An Early Tech Backer’s Journey From Steve Jobs to Pete Buttigieg

(Bloomberg Markets) -- Ben Rosen has had several careers—technology analyst, early venture capitalist, entrepreneur—any one of which would have made him notable. A New Orleans native educated at the California Institute of Technology, Stanford, and Columbia Business School, Rosen introduced Steve Jobs to Morgan Stanley and financed Compaq Computer, Lotus Software, and Electronic Arts. With his older brother, Harold, Rosen co-founded in 1992 a hybrid car engine car company that employed J.B. Straubel—long before Straubel helped start Tesla Inc. In an interview at his home in Kent, Conn., Rosen, 86, looks back over his pathbreaking career and describes what excites him today. Here are some highlights.

MARTY SCHENKER: You were there at the crossroads of some historic developments.

BEN ROSEN: The timing was fortunate. I just happened to cross paths with some people who were really important in our lives. Steve Jobs and Bill Gates when they were 22 years old. And then Gordon Moore. He was my teaching assistant—when I was a freshman at Caltech, he was a first-year graduate student. So I’ve known him since 1950, and we stayed in touch. Later, Compaq was Intel’s No. 1 customer. The inventor of the spreadsheet, Dan Bricklin, and his associate Bob Frankston, I knew. They showed it to me in the beginning. And Mitch Kapor, who took it to the next step. Bob Noyce and Jack Kilby, who invented the integrated circuit. Kilby got the Nobel. Bob didn’t get it—only because he was dead.

MS: And Morgan Stanley’s position as an underwriter of technology company initial public offerings [IPOs] started with your introductions.

BR: First was the Apple IPO [in 1980]. They’d done one [technology IPO] many years ago, decades earlier. I don’t even remember the name of it. They apparently lost their shirts on it. They were embarrassed. It violated their rules, which was to be the banker for the No. 1 or No. 2 major companies in the major industries. They took a chance on this company. It was a disaster, so they decided no more technology.

MS: But then you introduced Steve Jobs?

BR: To Bob Baldwin. And it was funny to watch them. This was at a small trade show at the Hilton a few blocks from Morgan Stanley. And Steve knew nothing about the financial world, and Bob [who led Morgan Stanley from 1973 to 1983] knew less about technology. And the two of them were each trying to sell themselves. Neither heard the other or understood what they were saying. But anyway, they [Morgan Stanley] became a big technology underwriter. I had just left Morgan Stanley, and I was a one-year consultant before I moved out altogether.

MS: You could have been an early investor in Apple?

BR: Mike Markkula, who is the original investor in Intel—he bought a third of the company in 1976, I believe, for $91,000—one might call it really good venture investing. I knew him when I was an analyst. I used to see him at Intel. And he met Steve at a home-brew computer club in 1975. We were good friends, and he offered me $1 million of Apple stock at the time. I thought that somehow this was a conflict, even though Apple was a private company. I was an analyst. I was never on the banking side.

MS: So do you follow technology now? What interests you?

BR: Well, there are a lot of things that interest me. But to what extent? I’m an optimist. I got the optimism from my brother. He was the inventor of the geostationary communications satellite. He would always see the glass half full.

With something like climate change, I don’t minimize the issues, but I think that the solutions are being minimized. And the way to do something is to fund science.

The only investment I’ve made in 20 years, I just made [in Energy Vault SA]. There’s a longtime friend who runs an incubator in Pasadena, a Caltech graduate named Bill Gross. He’s actually the inventor of something called paid search, and he had a company called GoTo.com that started before Google, and they created the system that allowed one to get paid for search online.

He has a new invention now with another person, attempting to solve the single problem that is most impeding renewable energy, and that is storage.

Nature does it by having a lake at a high altitude, and you can release the water when you need the energy to generate electricity, and when you have excess electricity you pump it up again. But all of the natural storage areas are taken. So Bill came up with the idea to emulate nature, but instead of using water to use concrete. So the [Energy Vault] system takes 35-ton concrete blocks, lots of them, in a solar field or a wind farm, and when they’re generating energy that’s not needed, they have a six-arm crane very high up that pulls these up. And when they need energy, the cranes let these things down and they generate electricity. I’m not interested in apps—they’re useful and all—but I like things that are grand, and this is grand.

MS: When you started in venture capital in technology, it was a relatively new field.

BR: This is ’81. You could count on your hand how many venture firms there were. So what we were [Sevin Rosen Funds, founded with L.J. Sevin] was a startup only, just green fields. We didn’t do, with very few exceptions, any secondary investments.

MS: What always fascinates me is the difference between the person and the idea. How do you weigh those in your investments? Is it the idea or is it the person that’s more important?

BR: You mean in making the decision? The answer is yes.

MS: [Laughs] So it’s both.

BR: In some cases it’s one. For instance, in Compaq. At our initial meeting with the three entrepreneurs in Houston, they presented us with a hard drive for the then-just-introduced IBM PC. They were all at the hard-drive division at TI [Texas Instruments]. This is what they knew, and this is what they wanted to do. And we didn’t think that was enough, for us anyway, to build a company with. We encouraged them to go back and come up with another idea because we liked them.

Then they had a sketch of a portable PC. That sold us, and we invested in them because it was something that nobody was really doing at the time. The other thing we did was subtler but more important, and that was to make the first fully compatible PC with IBM. We knew IBM would get the business market, and we had to make something that a buyer and a customer wouldn’t get fired for [having].

Some people—Trip Hawkins at Electronic Arts—he was at Apple before. We liked the guy, and he said he was going to become a game studio.

One of the big risks is falling in love with a product. Because products usually have a lifetime, and if you don’t have an organization that comes up with the next product and the next and the next, then it will be a short-lived investment.

MS: There are people who are raising questions about [Apple Inc. CEO] Tim Cook and what’s next after the iPhone.

BR: Why don’t you come up with another half-a-trillion-dollar product? What’s wrong with you? [Laughs]

MS: In terms of people, I’m also curious about your involvement in politics. You held the first fundraiser for Barack Obama, or among the first.

BR: Not the first. I don’t know who the others were, but yeah, we’d seen Barack Obama on television. This is before he declared in Springfield in February ’07.

We saw Mayor Pete [Buttigieg] on Charlie Rose a couple of years ago. He was just a mayor. And then we started hearing about him late last year. And so I wrote, “To the mayor of South Bend, South Bend, Indiana: I would like to invite you to a fundraiser.”

With both of them it was hard inviting people. The first time, because Hillary was inevitable. We had a different problem with Pete because we sent the invitations in February, and he was really not known. And then 10 days before our meeting was the [Buttigieg] CNN town meeting, and that was really a spike. So we got 85 people to come to our apartment [in Manhattan].

MS: Is there anything, looking back on your career, that you would love to have done differently?

BR: Well, let’s see. I made a huge investment in a company my brother and I started, to make a hybrid electric power train for hybrid cars. Rosen Motors. It was one of those things that was an artistic success and a commercial failure. The technology was incredible. Some of it lives today in other companies, but not the promise that we had for it.

Other things, well, if I got another chance, I’d go to a liberal arts school because I’m more interested now in the cultural world. I went to Stanford after Caltech, and I saw the difference, because it had a student body that was interested in everything.

MS: So if someone in business school was interested in an entrepreneurial career, what would you advise him or her to do?

BR: I’d advise them to go to work in a company that’s doing something that would provide requisite experience—organizationally, maybe technically—in what the real world is like. Even though I went to business school, I don’t think it’s as helpful as getting industrial experience. And when I see now who’s in venture capital firms, they’re replete with people who’ve been in the industry. The other thing you learn by going into the real world is the network you develop. The network I got, even though it wasn’t industrial, but just by starting a conference and by starting a newsletter, I knew everybody in the part of the technology world I was interested in. And it was invaluable.

MS: You want to change philanthropy now?

BR: We live near Lincoln Center, and when we go to the ballet, we go to David Koch hall, and when we go to the Philharmonic, we go to the David Geffen hall. But if a person could go to a ballet at the Balanchine hall or a concert at the Leonard Bernstein hall, it would have such a different impact. There are 60 buildings at Caltech that have names, but there’s no Richard Feynman physics building, there’s no Linus Pauling chemistry building. The largest single contribution that we’ve made has been to start a biotechnology center at Caltech, and it’s a big deal there. And the woman who runs it, Frances Arnold, won the Nobel this past year. So the Donna and Benjamin M. Rosen Bioengineering Center is going to be the Frances Arnold Bioengineering Center.

Schenker is Bloomberg’s chief content officer in New York.

To contact the editor responsible for this story: Christine Harper at charper@bloomberg.net

©2019 Bloomberg L.P.