David Whorton
Founder and C.E.O., The Tugboat Institute
Underappreciated Evergreen Companies: Capitalism at Its Best
Lecture
Tuesday, September 26, 2023
4:10 p.m. – 6:15 p.m., Banatao Auditorium, Sutardja Dai Hall, UC Berkeley
Co-sponsored with Haas School of Business and College of Engineering
About David Whorton
Dave Whorton founded Tugboat Institute in 2013 as a membership organization for purpose-driven leaders of successful privately held businesses. He coined the term “Evergreen companies” and “Evergreen 7Ps” to describe the defining characteristics of these companies. Tugboat Institute includes as members first generation entrepreneurs, family owned businesses, and employee-owned businesses.
Dave is a serial entrepreneur and venture capitalist by background. He worked at Hewlett Packard in high school and college and has co-founded four companies, including Good Technology, Inc. and Drugstore.com. He has worked as a consultant at Bain & Co, a global strategic consulting firm, and as an associate partner at Kleiner Perkins Caufield & Byers (KPCB) and a managing director and partner of TPG Ventures, the venture capital arm of Texas Pacific Group. At those firms, he led investments and worked closely with the founders of Amazon, Google, Autotrader, Successfactors and Blue Nile, among others, in their early days. He earned a B.S. in mechanical engineering from University of California at Berkeley and an MBA from Stanford. Dave is home-based in Sun Valley, Idaho, married and has two children.
About the Lecture
Since the dot.com boom, the de facto growth model for venture capitalists (VC) has been get-big-fast. It later evolved to growth-at-all-costs with the advent of cheap money under loose Fed policies. This playbook led to numerous excesses, including the manic pursuit of ever larger,higher valuation rounds in hot companies. Notable venture capitalist Dave Strohm said a few years ago, “Companies today are designed to raise cash, not generate cash.” Prior to this period, startups focused on getting to profitability early and growing profitability from there with what Clayton Christensen called “patience for growth, impatience for profits.” In the same period, private equity (PE) has risen dramatically, unwisely seen by many as a safer asset class than public stocks; an industry sits on over a trillion dollars of dry powder to invest, matched with a couple trillion of debt, giving the private equity firms purchasing power over $3 trillion dollars. Research by Professor Doug Tatum has shown that nearly 20% of US employees work directly or indirectly for private equity companies and their portfolios. With private equity comes their playbook of layoffs, reduced costs, curtailed R&D, cheaper inputs, and dramatically diminished charitable giving and community support, all in service of paying down high debt levels (7+ x cash flow) to earn an outsized equity return and raise their next fund. It’s tragic that nearly 20% of US employees are subject to life under that playbook.
After founding four companies and working at top firms in VC and PE, Dave Whorton has spent the last 11 years exploring and developing the concept of the Evergreen company—one built to last privately over one hundred years. The Evergreen company stands in contrast to those that are being built to flip to generate wealth for a small few. Instead, Evergreen companies are being built with very long planning horizons and the commitment to share their success with their employees and their communities. They are incredibly important to our society, but overlooked and under-appreciated relative to VC, PE and public companies that represent the de facto growth company models. The Evergreen companies that Dave has served since starting Tugboat Institute span from founder-led to ninth generation CEOs (over 300 years old), in every industry you can imagine including highly competitive software markets, and in almost every state in North America, plus the Austrialia,, Chile, China, Estonia, and the UK. In Dave’s lecture, he will share his learning journey, briefly discuss the current state of venture capital and private equity and their playbooks, and outline the opportunities, challenges, and lessons learned in creating and scaling these Evergreen companies. Dave believes that Evergreen companies represent capitalism at its best, and the highest calling for the companies of any aspiring entrepreneur who wants to make a dent in the universe. Through his talk, he will strive to bring a fresh perspective, inspiration, guidance, and hope to the alumni and students at UC Berkeley.