Group Impressed by Mayor’s Venture Capitalist Insights

Pausing between formal gatherings of the Los Angeles Economic Action Summit on Monday, Mayor Richard Riordan dropped his political face and became, once again, a venture capitalist:

“It takes years to build a business, to know the smell, the feel, the touch of a business,” an uncharacteristically effusive Riordan told a group gathered in a back room of the USC campus. “You need to surround yourself with the best. When I’m looking at a company, I look at the accountants, the lawyers. If those people are no good, I pass.”

Around him, the business people in attendance did what Riordan’s political audiences only occasionally do: They dropped their low background banter and focused on the mayor, who obliged by spinning tales of successful and unsuccessful investing. He drew upon his own experiences, and livened those with a reminiscence or two about Earvin “Magic” Johnson, who parlayed his basketball fame and fortune into a lucrative movie theater investment, partly with Riordan’s help.

During breaks, conference participants cautiously approached Riordan, a few to shake the hand of the city’s $1-a-year mayor, more to ask the advice of the man who made hundreds of millions of dollars investing in and restructuring companies. Where, some asked, should they look for new business opportunities? How could they line up capital? How should they scour for talent?

Riordan patiently fielded those queries and jumped in on a couple of the conference’s working groups, one devoted to technology development, another to hooking up businesses with investors. Each time, participants shoved chairs aside and hushed as Riordan spoke.

Indeed, as mayor, Riordan on Monday worked the podium and dignitary rounds with unspectacular results. He responded to new crime numbers by reiterating his belief in the city’s law enforcement efforts and by championing what he sees as its recently improved police management. In speeches and a brief news conference, he cited statistics and trotted out slogans that he often uses in touting the city’s progress.

During his brief remarks at the end of the conference, Riordan talked up regional cooperation and emphasized the work left to be done. The audience, by then only a few observers, was underwhelmed. “He always says this,” one participant remarked wryly.

But if Riordan-the-mayor made few waves in his official capacity, Riordan-the -multimillionaire-investor was the event’s top draw. It was in that role--of booster and living proof of the money to be made in Los Angeles, that Riordan was most noticeably at home.

He mused about one investor who’d never hit it big despite decades of trying. He shook his head in wonderment over a friend who made it rich in Intel stock. He reflected on another group who cashed in their quick $4-million profits from one deal and retired on the spot. And he pointed out a woman at the conference who once gave Riordan the chance to invest in her up-and-coming software company.

“I turned it down,” he said with a rueful grin. “I could’ve made $100 million.”

Riordan helped kick off the first-of-its kind event Monday with a speech that blended boasts of the city’s progress in recent years with promises to do more in his second and final term. In particular, Riordan highlighted the planned expansions of Los Angeles International Airport and the Port of Los Angeles, as well as construction of the Alameda Corridor, a high-speed railway that will link the port and the downtown railway station. Each of those projects, Riordan said, will leave Los Angeles-based businesses better equipped to compete in national and international markets.

As he often does, Riordan also highlighted the need to revamp the area’s public education system, a system he said was so bad that it discouraged talented workers from moving to Los Angeles and thus dragged down the area’s economy--not to mention depriving local young people of their chance to compete for good jobs.

“We have to demand that our schools give our children the tools to compete in the future,” Riordan said in his opening address. “We have to demand that they hold bureaucrats, politicians and others accountable. If they fail children, fire them.”

That short address was politely received--the audience interrupted it once with applause--but it was Riordan’s business acumen that clearly was in greater demand.

After the speech, Riordan nabbed a cup of McDonald’s coffee and drifted through the conference workshops.

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At a working group on access to capital, Riordan peppered his comments with real-life suggestions. Among them: Entrepreneurs should never go straight to a venture capitalist for money. Hire a good lawyer, accountant or consultant and have that person make the call, Riordan advised.

Those people are known to venture capitalists and can give an entrepreneur a foot in the door, he said, adding later that he once appeared before dozens of venture capitalists and asked how many had ever invested money in a company whose executives had come straight to them. One person raised a hand, Riordan recalled.

At another working session, Riordan pulled up a wooden chair and settled into a group talking about how to attract high-technology companies to Los Angeles.

The mayor, no fan of professional discussion “facilitators,” quickly interjected himself into the talk, calling on people and asking them to elaborate on their comments. “I don’t mean to take your job away from you,” Riordan told the discussion leader--as he proceeded to do just that.

When speakers wafted into talk of summit conferences or vague notions about positioning the city’s public relations efforts, Riordan steered the conversation back to what a business executive of a small firm might need. One idea, creating a database of local companies that would list products and services available in the region, drew Riordan’s ringing endorsement.

“There are about 5,000 little businesses that serve the entertainment industry,” he said. “A database would allow you to cross-reference what people can do. . . . That would help a small businessman.”

And when talk of that database began to careen aimlessly around the group, with some participants suggesting that a site could be created on the Internet and companies encouraged to enter their own information, Riordan, suddenly all business, again intervened: “If you’re really going to do it, you have to hire someone whose only job is to put together this database. You can’t rely on institutions to do it or people to do it themselves.”

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Riordan acknowledged that he was never much for economic conferences when he was in business and ducked out of the session before the formal unveiling of the summit’s recommendations. But the mayor, whose choice to head the city’s embattled Department of Water and Power is pushing for the largest municipal layoffs in Los Angeles history, had a suggestion for a conference participant who complained that it was hard to find qualified workers for some sophisticated technology jobs.

“Send us your address,” Riordan quipped. “We’ll send you the list of DWP workers.”

* COMMON GROUND

Conference participants were surprised to learn they share many of the same issues. D1