Ray Rothrock: Venture Capitalist with a Cause

Ray Rothrock - Venrock

Most venture capitalists embrace the career after a stint as a banker, CEO, or tech executive. Then the average tenure as a VC spans over 15 years, during which they groom two new startups per year, and enjoy the lifestyle attached to that profession. Eventually they retire, often rich, and “vanish to the sunset” as John Fisher, the founder of Draper Fisher, elegantly put it.

Few would have anticipated that Ray Rothrock, would have gone the other way, and reversed from a successful quarter century role at Venrock, the famous Rockefeller venture firm, to spearhead a then fledgling start up as his last assignment in his professional journey.

In hindsight, the mild-mannered Texas-born nuclear engineer does not fit into any mold. Half of him is rooted in pushing new frontiers and the other in supporting public service causes. “Without this dichotomy and balance”, says Brian Ascher, his 20-year-colleague at Venrock, “it is difficult to size him properly”.

Fort Worth Texas in the 1960s epitomized middle America. Rothrock grew up in a middle class family, his father a machinist and his mother a teaching aid. As a teenager, he would help his father fix hardware, unmount TVs piece by piece while his mother would oversee his grades.

These formative years forged Rothrock’s temperament and skill sets. His seven years in the Boy Scouts compounded them: once, he even received the Atomic Energy Merit badge, which led him to interest in nuclear energy. He joined science fairs and receive a recommendation for Texas A&M.

Entering Texas A&M in 1973 was the first step out of home and of a stellar academic resume. Father and son had visited Baylor and other colleges as young Rothrock still hesitated between studying Physics, Music or Engineering. At Texas A&M the Head of the Engineering Department, impressed by his record made the choice for him.

“Join us for summer school, he said, while he was calling the registrar’s office,” Rothrock says today. That was it. Four years later, his BS degree summa cum laude in hand, Rothrock was ready for the world.

During his senior year, Rothrock applied for graduate programs. One of his A&M professors, a PhD from MIT encouraged him to send his application to the school most still consider today as the most prestigious in academic sciences. Their answer: full scholarship.

“Imagine what it represented to go and study with a full ride at MIT,” Rothrock says. “The day I received notification that I was accepted, I called my dad and mom (who had never heard of the school and thought it was in Michigan); they were silent on the phone because I was going to leave Texas.”

In 1978, with his MS degree in nuclear energy in his pocket, Rothrock wanted to take a pause, a common practice among PhD Candidates. He was hired by Yankee Atomic Electric Company which managed four nuclear plants in the North Eastern states of the US.

Two years into Rothrock moved to Exxon which had a uranium processing division. Then everything unraveled: Three Miles Island, and plunging uranium prices. One day a VP came from New York with manila folders and shut the entire division.

Unfazed by the situation, Rothrock parlayed the division’s closing announcement into an opportunity. Having read an article about Silicon Valley in National Geographic – then barely a few orchards – he packed his belonging in his car and crossed the country.

For two years Rothrock consulted in the Bay Area for startups. The last of them was a small venture headed by Vinod Khosla and Scott McNealy of Sun Microsystems. It became one of the Valley’s flagships and a springboard for Rothrock’s future endeavors.

In 1984, Sun had fewer than 200 employees in 1984 and $9m in revenues. But it was staffed by an all-star team: Eric Schmidt in software engineering; Carol Bartz in marketing; and Andy Bechtolsheim and Bill Joy in engineering.

Rothrock liked the startup’s stamina: the Saturdays, for example, when his marketing group was asked to come in jeans to load trucks with boxes of new workstations. Working for Bartz allowed him to put his technical skills to work, helping drafting the S1 document for the upcoming Sun Microsystems IPO in 1986.

During the process, he met with the company’s VCs, John Doerr, among others. The VC world appealed to Rothrock’s practical and academic skills. And the workstation company transformed his life in more ways than one: at a trade show, he met a Boston sales representative who graduated from Berkeley.

He got engaged and married while applying to Harvard Business School. Rothrock says, “An MBA was a must have credential to become a VC at that time. So, I tried.”

Rothrock then entered Harvard Business School and graduated among the elite. Sun’s IPO helped Ray and his wife, Meredith go unscathed through tuition costs. Then he competed with 50 other candidates for a job at Venrock.

In 1988, nothing rivaled the blue-blooded venture capital arm of the Rockefeller family: the most venerable institution had started in 1938 and renamed itself Venrock in 1969. A decade later, after being part of the Apple Computer’s Series C round, the partners and the Rockefeller family realized that a New York centered outfit would soon be sidelined for Silicon Valley deals; they eventually took the plunge, sent an outpost partner, Tony Sun, and, in 1997, opened a satellite office in Menlo Park.

Ray Rothrock joined Venrock first in New York but then returned to Silicon Valley a decade after he left Sun, as the wingman of another MIT/Harvard MBA alumnus, Tony Sun, the first Chinese-born partner in an American VC firm, and a pioneer of the US-Chinese venture capital development later in his career.

Their charter: to make a name for Venrock on the West Coast and land the best deals. During the next two decades, the choices and results exceeded expectations.

In fact, Venrock capitalized on its strengths. On the one hand, it built upon its technology depth and invested in complex technology solutions. On the other it benefitted from multi-geography DNA, and took equity in startups in New York (Doubleclick), Israel (Check Point) and then China (with GGV as a partner). Rothrock increasingly became a security specialist at a time when cybercrime and digital bandits started to menace the Internet, corporations and governments.

But in truth it all started with Check Point. By 1995, few startups in Israel had expanded beyond their backyard. As a non-Jew in Ramat Gan, near Tel Aviv, Rothrock was in a foreign environment, with a trio of post teenagers, self-taught entrepreneurs whose ambition was to protect the web with a firewall.

They had no corporate background, little formal training, no U.S. exposure, yet Venrock and Rothrock bet on them. Rothrock used his Sun Microsystem relations and Check Point eked out a life changing sale agreement with the workstation company, opening doors in Wall Street and corporate America. Less than 24 months later Checkpoint’s IPO and subsequent ascent rewarded the risk.

Success feeds success. By 2001, Double-click and Check Point alumni started their own start-ups and Rothrock, now a recognized world expert in security, backed them up (PGP, Vontu, Shape Security). Among them, Imperva went public at an ultra-high valuation, the most successful of 2011 IPO. Forbes selected Rothrock for its Midas List, the hall of fame for venture capital.

However, not everything went well and his environment changed. On the one hand, some of Rothrock’s investments fail, leaving scars. After years touting space technology, with Space.com, long before Elon Musk, he falls short in bringing it to shore. Venrock partners refused to invest in Yahoo, a deal pitched internally by Tony Sun and Rothrock.

Tony Sun, Rothrock’s mentor, left Venrock giving the baton to his uber-loyal right hand man. By that time, Rothrock’s son, Nathaniel, had completed his liberal arts studies from Middleburg College. Almost ineluctably, time had come to leave the comfort of Sand Hill Road for new pastures.

Ascher, Rothrock’s partner at Venrock confides: “Ray shows that it is more about character than anything else. It was a personal decision and he is always about giving 100% and serve a great cause.”

First destination: Washington. Rothrock’s fellow VCs elected him to the helm of the National Venture Capital Association (NVCA), for the 2012-2013 term. The NVCA shouldered the U.S. government battle against malware and cybercrime and testified about cybersecurity in Congress.

The Texas engineer was heard on the Hill and his crusade was echoed by daily news of foreign intrusions. Rothrock huddled large corporations’ CEOs to protect US digital assets. Because of his ties to MIT, he enrolled Susan Hockfield, then President of MIT, to foster higher scientific education – a key factor to increase America’s competitiveness.

The second destination was a U-turn. After 25 years in venture capital, watching entrepreneurs bringing to life revolutionary solutions, Rothrock itched to go back to the real arena. He had pitched everyone and everywhere about cybercrime, yet watched technology at work from an observer’s seat as a financier.

A platform was coming to age, where has invested since 2004, RedSeal which harmonizes large corporation digital defense systems. Since he didn’t need the money, he could have retired, or continued to dabble with other people’s money.

Instead, he gave up the golden job and returned to its startup roots.

By 2013, RedSeal had not yet taken off after more than ten years. The first day as CEO, Rothrock rolled up his sleeves and made tough decisions, firing most executive staff members and realigning strategy.

“Ray has always been a hands-on VC, close to operations,” says Irwin Federman, an iconic partner at USVP and board member with Rothrock at Check Point since 1995. The next day Rothrock hit the road, traveling 15 days per month in the U.S. and abroad. Borrowing a page from Steve Jobs, he realized no technology reaches the top without an evangelist.

Gradually, RedSeal’s message sank in. “Cybersecurity is fraught with fear as the main driver,” says Federman. “Corporations load themselves with appliances against the next wave of attacks. That is why RedSeal is so useful.”

Rothrock’s corner office and board room acquaintances realized his company tackled a broader issue: corporate survival. Orders rained in and since January 2016, RedSeal’s revenues surpassed budget. Competitors now predict that RedSeal is on a fast growing trajectory with an eye to an IPO. It would be Rothrock’s final hurrah.

Rothrock’s ultimate pursuits will last beyond RedSeal. The drummer and clarinet player migrated onto bass guitar fandom and has not given up on his musical penchant, performing in rock concerts with his son in a Silicon Valley band half his age. Rothrock also sponsors Texas A&M liberal arts studies and sits on the board of UTIMCO, the third largest education endowment in the U.S.

But Rothrock’s journey cannot be summarized as a list of academic, personal or professional achievements. The quasi-patriotic zeal behind RedSeal underlies a more secretive aspiration which started long ago, during his Eagle Scout days.

In an old interview with his alma mater, Texas A&M, Rothrock reminded how a handful of nerdy engineers set to create the university’s first orchestra. Rebuked by the officials again and again, they brought in their own instruments and, after months of perseverance, staged its first philharmonic event, with Rothrock playing Johann Strauss’ Die Fledermaus in front of his parents and hundreds in attendance.

The discrete, self-effaced personality hides a strong will and an appetite to get things done, when others believe it  impossible and, more so, when it serves a higher purpose.