Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. So do you want to bring
Speaker 1: in our next guest Um at this hour? Because he
Speaker 1: is certainly well known um in the venture capital world.
Speaker 1: He was an early vc UM investor, from Patrick Off
Speaker 1: and Code to Apax Partners to today he's the founder
Speaker 1: and managing director of grey Croft. It has about a
Speaker 1: billion dollars under management, and he has helped build and
Speaker 1: grow such companies as A O L Office Depot, Apple,
Speaker 1: so many different companies. Allen joins us on the phone
Speaker 1: in New York from Southampton. M Allen, nice to have
Speaker 1: you here with us. First of all, I hope you
Speaker 1: are well your family as well. We did actually get
Speaker 1: to speak with your son Mark last week. Yeah you
Speaker 1: hear about sport, Yeah, exact streaming, streaming and politics and
Speaker 1: so many different things. You Patrick Offs, You guys are
Speaker 1: very intellectucy, curious and dare I say, uh uh, corporately
Speaker 1: promiscuous in the best way, Alan you get you have
Speaker 1: so many interests. I've got three sons and they all
Speaker 1: are very active. So at you you have been an
Speaker 1: active investor, and I first want to ask you. Um,
Speaker 1: let's do big picture. How you see this virus because
Speaker 1: it has certainly upended our world as we know it
Speaker 1: on every different or from every different angle. Um, how
Speaker 1: do you see it? How do you see the stimulus
Speaker 1: that's being talked about in Washington? And and can you
Speaker 1: even start to think about the other side of it
Speaker 1: when we get through it. Well, listen, it's very obvious.
Speaker 1: This is the I think, I don't know how you
Speaker 1: gol anything less and devastating to certainly small growing businesses. Uh.
Speaker 1: You know, to the companies that are larger, the ibms,
Speaker 1: the Microsofts of the world, they can withstandard Apple people
Speaker 1: with great balance sheets and lots of cash on hand,
Speaker 1: they'll be you know, they'll whether it's fine. The real
Speaker 1: challenges to the smaller companies, even small below the venture
Speaker 1: capital level, the local businesses with small shops and small
Speaker 1: whether they're industrial type companies or or retail or consumer service,
Speaker 1: they're all being severely affected. Uh and I you know,
Speaker 1: and that's going to be here for the next thirty
Speaker 1: nine days. I mean, this peak point we keep hearing
Speaker 1: the first it was April ninth, and it was April fifteenth,
Speaker 1: and April and now we don't know when the data
Speaker 1: is where it's been a peak, but I think we're
Speaker 1: in for a difficult kid time going forward. And so Alan,
Speaker 1: what does that mean for you? Know? You you mentioned
Speaker 1: that the big firms are are resilient. Tell us more
Speaker 1: about smaller companies because you know they have less wiggle room.
Speaker 1: You know, some of them don't have those fortress balance
Speaker 1: sheets that big companies do. What's the mood among you know,
Speaker 1: the smaller companies that we know you're in touch with. Well, yeah,
Speaker 1: which is my area focuses, right? Should smaller companies are
Speaker 1: in a very disadvantageous position unless they have a very
Speaker 1: strong cash position, uh and not a lot of debt. Uh,
Speaker 1: they are going to be under severe pressure. And even
Speaker 1: if they have cash, if you don't have enough cash
Speaker 1: on hand for six to twelve months at least, uh,
Speaker 1: you're gonna have real concerns and an environment where raising
Speaker 1: money is going to be harder than it's been and
Speaker 1: it's never easy. I think that you're you have already
Speaker 1: seen immediately, uh significant layoffs, and I think you're going
Speaker 1: to continue to see that. I would expect the unemployment
Speaker 1: figures are going to increase dramatically even further tomorrow. Uh,
Speaker 1: and I think we're gonna be seeing that for the
Speaker 1: next couple of weeks. So we get to a level
Speaker 1: point in the business world. Forget about leveling off of
Speaker 1: the flattening off of the of the virus curve. I
Speaker 1: think the uh problem in the business is lay up.
Speaker 1: It's just not people are doing gradually. They're not all
Speaker 1: acting fast. But frankly, the secrets is staying alive. Here
Speaker 1: is to take quick action and to not to contemplate
Speaker 1: and study the problem too long. I think that one
Speaker 1: has to get a visit in a financial shape very quickly,
Speaker 1: and which means cutting your expenses and realistically reassessing what
Speaker 1: your revenue expectations can be in this environment and you
Speaker 1: know which customers you have are going to survive, who
Speaker 1: is going to pay you and managing your cash. What
Speaker 1: does that mean for your portfolio companies? I mean you're
Speaker 1: invested in gaming, fintech, healthcare, software, publishing. I mean you're
Speaker 1: in so many different areas healthcare, Um, what does it
Speaker 1: mean for your portfolio companies? What are you saying to them? Um,
Speaker 1: what are your expectations in terms of their survival? Well, Uh,
Speaker 1: we're across the board. As you just said, I mean
Speaker 1: clearly if you're in the the areas of healthcare, you're okay.
Speaker 1: If you have any kind of service that's performed from
Speaker 1: the home. Uh. You mentioned gaming where a company called
Speaker 1: Scope lead another one called Dots. Both of those are
Speaker 1: games companies that people pay on play online. They're doing
Speaker 1: very well in this environment. We have a to home
Speaker 1: delivery grocery companies, one quotes Thrive Markets, which is kind
Speaker 1: of a uh better less coarsely try Whole Foods. And
Speaker 1: then we have another company called Box which is doing
Speaker 1: bulk delivery, which is a even cheaper cotsco. So those
Speaker 1: companies are doing well and our hiring people and can't
Speaker 1: meet meet up with the demand. We have companies that
Speaker 1: are dealing with special aspects of the public market, building
Speaker 1: portfolios on online and they're doing very well. So I
Speaker 1: think it really is uh selective. As you're in a
Speaker 1: retail store chain, you've got a lot of problems. Fortunately,
Speaker 1: we don't have too many companies that are in the
Speaker 1: retail area. Most of our companies are in e commerce
Speaker 1: that are selling merchandise, and so far those things to
Speaker 1: be holding up. But everybody has got a look take
Speaker 1: a new look at their budget for this year and say, realistically,
Speaker 1: you know, I can't just expect that what I call
Speaker 1: a cast stade of miracles, which is everything is gonna
Speaker 1: be all right, and everything's gonna turn out well, and
Speaker 1: and I think you've got to prepare for, you know,
Speaker 1: a really severe thunderstorm and perhaps a hurricane. Still with us,
Speaker 1: Alan patrick Off, founder managing director of great Croft Ventures
Speaker 1: Carol did a nice summary of his long four decade
Speaker 1: career in the world of tech finance, backing well known companies.
Speaker 1: Still in the business of startups very much, Alan joins
Speaker 1: is on the phone from the Hampton's where I trust.
Speaker 1: Uh A lot of people are Alan, what's it like
Speaker 1: out there? Well, it's not Times Square, but I think
Speaker 1: people are following the rules and things secluded, and I
Speaker 1: think that, uh, you know, we're in my home and
Speaker 1: very tight and not having visitors and not visiting anyone else,
Speaker 1: so we're like everyone else is following the rules. There
Speaker 1: are a limited number of cars on the road, and
Speaker 1: there are all the only people that are open to
Speaker 1: the restaurants which are served have take out at night
Speaker 1: and at a drug store. But other than that, everything
Speaker 1: is shut down it. Yeah, it's very interesting. Well, normally, uh,
Speaker 1: in in a normal part of a normal year, uh,
Speaker 1: certainly presidential election year, we would certainly be talking to
Speaker 1: you in a different context about the political world. We'd
Speaker 1: be looking ahead to the Democratic convention. You obviously backed
Speaker 1: a lot of Democrats over the years. What do you
Speaker 1: make of the political landscape in all of this, and
Speaker 1: what do you think happens from here, especially on the
Speaker 1: Democratic side. Well, it's no secret I've been supporting Joe
Speaker 1: Biden since he announced and before he did last March,
Speaker 1: last March actually almost a year, and uh, I still
Speaker 1: a very loyal supporter and very enthusiastic about his prospects
Speaker 1: for winning. I think he's got a difficult position, uh. Sequestered,
Speaker 1: uh and comfortable to went to Churchill during World War Two,
Speaker 1: sequestion in the war rooms underground. Uh. He's in his
Speaker 1: own mini TV studio and not able to go out
Speaker 1: in campaign and do that famous thing in politics in
Speaker 1: which has touched people on their hands and their shoulders
Speaker 1: and greet people. And I guess that's even when this
Speaker 1: starts getting better, that that possibility is going to end also,
Speaker 1: So it's going to be a different kind of campaigning
Speaker 1: different fundraising challenges is much greater because you can't have
Speaker 1: any live events. Everything's got to be virtual, UH, and
Speaker 1: it's it's not as easy to stimulate high donors in
Speaker 1: a virtual environment. I think it's not a problem for
Speaker 1: most online UH small donors. They they've been doing that
Speaker 1: regularly since last year, and he's had some very good
Speaker 1: online months. I'm not familiar with what they did in March,
Speaker 1: but certainly UH going into that month they would have
Speaker 1: had record weeks until this thing happened. So I think
Speaker 1: it's a it's a challenging environment. I think Joe is
Speaker 1: still a candidate who's going to prevail UH and the
Speaker 1: oil and I will stay that way and I will
Speaker 1: be act doing everything I can actively. I think in
Speaker 1: the congressional sense, UH, I think the phones UH bring
Speaker 1: off the hook UH daily becomes the progressional people are
Speaker 1: reading for Congress all over the country who have every
Speaker 1: UH name on a list that they can cold call
Speaker 1: and UH they have no hesitation, and so I think
Speaker 1: the so it's a real challenge for everybody on a
Speaker 1: local as well as the national level level to get
Speaker 1: to raise the funds and get their message. Of course,
Speaker 1: even even more importantly, Allen, how you know, in any
Speaker 1: normal year with an economy tanking, one would think the
Speaker 1: incumbent doesn't even stand a chance politically. But this is
Speaker 1: a year unlike any other. You know, There's been folks,
Speaker 1: including the President, have talked about it as like we're
Speaker 1: in a war, you know, a health war. UM. And
Speaker 1: I'm wondering how you think the economy, the handling of
Speaker 1: the virus, the virus itself will ultimately impact the outcome.
Speaker 1: I mean, you understand the political world better than most,
Speaker 1: So how do you think all of this will ultimately
Speaker 1: impact the outcome? I think it's uh. First of all,
Speaker 1: Donald Trump was running on the basis of having a
Speaker 1: very very strong economy, and we all know how many
Speaker 1: times you referred to the stock market UH as a
Speaker 1: mind of his success. I think that that UH line,
Speaker 1: that logo line, that buzz where it is really going away.
Speaker 1: And I think that he certainly can't point to that.
Speaker 1: On the other hand, UH, In all fairness, I don't
Speaker 1: think anyone could ever have anticipated what is happening now,
Speaker 1: whether it's a month later or not. The decline that's
Speaker 1: taking place is so dramatic that the economy's success is
Speaker 1: going to be far less a factor than it might
Speaker 1: have been otherwise. I think that so you get back
Speaker 1: to how the how the healthcare issue is handled is
Speaker 1: front and center. But I think you've come back to
Speaker 1: before we get there in September, and even if they
Speaker 1: ascuse me, in November, even before you get there, there's
Speaker 1: going to be a chance to see these two candidates
Speaker 1: had to had in some fashion. Uh, even if they're
Speaker 1: standing on the stage with no one in the room,
Speaker 1: and we're going to get a good sense of who
Speaker 1: these people are. And I think that Joe will come
Speaker 1: out on top in terms of his his style and
Speaker 1: his knowledge of of domestic and foreign affairs, his ability
Speaker 1: to cross the bipartisan divide. And I think that that's
Speaker 1: where he will show himself and our president current president
Speaker 1: will I think, bluster and and and exaggerate and make
Speaker 1: lots of claims and uh, I think we're gonna have
Speaker 1: to live with that, and you know, calling people names
Speaker 1: that he'll create. Uh, it was just the style where
Speaker 1: we will you know, gotten used to over the last
Speaker 1: four years, and hopefully the public will see through that.
Speaker 1: I I think I think we've all come to realize
Speaker 1: who the real Donald Trump is. And I think the
Speaker 1: real Joe Biden everybody is known for forty years, thirty years, uh,
Speaker 1: forty years probably, and Uh, I know the kind of
Speaker 1: man he is and the character he has, the compassion
Speaker 1: and he has, and I think that will show through
Speaker 1: when two of them are standing on a stage together.
Speaker 1: I'm sure Donald Trump will do everything he had not
Speaker 1: to be on that stage with him, but I don't
Speaker 1: think in the end he'll have to have a choice
Speaker 1: on that. Alan, you think you think we will get
Speaker 1: to a point that where they're both sharing a stage again.
Speaker 1: I mean, we're all kind of waiting to see what
Speaker 1: happens or whether there's a second wave of all of this,
Speaker 1: but you do foresee that ultimately, by November will be
Speaker 1: in a situation where we can have two candidates safely
Speaker 1: on a stage despite the virus. Well they might be.
Speaker 1: I don't know if they'd be safe even if there
Speaker 1: were no virus, right, And so, Alan, Um, I do
Speaker 1: want to ask you something We've been asking all of
Speaker 1: our um, all of our guests, especially those with a
Speaker 1: lot of experience like you have, uh in the market,
Speaker 1: what changes on the other side of this, maybe something
Speaker 1: that is under appreciated. How does the world change, and
Speaker 1: especially through the lens that you look at as an investor.
Speaker 1: I like that question. It's a very good question. It's
Speaker 1: it's absolutely where we should all be thinking. How is
Speaker 1: the world going to be different whenever this ends? And
Speaker 1: I think it's going to have some profound differences. First
Speaker 1: of all, I think we've all learned to work virtually.
Speaker 1: What's the implication going to be for high rise office
Speaker 1: buildings and clusters enormous clusters of of office workers, particularly
Speaker 1: doing uh standard functions, uh whatever, whether it's an assurance industry,
Speaker 1: the banking industry, whatever it else. We don't need, you know,
Speaker 1: a hundred thousand squareput possibly will not need that. Maybe
Speaker 1: the top people people are doing uh decision making need
Speaker 1: to get together. But I think that will change in
Speaker 1: how our work. I think we've all gotten used to
Speaker 1: being We may get used to a four day work
Speaker 1: we who knows, I think we we will also have
Speaker 1: a much greater appreciation I hope for the medical profession
Speaker 1: and what's being done and what is being done, and
Speaker 1: that includes nurses, doctors. I would assume deadness included. The
Speaker 1: E M T group are safety people who are making
Speaker 1: enormous sacrifice that I think people will have a greater,
Speaker 1: greater understanding. I think thirdly, I think we're all learning too,
Speaker 1: you know, as a family, as family groups, we're learning
Speaker 1: to learning about each other and learning how to that
Speaker 1: the family meal is a tradition that maybe we'll be
Speaker 1: restored again. And I think that, uh, there may be
Speaker 1: a kinder, better world. And I don't mean to be
Speaker 1: you know, too over uh schmaltzy in terms of uh,
Speaker 1: you know, uh motherhood, but I think I think that's
Speaker 1: a possible, very probable outcome. Another thing I think, which
Speaker 1: is probably not as good, is I think that we're
Speaker 1: going to become more and more nationalistic. I think, uh,
Speaker 1: there's been a strong trend even before this happened, our
Speaker 1: president being the leader of it. It also bars Johnson
Speaker 1: and in England, what's happening in Italy. With's happening a
Speaker 1: lot of countries who are becoming more isolated, more less globally,
Speaker 1: and I think that that's going to change the nature
Speaker 1: of our of our home to international society. And it
Speaker 1: comes to the time where we need cooperation for the climate,
Speaker 1: which I think everybody realizes even now, maybe when they're
Speaker 1: outdoors more is an important thing that's worth saving. And
Speaker 1: it's gonna be a lot harder when we have a
Speaker 1: lot of countries who are all they all they're going
Speaker 1: to focus on is their own self interests will be
Speaker 1: less importing. Uh there'll be more of a trend to
Speaker 1: try to manufacture at home and not depend on other people,
Speaker 1: whether it's oil or whether it's electronic components. So I
Speaker 1: think there's going to be a lot of changes, and
Speaker 1: that's things we should be thinking about. How how is
Speaker 1: this world going to look like when we come out
Speaker 1: of this uh pit that we're in. So this is
Speaker 1: like the perfect it end, But I have to ask
Speaker 1: one follow up? Will it impact? It sounds like obviously
Speaker 1: it will impact maybe you're investing going forward. Yeah, I
Speaker 1: think sure it is. I mean we'll be looking at
Speaker 1: different kinds of companies that provide different kinds of services,
Speaker 1: and out of all uh upheavals come new opportunities. And
Speaker 1: I think that's the way you have to look at it.
Speaker 1: That adversity brings the opportunity, and it's for the the wise,
Speaker 1: the astute, the the pioneers, the adventuresome who will take
Speaker 1: chances in new ideas, new technologies, new concepts to deal
Speaker 1: with the world that we're going to be living in,
Speaker 1: whether it's in June or September or drive forbid it,
Speaker 1: you know, even later. But you know we all, we
Speaker 1: all like to see that happen sooner rather than later. Well,
Speaker 1: we wish you so well, Alan, and thank you so much,
Speaker 1: Um for finding a nice tunk of time to spend
Speaker 1: with us and really get your insights. So do take
Speaker 1: care of yourself and your family. I'm delighted to have
Speaker 1: Alan Patrick off with us, of course um the founder
Speaker 1: and uh managing director of greg Crop, but really someone
Speaker 1: who's legendary within the venture capital world, Jason and the
Speaker 1: political world to political you heard it all. There is
Speaker 1: the scope. You can tell why he has such smart boys.
Speaker 1: He's a good guy. Uh. In any case, Alan PATRICKROF
Speaker 1: grateful to him.