John Doerr: 700 Investments, 192 IPOs, 375,000+ Jobs Created

1. 0:00 – 0:05

   Intro

   1. JDJohn Doerr0:00

      [on-hold music]

2. 0:05 – 1:31

   Setting the agenda: student-led discussion topics and Q&A format

   1. JDJohn Doerr0:05

      Really a pleasure to be back here and see you all in such a wonderful new setting where, you know, we're above ground and there's windows [laughs] and you can stretch your legs. Uh, m- m- my hope is that this time is your time, and we talk about topics that are really of interest to you. So this is gonna be much more of a discussion, hopefully not a lecture, and we'll, uh, drive it off topics and questions that are of your interest. I have prepared a, a few slides that we'll get to eventually that says something about Kleiner Perkins, but more about where we see, uh, major opportunities. Uh, but I wanna get to those after we've, uh, filled out this whiteboard. The topics I thought would be great to start with included any questions y- you may have, or discussion about your career, or the next big thing, or mobile and the web. Thank you. Uh, energy, uh, start-ups, venture capital, Kleiner Perkins, education, policy, global change. Uh, we could, uh, discuss some personal topics if you want. I can offer some, uh, hot stock tips. That's HST.

   2. SPSpeaker1:13

      [laughs]

   3. JDJohn Doerr1:15

      And, uh, other. We can put in other categories. Really, this is your time, so let's begin now. If you'd put your hand in the air, I'll recognize you, and I'd love to get your name and, and then a question. And, uh, thank you, mic runners. We'll try to do it with the mics, but I'll probably go faster. Thanks.

   4. SPSpeaker1:30

      Hey, John.

   5. JDJohn Doerr1:31

      Yeah.

3. 1:31 – 7:04

   Rapid-fire audience questions: energy, mobile payments, VC, policy, and markets

   1. SPSpeaker1:31

      Thanks for coming. My name's Mike Volpe. I'm a second year here. Uh, my question is around the advancements in the production of unconventional natural gas-

   2. JDJohn Doerr1:40

      Mm-hmm

   3. SPSpeaker1:40

      ... and how they may have impacted the thesis in clean tech investing.

   4. JDJohn Doerr1:45

      Yeah.

   5. SPSpeaker1:45

      And then whether Kleiner is still bullish in that area and will be raising future funds.

   6. JDJohn Doerr1:49

      Natural gas, clean tech, energy innovation. Great question. Another one, please. Yep.

   7. SPSpeaker1:57

      Uh, hi, John. I'm, uh, Kh- Kh- Khadir Anomale, uh, MBA one. Um, I had a question about mobile payments, and specifically around, uh, N- N- N- NFC and, and sort of w- w- why, like although NFC has been here o- o- o- o- over the last like three, four years, um, like it's not been, uh, adopted en masse.

   8. JDJohn Doerr2:21

      Okay. Mobile payments, NFC. Great question. We have one up here. Thank you. Up top.

   9. SPSpeaker2:29

      Who is a CEO who you think i- is doing most things right, and what are those things that they're doing right?

   10. JDJohn Doerr2:35

       Hmm. My favorite CEO. And your name is?

   11. SPSpeaker2:37

       Senya.

   12. JDJohn Doerr2:38

       Okay, I'm gonna put that under start-ups, all right? But certainly some of the CEOs who I'm fond of are running something more than a start-up. [laughs] We've got a microphone here and a question. Yes, yes sir.

   13. SPSpeaker2:50

       Uh, hi, I'm Neil Sangal. I'm a JD MBA here, and my question's about your career and the value, um, that your time in industry at Intel added to your, uh, career as a VC, and if you think-

   14. JDJohn Doerr3:01

       The value of Intel

   15. SPSpeaker3:02

       ... you would do that again.

   16. JDJohn Doerr3:03

       Great. Thank you for asking about that. Question over here. Yes, sir.

   17. SPSpeaker3:07

       Uh, hi, Steve Grossman. I'm a first year, uh, MBA student. I'm just curious as to what advice you gave the president as part of your, uh, advisory role-

   18. JDJohn Doerr3:13

       Okay

   19. SPSpeaker3:13

       ... and, uh, which of it he took.

   20. SPSpeaker3:14

       [laughs]

   21. JDJohn Doerr3:17

       Well, I'll answer part of that question. [laughs]

   22. SPSpeaker3:19

       [laughs]

   23. JDJohn Doerr3:20

       Advice to POTUS. Yes.

   24. SPSpeaker3:26

       My name is Tommy Byerin. I'm visiting Stanford. You have been attributed of saying that it takes 25 million U.S. dollars to develop a VC as, as a person-

   25. JDJohn Doerr3:37

       [laughs]

   26. SPSpeaker3:37

       ... as a career person.

   27. JDJohn Doerr3:38

       Yes, yes.

   28. SPSpeaker3:38

       I wonder how you take it this now people are talking about establishing their new, uh, website, uh, servers, uh, for $100 a month.

   29. JDJohn Doerr3:47

       Hmm.

   30. SPSpeaker3:47

       In this new environment, what's your view? If you would, uh, estimate like a medium size venture capital fund-
4. 7:04 – 8:38

   Formative Intel experience: management systems, operating learning, and luck

   1. JDJohn Doerr7:04

      and, and, and where we see opportunities. I think a place to begin is, is with the value of, of Intel for me, and it was, uh, formative. It was the most influential thing in my career other than my father. And I went to Intel at a time when it had a couple of hundred employees as a summer student. I fell in love with the place. I, uh, I, I even somehow as a summer student talked my way into Andy Grove's first course at the company, which was called Intel Organization, Philosophy and Economics. And even at that time, I could recognize this was a very well-run company, very aggressive, very disciplined, and many of their practices I've tried to take to our partnership and then other companies like objectives and key results, which Google has adopted for everyone, or how you do performance reviews and performance management. And Andy Grove's little book, if you don't have it, High Output Management, I think, is one of the best books available on management. So, um, [laughs] Jim Collins says there's a return on luck. A lot of life is luck, and I'm one of the most luckiest guys in the world that I landed at Intel instead of at... I mean, I was thinking of going to work for Burroughs because I thought their computer architectures were pretty good, and they went straight out of business. So this, uh, generalizing, this value, I think, of operating experience in a rapidly growing company, uh, where you're gonna learn from the people who are there, that, that's a key element of career advice that, that I'll, I'll be giving you. Uh, a n- a number of the other topics I'm gonna address in these slides, so maybe if we could cut to those. Uh,

5. 8:38 – 11:40

   How Kleiner Perkins invests: focus on entrepreneurs, selectivity, and three domains

   1. JDJohn Doerr8:38

      if you'd, uh, go to the PowerPoint, that, that would be, uh, ideal. So, uh, I'm one of the partners at Kleiner Perkins Caufield & Byers. People would think I run the place. I do not. I get one vote around the table in what we invest in and, and in what we do. Our partnership is, I think, unique in Silicon Valley in that we're not a quantity shop. We're trying to invest in, in the most things. We're, like Stanford Business School, more interested in quality and, in particular, in the entrepreneurs who are disruptors, the wanna, the ones who wanna change the world and, and, and make a big, bold difference in what they do. We also invest across a spectrum of technologies and stages of companies and, and, and, and, and I think, uh, that's, uh, that's resulted for our partnership in, uh, really a, a, a pretty impressive array of companies. I've just selected some of them. Some of them here are newer. Uh, uh, some of them are, are older, like Genentech, which pioneered the, the life sciences industry. But, uh, whether you're looking at, uh, a Coursera, which is the newest of these investments we, we made, it's been out in the market for 11 months or so, Twitter, which is the largest check we've ever written to back the company, uh, Amazon, Google, the, these are, uh, companies that we're incredibly proud to be associated with. Uh, not so much for their IPOs, but the, the thing that, that impresses me the most is the number of jobs that these innovators have created, with over the half of those jobs being in the US. Almost all of them, most of them, when they get to any scale, become global companies. Now, I've done this work together with, uh, 18 other senior investing partners at Kleiner Perkins. We're in three fields, so you can figure that's about six partners per field, six partners for life sciences or for digital or for green. It's not quite evenly divided, but we're investing in three areas. One is, uh, the life sciences or biotechnology. I refer to that as BT. Another is new energy technologies. Think of that as ET. And, and then there's information technologies, IT. So BT, ET, IT, all driven by innovators, all investing against an initiative, a thesis or a theory or a passion that something important new is gonna happen. And, and I do wanna tell you, since we're doing big, bold things, uh, uh, uh, these companies can fail. Even whole initiatives can fail, and that's okay with our limited partners. They have a number of managers and venture investors, and they, they'd like us to swing for the stands. Uh, let me say one other thing. Of these, uh, 18 or so senior partners that we have, uh, four of them are alumni of the, the Graduate School of Business. I applied, I've audited courses, but I didn't quite make the bar to get in. [laughs] I wanna focus on IT, not so much on BT or ET, and

6. 11:40 – 14:45

   Three waves of IT change: microchip → internet → mobile/social/cloud convergence

   1. JDJohn Doerr11:40

      it's, it's because, as the dean said, y- you and we are extraordinarily fortunate to live where we are. This is ground zero. Within 20, 30 miles of here is most of the world's innovation in most of the technologies that have changed the world. It's, it's really remarkable, and I can't imagine Silicon Valley without Stanford University. There have been three huge waves, I think, in the information technology innovations during our lifetimes. The first w- was when Intel popularized the microchip in the 1980s, and we saw, uh, it as the personal computer era. Companies like, uh, like, like Microsoft and, and Apple Computer grew out of that. 15 years later in 1995, we embarked on the second great wave, and that was the internet, and it led to companies ranging from Netscape to Amazon.com. And I want you to know, through the worldwide economy, most leaders of most businesses were terrified. They could not understand what it is that that internet would do to their, uh, to, to their businesses. Coincidentally, run the clock forward 15 years further to 2010, and there's a third huge revolution underway, and it's driven by mobile devices, by the special properties of social networks, combined often with those devices, in the transition to the cloud. And, and, and, uh, we've seen, uh, leaders emerge, like a Facebook and a LinkedIn. Uh, I've highlighted here some of the companies that we're investing in, in those areas. The combination of mobile and social and cloud coming together is like three tsunamis converging, so their effect is multiplicative, the, uh, not additive, and, and that's why I think there's such extraordinary opportunity. Look at the trends just here in mobility. I want to start with the growth of the iPod from the first quarter it was launched, the first device that made Apple a mobile computer company. Compare that, if you will, to what happened with the iPhone. That's the iPhone relative growth compared to the iPod in the beginning. And now layer on top of that, if you will, the iPad, and look at that growth relative to the other two. What's happened at Apple Computers... Remember, there was no iPhone six years ago in 2007. There was no App Store five years ago in 2008 at this time. Uh, there was no iPad three years ago. And in those three innovations, Apple has created a new business, several new businesses, that are running at $100 billion a year of revenues. 100 billion a year of new businesses. It's quite extraordinary, and so the company today is worth $400 billion and one of the four horsemen that are really setting the, the pace for innovation. And of course, it doesn't stop there. If we go from Cupertino to Mountain View and visit our friends at Google, Google, that's the growth of iPhones, right? Look at the growth of Androids in the same quarters. So [laughs] there's something really extraordinary going on that's creating, uh, enormous opportunities in and around mobility, but mobility's not the only story. Another powerful one is social networks. Eight years

7. 14:45 – 16:48

   From websites to people and places: social networks reshape products and media

   1. JDJohn Doerr14:45

      ago, there was no Facebook. Today, Facebook has 1.2 billion users. A half billion of them use it every day, and what that's allowed entrepreneurs to do is to reimagine and reinvent the web. Every application, every service, is now being, uh, recreated in the form of mobile and social. So we're moving from the old web of documents and websites to the new web based on people and places. From documents and websites to people and places, and it's having a, a quite extraordinary effect if you look at the companies that just in the last few years that are reimagining and reinventing the web. Uh, back then, newspaper was the way we got our information. Today, it's Twitter with real-time reporting and graphics. Back then, we used magazines. Today, these are social magazines and, and, and moving very rapidly to be a rich way to get to the most valuable stuff on the web. I'm citing Flipboard. Look at Path. Back then, it was diaries. Today, it's really intimate sharing of frequent moments in a truly personal, truly, uh, uh, social network, not just a gathering of your acquaintances. Next one, Coursera. Somebody asked about re-envisioning higher education and competitors. We're quickly moving from this world of, uh, lectures and rote conversations to where that material is online, and you can educate kids in a, a, a blended academy or get the world's best universities available any and everywhere. Traffic. We've gone from maps to social maps. Anybody here use Waze? Who has Waze on their... Okay, next slide. [laughs] Health. Digital health is a frontier that the nation, our country, desperately needs, which is to use big data, use mobility, and use smarts and changed incentives to deal with the crisis in healthcare costs. Uh, and we're investors in a half dozen or so of these companies and very excited about what that can mean. Healthcare system, the

8. 16:48 – 18:21

   Energy and sustainability innovation: Bloom, Nest, low-power computing, and new food tech

   1. JDJohn Doerr16:48

      single largest, most screwed up part of the American economy. There are important innovations underway in energy. Uh, the most efficient machine in the world at converting natural gas into electricity without burning it is Bloom Energy and Bloom Boxes. They sold almost $400 million of those last year. They have a bigger backlog than that for the coming year. Uh, what I want to tell you about these, though, is they take a lot of capital, and they take a long time. They have entrenched incumbents. But the markets are enormous and really ripe for innovation. Here's energy innovation. How many people have seen or installed a, a smart thermostat from Nest? We're blown away by the results of this company. In just a year's time, they're more than five times their revenue forecast, and who'd have thought you could take an ugly old thermostat, reimagine, reinvent it, and then sell it at $300? It's quite extraordinary and disruptive. There's another part of energy that really matters. About 15% of the world's energy is used in data centers, and what limits the performance of those mobile devices is the energy they consume. So we have a low power initiative that involves five breakthrough technologies that would do everything from taking us past Moore's law to delivering displays that are 10 times more efficient. Very exciting work in that low power initiative. And as another example of, uh, in innovation, uh, w- we're, we're backing some entrepreneurs that have found a way, and you can buy it at Whole Foods now in small quantities, to deliver chicken- It has none of the entrails, none of the diseases, none of the blood, is

9. 18:21 – 24:24

   Career principles: prioritize learning, build networks, choose culture, and value execution

   1. JDJohn Doerr18:21

      completely taste like chicken, more protein from legumes, and, uh, and it's lower cost, which has tremendous implications for the developed world. So look for, uh, Beyond Meat. I wanna transition from those, if I can, for a moment, to a little bit of career advice and then dive into these questions. The, um... If I could have the next slide, please. Ah, thanks very much. Here's what I did when I was making my career choices. I don't know if it's relevant or right for you, but I prioritized looking for a place and a way that I could learn and grow as opposed to just ordinary incoming compensation. [snaps fingers] Next one, please. I think it's really important to build a strong foundation of experiences. Many of you have come to the school with some, or maybe you think enough of those. Others of you don't have very many of them, but I would try gaining experience in different fields. Uh, always, always network, okay? Every day you wanna do more networking, and I don't mean on Facebook. It's reaching out to people. I think one of the very best things about this school is not in the programs or in the classrooms, but it's in the networking you can do around the rest of the university and with the entrepreneurs and, and, and CEOs who come in and speak with you. [clears throat] When you're looking for an opportunity, my choice was to try to get in on the ground floor of a very rapidly growing company where it also thought it was well-managed. In the dream scenarios where you're working for somebody you really think you can learn from, it's hard to get all those factors together, but rapid growth is gonna create lots of opportunity, 'cause to advance you don't have to climb over the back of someone else. Rapid growth tends to attract other really great executives, and you'll strengthen your networks. I think there'll come a time, probably, not certainly, where you're gonna decide, "I wanna swing for the stands. I wanna found a company. I wanna be a co-founder of a company. I wanna run my own show." For those of you working in the private sector, I believe that's also for entrepreneurs working in the social sector. You don't have to do that right away. There's always gonna be a demand for outstanding, uh, leadership. And, uh, on, on the other hand, I don't wanna discourage you. If you happen to be the next Mark Zuckerberg, I'd like to meet you right after [laughs] this, this conversation. And, uh, I think across all these factors, uh, one of the most important things you can look for is the culture of the place you're gonna join. Culture really matters. Culture has to do with values. And in my years in the Valley, I've seen there's companies, uh, with really, uh, cultures that appeal to me and others that do not. I don't wanna make a judgment about these, but just have you be tuned up for them. My partner Ramy- Randy Komisar wrote a book, he teaches over at the engineering school, called The Monk and the Riddle. Great book for you to read about Lenny and his start-up venture, funerals.com. But he contrasts the difference between mercenaries and missionaries, and, uh, uh, the, the, uh, the difference is really very profound. Uh, the mercenary cultures are quite driven, and, uh, paranoia is kind of at the heart of what drives them. I, I would frequently have arguments with Andy Grove. Andy would says, "Only the paranoid survive." And I'd say, "Hey, Andy, paranoia is a disease state, you know? That, that may not be the best way to motivate." Because instead of paranoia, you can have passion for what you're doing. Paranoia pushes you forward. Passion draws you into an opportunity. It's the difference between opportunistic and being strategic, or the difference between, the difference between mercenaries and missionaries. It's the difference between the pitch and the deal or forming a real partnership. This difference can be seen in the time view that you have. Is this venture on a sprint to go build the next Instagram as fast as we can, or are we gonna take a very long view the way Jeff Bezos does at amazon.com? I'm not judging one or the other as right or wrong, but it's an important dimension. Uh, are you gonna obsess on the competition or obsess on the customers? Are you going to set up the culture so there's a kinda aristocracy of the founders who really call all the shots, or do you want a meritocracy where you can get the, all the ideas on the table, have the best ideas win? It's the difference between focusing on the financial statements or the value statements. I think it's the difference between whether or not you're in a culture where there's a lot of loners and you're on your own, or there's a real emphasis on mentoring, on coaching, so that the whole team gets better. I think it's the difference between an attitude of entitlement, which I find unappealing, or the Hewlett Packard idea that people go there, they make a contribution that's recognized, and that makes everybody more effective. [laughs] In, uh, in Randy's book, he calls it the difference between the deferred life plan and a whole life, one that really works. My take on this is it's the difference between a lust for making money and a lust for making meaning as well as money. And any entrepreneur that comes to tell us that they're not interested in making money, these are the enterprise for profit entrepreneurs, I usually don't believe them. But I think you can achieve success and significance, not just focus on success, by choosing, uh, what it is that you choose to do. Here's my last thought on this topic. Anything that you wanna do of consequence, I believe you're gonna do with others. And what this school is all about is, uh, helping you, uh, grow and be more capable as a leader. Ideas, I worship at the altar i- of ideas. You know, innovation, I'm a junkie for it, and I'm sure you're attracted to it as well. But ideas are, relatively speaking, easy. It's execution that's everything. The difference between Sun Microsystems and Apollo was how they executed. The difference between Facebook and MySpace was how they executed. And- It takes a team to execute well. These three ideas, that ideas are relatively easy but

10. 24:24 – 27:40

    Second round of questions: enterprise software, saturated markets, geographies, and healthcare focus

    1. JDJohn Doerr24:24

       important, execution's everything, it takes a team to win. You wanna figure out how to be a very effective member of a high performance team, and then lead a team of your own to enable them and empower them. And that, I dare say, is gonna be the most valuable thing you'll take from your time here at the Stanford Business School. I think this would be a good time to throw a few more questions up on the board, and then I'm gonna work on answering some of them. So if we can pull the mics out again, whoever gets the first mic, I'm gonna call on. Yes, sir. It's you, and then up there.

    2. SPSpeaker24:59

       Me first. Uh, hi, John. I'm Dan. Uh, I'm a Sloan alumni.

    3. JDJohn Doerr25:04

       Yeah.

    4. SPSpeaker25:04

       Uh, my question is about, uh, what do you see the opportunity in enterprise, uh, software and enterprise infrastructure? Do you think it's the biggest next thing? Thanks.

    5. JDJohn Doerr25:14

       Yep. I'm gonna put that under next big things, okay? Enterprise opportunity. Another question, please. Name? Topic?

    6. SPSpeaker25:23

       Hi.

    7. JDJohn Doerr25:23

       Yep.

    8. SPSpeaker25:24

       Oh.

    9. SPSpeaker25:24

       Go ahead.

    10. JDJohn Doerr25:24

        Up here.

    11. SPSpeaker25:25

        Hi. Thanks. My name is Elad. I'm a first-year MBA student. Um, you said in your slides before that focus not on competition, but focus on your customers.

    12. JDJohn Doerr25:35

        Yeah.

    13. SPSpeaker25:35

        Now, in technological innovation, you s- you sometimes enter a field with lots of existing intellectual property and existing patents and lots of hurdles to innovate. And how would you recommend an entre- entrepreneur entering a saturated field, but still with a passion to disrupt, to handle these issues?

    14. JDJohn Doerr25:56

        Okay. I'm gonna put that under start-ups entering saturated fields. Couple more? Who has the mic?

    15. SPSpeaker26:07

        Hi.

    16. JDJohn Doerr26:07

        Up top. Yeah. Up there, thank you.

    17. SPSpeaker26:09

        Hi. I'm Jasper. I'm a first-year MBA. I'm curious, what are some, uh, spaces and opportunities that you're excited about now that you have no idea whether you'll be able to make money doing?

    18. JDJohn Doerr26:19

        Okay. Uh, new spaces that may be nonprofit. [laughs] Who else? Thank you.

    19. SPSpeaker26:29

        Uh, I'm Alex. I'm a first-year MBA. Uh, my question is a bit similar, but if you're an MBA right now, where would you be focusing on?

    20. JDJohn Doerr26:37

        Hm. All right. MBA now. Hm. I didn't come here to talk about it, but are there any questions about Kleiner Perkins? If so, I want to, want to not overlook that. Yes, sir.

    21. SPSpeaker26:48

        Hi. I'm Tom. I'm a second-year MBA. Um, I'm curious what your thoughts are about start-up markets in the US outside of Silicon Valley, so New York, LA, and so on.

    22. JDJohn Doerr26:56

        Okay. X the Valley. Yes, sir.

    23. SPSpeaker27:03

        Hi, John.

    24. JDJohn Doerr27:04

        Hi.

    25. SPSpeaker27:04

        I'm Geraldo, MBA too, from, uh, Mexico City. I'm curious on what your thoughts on, are on, uh, the p- proliferation of start-ups outside of the US, uh, going a little bit deeper into that.

    26. JDJohn Doerr27:13

        Okay. Start-ups outside the US. One more, and then maybe I'll dive into some of these. Who else has a mic? Yes, up top.

    27. SPSpeaker27:23

        Hi, John. My name is Drew Bodipali. I'm a, a joint MD, MBA. So my question is, uh, about Kleiner's, um, strategy in healthcare that's not just biotech. I know you, you were very large in medical devices, but doesn't seem like that's as much a focus right now.

    28. JDJohn Doerr27:38

        Yeah.

    29. SPSpeaker27:38

        Your thoughts on that industry?

11. 27:40 – 38:44

    What to focus on as an MBA now: technical fluency, networking, and a personal life decision

    1. JDJohn Doerr27:40

       Where, where did I put healthcare? There was another healthcare topic. Ah, therapeutics. Well, so that's a Kleiner question, really. What's KP's healthcare, uh, healthcare strategy? Let, let me, if I can, ask you to hold the questions, and I'm gonna tick through some of these that we didn't cover before, and I think we're gonna have time to come back for more. So I talked about the value of, uh, my experience anyway at Intel, and, uh, so then somebody asked me a really tough question, which is what would be my advice to an MBA now. And I, I think the place where I'd start is to, uh, recommend that you go to a field, first, that you believe is attractive, but secondly, where you have technical expertise, some kind of technology expertise. And that doesn't mean you gotta go get a degree in engineering or computer science if you don't have one. But, uh, if, if, if I had decided that I was really interested in, uh, uh, a technology of, uh, hybrid seed breeding, I would find while I'm here one or two courses outside the school and audit those or take those for credit because you are also at one of the great scientific and engineering institutions of the world. And I'd work to network in that way because I think innovation in technology is a great disruptor. That doesn't mean you've gotta pursue seed breeding as a career for the rest of your life. But I, I must tell you, all the CEOs that I know or start-up executives who are trying to lead and run technology companies and who can't program or don't have some grounding in the technology, they regret that. So that'd be one piece of advice. Uh, th- the second thing is, uh, I would, as I said before, network like crazy. I hate to say this with the dean here, but I don't think your grades at Stanford Business School matter. What, what, what matters is gonna be the, uh, of course they're important, you... [laughs]

    2. SPSpeaker29:35

       [laughs]

    3. JDJohn Doerr29:35

       But, but I think the quality of the networks and your hunger, uh, for, uh, for, for learning and figure out how you're gonna make a difference in the world i- is, I believe, more, more important than, than those. Is there any third advice? Okay, so this is out of the, out of the professional domain. But I, I am convinced without doubt, and it goes without saying, that the most important decision you'll make during, say, your 20s, is who it is that you would choose to spend the rest of your life with. So don't give that short shrift. Don't wait until you're 30 to figure out who you may marry, 'cause you might find yourself running out of time by that time, and end up choosing whoever it is you're, you happen to be with. There's a wonderful author who's just put out a book on this topic called, uh, The Defining Decade. And her name is Meg Jay. And I won't say anything more about that, but those would be three of the top things on my agenda. And, and price, a number of you already have that covered, so forgive me. Um, let, let's go to the next big thing. Um, enterprise opportunities and new spaces. There, there's a revolution underway that's almost as big as mobile, and that's the move to cloud computing, and enterprises initially resisted this and now they're embracing it. The estimates are that we're gonna go from zero cloud revenues, which is when Amazon Web Services started here a few years ago, we held a reception with Jeff Bezos, to $270 billion by 2020. That's an enormous, just services, that's an enormous shift in how computing is done. So I think the, the, the cloud, fundamentally for economic reasons, is gonna transform how we compute around the world, and that has consequences in terms of the architectures for cloud computing, the software. Systems are now being built to scale horizontally in services as opposed to go vertically, and, and the opportunities ahead are, are, are fantastic. Uh, I ha- I have a couple, actually three partners at Kleiner who focus on this, sorry, three and a half, including Mike Abbott, who is the, uh, guy who went to Twitter two years ago when the fail whale was always coming up. Do you know what I mean? And he did two remarkable things. The most impressive was, in 18 months' time, he personally recruited 300 top engineers in the toughest recruiting market in the world, which is San Francisco, and then he organized those engineers to stand up that service. So it's scaled as they've gotten to 150 million, even more users, without, uh, going down. We, we took a bet on him, that's when we invested, when he arrived. And, uh, it, I think it illustrates the power of those cloud technologies, and also something else I said, which is the new currency is engineers. They are what are very dear. And I think that's true whether it's in, uh, computer science or whether it's in life sciences or, or whether it's in energy innovation. Which goes back to my recommendation to you, which is, don't be afraid of technology if you're not an engineer or a technologist. Dive in there, audit those courses, figure out the publications you want to read. Uh, you know, Bill, Bill Gates, uh, graduated from Harvard without a degree at all, and he self-taught himself to be an expert in vaccines. So you can do this. Uh, what are the new spaces, the, the big wide open ones that, uh, we're looking for anyway? Well, I'm not gonna tell you about all those, but, but, but, but there are some we talk about, and every year we go off and we look out three to five or more years in the future. Our partner, Bill Joyce, sees even further than the rest of us. He's, he looks around corners. But in each of the areas that we work in, for example, in healthcare technologies, we think it's possible now to build very targeted therapeutics with some- something we call a tiger team, where our venture doesn't go through the long, expensive clinical trials, but takes a, a, a Technology right up to that point, and then, uh, sells it in a very novel way to a large pharmaceutical company. That's exciting. So as I said already, is digital health. In the area of energy innovations, uh, my particular passion is batteries. It sounds pedestrian, but storage is the holy grail. If we could, together, make a battery that had three times the energy density of today's batteries, that would mean it would weigh one-third as much and cost one-third as much. And if that was the case, electric vehicles without subsidy would be cheaper than gasoline vehicles. Think of that. We backed four battery companies. Some of them look promising. I don't know if any of them are gonna work. But it's showtime. We're gonna fire, figure out in the next year or two. I think the biggest opportunities, though, are in and around the digital technologies, the mobile and, and, and, and the web, and you can just see hints of what those transformations are when you hang around Google or read the technology press. Uh, how many have been in a self-driving car? It's an extraordinary experience. It really is. And what that will mean for the productivity of people who are wasting time in traffic, the fuel that's wasted, the dollars they have tied up in cars, as opposed to typing in on your smartphone, you flick it outside, uh, your, your apartment or dorm room and it appears. Uh, the safety, 35,000 people in the United States die in traffic accidents, the congestion on the roads. Uh, God, God bless Larry Page. He's got... and Lar, and Sergey, he's got a great big vision. We believe that these wearable devices, whether they're smart bands or Google Glasses or, uh, gathering more d- more- more data, watches, are gonna be quite big. There's gonna be a big opportunity there. In many cases, I think they'll take the place of the smartphone that you carry around with you. Uh, I'm particularly passionate about innovations in education. I think the second largest, most screwed up part of the American and the worldwide economy is public education. And in particular, in about 20% of those skills, uh, schools in our country, we are killing the kids. They do literally design where they're gonna put prisons around the neighborhoods where the academic performance is terrible. Bill Gates says everybody ha- e- every life ought to be created equal. I think every kid ought to have an opportunity at a great education. And I've been working in this field with a Stanford GSB Ed School alumnus, Kim Smith, to create a venture fund called the New Schools Venture Fund and encourage entrepreneurs and fund them. And I think only now can we begin to see something that'll scale very quickly. You see it in Khan Academy, which has over 5 million daily users taking their courses, and we know by studies advancing a lot further. You see it in Coursera, right? Coursera is 11 months old. They, uh, now have, uh, two and a half million students who've signed up for three and a half million courses. They come from 58 universities with a course catalog of, I, I think it's something like 300 offerings. And, and they have, uh, good competition also in this field. So finally, I think one of the last bastions, uh, resistant to change, the education system, the ones dominated by teachers' unions or higher ed, which has the benefits of tenure, are, are extraordinary. I remember when John Hennessy called me about Coursera, and I said, "So John, why are you excited about this?" And he said, "You know what? The community college model in the United States is broken. Their business model is broken. They can't get enough really great faculty. They can't great... get great curriculum. But if you can take the mainstream or even the specialty courses and offer that to US community colleges, that- that's a great deal of good." And I haven't said anything about education globally either. Okay, payments and NFC. Uh, I confess I should know more about this than I do. I think there's, uh, very little doubt, we can all agree that, uh, these devices, this Android, which has NFC in it, are gonna become our mobile wallet. These are amazing things. They're broadband, they're connected, they're always on. They know who you are. They know where you are. It's your diary. It's your entertainment. It's your wallet. It's your identity. But, um, I remember talking to Steve about this from the point of view of Apple. He just didn't believe in NFC, and he didn't actually believe in trying to create a digital wallet until you could put everything in it, your driver's license, your Social Security card. So, so payments wasn't enough for him. Uh, fortunately, I'm really proud, we were able to back Jack Dorsey in his company Square, where my partner Mary Meeker's on the board. And, uh, they took a particular part of the unserved payment system, which is very small merchants, and said, "We're gonna sweep through there with an innovation and then partner with large retailers, like Starbucks, to transform the purchase experience." So how, how many of you use Square on a smartphone? Okay, so maybe 30, 30% of us. With Square on your smartphone, you walk into Starbucks, and you just tell them what you want, and it's never rung up. It identifies who you are. It concludes the transaction. It gives the retailer the

12. 38:44 – 44:31

    Venture capital realities: risk, measurement, time-to-liquidity, and favorite CEO traits

    1. JDJohn Doerr38:44

       history of what you bought before, and I think that will spread. Yeah, it, it will spread rapidly but not explosively. I think change of that behavior takes time. Mobile payments is a really big deal, and probably there'll be multiple winners. Let's go to venture capital for a moment. Uh, this notion about it takes $25 million to start a VC fund, a- as I said before, know that I think it takes 25 million of losses [laughs] to train a good venture capitalist, which is to say the business that we work in is one with risk, and there are failures. Most ventures fail, as measured by they're not in business five years after you invest in them. So at least for my partnership, the way we work is we try to find, in any given fund, uh, several ventures that will deliver 10 times or 30 times or 50 times, and those will cover for the, uh, losses of, of, of other ventures. And, and you live in an extraordinary place. This is the only place in the world that I know where it's okay to fail, and you can change your job without even changing where you park your car. I mean, it's, it, it's, it's very, very special to the culture and economy of this place. Um, the long feedback cycles are incredibly frustrating. What I will say is the long, the long feedback cycles in venture capital, in backing a team. What I will tell you is along the way, you can measure proj- progress. Andy Grove says, "If you don't measure, it doesn't matter," and I'm definitely of that, that religion. You can have ventures that'll, uh, lay out goals by audience, by revenue, by technical progress, and, and, and talk to your partners about how that's going. At, uh, Kleiner every quarter, we have a very detailed operational review. Sometimes [laughs] there's not much to it 'cause we're trying to build a breakthrough battery, but other times it's what's, what, what's the, what's the audience now for Path? How engaged are the Path users in using this service? Uh, uh, uh, what, what is their, uh, engagement rate? How do the cohorts stay engaged or not? So, uh, I think lots of things about the business can be measured, but the average to a return, they call them exits, I don't like that word, but to liquidity, is gonna be on the order of five or six years. It was five years after we invested in Google that it became a public company. It'll be 13 years after we invest in Bloom Energy that it'll be a bigger than billion dollar, uh, profitable energy provider. Uh, somebody asked who my favorite CEOs were, and, and, and without ranking them in any particular order, of course, I think the one we all miss the most is Steve. But Jeff Bezos is extraordinary for the clarity of his vision and his commitment to the long term and his willingness to experiment and innovate. Uh, I'm a big fan, as you can imagine, of, uh, Larry and Sergey and Eric Schmidt. What th- those three guys did when they welcomed, or those two founders did when they welcomed Eric into their team, you know, in the next decade they built from nothing a quarter billion dollars of value in technology companies. And through that period of time, our, our hope was that Larry would be ready to take over from Eric, which turned out to be the case, so great team, great CEOs, their founder. Um, I really admire, uh, Jack Dorsey. Here's a guy who was the founder of Twitter and the founder of Square. Incredible sense of taste. Some people say that Elon Musk is gonna be the, uh, the, the next great CEO. I... It's extraordinary what he's done, right? He founded a successful solar company that's public, a successful car company that is public. Those are two great big green wins, and along his way, built a spaceship company. [laughs] So, uh, there, there's something going on there that's, that's quite important. Who el- who else? Who else thinks there's a great CEO out there who you admire? Just put your hand in the air and call it out. I'm not gonna get any takers here? Come on. Yeah.

    2. SPSpeaker42:50

       Pat Romano.

    3. JDJohn Doerr42:50

       Pat Romano, okay. Any others? Yep.

    4. SPSpeaker42:59

       Mark Benioff.

    5. JDJohn Doerr43:00

       Mark Benioff. I think Mark's fantastic. Uh, among the new generation of CEOs, I'm a huge fan of, uh, of Mike McHugh over at Flipboard and Dave Morin. He's one of the, the, the younger CEOs that we backed at Path. I'd, I'd watch these companies. I think they're gonna do very well. Hey, Tony, Tony, uh, Fadell, who built Nest company and did the iPod before that. So, favorite CEOs, disruptors. What do you do if you're gonna be in a venture that's got saturated competition, lots of entrenched competitors? Do you then obsess on the competition instead of on the customer? Uh, I'd suggest no. I'd suggest you do something else, you know? [laughs] The, the, the, the, the, the best way to build a great company is to find a large underserved market or a displacement market that exists. So now, if the Google guys followed my advice, they wouldn't have built yet another search engine. Here's the point. They had a really disruptive technology, the PageRank system, that they were running out of their dorm room at Stanford, and it was growing so rapidly that Stanford decided they were gonna throw them off campus. It, it was a real load on the network, so they went down University Avenue to the office above the ice cream parlor, and, and the rest is, is history. But I really think there wi- there's wisdom in this. Jeff Bezos says this, "I'm gonna obsess on my customers, not my competition, because if I serve those customers better than the competitors, I'm, I'm gonna win." Jeff's very disciplined in his

13. 44:31 – 49:35

    Policy, adoption, and market shifts: customers over competition, natural gas, and the JOBS Act

    1. JDJohn Doerr44:31

       communications. You'll notice the only words that come out of his mouth, the only thing you'll find in an Amazon press release are customer benefits. If it doesn't convey a customer benefit, don't say it. That's all that matters. I remember when I first met Jeff, his, um, he was gonna be the, build the world's most customer-centric company. That was his goal, and I think to a large measure he's achieved it. Uh, payments. Natural gas, a word or two about natural gas. Uh, this is a big disruptor. Nobody forecasted this, and, uh, if I can be a red-blooded patriotic American citizen right now, it's a very good thing for our economy. I think it's gonna mean manufacturing comes back. It's a very good thing for our climate. The, uh, uh, greenhouse gas emissions from an equivalent unit of energy are about half what they'd be from coal. It means we're not building new coal-fired power plants. It, uh, advantages some of the investments we've made and disadvantages others of them. You'll be happy to know we haven't invested in any coal-fired power plants [laughs] but Bloom Energy, great advantage in having cheap, reliable natural gas for a long period of time. Uh, what's the role for venture capital in these kinds of innovations? Uh, look, we've, we've learned some lessons along the way. We started investing in, in green energy in 2007, I think, and some of the projects were capital intensive. And of those projects, some of them I wish we didn't do. We, we made mistakes. So our... But, but others that are capital intensive, like Bloom Energy, I think are gonna be huge winners. So you remember that slide I put up at the end, ideas are easy, execution's everything, it takes teams to win? The great difference between the successful ventures and the not successful ones, in green, whether or not they're capital intensive, is how they execute. Elon Musk executed with Tesla incredibly well in a capital intensive car company. It's worth $4 billion today. So execution's everything. Nonetheless, I think if you're gonna invest as a venture capitalist in this field, you better pick the low capital projects, and you better build a broad base of investors and get strategic alliances to help get to the market. These are incredibly large markets. It just takes time to get there, time and smarts. Uh, this, this is the personal one. Uh, that was mostly hot scott, uh, stock tips. And [laughs] to the question, right, I think was up there is, "So John, what's your financial forecast for sectors of the economy?" I don't know. That's... I'm not gonna be able to help with that. Uh, the dinner with the President, what was the advice to the President that came? Not so much from me, but all the executives who were around the table, who included Carol Bartz and Larry Schmidt and Mark Zuckerberg and Steve Jot. We put Mark on the right of Steve. I asked him to not wear sandals [laughs] and, and on his left was Steve, and it was a very free-ranging conversation with an incredibly bright, uh, leader of the country. As I recall, Art Levinson argued for changing the regimen for approving drugs based on the new molecular understanding that we have of diseases, with the FDA having slowed up. Um, let's see, Reed Hastings made some impassioned arguments in favor of public education. Uh, Larry Ellison, he went on a real tear around immigration. You know, this whole idea that we ought to staple a green card to the diplomas of foreign nationals who are educated and the, the difficulty, the, the, the craziness that we'll have foreign nationals come to our great universities and then tell them they have to leave. I mean, what kind of national strategy is that? So, um, I think there were themes that, uh, you would know about and resonate with. What was impressive is that he came here to learn about technology and, uh, not to do any fundraising. He came for dinner and then went up to the Pacific Northwest. The Jobs Act is something that came out of the President's Jobs Council, and Steve Case deserves enormous credit for driving that through Congress in a bipartisan way, in a Congress that really didn't do anything. There's three components of that. The, the first that I really cared about was reforms in how you go public, so you're not subject to the withering criticism that, uh, a Groupon, for example, had to endure. Now you can- File, not have all that information be public until you decide you're really gonna go out for an offering. They also, uh, changed some of the overreaches, I believe, from the Spitzer era around, uh, a disclosure and, and, and analysts. There's a couple other parts of the Jobs Act that w- it's gonna remain to see what happens. There's people who are predicting there'll be a lot of abuses when any entrepreneur can raise a million dollars off the web, essentially. But here's what I believe. Our country ought to have more entrepreneurs. We ought to have more capital that can get to entrepreneurs and more innovation. So I'm glad this act was passed, and I, I think any corrections that need to be made can be done on a regulatory basis. Uh, we're coming quickly to the close of our time, so I think what I'd like to do is ask for three more questions. Just those three, and I'll try to

14. 49:35 – 55:10

    Closing Q&A: the “next screen,” what Kleiner avoids, and how selective investing works

    1. JDJohn Doerr49:35

       answer them right after you pose them. You got a mic there. Thank you.

    2. SPSpeaker49:38

       Hi, my name is Josiah. I'm a second year MBA. You mentioned, and you showed us the growth of smartphones and then tablets.

    3. JDJohn Doerr49:44

       Yeah.

    4. SPSpeaker49:44

       I'd be interested in your thoughts on what you think the next screen's gonna be and when, you know, how far behind we are in terms of that nes- next growth trajectory for, for that specific screen, whether it's home television, Google Glass, or the next-

    5. JDJohn Doerr49:53

       So I, I ne- I think the next great screen is gonna be the second screen in the living room, and Apple does not yet own the living room, neither does Comcast. Uh, we've backed some entrepreneurs who hope to build services in advance of those screens coming out. Maybe they're gonna be Android tablets. I don't know, but I think that's the most important next screen. If your question was about the screen display itself, there's this company called LuxVue that's figured out a way... D- did you know 90% of the power that goes into a screen today is wasted? There's this backlit, uh, emitting device, and then it goes through all kinds of filters. Well, if instead you have a technology that can put down tiny LEDs, two of them per pixel, and they directly emit the light, you get 10 times greater brightness out of that device, and it's flexible. It can fold. So you can see it vividly out of doors. That's what LuxVue is making and building, and it'll transform the biggest source of power consumption in the devices. Thank you.

    6. SPSpeaker50:50

       Hi, John. I'm Lance. I'm a PhD student here.

    7. JDJohn Doerr50:52

       Yeah.

    8. SPSpeaker50:52

       And I'm curious to know what you guys aren't interested in, either because you think there's been overinvestment or because the impact of technology's overstated.

    9. JDJohn Doerr51:00

       Hmm. That's a good, good question. Uh, uh, we're next, we're not interested in the next relatively inconsequential, anonymous social dating site that will allow you to get laid before you get to the end of Palm Drive.

    10. SPSpeaker51:18

        [laughs]

    11. JDJohn Doerr51:20

        That, we've ruled those out. Um, we can't do everything, so, uh, there, there are some venture firms that are, uh, focusing on, for example, uh, retail technologies. There are, uh, venture firms that are i- investing broadly in diagnostic devices, which we did at a period of time, and we've stopped investing in. Um, we're, uh, we're generally not investing in new c- new hardware, but Nest would be a counter example. Whatever rules I tell you, I wanna tell you, are just guidelines. The, the key to my business is every year we receive 3,000 proposals from entrepreneurs. We read them all. We take probably 500 meetings with entrepreneurs out of those 3,000. And the first thing we read, by the way, is the back of the proposal to look at their resumes. We take 500 or so me- first meetings. Those will result in 100 second meetings, and in the end, we'll make 30 new investments per year over those three groups that I'm talking about. So we're pretty picky. We measure ourselves on how many of the investments we see that our competitors have made. We do a six-month retrospective. There's half dozen competitors we pay attention to. We are seeing right around 50% of the investments our competitors make, and our goal is to drive that to greater than 60. It's been improving about 10% a year. Then we measure how often we think we make the right decision. Um, I'm not gonna reveal that number [laughs] but I will tell you when we decide to compete for an investment, we measure that, and we win 80% of the time. So we're not trying to work on that ratio so much as, uh, coverage and better decision-making. I'd like to close with two thoughts. Uh, the first is that for those of you who would someday like to be in the venture capital business, my advice is get really meaningful, successful entrepreneurial experience first. I really recommend that because it's gonna help you serve the entrepreneurs you're working with. It's gonna help your judgment. It's gonna help you compete to win the opportunity to advise them. You can't buy a position on a board of directors. You wanna earn the opportunity to do that, 'cause you can hopefully add some value to what the entrepreneur's gonna do, and together you can make new mistakes instead of affecting the mistakes of the past. My second thought is there's never been a better time than now to start a new company or to be part of a start-up. It may or may not work in your career, but this explosion of technologies that I described, the fact that the market of internet users is a billion people, uh, I, I kind of pinch myself and can't believe I'm alive at this time, working in this place with the, um, the, the, the really great opportunities that we have. So here's the deal. If you would like a copy of these slides, I'd like you to send me a mail message to jdoerr@kpcb.com with your three favorite books, and I'll send you the slides and the, the, uh, three of my favorite books. Before I sign off, I want to tell you the three that I've read recently and that, uh, I'm enjoying a lot. Uh, the first is Al Gore's The Future, a very unpretentious name [laughs]

    12. SPSpeaker54:29

        [laughs]

    13. JDJohn Doerr54:30

        Where, where he's describing six global drivers of change, and it's really worth reading, maybe a chapter at a time. Uh, the second is this book I already mentioned called The Defining Decade by Meg Jay. It's not written for me. It's written for 20-somethings. And, and then the th- the, the third, if I can promote it, is, uh, Sheryl Sandberg's book that just came out today called Lean In, which is, uh, about women, work, and the will to lead. Thank you very much for the time.

    14. SPSpeaker54:58

        [clapping]

    15. JDJohn Doerr54:59

        I look forward to hearing from you. Thanks.

    16. SPSpeaker55:07

        Thank you so much.

    17. JDJohn Doerr55:08

        Thank you.

    18. SPSpeaker55:10

        John, thank you. [outro music]

Episode duration: 55:11