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What does it look like to seize opportunity with common sense and decisiveness? Today Marlin invites his long-time friend and Chairman Emeritus of GreyLock Partners, Henry McCance to share his stories of investment and philanthropy with the goal of inspiring the younger generation to cultivate good character.

Episode Transcription

Note: This transcription may vary from the words used in the original episode for better readability.

Marlin Detweiler:

Hello again, and thank you for joining us for another episode of Veritas Vox, the voice of classical Christian education. Today we have a guest that might seem a little bit unusual for what we do, but if you'll hang in there, I think you'll see why. Our guest is Henry McCance. Henry, welcome. I'll tell the people who you are and how I know you. But I wanted to welcome you first.

Henry McCance:

Thank you. Thank you so much.

Marlin Detweiler:

Henry is a neighbor of mine and we play golf together from time to time in the winter. But Henry has had a very, very interesting life. When I first met Henry, I learned that he had worked for a company– and when I mentioned it to my four boys, who are all fairly tech savvy, their reaction was amazement because Henry was the first employee at a company called Greylock.

And if you've not heard of Greylock, I'll tell you a little bit about them, and we'll get Henry to tell you a lot more. But Greylock, according to my children, is the premier investment firm in technology that's ever existed in America. Henry, is that fair?

Henry McCance:

No, that's over overhype.

Marlin Detweiler:

Well, I don't know if it's over hype.

Henry McCance:

Your sons are very nice!

Marlin Detweiler:

But, Greylock, tell us a little bit about your background and how that came about. I've heard the story before and I think our listeners would love it.

Henry McCance:

All right. Well, I'll make it quick. Marlin, I went to Yale College, with an economics degree, in 1964. And then I got an MBA at Harvard Business School, 1966. And the Vietnam War was going at that time. I was married, no children. So I was eligible for the draft. And I was able to get a critical skill assignment in the Pentagon for two and a half years working for the Assistant Secretary of Defense in systems analysis.

When I finished that, I wanted to come back to Boston, where Harvard is. I love Boston. In my class at Harvard Business School, class of 66 nobody, including me, knew what the term venture capital was. It really was just a very small cottage industry just starting out. And I was fortunate to be introduced to three founders of Greylock Partners and I was the first employee hired by the founders. They had raised the amazingly small amount of capital of $10 million for their first fund.

Marlin Detweiler:

$10 million was worth a little bit more back then, though.

Henry McCance:

It was a little bit more. But when you see Greylock today raising $1 billion funds, 10 million looks like you lost a few zeros. In any case, I just was lucky. If I had any advice, by the way, for young people talking about careers. I think the lesson I learned from Greylock was I really admired the founders. They were experienced at private company investing. And, so I would say that choose a position or a job where you can be mentored by your boss and injury being mentored as opposed to picking an industry or a specific company and getting in with an assignment that you don't know who you're working for.

So I was lucky and Greylock and I and the venture capital industry grew up together over the next 45, 50 years. The venture capital industry changed from a little cottage industry to a stream to a river, perhaps now to a flood of capital coming into venture capital funds who back world-class entrepreneurs in technology mostly. That was graduates-focused. And we're active investors. We're not passive. So we go on the boards of the startup or early-stage companies and we try and provide some wisdom or advice to the entrepreneurs as to how to scale their operation. And we have experience after after 50 years as a firm, we have experience of having done that successfully and sometimes fail at doing that over 300 times. And usually as entrepreneurs first or second time trying to build a business. So that's what we offer in addition to capital. And I would say, go ahead.

Marlin Detweiler:

Well, I was just gonna say I went on the website of Greylock in preparation for this, and I noted four companies that I was personally familiar with, and there are many others that others would be familiar with. I'm curious what the company's role was with these companies that are listed as companies they invested in, and when you invested in them, and stage was LinkedIn, Facebook, Workday and Airbnb who are very notables.

Henry McCance:

Okay. That's a great question. And the good news is that those investments for all done by my younger, smarter partners, I had really not much to do with any of those wonderful, successful investments.

Marlin Detweiler:

You were probably chairman at the time.

Henry McCance:

I was, but what I would say about all of them, and we're going to get to this theme when I get to philanthropy in the second half of my career. Greylock, and I believe most really good venture capitalists, try and identify a world-class founder. It's said that if you give me an A founder with a B minus business plan or an A business plan with a B founder, you take the first one every time because, the conditions, the competitive conditions, are always going to change.

And if you have world-class leadership in your organization, they can make these necessary adjustments to the strategy. So 3 or 4 companies, Facebook is a good example of the fact that some venture capitalists, including, my younger partners, are not reactive. They don't sit at a computer and respond to requests for funding that come over the transom.

Instead, they're proactive and to try and identify who these world-class entrepreneurs are. So we were not involved with the founding of Facebook. They raised their Series A, first round of financing, but my younger partner, David Z., got to know the founder of Facebook and came to build a relationship so that when they decided to do a Series B financing, the first call that he made was to David Z. at Greylock so that that's the way that investment came out.

It wasn't a startup. David Z. went on the board, and that investment was done at a pretty hefty valuation, in our opinion, at a time when the company was just beginning to scale. It was losing money, but there had been very little capital put into that, investment into Series A so when we participate in Series B, we, had a preferred stock position of along with the Co-investors $30 million and the company was valued at $500 million.

And we said, you know, we may not make any money on this, but it's very rare that it's not going to be worth at least 30 million. And we get our money back as a preferred investor. So anyway, the rest is history. As you know, the next one, LinkedIn, we were the founding investor and again, the founder was a gentleman named Reid Hoffman. He was really one of the most respected technology investors out in Silicon Valley. He had been one of many top executives at PayPal before forming LinkedIn. Again, my partner developed a relationship with Reed and we were the Series A, and then we invested in the follow-up series B and C, as I remember.

And after LinkedIn was acquired by Microsoft, Reed became a general partner of Greylock. So he migrated from founder entrepreneur to general partner and investor. And his reputation in the valley, was top-notch and provided a lot of deal flow.

The other two you mentioned, Workday, was the reverse story of Reed. I hired Aneel Bushiri, to be a general partner at Greylock in about 2000. And Aneel had been, a Senior Vice President of an enterprise software company called PeopleSoft that specialized in human– so, yeah, human resource software. Aneel had every VP position in that company, marketing, sales, executive vice president, everything except product development or VP of development.

And that company was acquired in an unfriendly takeover by Oracle. PeopleSoft management were very unhappy. But Oracle offered a price that the board had to recognize and accept on behalf of the shareholders and the founder of PeopleSoft, Dave Duffield, quickly left PeopleSoft and formed a new company called Workday. To be a next-generation, cloud-based, SaaS-based, enterprise software and human resources.

And, he really didn't need any venture capital because he made $3 billion from his ownership at PeopleSoft so he could have funded Workday totally by himself but he wanted Aneel to be involved. So Aneel was now working at Greylock, and he made us the only investor alongside him in the Series A.

Marlin Detweiler:

So, he was looking for the expertise.

Henry McCance:

And that comes from Greylock and not the money.

Exactly. And then finally, Airbnb, comes full circle back to Reed Hoffman. Airbnb got early series A investments probably from I don't remember who from but angel investors I don't think it was from an established venture capital firm. But it was still a very small, nascent company, the founders working out of their apartment. And, they raised a Series B, I would say it's still a startup at that stage. And again, Reed was very much, sought after because of his LinkedIn success. But they did make capital and we invested, along with Sequoia, another top Silicon Valley venture firm, and maybe 1 or 2 others. And, the rest is history. So you picked four good ones.

Marlin Detweiler:

Well, they were the ones that I knew best. I think I clearly used three of them and I think all four of them. So it was easy and I thought it would be fun to hear some specifics like that. You've personally been very fortunate in a number of ways, too and I love having heard this story. I hope this isn't embarrassing for me to say to you, and I know what you're going to say. Just a very small piece. But, I'm fascinated because I know that one year as a small owner of the Boston Red Sox, a year that they won the World Series, you also owned a small interest in a horse that won the Triple Crown. That had to just be big.

Henry McCance:

2018 was a very good year for me. And again, I'm just one of the luckiest guys on the planet because in both cases, while in the Red Sox, as we get to when we talk philanthropy. In 2000, my wife was diagnosed with Alzheimer's disease, a very tough disease. I began to phase out of my Greylock duties, except to be chairman of the company, but I wasn't doing deals.

And we had really moved the company from Boston, where it was founded, to Silicon Valley, where most of our new investments were being made. And I was not about to move to Silicon Valley at that time in my life. So, I was phasing out of Greylock. I was starting a nonprofit to do Alzheimer's research. I was beginning to do more philanthropy in education in other areas with my family.

And, I wanted something fun. I've always loved sports. I'm not a good athlete, as you can attest, but, I decided maybe it would be possible for me to become a small, minority owner of a professional sports team. I did my research and quickly concluded that was out of my league. No matter how much success I had had as a general partner at Greylock, the opening price of being an owner of a Boston professional sports team was more than I was going to be able to afford. So, about a year in, October 29th, 2009, I was at a house party that my daughter was holding for her classmate five years out of Harvard Business School.

And I was overcooking steaks, grilling steaks, and one of the classmates asked me what I was going to do for fun. So I responded to just what I told you. And he said, well, I work for strategy for the New York Times, and they own 17% of the Boston Red Sox. And frankly, all of our businesses are going downhill because of the competition of the internet to print newspapers.

Except for the ownership of the Red Sox. So we'd like to sell our 17%. And I said, well, that's very nice. Well, but, 17% is out of my league as well. He said, well, don't be so sure. So a week later, I got an email saying from this gentleman saying, come to my office; my boss wants to see you. So I had nothing to lose. I went to the headquarters of the New York Times, and what I learned was they had hired an investment bank. I think it might have been Goldman Sachs, but doesn't matter. And the investment bank had identified and paraded in a number of qualified buyers who could come up with the financial requirements for 17% purchase, but all of them wanted to analyze to death the numbers and negotiate a price.

And the New York Times had no interest in doing that. They said, Henry, this is a full price that we're offering, but it's a fair price. And you've spent your career valuing private companies, if you will, pay our asking price. We'll sell a lot less than the full 17%.

Well, I had no interest in making money on this investment. I was doing it for the fun of being a small owner. And so I said done. And I bought 1.5% of the Red Sox. And of course, you needed Major League Baseball approval before you can complete the transaction. And I passed that. But you also needed the approval of the majority owner of the Red Sox, John Henry.

They just didn't want, any of their partners to be able to sell to anybody coming off the street. And I didn't know any of the partners, but they did their research on me, and they said to the Times, okay, the answers are right. You can sell them that, 1.5%, but we don't want 14 more new partners. So you have to sell the balance of your 17% to no more than two buyers.

Marlin Detweiler:

Oh, my. But you just had this little window that opened up for you.

Henry McCance:

And there is a lesson there. But I'll come back to the lesson, but the Times was able to establish the asking price through my purchase. And then they found an existing partner who wanted to add to his position and one new partner, to buy the rest at the same price I paid.

And the lesson from there is, over time, as you get to be a senior person like yourself. And at that time, like myself, it's my opinion that you have to in some cases, recognize and have a gut feel and go for it, as opposed to just analyzing everything to death. Yeah. And indeed, if I had problems and said, well, “Let me analyze it for the next three weeks,” it wouldn't have happened. I just went with my gut. This is good, people. This is a unique opportunity for me. Take it.

Marlin Detweiler:

And so the idea of investing in people, which you mentioned earlier and now has been a hallmark of what I've understood you to be from a manager and a decision maker. One of the stories I want to hear about your philanthropy in Alzheimer's and in education. One of the stories I remember from education is the idea of investing in a school leader in the little town that we, live in in Florida. I love that story. But I want you to be able to talk about what happened with the Alzheimer's Foundation. So bring those together, how you see fit.

Henry McCance:

Okay. Well, the first one was the Alzheimer's Foundation, timewise, because of my wife's diagnosis with the disease. And I will make it quick. I decided that I wanted to try and make a small contribution because this is a horrible disease that affects over 5.5 million Americans. There is no effective therapy. And beyond the 5 million Americans who have the disease, it really affects terribly the families of those victims.

So it's a big problem, and it's only going to get worse if we don't find effective therapies because of the demographics of our country, as we all get older, age is one of the important risk factors. So to make a long story short, two other founding families and I all Boston-based, identified what I believe to be the world's leading genetics researcher specializing in Alzheimer's.

And he was a doctor, Rudy Tanzi, at Mass General Hospital. He is world-class, no doubt about it. And, we said to Rudy, we want to back your research, and we want you to identify, to use a baseball analogy, since we are on that, you're that you're the starting pitcher. But we want a shortstop and a catcher, and the other, eight position players, as world-class as you are in complementary aspects of Alzheimer's disease.

And you know who those people are. We don't. So recruit them, introduce them to us, and then we're going to raise money. You're not going to have to compete for grants. We've already chosen you. You're going to get the money. We hate bureaucracy. Give us a 3 or 4 pager, and we'll give you the money in two months or less.

But what we really wanted was to work on high-risk, high-reward projects that you can't get funded from the National Institute of Health or other more conservative sources of funding. So that's worked amazingly well.

Marlin Detweiler:

How old is the foundation?

Henry McCance:

We just celebrated our 20th year. That was formed in 2004. Every year we've raised more money than the year before. We now raise over 30 million a year. We have funded over $200 million in research life to date. So it's been a really fun, rewarding exercise and education.

I've always been concerned about our public education. I was born with a gold spoon in my mouth from my parents. I was able to go to private schools, from K-12 and then to Yale and then to Harvard. But I feel that our country really needs to improve our K-12 education system and particularly give disadvantaged people, whether they're people of color or people in rural areas of low income, give them an equal opportunity if we're going to fulfill the promises of this country. And, as you suggested, when I got to Lake Wales and I'm now retired, I have some time. I discovered that the Lake Wales public schools were charter schools. They had broken off from the Polk County public school system because it was failing them. And they created charter elementary schools and a charter high school.

They did not have the charter middle school initially because the teachers in the middle school, public school voted against transitioning to charter. I think the teachers union was probably the strongest at the middle school. Yeah, this is before I was involved. So they created a new middle school across town and they had very minimalist facilities.

But they hired incredible educators. The first initial Principal of this middle school called Block Academy. And within the first year of her middle school she put the kids in uniforms. She insisted on a very, strict code of conduct at the schools. If you didn't or your parents or guardian didn't want to sign up to wear uniforms and to follow and obey the code of conduct, you didn't have to go to the school.

You could go to the public school across town that chose not to convert. But if you did, then your performance was expected. And within a year they were an A rated middle school by Florida. And they’ve always been an A ever since that starting time.

The high school was failing to take advantage of its charter. And so the superintendent of the charter system came to this principal, Donna Dunson, and said, Donna, it's terrible to take a baby away from my mother at age three, which was what Block Academy was at the time. But we need you at the high school, and you need to come and turn it around. And I had given some money to Donna for Block. And she came to me and Carol Collins as well. Another of our neighbors in in Florida.

And I told her, “You know, Donna, it's going to be a much harder job to turn a high school around than to start a new school where you have a blank sheet of paper. You can hire the teachers you want right from the start. You can insist on the contract that you did. My piece of advice to you is I'm going to support you at the high school financially, but don't do the turnaround one step at a time. Rip the Band-Aid off and let the communities, our constituents, the students, the parents, the teachers, and the community know that there's a new sheriff in town as the principal, and things are going to change big time.”

And, she put that school into uniforms. She changed the starting time. The school started at a ridiculously early hour, 7:00, I think. It got out at two. None of the high school students were ready to learn at 7:00. probably none of the teachers were ready to teach. And then at 2:00, there was nothing to go to but get into trouble, go to gangs, or to get into trouble.

Yeah. So she changed the starting time. Put the students in uniform, change the starting time to 8:30 to 4. She couldn't fire the 70 teachers en masse. That would have ruined the community. But she incrementally, after five years had brought in probably 80% turnover of new, more qualified, more ambitious, more passionate teachers. And the school went from a graduation rate of about 50% when she took it over to 90% in 2019.

Marlin Detweiler:

Well, I remember you telling me, too. And this was an insight that is worth noting that you provided her financial support, enabling her to make a big splash by giving everyone in that school a laptop for that first year.

Henry McCance:

That's true.

Marlin Detweiler:

All of a sudden, you've established a very desirable place. As somebody once told me, you catch more flies with honey than you do vinegar. And that's catching flies, in my opinion.

Henry McCance:

Yeah. Fair enough. And, it goes back to what I said. I wanted to make a statement that everybody would sit up and take notice of. That there is a new leadership here and we're serious. We're going to turn the school around. So that was what that gift did.

Marlin Detweiler:

Yeah. Well, I really appreciate this. I know you to be a humble man and a man that just, you know, would rather go out and play nine holes by himself than speak to a million people. And it's really fun to hear your stories. Thank you for sharing them with me again and with our community.

We have a lot of very talented young people. I want to have them get a sense of what their life can be by seeing models like you and many others who have seized the opportunity, who have had common sense and have just said, “Let's do it!” because perseverance and decisiveness may be more important than talent.

Henry McCance:

I like both those characteristics: perseverance and decisiveness. And I would say recognizing because I think it's a fact. There is a lot of luck in life, and recognize when you get the chance to do something great, seize it. Don't don't analyze it to death. Take advantage of the luck. It will be presented to you.

Marlin Detweiler:

Well, we have really been blessed at Veritas. We just had our end of school year celebration. We had over 1,100 people come to Lancaster, probably 40 states and a dozen countries represented. And I get to see these people. And I love just being able to share a story like this with them and the many others that couldn't make it because it's really about next steps and how things can play out in the providence of God. It's wonderful to have you revisit these things with us. Thank you.

Henry McCance:

Well, congratulations to you and to Veritas. That's the extraordinary, momentum that you've created.

Marlin Detweiler:

Yeah. It's been fun. Thank you so much. And, folks, thank you for joining us for another episode of Veritas Vox, the voice of classical Christian education. We hope to see you next time.