s the plan going forward?
JG: I started a family foundation that’s going to be doing philanthropic work in a few areas of interest — climate change, ending mass incarceration, working on homelessness, working on educational opportunities for disadvantaged youth.
I’m also excited to become an LP in emerging funds run by diverse managers. I’ve [invested in] half a dozen teams with African American leads or female leads or Latino leads, but while our industry has made some progress over the last, whatever, 10 to 15 years, it’s not nearly enough. [Helping them] is somewhere where I think I can move the needle. I’ve been at three venture firms and started one from scratch, so for me, in some ways I feel even more confident [in] coaching and mentoring other emerging managers than I do entrepreneurs.
TC: Are you modeling your transition after anyone you know and admire?
JG: A guy who has been a mentor of mine for many years is Russ Carson, who started [the private equity firm] Welsh, Carson, Anderson & Stowe. He has kind of become a role model of what I’d like to do for the next phase of my career. He’s on the boards of The Rockefeller University and has funded charter schools and been really impactful in the community.
I definitely have interest in supporting the local community in the Bay Area, but I also think some of these [areas I’ll be focusing on] are almost global in scope, and part of [leaving Emergence] is having the freedom to just be curious and learn about things as I go, then figure out where where I can make a difference and have some fun along the way.
TC: Did you and Gordon arm wrestle over who’d get to bounce first?
JG: [Laughs.] Yeah, we’re around the same age. I think the difference is that I’ve been in the venture business 30 years and he’s been in the business 15 years; he really started in the venture business with Emergence and I think he’s totally jazzed to stay totally in the game for the foreseeable future [whereas] I’m ready to shift from hunting to farming.
TC: Any advice for other firms that are contemplating how to handle succession?
JG: We hired somebody every couple of years and we made the decision not to hire multiple people at the same level. We basically said, ‘Everybody that we hire in this firm can be successful long term here, and your job is to make other people around you successful. That’s the best way of ensuring your own success.’ And so there was this shared sense of success and failure that I think that we institutionalize in the firm.
At a lot of firms, it’s a little bit more of an eat-what-you-kill kind of mentality. I think in the venture business that’s a little bit misplaced, because there’s so much luck involved in the business. You never know which partner is going to have that big home run. It can take 10 years to actually figure out what were the big wins [in a fund], so you’re going to judge somebody based on the deals they’ve done in the first two years or three years of the business? We tend to focus a lot more on the inputs than the outputs because the outputs are very variable and have a lot of uncertainty associated with them, but the inputs you can control.
TC: What fun thing are going to pick up now that you’ll maybe have more time?
JG: I’m trying to squeeze as much time as I can with my kids, who are juniors and senior in high school right now. They’ll be off to college soon and spending time with them is a priority, for sure. Health and wellness is also important and something that tends to take a backseat given how busy we all are, so that’s going to become more of a priority. But also just building and spending time with great friends and hopefully having more opportunities to create some great memories. I have no doubt my plate will be full.