Like many young scions, Mark Ghermezian joined the family business, an empire started by his grandfather that now includes banks, manufacturing companies and the largest mall in America. He spent two years leading an energy group, managing dozens of oil and gas drilling sites across Texas.
But last year, Mr. Ghermezian, 29, traded his plush Houston office and job security for a cramped work space in the meatpacking district of Manhattan and the uncertainty of a fledgling technology venture. Using his connections, he raised $3 million from his family and other investors to start Appboy, a service that helps businesses manage their mobile applications.
“I wanted to build something,” he said. “My family doesn’t quite understand what I do, but they know I’m their tech guy.”
The old money crowd has found the new, new thing.
Fresh from college and graduate schools, the children of some prominent dynasties are taking a different path, spurning their legacies in retailing, real estate and finance for a future in technology.
Justin A. Rockefeller, 32, the fourth-generation descendant of John D. Rockefeller, the oil tycoon, is a partner at the venture capital firm Richmond Global and a director of business development at Addepar, a financial software start-up. The real estate heir Joshua Kushner, 26, helped to found Vostu, a large Brazilian online game company, and recently raised $40 million for his own technology investment firm, Thrive Capital.
While many of them don’t know how to program code, they have a powerful combination in the start-up scene: wealth, wits and a well-connected family.
“They view this as the next great frontier,” said David Hornik, a partner at August Capital. “There’s not much money left to be made in timber or coal.”
It’s a natural fit for a generation weaned on the Internet and e-mail.
David Tisch, the grandson of Laurence A. Tisch, who turned a small hotel into a vast conglomerate, received his first computer in fourth grade. Without his parents’ knowledge, the young Mr. Tisch found ways to illicitly siphon minutes from AOL, when it charged an hourly rate for Internet access. As a teenager, he sold baseball cards on eBay and persuaded his father to let him use his bar mitzvah money to buy shares of the online marketplace.
After graduating from New York University Law School, he initially took a more traditional career path, interning at prestigious law firms and taking a job at Vornado Trust Realty, a real estate company. But as Facebook began to take off in 2007, he changed direction and started a technology investment firm, the Box Group, with money from his brothers. He also helped found LightsOver, a short-lived online group-buying service.
In 2010, Mr. Tisch met David Cohen, a founder of TechStars, an incubator that nurtures budding entrepreneurs and provides them with seed capital. Mr. Cohen was cautiously impressed with the extroverted investor, asking Mr. Tisch “if he was in it just for fun.” Eventually, TechStars hired Mr. Tisch to run its New York operations and help decide which start-ups to finance.
“We checked with many of the entrepreneurs he had backed as an angel investor, and universally they felt that he added tremendous value,” Mr. Cohen said.
While many in New York’s close-knit start-up scene cheered the announcement, a few looked askance at the appointment. Matt Mireles, a chief executive of SpeakerText, a transcript service, asked on Twitter, “Why is TechStars NYC run by a non-entrepreneur?”
TechStars stood by its decision. In one year, the New York program has become the accelerator’s most popular offshoot, attracting more than 1,500 applications for the spring class, almost double the year before and more than any other office. Still, it will most likely be years before the company will know if Mr. Tisch’s picks pay off.
“They’ll be judged by what they achieve,” said Mark Suster, a venture capitalist and TechStars mentor. “No one really cares who your parents are.”
Adam Pritzker, whose family owns the Hyatt hotel chain, is trying to marry his past with the current technology boom. In 2011, he co-founded General Assembly, a property management company that focuses on technology start-ups in downtown Manhattan. In a nod to his grandfather’s aesthetic, Mr. Pritzker and his team have outfitted the space with minimalist furniture, modern light fixtures and nary a hint of Ikea.
Along with renting spaces, General Assembly tries to create a salonlike atmosphere, offering regular classes and lectures for entrepreneurs. In early April, the company is set to hold a workshop on “going viral,” and an informal discussion about growth strategies with executives of Etsy and Seamless.com.
The campus environment is in part inspired by Mr. Pritzker’s grandfather, Jay Pritzker, who once told his 13-year-old grandson about a property in Atlanta with a 22-story atrium in the middle. Marriott and Hilton passed, citing its inefficient use of space. But the elder Mr. Pritzker bought the space, imagining glass elevators that would give customers a thrilling view. The once-unconventional design has become a Hyatt staple.
“This human-centered design approach to business is a value he instilled in me,” Adam Pritzker said in an e-mail.
A famous last name can be both a blessing and a curse. The well-to-do may not have to worry about coming up with capital, one of the biggest challenges for budding entrepreneurs and venture capitalists. But they have to work just as hard, if not harder, to gain the respect of the technology community.
Mr. Ghermezian, who raised his first round for Appboy from his family, scored a meeting with a venture capital firm, Blumberg Capital, through his family office. During a trip to Manhattan, he met with Bipul Sinha, then a principal of Blumberg. At first, Mr. Sinha was reluctant. Though he had known the Ghermezians for years, he knew little about the heir, mainly that he worked in Texas.
“I thought, this guy is in oil and gas, what does he know about technology?” said Mr. Sinha, who is now a partner at Lightspeed Venture Partners. “But then he started talking about the market, and I realized he was serious.”
Intrigued, Mr. Sinha followed up, and Blumberg spent several months analyzing his business model and Appboy’s market. The firm considered his previous venture, Xe Mobile, a wireless service that flopped, as a positive mark, reflecting his genuine interest in technology. Eventually, Blumberg agreed to invest $500,000.
“We had a relationship, but business is business,” Mr. Sinha said.
While a last name can draw skepticism, it can create rare advantages for would-be venture capitalists.
Mr. Ghermezian, who also runs T5 Capital, the venture arm of his family’s home office, made five investments last year. His portfolio companies, which include ChirpMe, a Facebook dating site, and Nutanix, a data storage company, can also tap his family’s rich retail connections. The Ghermezians’ conglomerate, Triple Five, owns stakes in some of the world’s largest malls, including Mall of America and the West Edmonton Mall in Canada, potentially giving the start-ups access to advertisers or customers.
Harrison LeFrak, the son of the real estate billionaire Richard LeFrak, started making technology investments after the financial crisis, when many investors closed their checkbooks. He recently helped one company, RoboteX, introduce its robotics technology to the New York Police Department’s bomb squad, by donating products. Mr. LeFrak, whose family has been a longtime supporter of the New York City Police Foundation, says he believes the relationship will be valuable to RoboteX, which will be able to test its equipment with one of the country’s largest police departments.
“Everything in life is personal,” Mr. LeFrak said.