Paul Allen’s Vulcan Reboots Despite Departures
Last year saw a lot of turnover, but the Microsoft co-founder’s family office is investing while rebuilding the team. In the works: a new CIO.
Ten months after Vulcan Capital lost its chief investment officer, Paul Allen’s family office is still looking for a new leader. Nonetheless, with Abhishek Agrawal, the head of Vulcan’s growth equity fund based in Palo Alto, California, acting as the firm’s interim CIO, Vulcan continues to make investments, including a plan to boost its presence in impact investing.
In October Vulcan Capital, the investment unit of Allen’s Seattle-based Vulcan Inc., participated in a $542 million Series B financing led by Mountain View, California–based Google for Magic Leap, a mysterious Florida-based company. In recent years Allen, 62, who co-founded Microsoft Corp. with Bill Gates, has also built up a significant real estate portfolio and has been a major player in the transformation of Seattle’s South Lake Union neighborhood, now a hub of condos and office space, including the headquarters of Seattle’s online retailing giant Amazon.com.
In 1986 Allen co-founded Vulcan — named after the Roman god of fire — with his younger sister, Jody, to manage business interests that now amount to about $17 billion.
The current uncertainty in the investment office is nothing new at the firm, however. Paul Ghaffari, who had handled investments for George Soros and co-founded hedge fund firm FrontPoint Partners, joined Vulcan Capital in November 2010, to end a period of unrest at the family office. Ghaffari’s predecessor, Chris Temple, had joined Vulcan in 2008 but lasted only seven months as CIO before departing. During that time Allen’s reputation took a hit when the Vulcan-controlled cable company Charter Communications filed for a prepackaged bankruptcy on March 27, 2009, and emerged about seven months later.
Ghaffari, who departed Vulcan in April 2014, is credited with helping to better organize Vulcan’s equity, technology and energy investments. Under his watch, Vulcan opened a Palo Alto office and hired Agrawal, a former executive with growth equity firm General Atlantic, to run it.
Ghaffari was not the only high-profile 2014 departure from Vulcan. In October Jody Allen stepped down from her post as CEO for what was described as an indefinite sabbatical. Technology adviser Parag Garg, previously an executive with Amazon and Microsoft, left in April after six months on the job for a Seattle home-improvement data start-up, Porch. In August Allen hired Barbara Bennett, previously chief financial officer at Digital First Media and also at the U.S. Environmental Protection Agency, to fill the newly created role of Vulcan president and chief operating officer.
Vulcan Capital is seeking a chief investment officer with direct investment experience, as opposed to an expertise in selecting managers, according to a person familiar with the search. Vulcan has a complicated structure. Paul Allen and the CEO — still listed on Vulcan’s web site as Jody Allen, although Bennett has taken up a number of her reports — play an active role in investment strategy, according to the job description: The new CIO will work with “the COO, CEO and Founder to set investment goals and strategies.” This makes Vulcan very different from MSD Capital, the New York–based firm that manages the fortune of computer billionaire Michael Dell, who has a very hands-off approach to investment management. Under the longtime leadership of Glenn Fuhrman and John Phelan, MSD has a reputation as one of the top investment managers in the world.
In addition to a CIO, Vulcan Capital is currently seeking a credit analyst, an investment analyst, a managing director for public equity and a senior quantitative investment risk manager. The public equities hire must have experience in long and short equity investing. The senior risk officer must “design, build and implement a risk framework and systems for the global public equity team,” according to the job description.
The absence of a permanent CIO at the helm of Vulcan Capital has not stopped Vulcan from committing capital. The family office continues to develop its extensive Seattle real estate portfolio. Headed by Ada Healey, Vulcan Real Estate this month announced plans to begin building a large apartment project near the University of Washington in Seattle this spring. The building, located at 4041 Roosevelt Way NE, is expected to have 216 apartment units, 8,713 square feet of retail and parking for 200 cars and 100 bicycles. The project is one of Vulcan’s first outside the South Lake Union area.
Then there’s Magic Leap. The company, which was reportedly started in 2011, is led by CEO Rony Abovitz, a flamboyant tech entrepreneur who sold his medical device company, MAKO Surgical Corp., for $1.65 billion in 2013, to Stryker Corp. Magic Leap has been the subject of great speculation about what it is actually developing, with both Abovitz and the company saying little about the project. According to patents and other reporting, however, the company seems to be developing some kind of retina-based augmented-reality device.
Allen is not just retooling his investment office. The owner of the Seattle Seahawks, which recently lost to the New England Patriots in the Super Bowl, is also revamping his philanthropic operations. Vulcan is currently looking for a new chief philanthropic officer, who will report to Bennett. Among the requirements for the role is experience with so-called impact investing, that is, using investment capital to produce financial returns while also having a social or environmental benefit. A requirement for job is that that person promote “the COO, CEO and Founder’s desire to crate a positive impact beyond the bottom line, via their investment strategies.”
Spoken like a true Vulcan.