Federico Peña has worn many hats – lawyer, mayor, presidential cabinet member, investment adviser, and now venture capitalist.
He served more than five years in the Clinton administration, first as transportation secretary and later as energy secretary. He was the first Hispanic to hold either position. His public-sector resume also includes a long stint as mayor of Denver and work as a civil rights lawyer.
In the business world, Mr. Peña has served as president and CEO of his own investment firm. After leaving the Clinton administration in 1998, he accepted his current job as managing partner in Vestar Capital Partners’ Denver office. Vestar specializes in management buyouts, recapitalization, and growth capital investments.
Consequently, Mr. Peña has a unique perspective on the challenges facing Hispanic entrepreneurs. In a recent interview with HISPANIC BUSINESS, he said he will share some ideas on the subject as the featured speaker at this year’s HISPANIC BUSINESS Entrepreneur of the Year (EOY) Award gala. Sponsored by Goldman Sachs, the event will take place October 3 at the Westin Bonaventure Hotel and Suites in Los Angeles.
HB: What will be the focus of your address at the EOY gala?
FP: I may change this a bit, but I’d like to talk about this notion of what I call the emerging opportunities and responsibilities for Latino business people. I firmly believe that over the next 10 years there will be incredible opportunities for the Latino community in our country, not just domestically but globally. With that opportunity come very significant responsibilities. I am well aware that all of these Hispanic chambers of commerce are terrific, and they are growing by leaps and bounds, and that many Latino business people are actively doing scholarships or embracing schools or helping nonprofits. But I think there is much more that needs to be done in the Latino business community as it develops wealth and becomes successful. I’m looking more at the business community than the Hispanic political community to develop leadership within the next 10 to 15 years.
HB: Are there entrepreneurial lessons to be gleaned from the recent dot-com crash, and if so, what are they?
FP: There are number of lessons that investors, CEOs, Wall Street, and the media have learned. One is that having a visionary technology guru is not enough. You need an experienced CEO who has successfully run a profit-and-loss operation to run these dot-com companies. The visionaries, the young technology geniuses, are absolutely critical because they provide vision, ideas, and creativity, but that is simply not enough. You need an experienced CEO to run a company.
Another lesson is that the Internet is not a product unto itself. It is a tool. It is perhaps the most sophisticated tool that the business community has experienced in decades, but a tool all the same. It ought to be viewed as a useful device for maximizing an already profitable operation. The counter to that is obvious; the Internet was seen as the product itself by a lot of these dot-com companies, and that was a mistake.
Investors learned that you need to use the traditional ways of valuing companies. Investors, and therefore the market, forgot about valuations where you look at current earnings and results and revenues as opposed to future earnings or potential earnings. For some reason, both investors and the market divorced themselves from the very traditional notions of value and focused on things like hits and bits and eyeballs, which were not producing any revenues.
