A Reflection

Steve Krausz

The pandemic of 2020 has disrupted the lives of all of us. Amidst the chaos, tragedy, and endless hours of Zoom, there is time to clear out boxes of photos long stored in a dark garage and dusty closets. Yes, there was a time when images were not stored as binary digits in a data center that consumes more power than many cities. I have a number of those boxes. One stored securely in a cabinet in my office contains a sparse photographic record of my father’s family from pre-WWII Austria; at least those few that made it out of post-Anschluss Vienna. I opened the box last week to add some photos my 93-year-old mother, Betty Krausz, had brought to me from her own garage box. Mom’s envelope included photographs of her family, including a few well-preserved photos of my grandmother, when she was still Lillian Fromkin, before her harrowing escape from pre-Soviet Russia during WWI.

My daughter Lily is named for my grandmother. In one of the two manila envelopes was an 8×10 black and white photo of ten smiling young U.S. Army Air Force crew members in front of their B-24 Liberator bomber. The photo was taken in July 1943. One of the crew members, a recently promoted Tactical Sergeant, Marshall Kruglick, was smiling in the first row, far left. A few weeks later, just days before the crew was to be deployed to Europe, their Liberator bomber crashed into the front range of the Rockies during a terrific rainstorm. All ten crewmen perished. My grandfather had recently become unemployed, and my grandmother, who made all the family income for most of the 1940s, had to bury their 20-year-old son. Betty, their daughter, was 16 and attending Roosevelt High School in Boyle Heights, a somewhat integrated public school many years before desegregation came to the LA Unified School District. Now Betty was an only child. My middle name is Marshall.

My father, Robert (Bob) Krausz, was able to escape Germany (Austria had become part of Germany) by what today one might derisively call “chain migration.” My father was born in 1924. My father’s parents had divorced when my dad was four. Very unusual for the times, divorce guaranteed great economic hardship for my father’s family during the Great Depression. My dad almost died of diphtheria in 1929, and his brother, Fred, battled with scarlet fever the same year. Vienna before the Anschluss was cosmopolitan, and my father and Fred attended public schools, where both showed an early aptitude for math and science. My father was 13 when the Nazis came. My dad’s mom, Bertha, did not hesitate as Vienna became a dark place for Jews, and she immediately began a search for a way out of Europe. Bertha had the boys write to their “Aunt Paula” seeking help. One of my grandmother’s aunts, Paula Goodman, had previously immigrated to the United States. Paula’s cousins, Howard and Etta Goodman, who were childless, agreed to sponsor my father and his brother. The Krausz family was fortunate. Howard Goodman was a successful businessman in Columbus, Ohio. Somehow, “Uncle” Howard was able to reach out to Congressman Sol Bloom of New York’s 19th district and had his letter answered. Congressman Bloom was on the Foreign Relations Committee. Because of that important position, Congressman Bloom was able to secure a visa for all three at a time when only 19,552 visas were granted to “Germans”– including my father’s family. Today New York’s 19th district includes the Catskills. Those of you who are fans of the Marvelous Mrs. Maisel will recognize the Catskills as the region of the state where New York Jews went to spend every summer renewing their Yiddishkeit. My wife, Alison, calls Stanford Camp, which we have attended with Ben and Lily every year for 15 consecutive years, the “Catskills for the Cardinal.” I think that is a bit of a stretch. The humor of Stanford Camp skits, while funny, doesn’t quite reach the skill level of Catskill stand-ups: Mel Brooks, Buddy Hackett, Carl Reiner, Sid Caesar, Danny Kaye, or Lenny Bruce.

My dad and uncle last saw their father, Franz, in August of 1938 before leaving for the United States. Franz had continued to be a part of his boys’ life after the divorce, but it was difficult, and there was much anger. Some residue of that painful divorce continued for many decades. Franz accompanied Bob and Fred to the Austrian government offices and the American Consulate as they sought the necessary papers to leave the country. Franz could not come to the United States. He was able to get to Portugal and finally made it to the Shanghai ghetto in 1940. Franz spent the war years in Shanghai with his second wife, Valy, whom he met in Vienna. They were desperately poor as Valy made money knitting doilies and sewing what she could sell. Franz and Valy tried to get to the U.S. or Canada after the war ended. They never received a visa. After Israel became a state in May of 1948, my grandfather and step-grandmother emigrated there and settled in Jerusalem.

August 1938 was the last time Fred saw his father. Bob saw his father once more in July of 1967 on a family trip to Israel. In the early 1960s my mother had encouraged my dad to reach out to his Aunt Alice, Franz’s sister, in London. Alice and my mother did most of the letter writing. My parents arranged a family vacation to Israel in June of 1967. It was my first trip outside of the United States. The Six-Day War broke out in early June, and it looked like our trip to Israel would be impossible. However, while on a boat in the Aegean in late June, the travel embargo to Israel was lifted. We landed at Lod airport, now Ben Gurion, in early July 1967.

I vividly remember the moment my dad saw his father for the first time in almost 30 years. It was in the lobby of the King David Hotel in Jerusalem. Franz was frail, skinny, and showed the effects of a recent stroke. But there was no mistaking that they were father and son. At the time, I was too young to appreciate what I was witnessing. It is now that I am a 65-year-old man with two beautiful children in their 20s that I can appreciate the moment. Franz was in tears. I don’t remember my father crying. But then I never did see him cry. We spent a couple of days with Franz and Valy. That was the last time my father saw his father.

My family returned to Israel in 1969. We planned to meet with Franz and Valy during the trip. Sadly, Franz died in the spring of 1969 a few months before our visit. I continued to travel to Israel, first as a tourist and then on business from then until today. I developed a warm relationship with my step-grandmother, which continued for another 30 years until her passing in 1999. She was a remarkable woman. Valy spoke nine languages. She was working for a position at the League of Nations before WWII began. I believe she could have stayed in London in 1939, but chose to go with Franz to Shanghai. She picked up her ninth language, Mandarin, in Shanghai. When they arrived in Israel in 1949, they were sent to Jerusalem to live as they had no “useful” skills. For many years, Valy was employed as a housekeeper at the King David Hotel. One did what one had to do, but what a waste of talent. Eventually, Valy was able to convince an attorney in Jerusalem that speaking and writing nine languages was a useful skill. The legal practice included a significant amount of work for refugees from Europe seeking to recover property stolen by the Nazis. Valy was granted modest reparations from Austria for herself and Franz in the early 1990s after 30 years of effort, 25 years after Franz’s passing. I planned to see Valy in September of 1999. She passed away just a few days before I arrived in Israel on one of my many business trips to Israel as a venture capitalist with U.S. Venture Partners.

My father received his draft notice at 18, while still in high school. The Army had begun the “Advanced Special Training Program,” which was used to identify what today we would call “gifted STEM” soldiers. He was sent to Oregon State University in 1943, where he studied electrical engineering and microwave design. A skinny, gangly young soldier, he guarded Italian prisoners of war when he wasn’t in class. Fred continued his studies at Ohio State in Physics and Engineering. Fred was drafted in 1944 and spent time working on a program that he only later learned was a part of the Manhattan Project.

My dad moved to California after the war. He worked for SRI (Stanford Research Institute), when it was still part of Stanford. My parents almost moved to Menlo Park in the 1950s to be at SRI headquarters. How ironic that I was the one to complete that journey to Menlo Park, where I have worked for the last 35 years. Bob married my mom, had four children, Janet, me, Paul, and Mara. In 1956 he started a microwave company, Rantec, based in Calabasas, California. Rantec developed microwave equipment that traveled on NASA spacecraft, tracked missile tests from Vandenberg Air Force base fired downrange to Kwajalein in the U.S. Marshall Islands, and enabled the DEW (Defense Early Warning) Line in Canada to notify the Air Force of incoming missiles from the Soviet Union. For a man who was forever grateful to America for giving him a chance to live, he gave back all he could. Rantec raised $5M in the public markets in 1962; IPOs were different then. On occasion, he rode his horse, Cookie, to work and tied her down near a deep space antenna. Such was the engineering culture of the 1950s and 1960s in Southern California. I learned a lot about managing people by observing my father. He was firm but fair and had a deep concern for the well-being of his team.

My father died suddenly from an unknown aneurysm that burst while skiing at Lake Tahoe. He was only 49. My mother, 16-year-old brother, and four-year-old sister were with him. It was December 1973, Christmas break of my sophomore year at Stanford. I got a phone call and jumped on a plane to Reno. He was in an unresponsive coma when I arrived and my mother gave permission to turn off life-support two days later. I had just turned 19, and my youngest sister had just turned four. I returned to Stanford ten days after we buried my dad. I have no way of knowing whether I handled the next few years of my life well or poorly. I had no context and no frame of reference. I just know that I carried on as best I could. Returning to my life at school was hard. For me, everything had changed. For everyone else in my dorm, they were just returning from a two week Christmas break. Winter quarter was tough. Spring quarter Stanford’s unions went on strike, and all dorm services, including meals, were closed. My fellow students in Lagunita lived on hot-plate cooked ramen and pizza from Round Table in Palo Alto; good friendships were made, and many continue to this day.

I was fortunate to graduate with a degree in electrical engineering from Stanford at the beginning of Silicon Valley’s transformation into the technology innovation center of the country. Little did I appreciate the greatness around me. I took classes taught by individuals that would become icons of technology. Jim Gibbons taught me more than I ever wanted to know about the principles of semiconductor design. Vint Cerf, one of the fathers of the internet, taught a course in programming where I scored near the median … about 27 out of 100. One student scored 93. Stanford engineering was a place that made one very humble.

During my senior year, I worked for NASA Ames Research while studying engineering and immersing myself in the Stanford Arms Control Program. The first Viking landed on Mars while I was at Ames. After NASA, I went on to three start-ups in Silicon Valley. One made super mini-computers that competed with Digital Equipment and Data General…remember them? One made a “portable computer” that weighed about 27 pounds, but you could still take it on an airplane – as checked baggage. The microprocessor was an 8-bit machine from Zilog, a Z80, the screen was a green 12” CRT, and it had two 5 1⁄4” floppy disks.

I worked for Daisy Systems, where I met some fantastic people. Harvey Jones hired me, and he later went on to be CEO of Synopsys and a board member of NVIDIA. Aryeh Finegold was the founder and CEO of Daisy Systems; he later founded Mercury Interactive, bought by HP. Vinod Khosla was an early employee of Daisy, but we did not meet one another until after business school. Vinod went on to SUN Microsystems, a USVP seed investment, and Kleiner Perkins, where we met. Tony Zingale, a young marketing exec at Daisy, went on to be CEO of successful start-ups Clarify, Mercury Interactive, and Jive Software. I learned during those early experiences that Silicon Valley was, at its heart, an intimate community where super smart and driven people from around the world came to build great new things. The late 1970s and early 1980s was an explosive inflection moment of America’s computer technology juggernaut. Many of the basic research ideas came from the defense industry, SRI, Xerox PARC, and Lawrence Livermore Labs. Stanford and Berkeley were the educators. Intel, Fairchild, and HP were the first jobs. Young engineers like myself, educated at Stanford or Berkeley, had an open door to young companies building fascinating, fun stuff. It was working for these companies and on risky new projects that many like myself received the training and opportunity to participate in the tremendous emerging engine of creative dynamism we admire today. It was a world where relationships mattered, but what mattered most was performance.

The GSB was my chance to take a breather from the pressure cooker of start-ups and recast myself as something other than an engineer who knew a lot about history and policy. I wanted to continue working with tech companies, but I had no formal business training. My thought at the time was to get an MBA and return to industry, hoping that I might be able to learn enough about business to recast myself as something other than a solid R&D engineer. During my second year at the business school, I interviewed with U.S. Venture Partners, a firm founded in 1981 by Bill Bowes, Bob Sackman, and Stu Moldaw. This remarkable trio of foundational risk-takers and successful entrepreneurs raised their first $31 million fund in 1981; USVP invested in Sun Microsystems, Applied Biosystems, and Ross Stores in that first fund. Bruce Boehm, a partner at USVP, championed my hiring as an associate in 1985. My expectations were set rather low during the interview process. I most likely would spend two to three years as an associate before being cycled out, maybe into a promising portfolio company of USVP.

The mid-1980s at the GSB were a time when investment banking and management consulting were the “hot jobs,” offering the highest pay and the most promising path to global domination. Few people in the country knew of venture capital. When I started at USVP and told people outside the Bay Area that I was a VC, many would look at me quizzically as if to say, “You’re a Viet Cong?” Yes, it was that long ago. Only three or four of my classmates went directly into Venture Capital – two to USVP: Nancy Glaser and myself. I have always been proud of the fact that USVP had two women partners during my early years, Nancy and Jane Martin. I can’t think of another venture firm that could make that claim at the time. Nancy would do retail investing with Phil Schlein, the former CEO of Macy’s of California and father of Ted Schlein, later a managing partner at Kleiner Perkins. Again, one can see just how small “The Valley” was in those years.

The GSB prepared me well for my career in venture capital. It threw me into a mixmaster of people, ideas, and energy. B-School accelerated a process of looking beyond my comfort zone, trying new things, thinking differently, engaging all people, working my butt off and remembering that you treat the people you meet and the friendships you make as the most important determinant of your success in life. Simple. Over the past 35 years, I worked with a great group of entrepreneurs, partners, investors, and industry leaders. I joined USVP in the early investment phase of USVP II; in early 2020, we raised USVP XII. Since joining USVP, I have invested in over 75 companies; 18 have gone public. For me, the path of working first in a large organization, NASA, then three start-ups was a fortunate preparatory path to the GSB and my later career. I experienced bureaucracy, success, failure, frustration, and exhilaration. At the GSB, I learned how to distill my thoughts into a two-page memo in Professor Burgelman’s strategic management class, run a proper financial model in Van Horne, and just how hard it was to construct a compelling investment pitch. Fortunately, my classmates and long-time friends, Tom Frederick, Atsuko Kaneda Jenks, and Tim Jenks, helped me on the latter more than once. I still learn from my GSB classmates.

Over my career, I have had the good fortune to join several happy teams at the bell ringing of both the NYSE and NASDAQ. One of my favorite snapshots is from the balcony of NYSE with the team from Imperva. Shlomo Kramer and Mickey Boodaei, two of the most successful Israeli security entrepreneurs, founded Imperva. I had the good fortune to back them; I funded Shlomo Kramer four times. Imperva rang the closing bell with Anthony Bettencourt doing the honors on its fifth anniversary of being a public company. Anthony and I met while he was at Verity in the early 1990s. Verity went public on the NASDAQ in 1996. I worked again with Anthony briefly as interim CEO of “National Banana,” a short form streaming video start-up that failed in the Great Recession. The short form comedic business model is now flourishing, ten years later. That’s the way it works in Silicon Valley.

The Imperva photo captures the texture of my career. One of the first search companies, Verity, spun out of a DOD funded software project and achieved commercial success. A young exec at Verity goes on to be CEO. Later that exec joins as CEO of one of the first Firewall security companies protecting the internet, ringing the bell at the NYSE. The photo of me with the happy Imperva team sits in a box with my family photos, the one holding the sepia-toned black and white picture of a young Lillian Fromkin in Russia and a younger Robert Krausz in Vienna. The images of Lillian and Bob were taken just before their hasty escapes to America. I held the three photos in my hands, reflecting upon the journeys they represent. My family members that made it to America were the lucky ones. I am the beneficiary of their hard-earned good fortune. I have a wonderful, loving wife, Alison, and two amazing children, Ben and Lily. All of us from the GSB Class of 1985 are the lucky ones.

Often it is said that the times we are living through now are not unlike 1968. I remember that year well. I was 14; it was a scary time. The bloody Tet Offensive, Martin Luther King’s assassination, Bobby Kennedy shot down twelve miles from my home in Los Angeles. Riots, demonstrations, and a very nasty election season. Sound familiar? Yet, the year ended with the Apollo 8 circling the moon on man’s first journey to a place where one could get a true perspective on this small sphere we call home. It was a reminder of our shared humanity, our common home, and the incredible potential of people. Three men circled the moon for the first time in history to close that terrible year.

I opened this personal reflection by taking note of the troubling, uncertain time in which we live. We have been here before, my family has been here before, and my GSB classmates have similar stories to tell. Our job now is to turn these stories and personal experiences into lessons of hope and action for our children. We have a remarkable class with remarkable skills, resources, and creativity. We have done much since leaving the GSB in 1985. More is required to turn our path to a better place. The astronaut crew of Bill Anders, Jim Lovell, and Frank Borman read from the book of Genesis as they glided around the moon on Christmas Eve 1968. Mission commander Frank Borman spoke the last passage, “And from the crew of Apollo 8, we close with good night, good luck, a Merry Christmas – and God bless all of you, all of you on the good Earth.” GSB Class of 1985, thank you, and let us make sure our children can enjoy long, fulfilling lives on a “good Earth.”