An Interview With Alan Patricof

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L.G.: Okay, so you’ve been traveling all around the globe. How many miles do you log?

A.P.: I don’t know. A lot.

L.G.: I hope you aren’t flying commercial.

A.P.: I fly commercial everyplace. I don’t have my own plane. I don’t have my own driver. Like everybody else, I commute either by taxi, subway, or bus—the great public transportation system. And occasionally somebody gives me a ride on their private plane if I’m lucky. But my trip just now to Alexandria was definitely on commercial.

L.G.: There’s obviously an attraction and a convenience to having access to a Gulfstream V or whatever.

A.P.: I think it would be wonderful. It’s not an extravagance that I would be comfortable with—let’s put it that way. Most of the places I go to are very easy to get to by commercial plane and difficult to get there by noncommercial. How would you like to be riding all by yourself to Alexandria, Egypt? I mean, I can’t envision it.

L.G.: So when did you actually start Greycroft Partners?

A.P.: I don’t know the actual date, but it’s probably going on two years ago.

L.G.: You have a pretty extensive portfolio.

A.P.: Yeah, we’ve actually put money in probably 18 companies already, and we’ve already sold one. Pump Audio [a six-year-old licensing company that digitally connects independent musicians with buyers in the mainstream media].

L.G.: And you got a 700 percent return on your investment?

A.P.: Yeah. We were lucky. We don’t disclose, but all of our investments are relatively small. Between half a million and $3 million. Traditionally, that’s the size of our initial thrust into a deal. The whole concept behind Greycroft is small. Everybody has moved up in the world. I mean, with the firm I started, Apax, its minimum investment is several hundreds of millions of dollars. And I watched everyone move up in scale. The longer your firm’s been in business, as business increases, the size of your investment gets bigger, the size of your investors gets bigger, and you have to, by the nature of the firm, increase the minimum size of your investment to make it economically viable or worthwhile to put the time into an investment. It takes as much time for a $100 million deal as it does for a $1 million deal, very often. And I’ve always had a passion for young, growing companies. So I decided to go back to my roots and start over again and deliberately do a small investors’ fund.

L.G.: And I’ve read $75 million.

A.P.: Seventy-five million dollars. It was deliberately kept at that size. And Apax now manages, worldwide, close to $30 billion.

L.G.: So you just decided you were going to start over again. You wanted the excitement of being on the ground floor. How old are you?

A.P.: I turned 73 in October. And, yes, there’s a certain degree of a feeling of involvement and attachment with young companies and watching them grow and suffering with them, and enjoying, perhaps, the fruits of your efforts. We have focused particularly in the new-media area. It’s just an area I’m very comfortable in, and I put together a new team, not people who have been at Apax.

L.G.: So you were looking for people with expertise in new media and the entertainment sector. Now I’m looking at some of these companies in your portfolio, and frankly, Alan, I don’t understand what they do, and I’m not going to ask you to explain them.

A.P.: It’s okay. A lot of the investors probably don’t understand either.

L.G.: You presumably understand everything.

A.P.: Well, not all of it. That’s why there are four of us. If I don’t, someone else does.... I could probably tell you about almost anything in the portfolio pretty accurately.

L.G.: Is there anything that you see here as the new Google?

A.P.: Well, I think everybody in this business would love to find the next Google. Who wouldn’t? But realistically, that happens perhaps once in a lifetime if you’re really lucky. I’ve been lucky in a couple instances. For instance, I was involved with the early stage of Apple and AOL. But you know, we’re looking for exciting young companies that hopefully will be in a takeoff mode.

L.G.: What kinds of returns do you look for? I mean, in the 1990s, there was a point where you were having average returns in the 30 and 40 percent range.

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