When Dave Whorton, MBA ’97, graduated from Stanford GSB, Silicon Valley was at the beginning of the first dot-com boom. Two years prior, a young, unprofitable startup had gone public and become worth $3 billion overnight. “Things changed so dramatically after the successful public offering of Netscape,” Whorton says. “It was a very good time to be investing in internet companies and just hoping that a few of them would become market leaders.”
Whorton went to work for the legendary venture capital firm Kleiner Perkins Caufield Byers, which had backed Netscape and pioneered the strategy of get-big-fast. He spent three years immersed in this new model of investing, working closely with Amazon, Google, Autotrader, and others.
A year after joining KPCB, Whorton met Jessica Herrin, then a first-year Stanford GSB MBA at a campus event, and the encounter would eventually help to shift the course of his career. Herrin had entered a business plan competition with an idea for a wedding registry. Whorton was a judge — he reviewed Herrin’s plan and saw potential. He suggested she pull out of the competition and meet.
Herrin’s wedding registry business, Della & James, launched with KPCP’s backing and grew at a rapid rate before being sold two years later when funding dried up. After going through multiple acquisitions, Herrin felt that there had to be another way to grow a lasting business.
In 2005, she approached Whorton again. She was launching another company called Stella & Dot, a consumer platform that sells jewelry, accessories, and skincare products and creates entrepreneurial opportunities for women. Herrin was frank about her exit intentions.
“Jessica told me, ‘I really liked you and your partners at KPCB, but I didn’t like your model,’ ” Whorton recalls. “She said, ‘My exit strategy is to be wheeled out of my office on a gurney with an oxygen tank in my lap.’ ” Herrin made it clear that she was eager to build a thriving, global business but had no plans to sell or go public, ever.
Herrin’s idea, unconventional by Silicon Valley standards, intrigued Whorton. He invested a small amount and watched her build Stella & Dot into a multi-hundred million-dollar global business.
The experience with Herrin set Whorton on what he calls his “hero’s journey” — in which he re-examined his personal values and asked himself new questions. What if we shifted our focus to supporting value-driven entrepreneurs like Jessica and scale businesses that would never go public or be sold?
“I was curious if there were other entrepreneurs out there in the world thinking along the same lines as Jessica,” Whorton says. Starting in 2012, he interviewed more than 300 people within the Stanford GSB and its alumni network, as well as other CEOs in Silicon Valley and around the country.
Whorton coined the term “Evergreen” to describe the businesses he learned about, businesses designed to grow, adapt, and succeed as private companies for 100 years and beyond. In October 2013, with a small group of these Evergreen CEOs, Whorton launched Tugboat Institute, an invite-only, membership-based community where leaders share new ideas and best practices in building Evergreen businesses.
“Evergreen might be perceived by some to be a lot less sexy than being the next Facebook, but in my mind, these companies are the unsung heroes of our society, and we need to better support them and encourage the formation of more of them,” he says. “These entrepreneurs have some deeper purpose for why they were building the company than just making money. We want them to be able to gain insight and support from their peers doing the same thing.”
Whorton expects these trusted relationships will lead to long term customer-supplier relationships and other crucial support, including permanent capital.
Tugboat Institute holds two major gatherings per year, supports local Tugboat Forums, produces unique Evergreen research and content, certifies companies as Certified Evergreen, and publishes the Evergreen Journal, which shares the stories of these CEOs and their practices.
Whorton prefers to hold Tugboat’s summits in Sun Valley, Idaho, nearly 800 miles from Silicon Valley. He does this for the same reason that Warren Buffet touts living and working in Omaha, Nebraska, far from Wall Street. “Being in the mountains, away from the working buzz of the city really allows people to let down their guards, foster trust, and think creatively.”
Working closely with CEOs across various industries helps inform Whorton’s experience as a volunteer for Stanford GSB’s annual Executive Challenge. Whorton, along with other alumni, visits campus for a day to help students act out real-world scenarios and get a feeling of what it’s like to be a CEO.
“They’re such an impressive group; it’s an honor to have the experience — both for the alumni and the students,” Whorton says. Faculty judges score students on decision-making skills, ability to communicate, and levels of self-awareness.
Whorton has volunteered for Executive Challenge for the past seven years and looks forward to seeing an Evergreen mentality emerge among students. He says he wants to erase the stigma attached to the idea of continuing a family-run company or forgoing the popular venture capital or private equity paths.
“There are people going back to their family business, but I don’t think they’re celebrating it because it isn’t the cool, sexy thing,” Whorton says. “My hope is that building awareness of Evergreens and their importance will make people get excited about this alternative path, and not define success so narrowly.”