Ric Elias says Red Ventures' edge is operating improvement, claiming a company bought at 10 times can be worth about 4 times within two years.
Red Ventures stayed bootstrapped for a decade, taking its first outside capital in 2010 from General Atlantic before Silver Lake followed about five years later.
Ric Elias credits survival, humility and a constant fear that good times would end for early success, and says money past a certain amount does not change lifestyle much.
Red Ventures' founder builds companies and a life around well-being
Ric Elias built Red Ventures into an operating-led private equity platform after a near-failed start, and he holds that culture is set by what a company tolerates. The Hudson River landing changed how he measures success, with inner well-being ranked above outward status. He now points his capital and attention at purpose, with Puerto Rico as the clearest case.
Takeaways
Operating improvement, not financial engineering, drives returns. Red Ventures is an operating private equity platform with permanent capital. Ric says a company bought at 10 times can be worth about 4 times within two years. He avoids sellers who are running away and prefers businesses with one or two variables.
Culture is what you tolerate. Red Ventures writes culture into seven belief statements. Ric's basketball team fired a jerk of a free agent and suspended its best player, then went from never making the playoffs to one game from a championship. COVID eroded operating rigor and in-office intensity.
Being well matters more than being good. Ric defines good as external circumstances and well as internal peace. He knows few wealthy people who are truly well. Money can corrupt, and past a certain amount it changes lifestyle little. He calls vanity life's greatest sin.
The Hudson River landing reshaped his priorities. Ric sat in 1D when an explosion hit on takeoff. For 3.5 minutes he was certain he would die. Afterward he let go of guilt, forgave himself and began living with more purpose.
Puerto Rico is where his capital now goes. After Hurricane Maria, Red Ventures pledged to move Puerto Ricans back to the island with real jobs at US salaries. It now has five companies and hundreds of employees there. Ric says he stopped investing in funds.
AI will disrupt every workflow and platform. Red Ventures was late to mobile and is trying not to be late in AI. Ric expects his own role at the company to change within three to four years.
How Red Ventures got built
In January 2000 Ric and a former colleague started with two aims, a company they would want to work for and one that would outlast them. The first plan was a paper-based search engine pitched on three PowerPoint charts.
They raised $2m from friends and had $117,000 left by November with no revenue. Selling marketing programs and consulting kept the company alive, and in 2004 it repaid investors with a 10% return.
In 2004 and 2005 Google became the aggregator of intent. The company turned to helping brands defend themselves, built on technology that mapped toll-free numbers to online experiences.
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Its performance-based pitch of outconverting clients by 30% became the first unlock between 2006 and 2010.
It took no outside capital until 2010, when General Atlantic became its first investor. Silver Lake followed about five years later.