June 08--Peter Kellner has always been a builder.
In high school he created the National Forum, a large program involving U.S. high schools pressing President Ronald Reagan and other leaders to discuss nuclear weapons on TV. After graduating from Princeton, he went to Hungary on a Fulbright scholarship and built the Environmental Management and Law Association, a still-active and respected environmental NGO in his family's homeland. Then he was off to Russia to create a company that would clean up oil wells.
While at Princeton, Kellner met Bill Drayton, who founded and heads Ashoka, the global nonprofit network for social entrepreneurs. "I remember emerging from my first meeting with him and thinking, 'I am going to attach myself to this guy for the rest of my life,' " said Kellner, who calls him his "hero, mentor and close friend." Drayton, the Johnny Appleseed of the modern social entrepreneurship sector, and Ashoka had a leading role in what would come next for Kellner.
After taking a leave from Harvard Business School and jumping to Yale Law School (he actually took several leaves from both universities but eventually finished both degrees), Kellner traveled with Drayton in Latin America and observed the Ashoka selection panels, where the organization selected the social entrepreneurs it would support.
There he met Linda Rottenberg, who worked with Ashoka then. They got to talking. "We had all these theories of entrepreneurship and said, 'Let's see if we can find the Steve Jobs of the emerging world,' " Kellner said.
That effort would become Endeavor, a global nonprofit that identifies and supports high-impact entrepreneurs who stimulate their economies with job growth and, in turn, give back to their communities. Borrowing heavily from the Ashoka model that Kellner had so admired, he and Rottenberg hatched their Endeavor business plan in 1996.
Their plan was to launch in Chile first but go global quickly: "We put together an Excel [spreadsheet] in the course of an afternoon with the number of entrepreneurs we would achieve in five years and where we would be on a country basis, and we were spot-on."
Kellner seeded the launch with his family's money, and during the early years in Chile and soon after in Argentina, it took a lot of hustle. "I was 26 years old with a backpack, talking about the model you know today. People thought I was nuts -- my background was a Russian oil company," he said. "I had dropped out of school, $750K in family money in this thing -- what was I doing? Those were some of the most challenging moments of my life."
But the hustle paid off: Kellner and Rottenberg made key connections with entrepreneurs and investors that opened doors. Endeavor steadily grew. It is now in 20 countries in Latin America, southern Europe, Southeast Asia, the Middle East and parts of Africa, and recently opened its first U.S. office in Miami. It supports more than 900 entrepreneurs; in 2012 alone Endeavor companies delivered more than $6 billion in revenue.
Rottenberg continues to lead Endeavor as CEO, and Kellner has remained on the board and is one of the nonprofit's large benefactors. "I never took a check from Endeavor, never invoiced for travel. I just never wanted to stop building," he said. "I have this disease."
In addition to his work with Endeavor, his philanthropic work and many other varied interests, including film-making -- we'll get to that later -- Kellner is one of the first global seed and early-stage venture capitalists to invest in technology companies across five continents.
He started his venture fund, Richmond Global, in 1995, while in his first year at Harvard Business School. One of his first and most successful investments was seeding aQuantive, which was among the earliest Internet ad-tech companies. "My friend [who started aQuantive] didn't have a lot of money but had a lot of great ideas," Kellner said. After aQuantive's IPO, Kellner continued to invest, often globally in the emerging markets, scoring big wins in India, China, Brazil and many other places. To date, he has invested in 52 companies.
In an interview last month at The LAB Miami and excerpted here, Kellner shared his thoughts on Endeavor and his other entrepreneurial pursuits, his investing style, and Miami's emerging entrepreneurial ecosystem.
Q. What moved you to push for Endeavor in Miami?
A. Miami was fortuitous. In the beginning Linda [Rottenberg, the CEO] and Edgar [Bronfman Jr., Endeavor's chairman] were not in favor at all, and they would tell you that. ... [After Cesar Conde suggested Kellner meet with the Knight Foundation'sMatt Haggman and tell him about Endeavor], Matt and I met, and a day or two later, he came to my hotel and said we would like to support Endeavor's launch in Miami. I was blown away because we were mainly in emerging markets. But the world has changed. There are large swaths of the U.S. that look a heck of a lot like the countries we exist in. Whether he knows it or not, Matt Haggman launched a tsunami. His conviction was about Miami. In retrospect, a city-based approach makes so much sense in this country. I can think of several [ Endeavor Miami] board members who said "I am really doing this for my children and grandchildren, I want them to grow up in a robust prosperous city." ...
The model that Matt put in place is to get that foundational seed capital and then do what we have to do to get individual board members to commit to sustain the organization for five years. That is the model. Matt has done far more for Endeavor than he realizes. Endeavor took its time to figure it out; Bain did a study, there was plenty of due diligence. But while this was going on, I was falling in love with this place ... and decided to make a move down here and go back to my roots helping create the local organization.
Linda and Edgar and the team were extremely methodical about the decision to come here, but I think they are all quite happy with that decision ...
I have over the years taken great delight joining early [Endeavor] countries. I am on the board of Endeavor Jordan, and that is similar to what happened here. If I can be helpful in other new launches, that is where I want to be.
Q. What does the Endeavor Miami experience have in common with Amman, Jordan?
A. Amman is a wonderful comparison in some ways. Amman has an incredible board, and without a committed board, Endeavor will not succeed. Miami also has a phenomenal board. Both Amman and Miami had a lot of activity around accelerators and incubators and establishing programs in the universities.
Of course, that comparison can only go so far. I had my doubts when we started in Jordan, but King Abdullah really got it. The Jordanians are the top tech entrepreneurs in the Arab region. They don't get cut checks like in the UAE [the United Arab Emirates, a country Endeavor is also in], they aren't resource rich; in Amman, Jordan, they don't have much to work with except their brains. If Endeavor can work in Amman, Jordan, it can work anywhere.
Q. Tell me about Richmond Global.
A. In 1995, while at Harvard Business School, I made my first investment in Internet Securities, founded by Gary Mueller, who was a founding board member of Endeavor, and he was the first person to put financial securities in emerging markets online, a brilliant idea.
Q. What does Richmond Global invest in now?
A. We do all tech except clean tech, biotech and hardware -- everything else is on the table. We are very opportunistic -- mobile enterprise, SaaS [software as a service], some consumer. We do seed and early stage, and we're global. We have offices in New York and San Francisco, and I am hoping we can place an office here, but it's a work in process.
Q. How did Richmond Global get its name?
My grandfather was a very successful banker in Hungary before the Soviets took everything ... [after arriving in the U.S. in 1947 with his wife and son] he got a job in a tie factory sweeping floors, and my grandmother took on an accounting role. About 15 years into this, they convinced someone to loan them enough money to take over the factory.
I grew up with all this history -- my grandfather fought in Stalingrad ... -- and this history of entrepreneurship. My dad is a super-high achiever, an incredible athlete, a nationally ranked squash player when he was in his 30s. I always felt there was a high bar. ... My dad started one of the first merger-arbitrage hedge funds. I was surrounded by that success growing up, I tried to work super super hard ... I watched my dad always giving unbelievable amounts back.
My grandparents sold the factory and bought this farm in upstate New York. ... One of the properties was called Richmond, built by the Livingston family that signed the Declaration of Independence. Richmond stands for ... achievement in America, rich world, but mostly to me, it symbolizes the story of my grandparents and my father.
Q. How would you describe your investment style?
A. Super hands-on. I've had 52 investments, eight losses, since 1995. I am very concentrated because I am very hands-on. There is nothing exciting to me about sitting behind a computer and having an existential relationship with an entrepreneur. I need to know them. I need to know their stories. I need to coach, and I learn from them. Stop learning, and you are basically dead.
Q. Why are you bullish on Miami's emerging entrepreneurial ecosystem?
A. The people make me really confident. They are so committed. There is real talent here, and this is a place that can attract talent. And why not Miami with its tax base, its weather, its culture and diversity that's growing? Miami still needs better transportation infrastructure, but it has access to Latin America.
One thing I have heard since I arrived and I have kind of heard enough of is "Gateway of Latin America." Well, yeah, but this is a place in and of itself, where entrepreneurs can and should thrive. We need to create a framework recognizing that it's both. Frankly, it's a gateway to Europe, too.
It's the conviction of the people. Andres Moreno [founder of Open English] doesn't need to be in Miami. But he's committed. Jesus Rodriguez [founder of KidoZen] -- he's as good as it gets in Silicon Valley. Why is he here? There are a lot of proof points that the best in class are here. Look at our [Endeavor] board: There is a lot here. People really want to engage here. I could fill my days meeting people.
Q. Do you think importing talent is essential to Miami's tech-hub strategy?
A. I'm mixed. I can smell the ambition in the air here. I don't smell it in New York. I smell entitlement in New York. Here there is ambition, and I think it comes from the immigrant experience. I'm the son of immigrants, and my friends here are children of immigrants who are still building amazing things.
Miami has a beautiful narrative, a high-quality immigrant population, a city endowed by all kinds of resources, not the least of which is it is one of the wealthiest cities in the country. That wealth has not yet been put to work on this particular front, but it will. I think a lot of wealth is going to come here that targets VC once we get the momentum. Miami has a wonderful narrative, despite Tom Wolfe [whose book, Back to Blood, paints an often-unflattering picture of Miami].
Q. What's this area's biggest challenge, then?
A. I think our biggest challenge is patience. These things take time. Building a cadre of entrepreneurs, having the success stories, creating the foundations -- look, could we benefit if the mayor got super-progressive and did what Bloomberg did? There is this huge lot in [Miami's] Midtown ... Can you imagine an all-glass space there, ... la [Las Vegas entrepreneur] Tony Hsieh, where entrepreneurs can thrive? Zuckerberg, all of Silicon Valley would pass through there -- they all want a presence here, and we haven't made that available. Look at that Vegas example. I say if it can be done there, why can't it be done here? What Vegas has is that critical mass of constant flow, but boy, is it hot. Something really interesting could take place here if a really forward-thinking developer actually did that.
Q. How do you see the area's funding landscape?
A. Capital follows the entrepreneur, so it is really about the entrepreneur. There is no chicken-and-egg here. The fact that we don't have capital velocity right now doesn't concern me. It'd be nice, but the fact is, we don't have a base of high-impact entrepreneurs in Miami yet. That is what we are building, that is what we are all building -- Endeavor, Venture Hive, The LAB, we are all in this together. I really like that about this ecosystem. It is very complementary. If anything, we could even be more connected ...
Here's what I think will happen: You have a couple of companies that really succeed, and people notice, and people start organizing capital more formally. You move from primordial (angel networks) to more formally organized to institutional -- that's the phased approach. You see this all across the world. It's a function of more formal capital organization around opportunity that is visible. One of Endeavor's contributions is we make that opportunity visible by collaborating with groups like LAB and through our own system of selection. We are now closer to primordial than formal, but these things take time.
Q. Tell me about your film-making career.
A. Oh my, how did you find out about that? I went to this private boys school in New York. It was a very creative school. ... About six of my best friends out of a class of 17 went to Hollywood. While I was in Yale Law School, [David M.] Rosenthal and I made a documentary called Dylan's Run. My classmates and I have subsequently made a few other films. We made See This Movie, Seth Meyers' first film, and I helped write a movie called Falling Up. That's a fun one. It had Snoop Dogg.
It's kind of a passion of mine. I have always done it with my grade-school buddies. If someone comes out of the woodwork and says let's make a movie, I wouldn't do it because I can tell you, Nancy, that of the roughly five movies I have either produced and/or storied or had a small cameo in, I've gotten I think one check for $12 [laughing]. I think the industry is rigged.
Q. Are entrepreneurs born or made?
A. I gotta say born, hmm, but maybe they are made? What would have happened if my family hadn't had that background? Entrepreneurs are born and then they are made.
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