What It Takes to Be a Remarkable Leader: John Doerr, Venture Capitalist

it's a privilege to be here and even more of an honor to be here with two GSB alums partners of mine and I want to offer you some career advice and tell you the story of kleiner perkins and be sure that trade Vassallo to your left my partner since 2000 and in GSB grad can share with you her perspective on innovation entrepreneurs and venture capital and also Chiwa Chen a grad of 2006 is that right and I'll have more to say about both of them in just a second give the clicker I prepared 14 slides and my goal for this time is to spend over half of it in QA in interaction with you so as we go along I'll pull out your notebook write down questions we're going to try to cover as many of those as we can collectively my 'man the first part of our conversation is to tell you a little bit about kleiner perkins our business our strategy to tell you a little bit about what's going on in two of the three initiatives that we think are really important go into green technologies and digital technologies and then to offer you some unsolicited career advice as you're thinking about where you're going with your career and perhaps even your life that's worth what you're gonna pay for it which is nothing and and and then and then we'll dive right into questions and answers and I hope hope that'll do well we will end on time in an hour so the kleiner perkins partnership is a service business we're in a service industry our business doesn't scale very well our job is to help entrepreneurs and the way we've figured out to best do that is to build our team of partners with people who have had significant entrepreneurial experience so tre was a early founder of the company that today is really the core of palm computing she designed the palm 5 which is the iconic PDA chi-wah he worked at a very hot you know advertising networking company built ad networks and then we ripped him out of Excel partners to come take on a lot more response ability here at Kleiner that ability to connect with and serve entrepreneurs is key to being good in the venture capital business and we've done a good job we've got a couple hundred years of investing experience in our partnership we view ourselves more as company builders than financiers Iran more discounted cash flow statements at Intel than I ever have done since I've come to kleiner and and the heart I think of what we have to offer is our team this is a 16 of our investing professionals that's the whole team working on digital technologies and green technologies we have some other partners who work in the life sciences and of course you'll seed tray and you'll see chi-wah their kleiner has always had a strategy of being a multi-generational partnership so that anytime there's three generations of partners in our firm a venture capital firm could be an episodic collection that talented individuals unfortunately one when I joined in 1980 as an untalented individual Tom Perkins who had built kill at Packard said we want to build a service organization that can last that can last beyond any other partners so everybody I should point out here tray and chi-wah that's Al Gore stands out I guess a lot of venture firms have people that are door openers and their names on the nameplate and so forth al is not that he's an amazing leader in human being I mean we came so close within 400 votes in Florida of having him be present in the United States or one vote in the Supreme Court we'd be in a much better world today if that were the case but al al is this al al is a nerd he's a techie he's on email he responds all the time any time he's in the Bay Area which is often several times a month that he comes to the offices he comes to the partner meetings it comes to the strategy off sites and he gives us great investing insights I hope in your work in these fields that you'll get to know Al Gore thank you that's the track record those are the results a lot of jobs a lot of investments a lot of IPOs and a lot of market value we work for the Stanford endowment and other university endowments they give us part of the endowment our job is to return to them ten times more what what they give us and we've done that pretty successfully over about a decade we distributed a billion dollars of profits a year to our limited partners on average it's been tougher now for public offerings and for distributions and returns but that just means we got to work harder and the entrepreneurs have got to be more successful our strategy is to focus on building companies and helping the entrepreneurs at the world build companies that can take many different forms in the in the case of Google it took the form of helping them get a great CEO and then work on their strategies in the case of some of the companies that she was working on it takes the form of forging strategic relationships and going after the right markets if you do all that well the one final ingredient that makes for a really great company is the culture of the company what are their values because I believe that you'll in the next year or two be looking at where you launch your career I want to share with you an observation that Randy Komisar made about companies and their values and he said you know there's there's two really different strains if you want to paint the extreme in Silicon Valley companies and either one can succeed in fact we see both of them succeeding but I think if you go into your first assignment if you when you're interviewing have this in mind it I think can help you make better choices about what works for you and and and I refer to these strains as the mercenaries and the missionaries the mercenaries and the missionaries right in a mercenary culture there's tremendous Drive and in fact Andy Grove even said only the paranoid survive in a missionary culture by contrast there's passion Drive and passion think about the difference of those two in the mercenary culture I like to say that the entrepreneurs the executives are opportunistic the missionaries are more strategic the mercenaries focus on the pitch on the deal and they're sprinting for the short run it's approach to the missionaries who are paying attention to the big idea and understand it's a marathon in a mercenary culture you obsess on the competition you may developed an aristocracy of the founders the missionaries by contrast focus on the customers and they build a kind of cultural meritocracy where the best ideas can win those mercenary cultures tend to focus on financial statements and the way they develop the people is kind of loners kind of you're on your own in the missionary culture you'll hear a lot more about value statements and people really try to practice those and live those those are companies that are infused with coaches and they understand that it takes teams to win in the mercenary culture you're entitled to that additional bonus from your large enterprise software company as opposed to you've made a contribution and now you'd be rewarded for it it's a difference for joining what I like to call the deferred life plan or the whole life that really works anybody tells you they're not interested in making money I think is not telling you the truth so there's between a lust for making money or yes making money and also meaning I think like they characterize it as the difference between striving for success or success in significance I want emphasize again either these two cultures can work I know there's one that I prefer to be involved in which is that missionary culture but it's something to think about I believe as you look for where you're going to invest the very important and precious next years of your lives historically kleiner perkins has been in two businesses the information technologies and the life sciences technologies or as I like to call it the bits and bytes in the bugs and drugs and one of the third legs that we added to the stool it's a big strategic move for us in the last five years is to spend time with the green technologies the inner Technic energy technologies the biofuels and the batteries the solar solar cells the wind and it's quite a diverse industry it's been fun to learn about that industry and to try to rise to meet the challenges that we see the main thing I want to say and orienting you about the green or the energy industry is it's an enormous industry and if you want to learn about it I encourage you to start with this slide and then get al gore's latest plug this slide shows the energy flows the US economy the sources that are on the left the uses are yes are on your right for someone who's interested in green as I am it's notable that renewable resources account for less than 6% of our energy sources among those wind is the largest through this diagram flows about I guess I guess about a half trillion dollars a year of purchases of oil from places that are not particularly friendly to us the petroleum expenditures and another notable thing is through these energy flows almost half the US energy is wasted in the form of heat or inefficient engines or transmission lines so there's tremendous opportunities to improve this energy system lower its cost and have it be renewable it's a very large market we've been working in it actually seven years that we didn't know that when we started it's been five years that we've been knowingly making investments in the field we invested in a little over 50 companies and 600 million dollars perhaps and more to come we're very excited about those opportunities for those of you who care about leadership in the US and economic leadership the contrast between green and digital or the Internet is pretty profound what Microsoft and Apple and Google and and Netscape embarrass sign in eBay and Amazon all have in common all those companies are leaders in the Internet industry worldwide and they're all American if you look at where America stands today in the green technologies and and just pick the top 30 companies 10 each in wind in solar in vein as batteries of those thirty only four are American only four so so we are almost not in this race one of the top ten battery companies one of the top ten wind companies and two of the top solar companies that should give us pause the reason for that is we haven't had the right policies to develop local markets we haven't had the right level of investment in R&D and so these are things that we all as citizens and people who care about innovation and economic leadership in our country autumn ought to be calling for writing op-eds about talking to our senators and political leaders so if we do that and if we get it right we can ensure that our country is a worldwide leader in this next great global industry and if we don't we're gonna be buying our wind turbines from China borrowing money from China to buy oil in the Middle East and then to burn it in the middle of our countries so there's there's a lot at stake and I think the next five to ten years are very critical but a policy is not the business at Kleiner Perkins it's it's innovation and backing entrepreneurs to build great new things and and so I'd like trade to give us an overview of all the areas in which we're making green investments and I'm gonna ask GUI to do the same thing for our digital portfolio thanks John so as you can see we've actually been incredibly busy over the last seven years as John indicated we have over 50 companies that we would now classify as green tech investments at KP one thing that I think differentiates how we invest from some other venture firms in this area is that we haven't gone after simply the companies that look like information technology companies as applied to green but we've really looked at the whole spectrum everything from supply side those are the big renewables to efficiency companies to transportation and so I'm gonna highlight a few of the companies in our portfolio and please if you have any specific questions about any one of these companies you know we're gonna have a big Q&A session and feel free to ask us some more details as John pointed out you know we're less than 6% of all of our energy comes from renewables so we saw a huge opportunity to ramp that up and we also saw a lot of entrepreneurs we're coming to us with really deep fundamental innovations in this area as you can see we have a lot of stealth solar companies a lot of times in our early technology companies we don't like to be very explicit about what technology we're developing but we have several companies that are focused on next generation high efficiency lower cost solar we have large-scale solar through solar thermal companies we're investing in geothermal we're investing in in fuel cells so we have a very nice portfolio on the supply side that is really atypical for venture but again like we said it's a really big leverage point for energy economy going forward we've also spent a lot of time in renewable fuels and you can see that we have quite quite a few fuels portfolios now this is a sector that's gotten a lot of negative press lately for people who've gone after corn ethanol and basically taking food and trying to convert it to fuel we've stayed away from that from the most part and are really focused on the garbage part of the you know rather than taking the the fruits we're taking the parts that would otherwise be burnt or destroyed or you know people haven't been able to convert into other useful things so we have looked at every possible way chemical processes physical processes to convert that cellulose not into not only into fuels but also into useful chemical precursors so so we see a lot of exciting innovation and activity going on in this area despite what you may be hearing from the market and the press energy efficiency is really a catch-all for a lot of technologies that are on but what we call the demand side of the market it's how you use the energy and this is really about smarter energy usage making processes that are less energy intensive and and so this is a broad broad range of companies but there's one company in here I'd like to point out because it's really it's part of a whole ecosystem of companies that we're all hearing a lot more about these days and that's called the smart grid and if you look around and you look at all the networks that exist around us you know the electric grid is one of the dumbest there is out there it was invented a hundred years and really has not been updated since and the best way to describe Silver Spring is it's really overlaying the Internet on top of the electric grid you may have heard this but you know if the electricity goes out at your house right now the only way that the utility company knows about it is if you call them up and tell them it's a really truly dumb grid and technology like Silver Springs what that means by laying the internet over the top of it you're essentially creating two-way communication points between all the nodes on the grid so now you start to enable whole sets of ecosystems of technologies that no one has ever been able to think about before we're at the very very early stages of that and our portfolio company Silver Spring is one of the big leaders in this area and PG&E is one of their big partners and you may have heard but we just recently rolled out the one millionth node on the Silver Spring Network in the Bay Area so there's actually some incredibly exciting stuff going on in the smart grid the last area that I want to point out today in our green portfolio is really transportation and storage you know a lot of people talk about batteries being you know a key innovation piece for not only renewables performing better but for for transportation batteries are incredibly important so this is an area where we have several stealth companies that are innovating on new chemistry's better efficiencies that we think over time we'll be able to make electric vehicles renewables on the grid far more usable because we have appropriate and cost-effective storage techniques the last company I just wanted to highlight is one that I spend a lot of time on it and know well is in the transportation sector and that's the Fisker you may have heard a little bit about what they're doing but the timing of investing in a company like that is actually pretty extraordinary right now if you think about the automotive industry and it's existed since the late 1800s not a ton of innovation and so for the first time you've got this whole electrification of the drivetrain big technology shift happening and if you look at other industries historically this technology those major technology shifts don't normally come from the big incumbents so we've got this opportunity for new companies who are focused on this new technology to come in and meanwhile the big companies are fighting with insolvency and lots of other just macroeconomic issues so it really is an extraordinary time to be investing in the electrification of the drivetrain that's exactly what we're doing with a company like Fisker and so that's a quick snapshot and with that I'll hand it back over to John thanks very much trade you know you might get the sense that all kleiner is doing is green and the truth of the matter is is that our efforts in digital investing are just as big and and have been longer lived than the work that we're doing in green I'm gonna fly through a similar overview of the areas in which we're investing and then we're gonna dive right into the iPhone and the iPhone for the longest time consumer facing businesses have been explosive in terms of their growth and and we continue to I believe be a leader in in that field the most exciting of all these investments is a company called Zynga because anybody in this room played farmville or cafe bill or those games scramble Texas Hold'em where there's 70 million people who are playing Zynga games every month which is just a remarkably large population and I think they found a way to monetize to get value out of the social networks and that's by allowing people to buy virtual goods it's quite a rapidly growing company in fact the fastest I've ever seen we're going to come to the I fund in just a moment we're seeing a real resurgence of interest in innovation in the semiconductor fields in the science of the small innovative new storage new immense kinds of devices and then for quite a while we've been investing in digital infrastructure and innovations there it was June 27th of 2007 right when Apple shipped the first iPhones I think I've got that right and we were blown away at kleiner Bill joy had been forecasting that this kind of a device which could be in your pocket know who you are where you are be broadband always connected was an enormous new platform so out of strategic work that Gy and Matt Murphy and Trey and I had done we said this is going to be the next big thing we want to go do a deal with Apple and partner with them to encourage the development those applications and we did and we announced that in March of last year and chi-wah named the iPhone dealt with the 3,000 or more plans that came in and so I'd like him to give you a quick but really privileged glimpse into what's going on with the development of applications for these new mobile devices great thanks John so why did we launch the iPhone we saw several trends of all being simultaneously that got us really excited first of all wireless broadband everywhere directly into your pocket secondly a company like Apple that had a real consumer brand and was expert at developing great consumer products coming into this market that had historically been done by handset OMS that didn't have good consumer experiences a piece of hardware the iPhone that was fundamentally a computing device first and a phone second app store which sits on 150 million desktops via iTunes and can deliver new forms of software directly to consumers with no intermediaries and finally a software development kit that would enable people developers many of them who are in small to three-person companies to develop desktop like software that had historically been impossible on mobile devices so what we had was we had a computing device in your pocket that was broadband connected it was personal it was social it was context aware and it could enable it an entirely new class of applications and this gives you a sense of what that really means so to put it in raw terms how many of you guys own an iPod that's a lot of people so the iPhone is outselling the iPod over its two-and-a-half year launch period by a factor of 12 twelve times as many iPhones have been sold as iPods and you saw how many people own iPods in its two-and-a-half year launch period how many of you guys have downloaded a song on iTunes okay App Store is outselling iTunes over its two-year launch period by 20 times 2 billion applications have been downloaded on the App Store in its first eight quarters in that same that same period of time in iTunes history only had a hundred million songs downloaded putting it in more simple terms for something that you guys are now the Gees that you guys would be familiar with merrymaker put this slide together recently and it showed what's happening with the iPhone which is on the far left iPhone iPod Touch is a consistent platform compared to things we know like Netscape 5 times as large as Netscape yeah well 8 times as large as AOL and mode in Japan which is as was previously the most successful mobile platform twice as big as m-mode nine quarters after launch so what does that mean for us it suggests that there's an entirely new class of applications we've invested in nine companies so far and we're going after super verticals in those nine in in that area of mobile going after advertising commerce real time content creation communication and location-based services we think that there will be a significant revolution in the way that people access information which is what this is really about when it becomes mobilized and it becomes real-time and we're looking to invest in many more companies in that area let's wrap up I'm making these unsolicited career observations for you and I realized that some of you are in various phases of your career so you can tune out anything that doesn't doesn't feel right to you I think as you're making the important choice about what you're going to do when you leave the graduate school I prioritized learning and pick your first your next assignment based on your ability to learn and grow not so much on your level of compensation now if you're among the rare Stanford grads are almost grads you dropout the way Larry and Sergey did I want you to come see us right after this conversation but I think for the vast majority of us certainly for me I wanted to go work in a place I'd learn a lot which turned out at that moment in time to be Intel I think developing a strong foundation of experiences and commercial experiences not just finance not just control but selling yeah building a business carrying a bag watching a product managing people is a really important skill to develop I think you should try to learn really good management and leadership processes from some of the best companies because there are some really great people to learn from in the amazons yes the Intel's to this day the end to its that Google is even the GES there will come a time I think in your career where you're going to break that path and you're gonna go off and really swing for the stands and own or build your own business or build one with others that's not true for all of us but for many of us what I want to suggest to you is you'll know when that time is right you don't need to do it right out of the business school and indeed you can learn a lot from others on their ticket and on their own money whatever path you take I believe you're going to be judged on the following your ability to listen actively think critically and above everything else to communicate I think you're judged by your ability to speak on your feet to debate the merits of issues and that's whether you're in a large group or in a small group it's for a very fundamental reason we believe ideas are easy execution is everything and in anything worth doing it takes a team to win ideas are easy executions everything it takes a team to win the way you as leaders are going to inspire teams is by your ability to think and speak on your feet and rally others to go after that cause that that set of priorities that that business objective one thing Andy Grove taught at Intel was how important it is to be able to confront a problem without confronting a person so chi-wai it's not because you're a jerk because you're not you know it's this problem that we have with the backlog of I fund applications that are coming in we've got to figure out a way to solve that business problem together and so that that skill which I don't possess well enough of confronting a problem without confronting the person is an essential one in leading groups so I want to really encourage you to not forego opera Unity's to learn how to recruit to sell to hire and fire to inspire to manage to develop and motivate people with tough love because whatever field you work in I think it's a very fundamental skill and then finally there's always extra points for humor I sure wish I had a better sense of humor and was something of a stand-up comic I think quite to the contrary the results of what I do are what's kind of humorous extra points for humor it's a very powerful social and business weapon you're in the networking business right here and now and you were in the best place in the world to network this is so much better than any other place in the world and so I encourage you to always network develop and sustain personal and lifelong networks and I don't mean the Facebook kinds of networks I mean face-to-face personal ones find a way when you're networking so at every point in your life sustain a mentorship relationship with somebody find someone you admire and say will you mentor me there's nothing in it for them other than the satisfaction of helping you but you in turn can mentor someone else along your way network like crazy look for positions where there's a lot of external contacts marketing sales business development developer relations be prepared to take risks to ask permission is seek denial but all along the way please remember that integrity is a binary of state your integrity is like sand you hold in your hands and if you ever spread your fingers apart and you let that sand fall through it it's gone forever integrity is a binary state either you have it or you don't please well so if it's not obvious I am pregnant but I just wanted to say to you can have a career and you can have a family because I've seen a lot of my GSB classmates drop out of the workforce as life goes on and I just think that it's important to know that it's not easy but it can be done and so I just want to throw that out there and there never is a good time so I had my first kid when I was launching a product and a startup that I founded John was on our board it was crazy it works out so I just want to throw don't put off having a family too late I'm but that's a personal choice yep you have anything to interrupt me about yeah no not at the audition so this gig what we're trying to do it's it's a marathon it's not a sprint one of the things I've done past times I've been here as I've told you about some of my favorite books I'll tell you what if you send me an email with your three favorite books I will send you this list and of these my favorite at the moment is called our choice it's Al Gore's blockbuster book about the solutions to climate crisis not the problems so if you want to work at a start-up or if you got a business plan you'd like to get funded or you'd like to work with us on a 380 project at least they were called that please email me or chi-wah or tray that the addresses you see there and on that note I think we're going to move into the QA part of our conversation and I'd like to get as many questions answered as we possibly can this is your time so what we're going to do is take the questions at you can turn off the projector now please about three at a time we're going to throw them up in the board get as many on the board as we can and in it and then try to answer them so here's the way to handle a question if you'll put your hand up in your name then I'm going to write the question on the board and the questions are all in one deep breath and they end with a question mark yes you guys should sit here go ahead see Brendan yeah questions are fine let's go oh it's gonna be enough right yeah for those of you didn't see it are we going to avoid you catastrophic irreversible climate crisis okay what are what are the traits that we see among the partners let's go with another question please entrepreneurs yes he's got a question oh yes ma'am I was wondering I said most of the power generation companies in clean tech are Sodor what do you think about the other power gen other than solar ok great question how about another one okay there was a question about Android keep going trade you want to feel the question yeah hi Pablo what what's the one piece of advice you give someone starting a company today okay start company advice Mike what are the traits that you see that are successful among the entrepreneurs that really hit a winning traits okay page for context okay this is a venture capital grid culture okay life questions over here raising money at school for a charity for where your your tuition all right that's a venture capital really social entrepreneurs first you worry about the intensity of business and second what do you see as the monetization model for I write the answer the first questions yes ah how dollars for greentech okay I'm gonna get two more try me names Abhishek wondering what's the biggest mistake you've ever made and how did you overcome it okay that's a life mistake metric as cares about trends in the venture capital space and what kleiner perkins is doing in response event okay so this is great you know in about five minutes we threw up there fifteen questions I'm really impressed by our efficiency and we'll figure it will take ten minutes to answer a 15 question we won't get them all and now we might even give us some time for some more sand follow-up ones and I think I'll just take them in the order that we put here on the board I gave a talk at Ted where I got choked up at the end saying that the engineering me didn't think we were going to be able to avert catastrophic climate crisis fundamentally because the speed and scale at which we must act to solve these problems and I think now we will have enough innovation to solve the part of the problem that is in the 10 to 20 year time horizon but if that's all we do we will not avert catastrophic climate crisis so most importantly we've got to get some key policies right right now if we've got to get them right before we go to the midterm elections and if we don't if we don't put a price on carbon a price in a cap on carbon I think by the end of the next set of elections the United States will not have the political power to do it the United States doesn't lead the world is not going to follow and we could be set back five or ten years in the most important leg of this so I'm not sure it's enough yet stay tuned it really matters power generation other than solar we're very long on solar more so than any other venture capital fund I believe but we also think there are equally exciting ways to generate electricity and I would say solar thermal is one of those there is a wind as a way to generate electricity we think we found a breakthrough in wind and what other one I spent a lot of time on in fact that's one where we read an early study that said you know a sector where you've got a base load renewable the base load means it's producing energy all the time regardless of whether the sun is shining or the wind is blowing and that it was underfunded but that over the next you know 25 years we could have 100,000 megawatts of produced geothermal if we invested in it so we sought out the best team and we actually did actually seed fund a firm right now that just received a twenty six million dollar grant from the DOA and it's doing some of the most innovative work in geothermal I didn't know they got that yeah they did great has incubated this company it's really spectacular work by her I want to say again in the form of career advice trade could not have done that if she were not an entrepreneur before she came to kleiner and she didn't have that authoring experience so that's a great career role model how are we gonna get the money that we need for green tech well charity begins at home so the first thing that we did is we raised a billion dollar focused green tech fund biggest funds kleiner has ever raised in addition to devoting about 40 percent of our ordinary startup venture capital dollars to it but that's not enough we took a look at how much capital our current green ventures are going to need the 50 or so ventures it's another four and a half billion dollars so we actively syndicate those investments with other venture investors and God bless the Obama administration in the US government because we've really got the a-team now working on green innovation in our country and many of these companies have applied for some have made it some of not loan guarantees from the Department of Energy I think we're gonna be a little fund these companies but I'm hoping for in fact I'm expecting a really robust market for public offerings in green starting next year the next set of questions had to do with venture capital firms and someone astutely noted that if you look at the at the photos of the kleiner partners there's a great deal of diversity in our partnership and you're not going to find that in any other venture capital partnership I assure you most VCS or a half dozen to a dozen white male Wonderbread you know MBAs frankly some of whom have operating experience some of whom do not and our experience in building companies did you just do not make good decisions that way you do not deliver high service levels you you want a diversity of ideas and perspectives I think a third of our partners are not Caucasian we have three partners who are in the u.s. who are fluent in Chinese we've got a team in Shanghai led by Tina Zhu yeah and so diversity is highly valued at kleiner and in the companies we work on and in the boards of those companies what are the winning traits for entrepreneurs Chee Hwa what are you seeing great entrepreneurs create entrepreneurs have a huge idea and they can motivate a large group of people to go pursue that with them that's fundamentally the most important thing that they bring they also bring great judgment because many of them oftentimes are young so they have judgment above and beyond their experience and that's something that is not only learned but is oftentimes intuitive tre where do you in that I would say great entrepreneurs are oftentimes great leaders they're ones who can really inspire others to jump on their mission because you know when you're dealing in the early stages of these startup companies it's a lot more than just the amount of dollars you're making from a salary that's motivating you to do this because you're probably not making a whole lot in the early days and so you have to really have that vision and be able to inspire others to follow Marc Zynga who's the CEOs markeson Zynga Mark Pincus who's CEO of Zynga gave a talk that I think you can find online at the startup school I was really struck by it because he said to a bunch of overwhelmingly white male geeks listen you know let me tell you what the gig is the venture capitalists they'll back you and then as soon as they do they want to replace you they want to get serious professional management in there before you know it you've lost control of your company you were negotiating for the wrong things you negotiate it for valuation you should have gone for control but he said more than anything else you should try to figure out if you can be and become a CEO he said you ought to try to run that business and you ought to be honest with yourself to figure out what it's going to take for you to develop those skills and I'd say the best entrepreneurs the ones that really go the distance with their companies are always learning they don't know what they don't know so they attempt to do the impossible they often do but if you look at Jeff Bezos of amazon.com and you look at Larry and Sergey yeah a unique thing they did at Google bringing in Eric Schmidt these leaders these entrepreneurs really try to go the distance winning traits and entrepreneur's we did we spent a little too much time on Kleiner's culture how do we make decisions it's a pretty collaborative culture it's yeah there's a lot borrowed from Intel in the culture you want an environment where everybody can put their ideas on the table so that the best idea gets there and has a chance to win will disagree but after we make a decision we'll commit any individual partner can veto an investment trait can veto an investment I can jiwa can it doesn't happen very often because we build consensus along the way for investment decisions what else would you say about the culture I would add that I think we also work in teams a lot more than other venture firms just having insight into how some other firms work where it very much is a lone wolf who goes out finds you know his own investment and works on it himself we're we oftentimes have a couple of partners the other person can call the other partners oftentimes you tend to go native on a company and and it's good to have that balance of vision on what's actually going on and so I would say that's something that really differentiates KP G why you've been another venture firm what would you yeah I think the unique model that KP brings to the venture capital firm is that multiple partners are involved in every single venture so as opposed to being single threaded and getting one point of view you're gonna get multiple point of views and each of those are going to come through different sets of experiences which should help the entrepreneur make better decisions there's a topic here about investing in social entrepreneurs I think it's a really important thing to do you can back social entrepreneurs three ways you can back them with money if you have the money with which to do that you can back them with time and you can also back them with reputation connections or networking and every one of the kleiner partners spend some out of their time giving back some republic ways others in private ways it's one of our our strongly held values we could talk a whole lot more about that we could have a whole session on social entrepreneurs there's a graduate of the school Kim Smith who wrote a GSB 380 plan and founded something called the newschools venture fund which because of her work today has started not forty five schools but forty twenty five networks of charter public schools that are allowing a hundred thousand kids now in total to in really under underserved poor areas to get far better education as for venture capital in emerging markets I don't know very much about that we backed a team have built a team in China they make their own investment decisions we collaborate with them on those but business in China is very different than the rest of the world we do invest in India we do invest in in Europe but we do it out of Menlo Park so it's very select when will make an organization and investment outside this area the predominant trends in venture capital is that the industry is shrinking and it needs to because the returns have been lousy since 2000 take the industry overall it's a loser if you put money in the venture capital industry you'll lose your money so we've had too many venture capitalists chasing too few really good ideas funding incrementally undifferentiated socially networked anonymous chat sites so that you can get laid as you're walking down University Avenue I don't know what more to say about it than that that's certainly not what our priority is at Kleiner we'd rather help entrepreneurs and build really successful significant companies you're gonna make a difference I probably got enough trouble on that Android chi-wah yeah so Android is the second dominant platform we're watching it very closely by the end of this year that'll probably be between 10 and 20 million Android devices out there for those of you that don't know Android is an open source operating system focused on mobile devices that Google is created while iPhone is a closed source operating system that they control end to end the issue with Android that we're all gonna have to watch very closely if you guys are thinking of doing developing on Android today is fragmentation of the ecosystem when you have open source and you give it to a bunch of hardware OMS each of them do different things with it they've got different screen sizes different keyboard layouts some have keyboards some don't some go horizontal some go vertical some leave GPS turned on as default some don't so as an application developer what killed the mobile ecosystem over the last 10 years in applications was the expense associated with porting to hundreds maybe thousands of different devices for Android to be successful and we hope that is as part of this trend in open mobile it has to avoid that fate I think I probably didn't do justice to trends in venture capital I kind of got off with the industry is a lot tougher it takes more money to start ventures now than it did before it takes more time to get them to be developed therefore I think it's fair to assume that the that the returns are going to be lower for the industry but what offsets that are the outliers you know they're most of the money in venture capital has been made by firms in the top decile the top 10% and and in the industry even those have to perform better than they have in the past there is a trend towards green in the industry that's the most rapidly growing sector I think it's now number 2 or number 3 to your question about the life sciences that remains an incredibly important and vibrant part of what Kleiner's doing I don't really know enough about it to give you a very good perspective on it but we have a half-dozen partners who are the best they do that day in and day out kleiner is not a quantity shop we're not into the volume of investments or making money on the fees from the investment we'd rather be quality and and back a smaller number of ventures to be more involved in trying to help those there's another important trend in metric capital which is the rise of the angel funds and that's particularly been encouraged by virtue of the fact that it takes less money now to start an internet company by a factor of five or so than it did 10 years ago we've covered Android the advice to startup companies if you googled John doors startup manual there there's a nice interview that was done in Fast Company with me on exactly that point any readers I think we've just scratched the surface of what's possible I'm on the board at Amazon and one a note that amazon has said publicly when a book is available on the Kindle or available in the Amazon bookstore and they they are the world's largest bookseller thirty thirty five percent of the book sales are through the Kindle and it's been out for a little over a year that's an astonishing shift so I think physical books are not going away but the e-readers I believe are going to be here to stay in even in a world where we may see tablets from Apple and others this dedicated purpose-built device I think I'll stick around I'm gonna skip pay for content we just don't have time Silicon Valley for digital startups I believe it is the pace place still to do a digital startup of course not because of the latitude or the longitude but because of the quality of the people that are around here and you're in an incredibly privileged place here at the Business School one more piece of advice don't take all your courses in the business school figure out a way to get into those other schools at this great university hang around I don't know if they're still in Margaret Jack's Hall hang around the engineering school hang around the innovations in energy and in the life sciences because having taken one more or less whatever your course is accounting marketing whatever it is is not so important I think is is reaching out and connecting with innovation that's going on when I did a business school degree at Harvard I took all my independent study courses at MIT one in semiconductor physics one in speech understanding one was an independent study so you're in a very privileged place right here and you should take advantage of it tactical strategy for work-life balance I'm gonna give you mine and they have tray and Chia I give you theirs what I found the most important thing is for somebody who wants to raise a family and you may be a ways away from that probably is how many times you get home for dinner with your kids and then that you be there while you're there for dinner so I said fine I'm gonna set a goal yeah it came from Intel if you don't measure it doesn't matter 29:20 nights a month I'm gonna be home by 6:30 to have dinner with my two daughters and my wife and I'm not disciplined enough to do that so Angela helps me do it but we measure it and and I've been achieving that ever since I put it in as a goal but one other things so that you're really there is is I have everybody in our family check our iPhones and stay off the web for an hour before dinner and an hour after we declare that to be a family friendly internet free time zone okay so first of all I'd say that there is no such thing as work/life balance it always feels a little crazy and hectic and so the idea of you're gonna have serenity and balancing the two is just non-existent I think the thing that I've learned is it does require extreme prioritization and focus on what matters to you and so to that extent it's good to write it down and focus on I am gonna be home at these times and I'm gonna do my work at these times that I'm gonna go exercise here and I'm gonna be really anal and rigorous around planning this otherwise everything else is going to overtake my life and not let me do those things when I get home and I try and be home you know three of the five work nights a week which doesn't always happen but I try to I do not turn on my computer or my iPhone until my kids are in bed it's just it's a role I don't get a lot of sleep during the week because then after I put them in bed I'm up till the wee hours of the night I'm getting my work done but you know it's one of the trade-offs I make and I feel with that balance I get - I get really good quality time with my kids every night and I you know I get my work done we work really hard and and it all seems to work out yeah I think one of the critical things is to over communicate and set very very clear goals so my wife and I were married when we came to business school and during that two-year period believe in my class the class of oh six there was eight couples married couples who got divorced and for us that was quite a shock to learn that and to see that and what we learned through that is to really communicate very clearly and aggressively about how we were doing with one another we have a red light yellow light green light methodology where yeah it's it's it's really simple we can just check in with each other and when she says things are yellow I know that I have to slow down and then the the other very clear goal is if you set things that you need to do every day make sure that you're there and make sure that your partner's know you need to do it so I have a ten-month-old at home and one of the things that I do with her every day is I get home in time to give her her bath or feed her dinner give her her bath and put her to bed and I've managed to do that almost every single day in the last ten months because I said clinicals I communicated that to my partners they understood that was a priority but they also understood I've had other responsibilities that I would take care of on behalf of the firm I'm very proud of the culture at Kleiner and so I'd like to share with you what our values are because we screen for these you know everybody at Kleiner really I think likes being there and respects the values of each other and our our first priority is family first right and so if anybody's got to do anything to take care of their kid or they're dying parent or my mom's got brain cancer in a Taiwan I need to be out of the office for half the time to take care of her we just do that nothing matters more than family and not everybody's married and not everybody has kids but you get the idea it can be your extended family the second priority is partners right so more important than me trying to help Jeff Bezos is me working with Trey or with Chia and vice versa because ideas are easy executions everything teams win and so we're very much that spectacular Lone Ranger can do it all on their own there's really not room for them in our partnership our third priority is portfolio portfolio these are the CEOs if you're not in the venture capital business these are the clients to whom you've already made commitments we've got to serve them every day that's more important than the next new Facebook and so we prioritize that the next priority is you ventures new ventures exactly tre is too busy with the first three I got there more recently this is the most seductive thing the new we're innovation junkies we like spending a lot of time with that you want to prioritize it but it's clearly less important than your family and then the fifth priority is some form of public or community service again in the larger and the small interview no in a private way because we've been given so much it would be terrible if we don't give back sometimes i wedge into this list and notably not on it his friends and if you want if you if you're as busy as you are and we are and you want to have friends you better prioritize it you better invest time in it and I think on that we're at our time limit five minutes over and I'd like to thank all you remember before before that if you send us your three favorite books I'll send you the list back that we had and we'd love to talk about you with you about the future thank you very much [Applause]

Channel: Stanford Graduate School of Business

Views: 48,694

Rating: 4.9038463 out of 5

Keywords: Entrepreneurship, Leadership & Management, government, small business, start-ups

Id: LDWURusr02k

Length: 54min 55sec (3295 seconds)

Published: Wed Nov 25 2009