Kleiner Perkins
why Kleiner Perkins invested in Google, Amazon, and Genentech, and why they failed to invest in Tesla, VMware, and Robinhood
Brief History:
The idea of investors who were former entrepreneurs and engineers backing entrepreneurs and engineers is mainstream in venture capital today. Back in 1972, however, at the founding of the venture capital firm Kleiner Perkins, startups were presented with different types of institutional partners. Partners that were typically from a finance or sales background and used banking tactics to invest in risky startups.
We know now that this mindset of investing is clearly flawed, and the best venture capitalists are the ones who understand the entrepreneur’s mentality, product, market, and business plan, having been in the shoes of the entrepreneurs before and knowing what it means to build a product. Tom Perkins, the founder of a startup pursuing a new laser technology, and Eugene Kleiner, a member of the “Traitorous Eight” who left Shockley Semiconductor to form Fairchild Semiconductor, were the firm's founding partners with the uninspired name of Kleiner Perkins.
As we’ve mentioned in past essays, VC firms have to sell their services, so every new firm needs to stand out. Kleiner Perkins, being a firm of entrepreneurial engineers for entrepreneurial engineers, was certainly a way to stick out in a field that had yet to find this notion as mainstream.
As a result, Kleiner Perkins cemented itself as one of the top VC firms throughout the 70s, 80s, 90s, and early 2000s. Much of their early success is attributed to this counter-positioning, allowing them to partner with exceptional entrepreneurs pursuing a difficult technical challenge that the Kleiner team could analyze better than many investors. In the '90s, the firm reached pinnacle status as one of its partners, John Doerr, became unquestionably known as the top VC in the valley, and many young entrepreneurs sought his counsel.
However, this run did not last, as the firm has seen less-than-exceptional results since pursuing a green-tech wave in the mid-2000s, from which it is now recovering. The firm currently has a group of twelve partners, all having joined the firm no earlier than 2017, seeking to bring Kleiner Perkins back to its heyday by investing in breakthrough internet technologies, much of what made the Kleiner Perkins of old so spectacular.
Today, we will investigate why Kleiner Perkins invested in Genentech, Amazon, and Google, their general investment theses, what they look for in founders, what traits they feel make the best VCs, and general advice they have for founders. At the end, we’ll look at some huge misses they had in the past in companies like Tesla, VMware, and Robinhood.
Here we go.
Why did Kleiner Perkins Invest in Genentech?
First, I recognize many may not know Genentech, and I recognize that, on paper, Amazon and Google seem far more interesting; however, the Genentech story has many lessons and principles that are foundational to Kleiner Perkins today and set them up to be a premier venture capital firm.
As a firm built by entrepreneurs for entrepreneurs, Kleiner Perkins hired employees assuming they would eventually start a company and Kleiner Perkins would be their first backer. It was essentially an entrepreneur-in-residence program, but one where they would still invest in companies as venture capitalists when they weren’t starting their own.
Kleiner hit big on this thesis in 1974 when one of their partners, Jimmy Treybig, started Tandem within the walls of Kleiner Perkins and delivered the partnership a 100x exit on his company.
Shortly after, in 1976, another employee at Kleiner, though this time an associate, would have a similar path. Interestingly, this path had a different start as this associate, Bob Swanson, had been fired from Kleiner Perkins before co-founding his company, Genentech.
Swanson had an idea for a breakthrough biotechnology product of human insulin developed from recombinant DNA. This was certainly a breakthrough because insulin at the time was extracted and refined from the pancreas of cows and pigs.
I’m no scientist, but the first option seems better to me.
So, even though Swanson was fired, lucky for Kleiner Perkins, he couldn’t find another job, so he stayed around the Kleiner Perkins office, not on payroll, and cold-called many scientists at research institutions regarding whether they’d pursue this idea with him. He received many no’s, but all he needed was one yes, and that yes came from UCSF researcher Herbert Boyer. Boyer understood DNA technology well, but Swanson enlightened him on the potential commercial applicability of such a product, leading Boyer to join him in this pursuit.
When reading this founding story, I was reminded of a quote by former Kleiner Perkins partner Randy Komisar, where he discusses the importance for founders to engage an associate at a VC firm who cold-calls them, even if he or she is not a decision-maker. He said,
“You have to make them your ally. I think, without offending them, you need to let them understand that you quickly need to get a sense of the support he's going to get or she's going to get in her organization. You need to turn this into how am I going to help you - associate - get the support for this project. I like you. You understand my business, we have a good rapport, but we quickly need to get this raised to a level where I understand the commitment of your organization. I'm gonna do you the favor. I'm going to go in and sell your support of my idea. Let's figure out how to do that.”
So, while Swanson technically wasn’t an employee of Kleiner Perkins anymore, he still worked at their office and had relationships with the partners. He was confident that if he could develop this idea more thoroughly with a renowned scientist, his former partners would back his company. Therefore, as the quote suggests, it’s imperative that you, as a founder, listen to the associates when they call you because they can be the first stop on your way to a key decision-maker at a VC firm.
Swanson and Boyer spent the next few weeks developing a thorough business plan to bring to the Kleiner Perkins partnership. They had a thesis on developing this technology, which wouldn’t be easy but would be possible. Also, if they could achieve it, the results would be revolutionary, creating incredible value for Genentech.
Kleiner Perkins was built on the premise stated by Tom Perkins that,
“Market risk is inversely proportional to technical risk.”
Therefore, if you can solve the technical risk, the competition will be minimal. So, Kleiner loved to back big, audacious, technically difficult projects because they knew the outcomes could be outstanding. Therefore, if they could assign a 5% chance of this company’s technology succeeding, which would accrue $100m in value for Kleiner Perkins, then any investment less than $5m is a good risk-adjusted investment.
So, Kleiner Perkins invested in Genentech because they felt this was a big, audacious, technical project that, if solved, would generate incredible financial returns. Tom Perkins stated that this technology could create a “microbial Frankenstein” and compared it to being able to play God.
After all, Genentech was building technology that would manipulate genetic material, creating many new opportunities in drug development and production that no other companies were pursuing.
As a result, Kleiner Perkins felt conviction backing a very challenging technical project because, first, Boyer was an exceptional scientist who, with Swanson, brought together a great plan to attract other exceptional scientists to help build what seemed to be an achievable task. Second, the market potential outweighed the technical risk as Kleiner decided to invest $100,000 into Genetech for 25% of the company.
This meant that Kleiner Perkins invested slightly over 1% of their $8.4m fund into a company that the partners felt had an incredible 100x return on investment potential if the Genentech team could build the product they pitched. Therefore, by only putting about 1% of the fund into the company, they made that risk-adjusted investment based on the technical risk compared to the potential financial outcomes.
It turns out that the 1% chance of success was a little too conservative because Genentech was very successful shortly after Kleiner’s initial investment in 1976. As Genentech reached new technical milestones, they raised more money from other investors, with Kleiner continuing to participate.
Kleiner Perkins ultimately invested somewhere around $500,000 total into Genentech to maintain their 25% stake in the company, which, shortly after Genentech’s IPO in 1980, was worth around $100,000,000 yielding Kleiner Perkins a 200x on this investment and a 276% IRR.
A fantastic risk-adjusted investment on an immense technical problem with immense market potential.
The model of creating a venue of entrepreneurial-minded, engineer-background employees to pursue breakthrough technologies, whether through investing or building their own company, set Kleiner Perkins up for immediate success thanks to Genentech, among others, as their first fund returned around 42x its invested capital!
But perhaps the greatest return on Kleiner Perkins’ investments based on this entrepreneur-in-residence model was attracting John Doerr: the legendary VC regarded almost without a doubt as the greatest venture capitalist of all time and a homing beacon for fantastic entrepreneurs based on his high intelligence, incredible drive to succeed, and belief in big ideas. He is a big reason for Kleiner’s success in pursuing and investing in the next two companies we will discuss.
Why did Kleiner Perkins Invest in Amazon?
While Amazon has an interesting founding story, we’ll jump ahead to what the company looked like two weeks after they launched. After two weeks, Amazon generated $25,000 in revenue with no marketing spend. It was purely driven by word-of-mouth. That is the definition of immediate product-market fit right there.
This was in July 1995. By the end of that year, they had $500,000 in revenue. In 1996, they did $15,700,000 in revenue, so yeah, like I said, immediate product-market-fit.
Around mid-1996, Bezos and the Amazon team went out to raise money to help fund this accelerated growth. After all, Amazon was not profitable at this point, and running a supply chain for thousands of books a day is a hefty challenge, both logistically and financially.
So, like we talked about with WhatsApp in the Sequoia essay, this deal was hot. Kleiner didn’t really have a unique insight into why Amazon would work because, uhhh, they did $15.7m in revenue in their second year of existence. $15.7m in revenue for e-commerce when the internet adoption rate looked like this in 1996:
Since there’s no way you can tell from that miniscule bar for 1996, there were about 45 million users on the internet. So Amazon was making about $0.35 per internet user. Kind of a crazy stat. Especially for a company 18 months old.
So, as I mentioned before, John Doerr has joined Kleiner Perkins by now, and John Doerr is a rock star. Every company in the valley wants John on their board because of his high intelligence, incredible drive to succeed, and belief in big ideas. On top of that, If you got John on your board, you had a much higher chance of succeeding than the average VC-funded company.
John was very similar to the entrepreneur because he was just as much a dreamer as the entrepreneur and loved building companies as much as he or she did. There was truly an alignment between founder and investor that didn’t feel transactional but more like a partnership.
Luckily for Jeff, he didn’t need to pitch John because John was reportedly calling Tom Alberg’s wife, Tom Alberg being the Amazon seed investor and an early board member, “every 15 minutes,” asking if Tom was home yet and how he needed to talk to him. This is like if Phil Jackson called a low-level D1 basketball coach’s wife every 15 minutes about one of his players. Doerr had that type of hustle, even though he had such a high reputation.
So, why was John so confident that he needed to invest in Amazon? How did he jump on this deal so fast? Well, Doerr attributes this to having a prepared mind, a core tenet of being a successful venture capitalist. He says,
“You must bring a prepared mind to these decisions, and so I think it's important to read and learn and bring curiosity and energy. Work to stay abreast of what's important and why. It's not enough to know that Bitcoin is a new means of conveying value. You ought to know how bitcoin works and what the physics behind it is in the technology because that gives you a better opportunity to understand what the innovators and entrepreneurs are saying.”
John was obsessed with the internet. He thought the internet was going to be way bigger than anyone thought, which still exceeded his expectations. This is why Doerr led the investment in Netscape, the world's first public internet browser because he knew this would unlock the capabilities of the internet for millions of people.
Having seen the success of Netscape, he was confident an e-commerce “everything store” like Amazon would be huge. It was a giant, industry-defining investment that fit the type of companies John loved to invest in.
Therefore, John was persistent in getting in touch with Amazon because he had so much conviction to invest and wasted no time. But John wasn’t just interested in Amazon, the company; John also had great admiration for Jeff Bezos. Doerr said,
“When you meet Jeff Bezos, you just know that you want to be in trouble with him. Jeff was a computer scientist from Princeton; exceedingly bright, and I remember walking into his offices in a very seedy part of Seattle in fact the free needle Clinic was right across the street from his office, and Jeff came bounding down from The Loft in this place where they were distributing the books with a laugh that only could barely be described as a laugh, it was more like a honk.
At that moment, from the intensity in his eyes and the way he talked, I knew there was a kind of personal bond that meant I wouldn't mind being in trouble with Jeff. One thing I'm pretty sure about is any of the entrepreneurs that I get to work with who are going to do something world changing, we are going to get in trouble.”
I love that framework of investing in someone you wouldn’t mind getting in trouble with because that was absolutely the case with Amazon. In fact, Amazon was constantly threatened by Barnes and Noble in the early days. Jeff wouldn’t back down, but a lesser founder surely may have, as Barnes and Noble was the king of the book industry.
Amazon had to fight off lawsuits, several short sellers, and investor criticism, but Jeff fought on, and John could foresee this future with Bezos. He saw Jeff was a fighter, and they’d have a lot of fun disrupting an entire industry.
Interestingly enough, this investment almost fell into the Kleiner Perkins Anti-Portfolio. As much as John loved Amazon and Bezos, he could not accept a board seat at the company. He was already oversubscribed, like always, on board seats, and he could not make time for Amazon. He instead wanted to put a junior VC on the board.
This is the blessing and the curse of Kleiner Perkins: They attracted the best entrepreneurs because of John Doerr, but they also missed some of the best entrepreneurs because of John Doerr. In the eyes of many founders, Kleiner Perkins was John Doerr, and if John couldn’t be on your board, then there was no reason to work with Kleiner Perkins.
On top of this, Bezos had an offer from General Atlantic for twice the valuation that Kleiner was offering! Twice! Bezos was ready to go with General Atlantic until Doerr very wisely committed to a board seat on Amazon and invested $8m for 13% of the company.
It’s crazy that Bezos diluted twice as many shares as he had to for that $8m investment just to have John Doerr on his board. I can’t believe a VC was worth that much at that point in time. No one in the VC industry today is worth such a difference in valuation, and there likely never has been anyone quite to the level of John Doerr. It’s crazy.
It is unclear when Kleiner Perkins sold all of their shares in Amazon. Doerr remained on the Amazon board until 2010, so they may have held some of their stake until then. Probably not, though. I read one article that said as of October 1998, they had made over $325m on that investment but hadn’t finished distributing all their shares yet. So, since this is the only factual number I have, we’ll calculate Kleiner Perkins’ ROI on Amazon as of 1998, which means they returned $325,000,000 on an $8,000,000 investment just two years later, yielding them a quick and spectacular 41x on their investment, and an even more impressive 537% IRR.
Side note - after researching Yahoo, eBay, and now Amazon, these dot-com investments were just absurd. I can’t imagine VCs ever seeing IRRs like they saw in the late 90s ever again. But then again, who knows.
Why Did Kleiner Perkins Invest in Google?
To kick off this section and give you readers an idea of what Google was like when Kleiner Perkins invested, I’m going to pull up an excerpt from last week’s essay on Benchmark Capital. The following is why Benchmark passed on investing in Google:
It was 1999, and search engines were still in an ultra-competitive environment with questions regarding whether their business models actually made sense. Many search companies were starting and failing consistently, and it was beginning to look pretty murky. There were still many questions regarding whether anybody could make a sustainable business out of search and if anyone could compete with Yahoo.
Sergey Brin and Larry Page were two Stanford PhD students adamant about being CEO despite never running a company before, which, in late 1999, was extremely novel and gave many investors pause, including Benchmark.
Despite these two concerns, the price was still remarkably high. Gurley also mentions how the founders were so confident in their product and their abilities that it actually gave the opposite impression to the Benchmark team that these guys were maybe overselling themselves and might not be as exceptional as they seem.
So, that was Google. The 18th search engine built by two Stanford PhD students adamant about being CEO and demanding a very high valuation for their company that had yet to earn a dime.
But John Doerr loved Google. So what did he see that the Benchmark partners didn’t? Well, as I mentioned in the Benchmark essay, Doerr looked past all of those initial concerns and investigated the underlying technology, which blew him away. Like many Kleiner Perkins partners, Doerr was an engineer by training, so he could understand these entrepreneurs and engage with them better than most other venture capitalists.
So, there were two big reasons why Doerr and Kleiner Perkins decided to invest in Google. The first, as I mentioned, was the underlying technology. Doerr said,
“The first of which was, their search was much better, this notion of PageRank, which was, we’re going to return results not based on keywords, but on how many pages point to the page, or the answer in question, produced a demonstrably better experience. The second observation was, because of that, their numbers were off the chart. And so the growth rate was unlike anything we’d seen for any other service. And finally, coming from the technology industries, from Intel and networking companies, it didn’t take a great leap of imagination to see that search well done could transform everything.”
This notion of PageRank, which was derived from the founder's experience in academia in which the prestige of an academic paper can be attributed to how many other research papers cite it; therefore, the pages with the most websites linking to it must be the best pages to show to the user, was a novel insight at the time and was a key factor in delivering a better search experience.
But again, Google was the 18th search engine, so could it really be that much better than the incumbents to capture enough market share to be a public company? Well, former Kleiner Perkins partner and founder of Khosla Ventures, Vinod Khosla, who we will absolutely talk about more in the eventual Khosla Ventures episode, had this to say when describing the potential Google had to succeed in a crowded market. He said,
“If you thought existing search technology was 90 percent as good as the best possible version, then pushing performance up to 95% was not going to win you customers. But if you thought there was more headroom - that existing search technology represented only 20 percent of the potential - then Google might be three or four times as good as its rivals, in which case its margin of engineering excellence would attract a flood of users.”
PageRank convinced Doerr and Khosla that Google could actually be multiple times better than the current search leaders. It was built on exceptional technology backed by two genius computer science doctoral candidates, and, based on its growth rate, it was showing early signs of success. There were no indications that this would change; all signs pointed to Google continuing to grow.
The second reason John had so much conviction in the Google investment was that he believed in the potential of the internet far more than the average person; in fact, probably far more than the top 1% of believers, and he loved ambitious entrepreneurs who had lofty aspirations.
Well, the Google founders had even bigger expectations for the internet than Doerr and dreamed even bigger than Doerr. Two traits that only the best Kleiner Perkins-backed founders encompassed more than Doerr.
John tells the story of the first time Google came to pitch him to invest. First, he was already enamored by Google's big and bold mission statement at the time: “We deliver the world’s information in one click.”
Oh, man. That’s beautiful.
But what really sent John over the moon was when he engaged the founders regarding the market potential. Having seen Yahoo's success and Google's potential, John thought they could attain a $1b market cap. However, when he asked the founders about their market potential, they blew Doerr’s estimate out of the water. Doerr recalled the conversation, saying,
“I’ll never forget my first conversation with Larry Page when I asked him how big Google would be, and he told me “$10 billion.” Remember now, this is around 1999. This is at a time when you still dialed up to get into the internet. I about fell out of my chair. I said, “Larry, surely you mean market cap at 10 billion.” He said, “No, John, I mean revenues. Search today is just in the very beginning; in fact, it’s a very crummy experience. I want the search system to be able to answer any question that’s asked of it and, indeed, to anticipate what our users want to know.”
$10 billion in revenues suggests a $100 billion market cap, 100x Doerr’s already ambitious expectations. This conviction and ambition was just the icing on the cake for Doerr, who was already sold on the underlying technology.
This was far from a unanimous decision at the Kleiner partnership, however. In fact, Doerr had to advocate fairly strongly for the Google deal. Luckily for Kleiner Perkins, a core tenant today, and one I’d assume at the time, otherwise this Google investment wouldn't have been made, is to support non-consensus investment decisions since the best investments are non-consensus and right. Current partner Ilya Fushman describes this principle as follows,
“We're really partner-conviction-driven in the sense that any partner can come in and propose a deal. Our job as partners is again to test or reinforce that conviction, but we don't have a formal vote. In practice, the way it really settles out is you look across the room, and if everybody looks really skeptical, then they probably have a reason to be skeptical, but you could still do that deal. Now, you can do that only so many times because eventually, once you do a bunch of deals that nobody likes and they turn out to be bad, it's kind of shame on you.
But, a lot of times, you have the conviction, and folks ask good questions, and you still believe in it, so you do the deal. So, we try to basically give people as much agency as possible to make these decisions because the best deals out there aren't obvious, right? They do typically come out of dissent and discussion and some conflict because the obvious deals would be pretty obvious, so we try to foster that.”
Since a unanimous decision was not needed on this investment and John Doerr, Kleiner’s unofficial leader, had immense conviction on this deal, Kleiner ultimately invested $12m for 12% of Google.
Google would turn out to be one of the best, if not the best, winners in Kleiner Perkins’s long history. In 2004, their stake in Google was worth about $2,875,000,000 at the IPO. Google did not raise any more money after their Series A with Kleiner since search is one of the greatest business models ever. Google could spit out ridiculous cash flow, allowing Kleiner to maintain their 12% ownership on their $12,000,000 of invested capital.
As a result, Kleiner returned 240x on their initial investment and a 199% IRR just five years after initially investing in Google.
A spectacular investment defined by an incredible founder-vc fit in understanding the potential of this product both technically and financially. Certainly, these investments are the ones all VCs strive to make.
The Kleiner Perkins Anti-Portfolio:
As always, we’ll conclude with some big mistakes Kleiner made over the years. After covering Sequoia, Benchmark, and now Kleiner, I can confidently say Kleiner’s misses are worse than Sequoia and Benchmark’s misses; not necessarily worse on a potential dollar outcome basis, although they certainly missed some big wins, as we’ll see.
What’s so frustrating about these mistakes is they shouldn’t have been mistakes. They weren’t really about price or some uncontrollable factor. In fact, they all either fit a thesis of theirs, were very similar to other companies they’ve backed in the past, while the last one, was a great mission with a big and bold idea that fit the typical Kleiner investment.
Tesla:
This investment is a head-scratcher for many reasons.
First, it was Elon Musk. Now, Musk certainly wasn’t the all-encompassing once-in-a-generation entrepreneur yet. That wouldn’t come until SpaceX and Tesla had become a success. Still, he had led successful companies in Zip2 and PayPal and had a reputation as an ambitious genius capable of solving difficult problems.
These are the entrepreneurs Doerr historically backed. The Googlers and Bezos were unproven founders, but they were geniuses capable of solving difficult problems. I’m surprised Doerr didn’t feel the same conviction he felt when backing entrepreneurs like these. Perhaps he was tired of the ambitious ideas as Kleiner began to enter a slump.
This fit Kleiner's thesis at the time. They were transitioning the focus of their partnership to green-tech investments. Tesla’s mission was to make electric cars the most affordable cars in America, which would decrease the number of ICE vehicles on the road. This should’ve been perfect for the Kleiner team, but they went with another electric vehicle company: Fisker.
Kleiner went with Fisker because the management team had experience in the automobile industry, which can be one of the most difficult industries to operate in, especially when you’re disrupting the whole thing. On the other hand, Musk had no operational automobile industry experience but was certainly capable of building a well-designed car. As we saw when investigating the Amazon investment, Bezos was not from a retailing or web development background. He worked at a hedge fund before starting Amazon.
But John mentioned how Jeff was just so bright and someone he wanted to get in trouble with because they were also disrupting an entire industry by bringing retail online. If anything, it’s good to disrupt an industry as an outsider because you’re not constrained by knowing what you can and can’t do.
Maybe Doerr and Musk just didn’t vibe as much as Doerr and Bezos did early on, and maybe Musk was much more different than he is now, but this is certainly a big miss and one I’m very surprised to have seen them not invest in when given the opportunity.
The only plausible explanation I can think of is that it would’ve been unfair to invest in Google, Amazon, and Tesla. Two is enough.
VMware:
This investment is also interesting because Kleiner had invested in Juniper Networks and Sun Microsystems, which, while different, were similar in the sense that all three of these companies worked with data visualization, storage, and computing. VMware should have been in Kleiner’s wheelhouse, having come out of those two previous investments.
The only reason I could find why they passed was due to, like all great companies, a high valuation. As I’ve covered in previous essays, a high valuation is a classic reason why investors don’t invest in future successful companies.
(Note to self - a good research project would be looking up the success rate of companies that were deemed to have “a high valuation” during venture rounds)
I don’t need to get into specifics about why I’m not a fan of the excuse of passing because of high valuations, but what’s even more frustrating about this pass is that Kleiner Perkins partner at the time, Vinod Khosla, had successfully co-founder and ran Sun Microsystems to the juggernaut it became. Therefore, he knew this industry well, and he reportedly had high conviction on this investment and was very adamant they invest despite the high valuation.
Perhaps no other partners could agree, and Khosla was outvoted, but as we touched on with Google, the best investments are non-consensus and right. Also, Khosla likely knew more about this industry than any other partners at Kleiner. If he is lobbying for this investment so strongly, then as the subject-matter-expert of the firm in this domain, he should’ve been given the green light.
This is why I favor smaller partnerships that don’t require a vote like Benchmark, rather than bloated firms with too much discussion and pandering around potential flaws of an investment, like a twelve-person partnership like Kleiner Perkins can bring. I believe that non-obvious investments are the best investments in venture capital. Therefore, the partner with the most domain expertise should be given the trump card over those with less domain expertise. This is how you get non-obvious and right.
Frankly, this one frustrates me more than Tesla, and could certainly be a reason why Khosla left to start his own very successful venture capital firm just a few years later.
Robinhood:
The last one we’re going to cover today is Robinhood. Once again, like every company I try to expose in the anti-portfolio section, I couldn’t find too much information on why they passed. What I do know is they were pitched at both the Series A and the Series B but passed both times before ultimately investing in a late-stage growth round when the company was valued at $5.3b. However, I’m still considering this an anti-portfolio investment since they missed at the more important stages when they had the opportunity.
I’m assuming they passed because Kleiner Perkins was kind of in shambles at this time. It was 2014, and they were coming off of a very unsuccessful run at investing in green-tech startups and a gender discrimination lawsuit that Kleiner won. Nonetheless, it hurt the reputation of the firm. Perhaps they just weren’t as focused or had enough conviction to invest in bold bets such as democratizing investing.
They were too gung-ho on this green-tech thesis, and much of their “consumer-tech” investments in the 2010s were growth-stage investments in companies they may have invested in earlier had they not been so thesis-driven.
I’m all for developing theses, but not when it becomes the only thing you do, or you will omit far too many exceptional companies. I believe in several theses for each industry or broader theses that can be applied to multiple industries. I suppose Kleiner learned this lesson the hard way.
Conclusion:
I feel like this ended on a pretty brutal note, so I am sorry to all Kleiner Perkins fans out there. I think John Doerr is the greatest venture capitalist of all time and no venture firm had a better run from 1974-2004, but that doesn’t mean they didn’t make crucial mistakes that sent Kleiner lower in the totem pole of great VC firms. It seems they’ve learned from their mistakes as they are all-in on breakthrough technologies, and the new partners seem to be generating some early success.
Regardless, I think this essay has many lessons regarding backing bold ideas by ambitious founders, supporting entrepreneurs at the lowest level and supporting their growth, and not being so thesis-driven, shortsighted, or democratized in investment decisions.
That is all for today; if you liked this essay, please share it with a few friends you think would be interested! I’m sure they’d be grateful you sent it to them. Also, if you want to listen to the podcast episode, you can do that here: Spotify - Apple. If you want to watch clips from the podcast episode you can check out the YouTube page. If you want to learn more about the companies Kleiner invested in that we didn’t cover and more investment theses of the firm and tips for founders, you can check out allthingsvc.blog. Lastly, you can follow me on Twitter, @Justin_Pryor_ for random tweets regarding the companies I cover and the lessons I learn.
Thanks again for reading! Stay tuned next week for a new essay with a unique format…