Billionaire Laurene Powell Jobs Turned Her LLC Into a VC Machine

(Bloomberg) -- In the seven years since the death of Apple co-founder Steve Jobs, his 55-year-old widow, Laurene Powell Jobs, has become one of the most high-profile philanthropists in the world. She’s donated tens of millions to innovative K-12 schools, stepped up her role in her longstanding charity helping underprivileged kids go to college and given multiple grants to investigative journalism outlets, in addition to acquiring a majority stake in the Atlantic magazine.

But Powell Jobs’s main organization, the Emerson Collective, has also become a quiet force in Silicon Valley for its less obviously altruistic investments. Since 2014, Emerson has backed more than 30 startups, according to research firm PitchBook, investing in a range of novel companies making everything from floating data centers to supersonic aircraft. Its portfolio even includes digital bulletin board site Pinterest Inc.

Started more than a decade ago, Emerson Collective may be the strangest entity in Silicon Valley: part charitable foundation, part venture capital firm, operating in near-total secrecy, despite being run by one of the most famous women in business. Like the philanthropic arm of Mark Zuckerberg, Emerson is a limited liability company. LLCs aren’t subject to the same reporting rules as nonprofits and can more easily invest in for-profit companies.

Emerson does that—putting money into companies that it says fit within the parameters of its philanthropic mission—with some success. The early investment in Pinterest paid off with last week’s initial public offering, which valued the company at about $12.8 billion. Earlier this year, two other investments, podcaster Gimlet Media and phone repair company iCracked, sold to larger companies for undisclosed prices.    

Powell Jobs, a former bond trading strategist at Goldman Sachs, assiduously avoids the spotlight. When she gives interviews (which is rare) she espouses the benefits of higher education and journalism, as well as entrepreneurship. Thanks to her penchant for anonymous giving, it’s difficult to get a full view of her donations, but when she does so publicly, she frequently gives to schools and news organizations. She’s also one of the wealthiest women in the world, with a net worth today estimated at about $22 billion, according to the Bloomberg Billionaires Index.

Besides allowing Emerson to act as a quasi-venture capital firm, Emerson’s limited liability setup suits Powell Jobs’s tendency to fly under the radar. But the model has drawn some criticism, for both its lack of transparency as well as the introduction of a profit motive to philanthropy. “What is disturbing is there isn’t any collective societal check and balance,” said Marty Levine, a principal at Levine Partners LLP who consults with nonprofits, and who has also critiqued Zuckerberg for using an LLC. “There is an egocentric sense that, ‘We are more capable than most people.’”

Where Levine sees secrecy, Powell Jobs and her team see flexibility. “Our investments are one of many tools we use to advance Emerson Collective’s broader mission,” managing director Steve McDermid, a former corporate development partner at venture firm Andreessen Horowitz, wrote in an email. “We evaluate opportunities based on the potential to advance solutions to some of the most pressing issues—including helping students thrive, advancing breakthrough cancer treatments, protecting the planet and investing in a strong and independent media.”

Emerson also hasn’t eschewed the charity model completely. Several organizations affiliated with Emerson, including secondary-education adviser XQ Institute and violence-prevention project CRED, operate as nonprofits.

As for its for-profit activities, Emerson has invested in more than 20 companies in since the beginning of 2017, according to PitchBook. It’s not uncommon for the philanthropic firm to join respected VCs such as Sequoia Capital as co-investors. And over the last few years, the pace of investment, as well as the size of deals Emerson is involved in, has grown substantially.

The idea behind those investments isn’t to reap a huge return, Powell Jobs has said. She declined interview requests for this article. Instead—as may be fitting for a member of the Jobs family—the goal is to help push along companies that have the potential to transform industries, or the world.

Powell Jobs founded Emerson Collective in 2004, naming it after transcendentalist writer Ralph Waldo Emerson. For its first decade it made few investments. Gradually it began staffing up. Her team now includes her brother, Brad Powell, as the managing director of investments, as well as her son, Reed Jobs, who oversees Emerson’s health portfolio. In 2016, Emerson brought on Peter Lattman, former media editor and deputy business editor at the New York Times, as managing director of media. Another key hire that year was Andy Karsner, former assistant secretary of energy under President George W. Bush, as managing partner.

The following year, Emerson stepped up its startup investing, backing more than 10 different companies, according to PitchBook. One of those was Neighborly, run by founder Jase Wilson. When Wilson learned he would be meeting with potential investors at Emerson Collective, he almost panicked. Never mind that he already had a list of backers that included A-list actor Ashton Kutcher—it was Powell Jobs that made him sweat.

Wilson, who comes from a small town in Missouri, waxes poetic about Powell Jobs’s goals of helping lift people from hardship and disenfranchisement, which mesh with his own. The meeting, he says, “was a dream come true.”

At his pitch, Wilson said Powell Jobs asked pointed questions about his business, which helps individual investors buy bonds to fund infrastructure projects like fiber broadband. She also suggested that his data team include long-term weather predictions from the National Oceanic and Atmospheric Administration when evaluating future projects. “She’s insanely, insanely bright,” Wilson said.

Though Emerson has a large and well-credentialed staff, entrepreneurs who have pitched the group say Powell Jobs remains deeply involved in the process, and shows keen interest in the details.

Philip DeSimone, co-founder of 3D printing startup Carbon Inc., which Emerson backed in 2017, recalls Powell Jobs examining pieces of a chess set that Carbon printed out, figure by figure, during their second meeting. She also showed up at an event wearing a pair of sneakers the company had printed just for her.

Many entrepreneurs, though, were hesitant to speak openly about their famously private patron. “They haven’t given me permission to talk about our relationship,” said Ryan Chin, chief executive officer of Optimus Ride Inc., a self-driving car company backed by Emerson. A representative from Emerson later clarified that he didn’t need permission, and Chin followed up to say Optimus appreciated Emerson’s “broad view.” Responding to questions about Powell Jobs, Emerson and its investment philosophy, Jim Connaughton, CEO of floating-data center startup Nautilus Data Technologies Inc., said, “You should get those details from them.”

Like much of the venture industry last year, Emerson Collective had at least a peripheral brush with scandal. After the brutal killing of journalist Jamal Khashoggi in a Saudi Arabian consulate, NBC’s Dylan Byers noted in the wake of Khashoggi’s death that former Citigroup Inc. executive and top Powell Jobs adviser Michael Klein, who has known Powell Jobs since their days as classmates at the University of Pennsylvania, also served as an adviser to Saudi Arabia’s Public Investment Fund. Saudi Crown Prince Mohammed bin Salman, chairman of the fund, has denied any sanctioned governmental involvement in the murder.  

In other ways, Emerson is still very much unlike a typical venture firm. For one, it has rushed headlong into the old-world media industry, including Hollywood. Emerson invested in Anonymous Content, the production and talent-management company behind the Oscar-winning movie "Spotlight." It also backed Macro, which makes movies with filmmakers from diverse backgrounds, and Reese Witherspoon’s Hello Sunshine, which focuses on female storytellers.

On the news side, Emerson has become something of a white knight for the struggling journalism industry. Beyond its stake in the Atlantic, it backed other outlets such as Axios and Ozy Media. In November, it acquired the publisher of Pop-Up Magazine, known for its live touring show, and California Sunday Magazine, known for feature stories and photography. (Bloomberg Beta, the venture capital arm of Bloomberg LP, was also an investor in the group.) 

Powell Jobs has said she finds the demise of local news particularly troubling. That concern prompted Emerson to not just take stakes in media organizations but to donate to nonprofits like the Marshall Project, Mother Jones, the Texas Observer, ProPublica and the American Journalism Project, which is creating a fund to rebuild local coverage. At a recent Recode conference, she said that local news was "under attack" and "we should think about it as a civic good, a public good, that should be supported by public and private entities."

As a media steward, Powell Jobs is said to have a light touch. "She is totally hands-off,” Jim VandeHei, Axios co-founder and CEO, wrote in an email. She “listens really intently and asks great questions,” said Doug McGray, the co-founder and editor in chief of Pop-Up Magazine and the California Sunday Magazine. But she also thinks strategically about the industry. “A colleague presented an arrestingly ambitious objective for the Atlantic ten years out,” David Bradley, chairman of Atlantic Media, wrote in an email. Then, “Laurene asked: ‘Why not five years? Ten years is too long; the world changes too much. Can we try it in five?’"

Bradley said she also helped him along in his cultural education when she took some Atlantic staffers to see rock star Bruce Springsteen’s Broadway show. During the performance Bradley whispered to Powell Jobs, a New Jersey native like Springsteen, that he was put off by the audience’s shouts of “boo, boo.” “She corrected me,” he recalled. The audience was yelling “Bruuuce,” she told him. It only sounded like booing to the untrained ear.

Later that night, according to a profile of Powell Jobs last year in the Washington Post, she took the staffers backstage to chat with the Boss himself. The pair seemed to know each other, which is hardly a surprise. Powell Jobs is often spotted with high-profile figures, including Michelle Obama during the 2012 State of the Union address. Yet, true to form, there is scant public record of her friendship with Springsteen—despite his status as one of the most famous people in the world.

Though Powell Jobs’s philanthropic profile is rising, in some ways Emerson Collective remains a family affair. “I think the fact that they have a Steve Jobs association through Laurene, and her reputation as focused on positively changing the world, is helping Emerson get into deals,” says George Zachary, a partner at Charles River Ventures, which is a co-investor with Emerson on Color Genomics, a health and genetic-data business. “So both of those factors help them. Plus, they don't try to push others out of deals. They try to fit into deals.”

Today, Powell Jobs’s son Reed Jobs is working on accelerating cancer research, an interest that stems from his father’s illness when he was a teen. Emerson is different, Reed Jobs says. "While most other players in this space focus on philanthropy or investment,” he said in an interview posted to Emerson’s website, “we are able to do both.”

--With assistance from Lucas Shaw.

To contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Mark Milian

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