Respect

Stuart Ellman

My friend and former student, Mark Davis, recently sent a link to a Wall Street Journal article titled The Venture Capitalists That Aren’t Jerks (referencing Mark’s quality post by the same title). The article made mention of VC rankings published by TheFunded.com, and because of that site’s membership requirements, the rankings reflect ratings given to VCs by actual entrepreneurs. I was ranked number 8 and my partner, Jim Robinson III, was ranked number 4. More than most accolades or mentions in newspapers, this one really meant something to me. Why? Because it talks about respect, both the way I have tried to live my life and the culture we have worked to create and maintain here at RRE.

My first job out of college was at Dillon, Read & Co. Inc. The firm was a prestigious, white shoe investment bank and the CEO was Nicholas “Nick” Brady. Nick was the CEO for my first three months and then went to become the Treasury Secretary in the first Bush administration. There was a very specific pecking order at the bank. Investment bankers were at the top, from most senior to least. Managing Director, then SVP, then VP, then Associates, then the lowly Financial Analysts. Below all the investment bankers were the sales and trading guys (and they were mostly guys). Below the trading floor was the administrative staff. And at the very bottom were the guys that worked in the print shop. I remember a cranky, elderly gentlemen who ruled the print shop. All the junior investment bankers treated him poorly. But there was always the rumor that he was friends with Nick Brady and could go right to him. Why? Because Nick treated everyone with respect, down to the guys in the print shop. That stuck with me.

When I co-founded RRE in 1994, I was still 27 years old. Our culture of respect really stems from James D. Robinson IV (J4) and James D. Robinson III (J3). J4 is simply the most decent person I know. I was always amazed how a kid who grew up in NYC with a Fortune 500 CEO father could be so down to earth, nice, and smart. But he is. I also need to spend a few minutes talking about James D. Robinson III. He is the epitome of a true Southern Gentleman. I remember hearing stories about when he was the CEO of American Express. He really took the time to know everyone’s name, including the security guards who let him in the building every day. He treats everyone with respect and people love him for it. His trainers, his drivers, and everyone who works for him feels, and is, special to him. I like to think our culture was built around this paradigm: Don’t do anything that you don’t want to see on the front page of the Wall Street Journal. And give everyone the respect and attention that they deserve. J3 is a special man and I thank him for teaching me so many important things.

This means many things to me on a day to day basis. Always return voice mails and emails on a timely basis. Always pay attention and give at least an hour to anybody that is presenting a business to our partnership. Always do the right things for our shareholders and use appropriate corporate governance. Now, I am sure that there will be people that comment to this blog saying that I never responded to an email or that somebody at RRE treated them badly. Nobody is perfect, but I can tell you, there is no surer way to end your career at RRE than to treat visitors poorly.

When it comes to respect, NYC is a tough place and venture capital is a tough industry. In NYC, everybody likes to think they are competing against everybody else and this manifests itself as a lack of respect to others. Few things make me madder than seeing somebody act very rude to a waiter/waitress or a cab driver. Why? Just because they can. Because those in certain service industries have little choice but to take the abuse. I see the same things in venture capital. Some VC’s feel that they are doing entrepreneurs a favor by hearing their pitch. Why? I don’t get it. The best entrepreneurs are doing VC’s a favor by showing them their deals. There is no reason for arrogance on either side. But for people that think VC’s never receive this treatment, they forget that we have to raise money for our funds. Here I see the same thing. The biggest mistake a young person can make is to confuse “the power of the pen” with earned respect. By this I mean that younger executives that work for large companies that have the power to put large amounts of money to work or can create important partnerships can sometimes forget that it is their “pen” or their ability to use their corporate power that causes people to pay undue attention to them. I will always remember a young guy who worked for a well known Fortune 500 company that did a lot in the venture industry. Every Partner at every big name VC firm would call him back immediately. He started telling me that he was so special that he was going to quit his job and would be inundated with job offers from large VC firms because they all respected him so much. So, he quit, and because he had no power over them any longer, nobody returned his phone calls. He stayed unemployed for a long time.

I know the world is not perfect but there should be no pecking order between VC’s and entrepreneurs. Nor should there be a pecking order between LP’s and VC’s. Everybody is just trying to do a tough, risky job in a difficult environment. So treat everybody well, it is not so hard. And don’t forget about karma; what comes around goes around.