Old execs, new tricks
Retired Fortune 500 CEOs invest in, advise dot-coms
BY ALEXIA VARGAS
Evan G. Galbraith, 71, already had retired from Morgan Stanley Dean
Witter & Co. when he heard that a former Yale pal needed somebody in
New York to spot new media deals for his venture capital fund,
San Francisco-based Draper Richards.
The Former ambassador to France was curious about the Internet and
felt the best way to understand it was to become a player and an investor
in it. So, rather than heading to the golf course in retirement, he
accepted the offer. He now invests about $25,000 at a time in start-up
companies such as CorporateGifts.com.
"My motto has been to die with my boots on," says Mr. Galbraith.
Like Mr. Galbraith, a number of very senior, old-economy icons in
New York are refashioning themselves as investors, directors and
consultants in the new economy. These former corporate leaders are
using a lifetime of experience to connect new media management with
investors and executives at Fortune 500 companies. The are also bringing
their expertise to the start-ups they invest in, adding credibility to
In several cases, these investors have been lured into the new economy
by their children.
In addition to Mr. Galbraith, the roster of these executives includes
former American Express Co. Chairman James D. Robinson III, former Citicorp
Chairman Walter Wriston, former Liz Claiborne Inc. Chairman Jerome A. Chazen,
and Jay Chiat, the founder of advertising agency Chiat/Day.
"I've always liked being in the frontier of change," says Mr. Robinson III, 64.
He started his own venture capital firm, RRE Ventures, along with his son,
James D. Robinson IV, and friend Stuart J. Ellman. Their first fund was so
successful that it returned 110% annually to investors, who currently include
institutions, prominent families, and pension and endowment funds. Manhattan-based
RRE Ventures invests between $4 million and $12 million high-tech companies only.
Mr. Wriston, who ran Citicorp (now Citigroup Inc.) for 17 years, recently joined
the board of Manhattan-based PlusFunds.com Ltd., an electronic marketplace for the
hedge fund industry. The 80-year-old Mr. Wriston also writes books and gives speeches.
And Mr. Chiat, 68, has assumed a new role as chairman of ScreamingMedia.com, a
Manhattan-based Web venture that syndicates content from news organizations and
redistributes it to about 1,000 Web sites.
Children have facilitated the transition to the new economy for many old-school executives.
When Mr. Chazen, 73, retired from Liz Claiborne in 1996, he wanted to take care of his own
About that time, his son, David, and son-in-law, Sid Banon, sold a plush-toy business and
turned their interests toward the Internet. The three decided to combine their interests
and founded Manhattan-based Chazen Capital Partners. The venture capital firm has invested
in about 25 mostly Silicon Alley start-ups, including Fashionmall.com, into which it
channeled $2 million.
Not very retired
"I'm busier today than I ever was," says Mr. Chazen. "It's a more controlled business,
so I like it."
Former high-ranking executives are valuable in the new economy because they're well-known
in many industries.
Jason Ariyeh had been an acquaintance of the Robinson's and a friend of Mr. Ellman's before
he and his family invested $500,000 in the first fund and $2 million in the second fund.
Mr. Ariyeh says that what sets RRE Ventures apart is the combination of what the general
partners bring to the table.
"Jim Robinson III has the best Rolodex in the world," says Mr. Ariyeh.
Both RRE funds have Fortune 500 chief executives involved, and the company's advisers act as
a bridge between the old economy and the new companies. "The new economy is a management
challenge," says Mr. Robinson III. "You have the run the companies, hire people and establish
These old-line executives say they have adapted to the casualness and the youthful spirit of
the new economy, or at least accepted it. Mr. Chazen admits to having been a little surprised
at first by the way people in the industry dress and conduct themselves. He still wears a
shirt and a tie, he points out.
A recent Pricewaterhose-Coopers survey found that the average age of New York's new media
employees is 35.
For the more seasoned executives, retirement has provided the opportunity to educate themselves
in the new economy, something they might not have been able to do while in their previous jobs.
Alan Kaufman, 62, was a former executive vice president at Cheyenne Software Inc. who retired
for the first time when his company was sold to Computer Associates International Inc. in 1996.
He then became a consultant to high-level executives of new media companies and made angel
investments in PowerAdz.com and Vicarious Vision Inc., two New York area new media companies.
"Retired people go in and out," he says. "I've retired twice."
These executives say that they are enticed to the new economy by the thrill of offering their
wisdom and expertise to a new generation. "It's mildly encouraging to see that we're not
totally over the hill," says Mr. Galbraith.