Son keeps father’s successful business legacy alive and well

Jul 7 2008 by Andrew Hebden, The Journal

A founder of North East accountancy software giant Sage, David Goldman was renowned as one of the foremost entrepreneurs the region has produced. Now his son, Daniel, who runs a venture capitalist business based in Israel, is looking to ensure the legacy of his late father lives on, as he tells Andrew Hebden

THE offspring of successful business people can, in my experience, be awkward interviewees.

While some find the family name a burden, others are happy to use it to hasten their career advancement, but seem ashamed to admit it to the extent that some even insist on the connection not being made in print.

So I wasn’t quite sure what to expect when I pulled up outside the Newcastle home of the Goldman family – a name synonymous with the establishment of that great North East business success story, Sage.

I was there to meet Sage founder David Goldman’s 39-year-old son Daniel who, as director of Israel-based investment fund Goldrock Capital, is quite an entrepreneur in his own right. He’s enjoyed a colourful career as an investor in the tech industry, a role he has juggled with his national service as a tank driver for the Israeli army.

But there is no escaping the influence of his late father, and it quickly transpires that Daniel is only too happy to acknowledge this. In particular, he says it has opened doors to him and given him access to some first-class advice, especially as he has moved into the field of investment capital.

“Being honest, there is no denying that it has not been a barrier to have my surname – but I’ve tried my best not to completely sully the reputation that my dad built over the years,” he jokes.

“However, it is unquestionable that it has been helpful and given me access to people that I wouldn’t otherwise have had access to – but I like to think that I have worked hard to make the best of that.”

Symbols of his father’s success decorate the living room of the family home in Gosforth, with his trophy for North East Business Executive of the Year sitting proudly on the window shelf.

Quickly a picture emerges of a remarkable but modest businessman who treated his work colleagues and his family with a tremendous level of respect.

“It didn’t matter whether you were the janitor or Bill Gates, there was no formality,” explains Daniel. “All the success and the things that came along with Sage didn’t in any way change his fundamental outlook on life.”

Sadly, David Goldman, who spent two decades with printing firm Campbell Graphics before setting up Sage with Graham Wylie in 1981, was forced to retire from the business due to ill health in 1996. At the time of his death three years later he had not seen the business emerge into the global market leader it is today.

“We will never know quite what he believed Sage was capable of becoming,” remarks Daniel, who had left the family home to study engineering at university in London even before the firm’s flotation. “That’s not to say there wasn’t excitement about what was going on, but it was clearly a very different story to the one that followed in the next 10 years after I left the house.

“My dad retired in 1996 and a lot of their success has come since he passed away in 1999, but if you ask those who are still running the company, including Paul (Walker, the current chief executive) who was brought in by my dad in the early days, they would say his influence lives on.”

After graduation, Daniel headed to Israel, driven by his religious conviction for life in the Jewish homeland. There, he worked with children with special needs, using the power of music to help them with their development. A talented singer and musician, who plays the piano and violin, Daniel says it was a great experience that also taught him some important values he would go on to use in his business career.

“It teaches you to leave your own ego at the door and look more closely at what motivates the other people around the table,” he explains.

These principles proved important in his career as a venture capitalist, he said, enabling him to understand what motivates the other people involved in a business, in particular its directors.

“It is crucial to understand what the expectations are of entrepreneurs. As an investor, if there is a mismatch of expectations between the investor and the management team or owner, then when it comes to generating the value, there can be great conflict.”

Daniel returned to London to learn his new trade, on the advice of his father.

He had no hesitation in deciding to return to Israel to put his new skills to the test and set up Goldman Investments, in 1999, a venture capitalist business specialising in early-stage investments in high-growth technology-driven companies.

At the height of the dot.com boom, Israel was one of the hottest international locations for hi-tech businesses, encouraged by an innovative and well-established package of government support. Alas, the boom was about to end and Daniel was also reeling from another blow, the premature death of his father.

“I was just getting started and the person who was best positioned to keep me on the straight and narrow stepped off the scene,” he says. “It was a very challenging time for all tech businesses. I had a decade of education crammed into a couple of years.”

Since 2001 he has been working alongside his Australian business partner Darren Rockman, with whom he shared the strains of the first few difficult years. After investing in some bright start-up companies with the hope of watching them grow and succeed, in many cases they were left trying to manage the more painful process of closing them down.

“We spent most of that period clearing up,” he recalled. “We had to decide which were going to be the non-performing companies and if they were going to be closed down we would stay there until the doors were closed for the last time.

“We tried to ensure that everyone got what they deserved -– or at least what they were owed. We wanted to pay a great deal of attention to making sure that we got that right and often that was to our own cost. During that period, there were times when I wondered what the point was. I couldn’t see the light at the end of the tunnel.”

Fortunately, around five of the 20-strong portfolio of companies the firm had invested in turned out to be big successes and they enjoyed profitable growth over the next few years. One of the biggest successes has been digital document management business Invu Inc, the only UK business with which he retains a connection and where he still serves as chairman.

The duo’s latest venture is Goldrock Capital, a new investment fund aimed at companies at a more mature stage of their development, again targeting Israeli growth businesses.

Daniel draws interesting comparisons between the success of the technology industry in Israel with that in the UK. Although Israel is just a tenth of the size, it has a larger VC community working in the sector, largely thanks to the huge level of government support on offer over the past 15 years or so. This has helped make the country the third most significant community for tech businesses in the world, after Silicon Valley and Boston.

He says Israel is now reaping the rewards of this investment, with a whole generation of entrepreneurs looking to put something back into the community from which they came.

“There is a feeling in Israel that an entrepreneur is a cool thing to be,” he says. “I think that people like this become a strategic asset for the country. Typically, they are successful creative people who like to get involved, not just business people who want to sit around and play golf for the rest of their lives.”

Which brings us to the subject of the post of David Goldman Visiting Professor of Business Innovation at Newcastle University Business School. This post, which each year is held by a leading business personality from the North East, was set up by the Goldman family as a way of ensuring his spirit of enterprise lived on after David’s death.

This year, The Journal is helping in the search for the next Goldman Visiting Professor to succeed Fiona Cruickshank, chief executive of successful Prudhoe-based pharmaceuticals business the Specials Laboratory.

Daniel says it is just a small example of how leading entrepreneurs can play their part in building a brighter future for the North East.

“You just look at the people who have been Goldman Professors and it is clear there are some very talented entrepreneurs in the region – so let’s get on the roof tops and shout about that.”

Although Daniel is firmly settled in Israel with his wife and four children, there is no doubting his passion for the North East. Like his father, he is a keen fan of Sunderland FC, although his brother Andrew’s support for Newcastle United creates a degree of family rivalry.

“Because my dad was born in Sunderland and he built Sage in Newcastle, then I think we have a responsibility to the region that has served us as a family so well over the years,” he says.

“It is part of the giving back as much as anything else. He never ignored where he came from, even though he did what he did through his own hands. I would like to see the region succeed and I still have a huge amount of sentiment for it; they deserve a vibrant tech-driven industry here.”