John Mumford: An innovative venture capitalist turns to philanthropy

The venture capital industry has honored John Mumford, a founding partner in the Silicon Valley firm of Crosspoint Venture Partners, with its lifetime achievement award. But it was not just his skill in leading the early-stage venture firm to success that earned Mumford this respect; it was also his reputation for maintaining the highest standards of ethics in his dealings. Recently, the W. P. Carey School of Business inducted Mumford (Accountancy, '67) into its Alumni Hall of Fame. That evening Mumford shared a podium with William Huizingh, the now-retired professor who turned Mumford's life around while he was at ASU. Grateful former students, including Mumford, have endowed a teaching award in Huizingh's name. Now Mumford hopes to emulate his mentor by helping young people who are off to a bad start.

For California venture capitalist John Mumford, it's never been enough to simply bankroll a promising project, then sit back and wait for his share of the return. "I've always had a sense of urgency in my business life. I'm a 'doer,' so I'd rather get in there and help build something. There is the excitement, the fun part — and the money follows," he explained.

In fact, Mumford and his team at Crosspoint Venture Partners are as likely to conceive a new product or implement an innovative service themselves as they are to fund other entrepreneurs' visions. They don't always exit once the checks are signed, either; if necessary, Mumford will speak up at a board meeting, give advice on management issues or review a marketing campaign.

Since 1970, when Crosspoint was founded, he's helped launch dozens of companies, including four private ventures that went public. Today, his hands-on approach has evolved into the vastly successful "seed venture" strategy now the model for small business growth nationwide. And this fall, almost four decades after graduating from the W. P. Carey School of Business, Mumford was inducted into the Alumni Hall of Fame.

But he's not ready to retire. At 63, he's easing out of the venture capital mainstream and into full-time involvement with two nonprofits — Amer-I-Can, a life skills and gang intervention organization founded by football legend Jim Brown, and Young Life, a Christian youth ministry.

"The excitement and commitment I used to feel towards getting a company started is now going towards solving other problems, the problems of our nation. I started to funnel money into these programs a number of years ago. Now, that's where I want to spend the rest of my time and energy," Mumford said. His eagerness to shift gears from a hugely profitable career to focus on the lower-key philanthropic path is more easily understood once Mumford opens the door to his early life.

"I was a bad kid, an alcoholic by 16, always in trouble. Even though I made good grades academically, I was kicked out of high school and went to Vietnam at 17 at the suggestion of my last arresting officer," he recalled. During his two-and-a-half year Navy service, Mumford worked as an air traffic controller on an aircraft carrier. Post-discharge, he enrolled at ASU, balancing schoolwork and two part-time jobs. It was there that he met William Huizingh, an accounting professor who became Mumford's friend and mentor, and later, steered him to the graduate program at Stanford.

While at Stanford, Mumford met an entrepreneur close to retirement age and looking for an apprentice of sorts. Before Mumford graduated, they collaborated on a few start-up projects, but once armed with his MBA, Mumford began what was to be a brief foray into the corporate world.

"I worked for IBM as a systems engineer, then went with KPMG as a management consultant. Got my CPA. But after a short time, it became obvious that working for big companies was not my schtick," he recalled. "I got in my El Camino pickup truck and drove from Dallas back to the Santa Clara Valley — soon to be known as the Silicon Valley — taking a 50-percent pay cut."

There, Mumford began testing a daring idea: take an intriguing concept or idea, pair it with an unproven team and build a new company around the two. It worked, and Crosspoint's entrepreneurial approach to venture capital, christened "seed capital," was launched. Early start-ups included food machinery automation companies — Santa Clara was an agricultural hub — and office products. One, Office Club, became Office Depot. Now the world's second-largest chain of office-supply stores, Office Depot reported revenue of almost $14.3 billion in 2005.

"Of the 25 or so companies Crosspoint started in the Bay area, most of them would not be categorized as 'high tech.' Basically I went after anything that made money and didn't require a lot of capital to go, because I was borrowing money from banks to fund them," he noted.

By the 1990s, though, he and fellow Crosspoint partners became more focused on business-to-business e-commerce, as well as the whole communications networking sector. "We started more companies in those two sectors than anyone, and as a result, ended up with the best returns of the venture business in the '90s. A trademark of ours was that we came up ourselves with the ideas for 25 percent of the companies we backed," Mumford continued.

During this period of rapid growth, Mumford grew to believe that it is "fine to try and fail." Failure offers a unique opportunity to learn essential lessons that will fuel future successes. Besides, he learned, early on, that he was willing to risk big for big payoffs. "We are in the business of taking very high risks. Crosspoint was set up to try to hit grand slams, which means we are going to strike out a lot. We are not an incremental investor; we risk the most to reap the highest rewards," he added.

Mumford also was an initial-stage investor in Ariba, Buzzsaw, Callidus, Centerbeam, Comergent, Connectify, e2open, TestMart, Alliente, and WhereNet, and backed three companies besides Office Depot that went public — Hello Direct, Inmac and Ariba.

In 2000, Mumford made a far-sighted decision that likely shocked investors: he returned a billion-dollar fund and told his investors returns were over. His timing was right. Six months later, the bubble burst, and Silicon Valley began its high-profile tumble. Around then, Mumford realized that his wildly exciting career had overshadowed his personal life. Family time with his wife and four children had long taken a back seat to work. During an 11-year period, he didn't take a single vacation.

"If you are wired the way I am, being an entrepreneur and highly driven, it was always work I chose. I never could keep that balance between God, family and work. Finally I began to focus on the spiritual and family side of life," he said. Mumford learned the importance of personal responsibility while in the Navy, and believes it was key to turning his life around. He became convinced that his next "job" lay with helping others turn a dead-end into a green light. Early on in his involvement with Amer-I-Can, he personally walked the worst neighborhoods in the Bay area, talking to runaways and drug users.

But his big-picture perspective had led to a new role: applying his top-notch fundraising, project management and networking skills to strengthen and expand Amer-I-Can's infrastructure. In fact, with both nonprofits, his future role will largely be "to get the management infrastructure in place, to hire the right people and get them equipped with the right training and tools needed to operate."

The nonprofit projects appear especially enticing as the venture-capital industry is changing, Mumford said. "For a number of years, the industry hasn't had any 'brave new world' opportunities in the enterprise space. The YouTubes, MySpaces, and Facebooks are kind of the new business models that get public attention. This is not something any of us at Crosspoint want to do. So we are winding down our portfolios so we can all retire," he explained.

What's ahead for the company-crafting wizard who grew out of the aimless troublemaker? He plans to follow Professor Huizingh's lead. "He helped me become a success, and now I'm going to copy what he did — I'm going to look for other John Mumfords and bring them along."