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Peter Barris T'77
Managing General Partner, New Enterprise Associates

Center for Private Equity and Entrepreneurship (CPEE): You haven't always been in the private equity business. How did you wind up in the industry?

Barris: I got into private equity about 12 years ago. I started my career out of Tuck at General Electric in a corporate staff position, working with a staff that ultimately reported to Jack Welch. At the time Welch wasn't the CEO of GE. He was the golden boy running what was then called the Components and Materials group: plastics, silicones, industrial diamonds„and also a few oddball businesses that didn't fit in anywhere else (although they were very good businesses), like medical systems and batteries. Welch was managing that group out of small office in Pittsfield, Mass. Although it was a corporate job, he was kind of rebellious and refused to work at corporate headquarters. He hired one MBA a year to be on his staff as an internal consultant, to go around and do three- or four-month projects. I did a project in medical systems, one in plastics, one in silicone, and one in batteries. It was a great job, but it was also pretty high-pressure because I was essentially a one-person consultant reporting to the division general manager.

The job was unique because it gave me visibility at the corporate level, even though we weren't housed in the corporate headquarters. So on one hand, I traveled to these divisions with the power of the group behind me. On the other hand, we could wear IZOD shirts and khakis to the office in 1977—long before the concept of casual Fridays!

I worked at GE for 10 years in a variety of positions. Then I went to Florida to work at the Battery Business Department of GE. That department was quite small, and I chose it because I didn't want to be a small cog in a huge machine—I wanted exposure to all facets of running the business. After that, I spent a few years in marketing and sales management, and wound up running the East Coast sales operation.

As much as I learned in the Battery Business Department, I knew the industry wasn't going anywhere. I knew someone in GE Information Services based out of Rockville, M.D., and sought a job in that area.

Here's an ironic anecdote: When I was at Tuck and we were banging away at the terminals in the basement of our dorm, I always got someone else in my study group to do the time-sharing projects. I was never very interested. Time-sharing was a concept developed at Dartmouth by Dean Kemeny, and the commercialization of time-sharing was done by GE Information Services. So I wound up as an officer in the business of the very thing I had avoided at Tuck!

My initial title within Information Services was manager, venture developments—it was a brand-new position. The guy who was running Information Services at that time felt that we needed to get out of the time-sharing business (about when the PC was coming along), and figure out a new direction to take Information Services. He basically asked me to solve that problem, in part by starting up new ventures within GE. That was my first introduction to small businesses and entrepreneurial enterprises.

In that job, I started five different ventures within GE. Then I moved on to different roles within GE Information Services, ultimately becoming an officer within the company and managing a P&L-based field office out of Chicago that covered half the U.S. In those roles, I acquired entrepreneurial enterprises (sometimes venture-backed companies) and, in doing so, I gained experience in creating businesses within a large business (new ventures within GE), and also in buying existing entrepreneurial enterprises. To integrate those businesses successfully within the GE infrastructure, I really had to understand what made those businesses tick. I had to understand the entrepreneurial culture and what GE could and couldn't do within that culture. I really enjoyed that part of the job.

Eventually I was offered a job from the former president of GE Information Services to run the turnaround of a systems software company called UCCEL (University Computing Corporation) in Texas. He hired me to be his right-hand man. The company was a break-even mini-conglomerate that was not doing very well. Initially I was in a corporate development role (buying and selling companies) and in that role I sold off eight of our businesses. Then we focused on the two remaining businesses: systems software and banking application software. After the restructuring, I was ran the systems software piece of the business. In this role I acquired many small companies (ones with $5-$20 million in revenue) and gained even more experience working with entrepreneurial enterprises. We built up the systems software business and ultimately sold the company (they made us an offer that we couldn't refuse) to Computer Associates for what at that time was the largest IT transaction ever: $800 million. It doesn't sound like a lot now, but in 1985 it did!

After the sale of UCCEL, I worked for a while at Morino Associates (another public systems software company). The company was eventually renamed LEGENT and became the replacement for UCCEL—and was the main competitor of Computer Associates.

I still had a bug for entrepreneurial enterprise through all this. At that point, the landscape was changing from centralized computing to distributed computing, so I decided to start a company that was a pure-play in distributed computing. The guy who I initially worked for at GE Info Services (who gave me the venture job) had become a general partner at New Enterprise Associates. When I decided to start this pure-play company, he said, "Work out of our offices and we can help incubate this company." So when I began working at NEA, I actually intended to start a company. While I was there, they were paying me, so this was the best of all worlds. Obviously NEA was going to get first dibs on any investment opportunity, but that was fine. Eventually they asked me to help out with some of their troubled companies, and I agreed. I wound up helping a company in Boston, and then, since I was traveling, the partners asked if I would check out some companies that had sent business plans to NEA. The next thing I knew, I was sitting in partner meetings making investment recommendations! One thing led to another and finally they said, "Why don't we experiment for a year—you stop all this entrepreneurial stuff and just do VC, and we'll reevaluate at the end of the year." And we did, and that's all she wrote. So I technically began at NEA in '91 working on my own business, but I officially joined the firm in '92.

It was a terrible time economically, similar to today's environment, but I believed in entrepreneurial enterprise and new businesses, and I felt there was a big role for them in the economy. I certainly didn't predict the bubble era we wound up in during the 1990s.

CPEE: Given the somewhat indirect path you took to a career in private equity, what is your advice for Tuck students who know they want to pursue that line of work right out of business school?

Barris: If there is a pattern to my career, it is this: I put myself in positions where interesting "accidents" could happen. I answered a letter on the bulletin board at Tuck that led to my first job at GE. That letter was about a job in plastics—and it wasn't the job I eventually got. It also wasn't the typical way one went about getting a job at GE at that time, since most folks interviewed for the traditional corporate GE track. I created an opportunity for myself by accepting the fact that I didn't know where that first job was going to lead. Later on, I created the same sort of opportunity for myself by initially associating myself with NEA in a nontraditional way. Throughout my career, there are plenty of similar examples.

So, I guess the lesson is that you have to take some chances and be open-minded. You can't be too rigid and try to plan every move of your career. If you network and get involved in many different areas, opportunities will come your way. You don't have to know at the outset exactly what effect each decision will have on your future. I don't believe in luck. I believe in the intersection of opportunity and preparation.

To those MBAs who want to pursue careers in the venture capital or buyout areas, I would say this: Private equity is still a relatively ill-defined industry; it is beyond the cottage stage, but it's not yet mature. Thus there is no well-defined way to enter the business (like there is for MBAs entering the investment banking industry, for example). I came in from the operating side of the business. I am biased of course, but I believe (at least for VCs) that the best strategy is to get industry experience first. Then you can leverage that industry experience back into the VC business. Industry experience is less important as you get into more transaction-oriented businesses (such buyout), but VC is not really transaction oriented. Working with the company after the transactional phase is the most important thing, and, if you don't know that industry and you haven't sat in the seat of the guy you are counseling, you are not that valuable. In today's very competitive environment, deals are won and lost based on VCs being able to really understand companies' situations.

CPEE: So you don't subscribe to the model of MBAs joining VC firms right out of business school?

Barris: I am going to contradict myself here: If you can get one of those jobs right out of business school, take it. Private equity is a hard industry to get into, so if the opportunity presents itself, make the most of it. But I think you become more valuable to venture firms, and it's ultimately easier to succeed in the business, if you've been in industry first.

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