When Arturo Cazares began organizing the Stanford Latino Alumni Association four years ago, he expected a lot of guesswork about which alums were Latino (because of the university’s privacy rules), endless word-of-mouth networking, and perhaps some awkward wheedling. Then he got an email from José E. Feliciano, MBA ’99, cofounder and managing partner of Clearlake Capital Group.
“Usually I have to reach out to people for support,” Cazares, MBA ’89, says. “But José just sent me an email out of the blue, said I could count on him for support. Then he started forwarding my information to other prominent Latino alumni, and they were supportive as well. That was just a unique, proactive thing to do because he didn’t know me from Adam.”
“He just naturally embodied the essence of what we were trying to create with this organization,” Cazares says, adding that the Latino Alumni Association is now chartered by the university and has more than 2,000 members. “He was about building this community up, keeping the community together, and connecting us all to Stanford. And he did it proactively.”
Diversity and mentoring expert Julia Sullivan, MBA ’82, who was on the award selection committee, said she was struck by Feliciano’s community service efforts, especially his effectiveness in marshaling action for hurricane relief in his native Puerto Rico. “I thought, ‘Here’s an alum who’s making an impact by taking his business connections and directing that network toward significant action.’ ”
By leveraging his business network for hurricane relief, Sullivan says Feliciano created a “ripple effect like a tsunami. It was amazing. And all of it happened by word of mouth.”
Feliciano cofounded Santa Monica–based Clearlake Capital Group in 2006 and today is a managing partner at the firm, which has attracted investors from more than 25 countries and has more than $7 billion of assets under management.
Were you always an overachiever?
(Laughs) No, and I still don’t consider myself an overachiever. My family placed a lot of emphasis on education, and I knew they were making sacrifices to get me the best education possible. I felt a responsibility to take advantage of the opportunities afforded me because of those sacrifices.
Latinos have been starting businesses at a fast pace during the past decade, but a recent Stanford study found that 98 percent of them report less than $1 million in annual revenue. Is access to financing part of the problem?
That’s the interesting thing about entrepreneurship in the Latino community. It’s not a lack of effort, or interest, or even ability to start these businesses. That study and others have shown that these businesses are not getting to scale quickly enough. Some are more service-based businesses where the ability to grow is more difficult, as opposed to IT or tech-driven businesses. But access to capital is not something to be underestimated. People don’t know the right sources of capital — anything from bank financing to private equity to angel investors. It all ties together to the question of leadership and role models.
The Latino community has a track record of leaders in the political sphere, but there are still not enough role models on the business side who have succeeded and then invested back into the community. I’m passionate about fixing that. Just knowing that someone who looks like you or has similar background has achieved something can be enough of a catalyst to inspire people to achieve something.
How are you addressing that?
Personally and through the philanthropic investment organization that my wife and I founded, I’m investing in smaller emerging businesses and funds that are managed by minorities, Latinos, and women — folks that have not been traditionally thought of as the prototypical venture capital or private equity professional.
The Stanford study also found that many Latino entrepreneurs aren’t funding their businesses through national banks or the Small Business Administration. Why do you think that is?
Partially it’s not knowing where to go or who to talk to. This is where informal networks are so important. If you know friends whose businesses got funded by venture capitalists or who were able to borrow money from a bank, you’re more likely to pursue that same path and get introduced to those people through those networks. It’s important to create as many avenues for access as possible.
How can you do that?
Some of it’s informal, like the Stanford Latino Entrepreneurship Initiative. Graduating 70 or 80 people per cohort that can talk to each other and get plugged into mentors and others, that’s the beginning of that network effect. If we can combine that with creating more early-stage capital providers — from small loans to early-stage equity investing — that will create the next wave of startups and fast-growing businesses.
Latina entrepreneurs now own 44 percent of Latino businesses. What do you think accounts for that?
I don’t want to get into clichés and stereotypes, but the mother figure in every Latino household is a very powerful figure. And often in Latino cultures, mothers have to provide for their family by starting businesses. That motivation and strong will are all the qualities inherent in entrepreneurship, that go-getter mentality, that willingness to take a risk and face failure and try again. Those are all embodied in the prototypical Latina.
Are there any leadership qualities you feel are especially important in the Latino business world?
It’s a culture of hard work and caring for others, very family oriented in that they treat employees like family. So the core raw materials are there for more emerging leaders. We need to tap into that potential.
You graduated from Princeton with a BS degree in mechanical and aerospace engineering. How did you end up in the capital business?
Serendipity. First I was going to stay home and study at the University of Puerto Rico. But I had the opportunity to apply to Princeton, and I was interviewed by a wonderful gentleman with a Puerto Rican background who convinced my family that Princeton was a fantastic place for me. I got in, and just showed up with my suitcase not knowing what to expect. I was focused on being an engineer, but one of my roommates during second year went to work for Merrill Lynch. That opened the window for me to think about other possibilities. Just seeing someone who looked like me be successful in that environment was eye-opening. I figured I’d spend a few years on Wall Street and then go back to the higher calling of engineering, but 25 years later I’m still doing finance.
You ended up as an investment banker at Goldman Sachs.
I was working with Latin American companies from Mexico, Chile, Argentina, Peru, and I loved it. I was learning about the intellectual challenges of understanding a business and trying to find solutions. To this day those are the things I love and enjoy — learning more about a business, getting to know the management team, and coming up with an interesting solution to capital and operational problems.
Did you learn anything about leadership during your three years there?
If you’re not making others better, you’re not leading. That was probably my biggest takeaway. Are you mentoring and training the junior people? Are you making sure the senior people feel they can rely on you? All those things are part of the same skill set, which is to make those around you better. If you can do that, you’ll succeed at anything.
If you could give Stanford MBA prospects one bit of advice at this point in their careers, what would that be?
To remember that business is the marriage of human capital and other resources. I look back at the most valuable lessons I learned at Stanford, and the ones I apply today are how to relate to people, how to motivate people, how to manage people.
Are there books you studied at GSB that you found particularly helpful?
Professor [Jerry] Porras’s Built to Last: Successful Habits of Visionary Companies. He wrote it with Jim Collins in 1994. It helped me think about possibilities and inspired me to set what Professor Porras called “big hairy audacious goals.” Identify the most aggressive goal you may have, and then double that number. That should be your goal. The biggest limitation we have is our own expectations. Our inability to see what’s possible.