Dodging Bullets

If you know many venture capitalists, you might think Jon Auerbach an unlikely VC. The principal at Highland Capital Partners isn't a boy-genius billionaire, a former CEO easing into retirement or even an investment banker taking the next step in a precisely planned career path.

Auerbach is a former Wall Street Journal high-tech reporter, war correspondent and high school teacher who never considered a future at a VC firm until a few years ago.

“I wish there had been a real method to the madness of my career path,” he said. But perhaps Auerbach's experiences on the other side of the reporter's notebook — and at the business end of a rifle or two — are the reasons why he is able to maintain perspective amid a horrid telecom economy that has frightened other venture capitalists into hibernation.

“We can't let today's market activities affect our funding patterns,” said Auerbach. “Right now is actually a good time to be looking for opportunities.”

Auerbach focuses largely on wireless start-ups, including Starent Networks, a developer of wireless IP core network solutions. A Starent spokesman agreed that the current market affords some space to new ventures. “There are opportunities created by some of the current economic turmoil because many of the traditional vendors have retreated to their core products. The newer upgrades and advancements can come out of companies that can be focused on that and don't have to support traditional products.”

One of Auerbach's latest opportunities is a seed project — a new company focusing on wireless LAN/WAN integration that's “trying to solve the thorniest integration problems” related to subscriber management, billing and session management. Though other details are under wraps, it's clear Auerbach has cultivated a deal with a company that is at the red-hot core of one of the year's biggest trends — carriers' growing interest in Wi-Fi.

“This company is already on the radar screens of many carriers,” he said. “Carriers consider LANs to be important, and they need control of them. The challenge for carriers is that they will need to establish seamlessness if wireless LANs will be of any use to them.”

The opportunity entails some risk because it's unclear exactly how and when carriers will enter the Wi-Fi melee full force. But Auerbach isn't flinching about the potential dangers. “What I learned about covering wars is that there is such a thing as calculated risk,” he said. “If you handle yourself in the right way, danger can be manageable.”

Though there may not have been an intended method to the madness of Auerbach's career path, it is not so difficult to see how one job gave him the skills and enthusiasm to pursue the next. After earning degrees in Russian studies and political science at the University of Pennsylvania in the mid-1980s, Auerbach decided he hadn't had a “proper education.”

“I needed to go read all the great books,” he said. He found a job teaching at a prep school in sleepy Concord, N.H., that allowed him to do just that.

After awhile, however, Auerbach decided that spending a lot of time reading — while affording him a well-rounded perspective — also meant he was watching life from the sidelines. He pursued a reporting job with The Boston Globe because he thought being a journalist would put him in the game. It did — in a way he hadn't imagined. In 1991, The Globe was looking to send reporters over to the Soviet Union, where communism was rapidly crumbling. Auerbach — young, fluent in Russian and without a family to care for — was a natural for what promised to be a harrowing assignment.

It did not disappoint. Not long after Auerbach arrived in August 1991, a handful of hard-line communist military leaders held Mikhail Gorbachev captive at his summer retreat and attempted to force their way into the Russian Parliament building to take over the government. They were met with thousands of backers of Gorbachev's reformation movement in a standoff that later claimed the lives of three people. “I was literally racing around Moscow dodging bullets,” Auerbach recalled.

After covering many of the skirmishes and civil wars that broke out in the former Soviet Bloc after communism's fall, Auerbach returned to the U.S. in 1994. Hanging up his flak jacket, he began covering high-tech for The Globe.

Auerbach excelled in writing about high-tech both at The Globe and later at The Wall Street Journal, winning several journalism honors and earning a Pulitzer Prize nomination. Still, despite breaking big stories — including the revelation that Lotus Development Corp.'s former CEO had publicly lied about past military service and education — Auerbach decided to make another seemingly incongruous career move to join Highland in 1999.

“I guess if there was a method to the madness of my career, it was that going from teaching to journalism was my attempt to get one step closer to the action, and becoming a VC was the same thing,” he said.

In fact, what he most likes about being a VC are the things that also defined his role as a journalist. “Half of the VC job is really legwork and talking to people,” Auerbach said. “The good thing is that then you get to work with the people you're finding out so much about.”

Ultimately, Auerbach feels it's the people — start-up management — Highland invests in more so than the business models. “An A management team can turn a B or C business model into something more. A C management team can't always manage an A business model. The business model always morphs. It is never quite what you thought it would be originally.”