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 formed 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 80s and '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.
To read this podcast in an abbreviated format, check out the substack: All Things VC. It has the same content as the podcast, just a little more direct with less improv.
To read more about Benchmark along with 15 other companies they invested in that we didn't discuss, more on their general investment theses, what makes a good VC, what they look for in founders, and general advice for founders, head to allthingsvc.blog to read more.
You can also follow me on X at Justin_Pryor_ for more nuggets of information that I post throughout the week based on what I talked about in this episode. Likewise, you can find All Things VC on YouTube to see clips of these episode separated by each major topic I discuss.
Why did Kleiner Perkins Invest in Genentech? - 3:34 mark
Why did Kleiner Perkins invest in Amazon? - 14:07 mark
Why did Kleiner Perkins invest in Google? - 26:35 mark
The Kleiner Perkins Anti-Portfolio - Why did Kleiner Perkins pass on Tesla, VMware, and Robinhood - 40:51 mark
