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

[MUSIC] Really a pleasure to be back here and
see you all on such a wonderful setting where we’re above ground, and there’s
windows, and you can stretch your legs. My hope is that this time is your time,
and we talk about topics that
are really of interest to you. So this is going to be much more of
a discussion, hopefully not a lecture and we’ll drive it off topics and
questions that are of your interest. I have prepared a few slides that we’ll
get to eventually that says something about Kleiner, Perkins but more about
where we see major opportunities. But I want to get to those after
we’ve filled out this white board. The topics I thought would be great to
start with included any questions you may have or discussion about your career or
the next big thing or mobile and the Web. Thank you, energy, startups. Venture capital, Kleiner, Perkins,
Education, Policy, Global change. We could discuss some personal topics,
if you want. I can offer some hot stock tips,
that’s HST.>>[LAUGH]
>>And 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
then a question. And, thank you Mike Runners. We’ll try to do it with the mic,
but I’ll probably go faster. Thanks.>>Hey John, thanks for coming. My name’s Mike Volpe I’m
a second year here. My question is around the advancements in
the production of unconventional natural gas, and how they may have impacted
the thesis in clean tech investing.>>Yeah.
>>And then whether Kleiner is still bullish in that area and
will be raising future funds.>>Natural gas, clean tech innovation,
great question. Another one please? Yep?>>Hi, Jon, I’m Kadir Anomway I’m MBA 01. I had a question about Mobile payments and
specifically around NSC and sort of why like although NSC has
been here over the last three, four years, it’s not been,
adopted en-masse.>>Okay, mobile payments,
NSC, great question.>>We have one up here.>>Thank you. Up top?>>Who is the CEO who you think
is doing most things right, and what are those things
that they’re doing right?>>My favorite CEO. And your name is?>>Senya.>>Okay, I’m going to put that
under startups, all right? But certainly some of
the CEOs who I’m fond of or running something more than a startup. We got a microphone here, any question. Yes, sir?>>Hi, I’m Neil Senegal, I’m a JDMBA here,
and my question is about your career and the value that your time in
industry at Intel added to your career as a VC and
if you would do that again.>>Great, thank you for asking about that. Question over here, yes sir?>>Hi, Steve Grossman I’m
a first year MBA student, I’m just curious as to what advice you
gave the president as part of your advisory role, and which of it he took?>>[LAUGH]
Well, I’ll answer part of that question. [LAUGH]
>>[LAUGH]>>The advice to POTUS. Yes.>>My name is and I’m visiting Stanford. You have been attributed
of saying that it takes $25 million to develop
a VC as a carreer person.>>Yes.
>>I wonder how you take this now people are talking about establishing the new
website servers for $100 a month. In this new environment, what’s your view,
if you estimate a medium size venture capital fund, what would it take
to be a partner in financially and also perhaps in terms of number of
deals that you have gone through.>>Right.
I’m going to answer that right on the spot. What I meant is, to be a successful VC,
you’re going to lose money. So wasn’t the size of the fund and the
loses would be about equal to what are we mean to crush an F16 and
that was around 25 million at the time. But there’s a good question
that builds on that. Yes, sir?>>Hey John, my name’s Tony,
I’m a second year here. My question’s actually somewhat related. So in VC under very long feedback cycles, how do you know if you’re doing
a good job on a shorter timeline?>>Integrate VC question. Another one please, who’s got a mic? Yes,
>>Hi, my name is Remi Halitray and the jobs act has passed and
that potentially opens the door for non-accredited investors to play in the VC
world, and from a policy point of view, is that a good thing,
how does the VC community view that?>>Jobs act, great question. Up top, yes thank you mom.>>My name is Ketty Holt and I work here
at the business school I’m interested in what you think is happening
in the markets right now. If you got hot stock tips or
what sectors you’re bullish on.>>[LAUGH]
>>I don’t have to answer all the questions
I put them on the board. Because a number of them,
I’m not qualified to answer. Yes.>>Hi John, my name is Katie Elkin and
I’m a first year MBA. I’m curious to hear your thought on
the future of Digital Education.>>Great. That’s Education, Digital, right? Another one? Hi John, I’m Greg Mulholland,
and I’m a first year MBA. I’m interested to know where do you see VC
in the energy space because so many energy projects require so much capital that most
VC’s can’t setup an entire energy deal?>>Right, role for VC,
because of the capital required. Let’s do two more. Yes?>>Hi, John, this is Lucas. I’m a first year MBA. I would like to know your vision on what
VC can do to plug the valley of death for developing new therapeutics.>>Okay, so, well, I’ll put that in other, maybe valley of death for therapeutic innovation. Who else has a mic?>>Hi, my name Zionas,
I’m a first year MBA here as well. I don’t know whether you can see me. I’m-
>>Yeah, I can.>>Back here. And my question is whether you think
there are enough frighteningly ambitious startups around at the moment?>>All right, so,
are there enough disruptors? Most of you want to put a big dent in
the universe as Steve Jobs would’ve said. So let’s do this. Hold other questions, and in fact,
gather them as we go along. Because if this goes according to plan,
we’ll have another 20 or 30 minutes to have more interaction. I want to take on a couple
of these at first, and then tell you a little bit about Kleiner
Perkins and where we see opportunities. I think a place to begin is
with the value of Intel for me. And it was 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
hundred employees as a summer student. I fell in love with the place. I even somehow as a summer student talked
my way into Andy Grove 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 to other companies like objectives and key results,
which Google has adopted for every one. Or, how you do performance reviews and
performance management. In 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. 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 Burrows, because I thought their computer architecture was pretty good and
they went straight out of business. So, this generalizing, this value I think
of operating experience in a rapidly growing company where you’re going to
learn from the people who are there. That’s a key element of career
advice that I’ll be giving you. A number of the other topics I’m
going to address in these slides, so maybe if we could cut to those. If you’d go to the PowerPoint,
that would be ideal. I’m one of the partners at
Kleiner Perkins Cough Field and Buyers. People would think I run the place,
I do not. I get one vote around the table on
what we invest in and what we do. Our partnership is,
I think unique in Silicon valley, in that we are not a quantity shop. We’re trying to invest in most things,
we’re, like Standford Business school, more interested in quality And in particular,
in the entrepreneurs who are disruptors. The ones who want to to
change the world and make a big bold difference
in what they do. We also invest across a spectrum of
technologies in stages of companies. And I think that’s resulted for
our partnership in really, a pretty impressive array of companies. I’ve just selected some of them. Some of them here are newer,
some of them are older like Genentech, which pioneered the life
sciences industry. But whether you’re looking at Coursera,
which is the newest of these investments 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. Amazon, Google, these are companies that we’re
incredibly proud to be associated with. Not so much for their IPOs, but
the thing that impresses me the most is the number of jobs that
these innovators have created. With over 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
18 other senior investing partners at Clanger 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 the life sciences or biotechnology. I refer to that as BT. Another is new energy technologies,
think of that as ET. And there is 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 going to happen. And I do want to tell you
since we are doing big, bold things, 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’d like us to swing for the stands. Let me say one other thing of these 18 or
so senior partners that we have, 4 of them are alumni of
the graduate school of business. I applied, I’ve audited courses, but
I didn’t quite make the bar to get in.>>[LAUGH]
>>I want to focus on IT, not so much on BT or ET and
it’s because as the dean said, 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 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 was when Intel popularized
the micro chip in the 1980s. And we saw it as
the personal computer era, companies like Microsoft 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 I want you to know through the wide
world economy most leaders and most businesses were terrified. They could not understand what it is that
Internet would do 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 transition to the Cloud. And, we’ve seen leaders emerge,
like a Facebook and a LinkedIn. 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, not additive. And that’s why I think there is
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. There was no iPad three years ago. And in those innovations,
Apple has created a new business, several new businesses that are running at a
hundred billion dollars a year of revenue. Yes, 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 pace for innovation. And of course it doesn’t stop there. If we go from Cupertino to Mount View and visit our friends at Google,
that’s the growth of iPhones, right? Look at the growth of Androids
in the same quarters. So there’s something really
extraordinary going on that’s creating enormous opportunities in and
around mobility. But mobility’s not the only story. Another powerful one is social networks. Eight years 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 re-imagine and re-invent the web. Every application, every service is now being recreated
in the form 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 quite extraordinary effect. If you look at the companies just in the
last few years that are re-imagining and reinventing the web. Back then, newspaper,
was the way we got our information. Today it’s Twitter with
real-time reporting, graphics. Back then, we used magazines. Today, these are social magazines 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 social network not just
a gathering of your acquaintances. Next one, for Sarah somebody asked about
re-envisioning higher education and competitors We’re quickly moving
from this world of lectures, and roped conversations to where that material
is online, and you can educate kids in a blended academy, or get the world’s best
universities available any and everywhere. Traffic, we’ve gone from
naps to social maps. Anyone here use Waze? Who has Waze on their,
okay, next slide [LAUGH]. 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 change the incentives to
deal with the crisis in healthcare cost. We’re investors in a half dozen,
or so of these companies, and very excited about what that can mean. Healthcare system, the single largest, most screwed up part of
the American economy. There are important
innovations underway in energy. The most efficient machine in the world
that can burn a natural gas into electricity without burning
it is Bloomenergy and Bloom he sold almost $400
million of those last year. They have a bigger backlog than that for
the coming year. But 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 smart thermostat from Nest? We’re blown away by
the results of this company. In just a year’s time, there are more
than five times the revenue forecast. And who would’ve thought you could
take an ugly old thermostat, re-imagine, reinvent it,
and then sell it at $300? 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. It would do everything from taking
us past Moore’s Law to delivering displays that are ten
times more efficient. Very exciting work in that
low power initiative. And there’s another example of innovation. 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 that has none of the entrails,
none of the diseases, none of the blood, it completely tastes
like chicken, more protein from legumes. And it’s lower cost, which has tremendous
implication for the developing world. So, look for beyond meat. I want to transition
from those if I can for a moment to a little bit of career advice
and then dive into these questions. If I could have the next slide please. 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 in a way that I could learn, and grow as opposed to just ordinary
income and compensation. 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. Always, always network. Everyday you want to 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
CEOs coming and speaking to you. [COUGH] 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 I also thought it was well-managed. And the dream scenario is
where you’re working for someone you really think
you can learn from. It’s hard to get all those
factors together, but rapid growth is going to
create lots of opportunity, because 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 will come a time,
probably, not certainly, when you’re going to
decide I want to swing for the stands, I want to found a company,
I want to be a co-founder of a company. I want to 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 going to be a demand for
outstanding leadership. And on the other hand,
I don’t want to discourage you. If you happen to be
the next Mark Zuckerberg, I’d like to meet you right after
[LAUGH] this conversation. And I think, across all these factors, one
of the most important things you can look for is the culture of the place you’re
going to to join, culture really matters. Culture has to do with values. And in my years in the Valley,
I’ve seen there’s companies with really, cultures that appeal to me and
others that do not. I don’t want to make
a judgment about these, but just have you be tuned up for them. My partner Randy Komisar wrote a book,
he teaches over at the engineering school, called The Monk in the Riddle. A great book for you to read about money,
and his start up venture,, but he contrasts the difference
between mercenaries and missionaries. And the difference is
really very profound. The mercenary cultures are quite driven,
and paranoia is kind of at
the heart of what drives them. I would frequently have
arguments with Andy Grove. Andy Grove says, only the paranoid
survive, and I’d say, hey, Andy paranoia is a disease state. 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 mercenaries and missionaries is
the difference between the pitch, and the deal performing 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 going to take a very long view? The way Jeff does at I’m not judging one, or another as right,
or wrong, but it’s an important dimension. Are you going to obsess on the
competition, or obsess on the customers? Are you going to set up the culture,
so there’s a kind of aristocracy of the founders, who really call all
the shot, or do you want a meritocracy where you can get all the ideas on
the table, have the best ideas win. So, 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, it’s recognized. And that makes everybody more effective. In Randy’s book, he calls it the difference between
the differed life plan, and a whole life. One that really works. My take on this, is it’s a 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
what it is that you choose to do. Here’s my last thought on this topic. Anything that you want to do
of consequence, I believe, you’re going to do with others. And what this school is all
about is helping you grow and be more capable as a leader. Ideas, I worship at the altar of ideas. Innovation. I’m a junky 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 San Mica systems
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 important, execution is everything,
it takes a team to win, you want to 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 going to 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 going to work on
answering some of them. So if we can pull the mics out again,
whoever gets the first mic, I’m going to call on. Yes, sir, it’s you, and then up there.>>Be first
>>Hi, John, I’m Dan. I’m a SLO alumni. And my question is about what do you see
the opportunity in enterprise software and enterprise infrastructure. Do you think it’s the big next thing? Thanks.>>Yeah, I’m going to put that
under next big things, okay? Enterprise opportunity. Another question please. Name? Topic.>>Hi,
>>Yeah.>>Up here.
>>Hi, thanks. My name is Allad. I’m a first year MBA student. You said in your slides before
that focus not on competition, but focus on your customers.>>Yeah.
>>Now in technological innovation, 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 entrepreneur
entering a saturated field, but still with a passion to disrupt
to handle these issues?>>I’m going to put that under
start-ups entering saturated fields. A couple more. Who has a mic?>>Up top.
>>Yeah, up there, thank you.>>Hi, I’m Jasper, I’m a first year MBA. I’m curious, what are some spaces and
opportunities that you’re excited about now that you have no idea whether
you’ll be able to make money doing?>>Okay. New spaces that may be non profit. [LAUGH] Who else? Thank you.>>I’m Alex, I’m a first year MBA. My question is a bit similar,
but if you’re an MBA right now, where would you be focusing on? All right. MBA now. I didn’t come here to talk about it, but are there any questions
about Kleiner Perkins. If so I want to point them out or
look that. Yes sir.>>Hi, I’m Tom, I’m a second year MBA. I’m curious what your thoughts are about
startup markets in the US outside of Silicon Valley, so
New York, LA, and so on.>>Okay. X the valley. Yes sir.>>Hi John, I’m MBA too from Mexico City. I’m curious on what your thoughts are on
the proliferation of start-ups outside of the US,
going a little bit deeper into that.>>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.>>Hi John,
my name is Drew I’m I joined MBA. So my question is about Kleiner’s
strategy in healthcare, that`s not just biotech, I know you’re
very large in medical devices, but it doesn’t seem like that’s
as much a focus right now. Any thoughts on that industry?>>Where did I put health care,
there was another health care topic. Therapeutics. So that’s a Kleiner question really,
what’s KP’s health care strategy? Let me, if you can,
ask you to hold the questions, and I’m going to tick through some of
these that we didn’t cover before, and I think we’re going to have
time to come back for more. So, I talked about the value of my
experience, anyway at Intel and then somebody asked me a really
tough question, which is, what would be my advice to an MBA now? And I think the place where I’d start
is to 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’re gotta
go get a degree in engineering or computer science, if you don’t have one. But if I had decided that I was really
interested in technology of hybrid seed breeding,
I would find while I’m here one or two courses outside of this 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 and technology is a great disruptor. That doesn’t mean you have to pursue
seed breeding as a career for the rest of your life. But I must tell you, all the CEOs
that I know, or startup 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. The second thing is, 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 matters is going to be, of course, they’re important,
>>[LAUGH]>>But I think the quality of the networks and your hunger for learning and
figure out how you’re going to make a difference in the world,
is I believe more important than that. Is there any third advice? Okay, so
this is out of the professional domain. But I am convinced, without doubt,
and it may 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 shift. Don’t wait until you’re 30 to
figure out who you may marry, because you might find yourself
running out of time by that time and end up choosing whoever it
is you happen to be with. There’s a wonderful author who’s
just put out a book on this topic called 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 in my agenda. And price, the number jar,
I have that covered. So forgive me. Let’s go to the next big thing. Enterprise opportunities in new spaces. There’s a revolution underway
that’s almost as big as mobile. And that’s the move to Cloud Computing. And enterprises has initially resisted
this, and now they’re embracing it. The estimates are that we’re going to
go from zero cloud revenues, which is when Amazon web services
started here, a few years ago, we held a reception with Jeff Besos
to $270 billion by 2020. Just services, that’s an enormous
shift in how computing is done. So I think the Cloud fundamentally,
for economic reasons, is going to transform how we compute
around the world, and that has consequences in terms of the architecture
for Cloud Computing, the software, systems are now being built to scale horizontally
in services as opposed to go vertically. And the opportunities ahead are fantastic. I have a couple, actually three
partners at Kleiner who focus on this. Sorry, three and a half,
including Mike Abbott, who is the guy who went to Twitter two years ago
when the fail well 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 going down. We took a bet on him and
that’s when we invested, when he arrived. And 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 computer science, or whether it’s in life sciences, or
whether it’s in energy innovation. Which goes back to my
recommendation to you which is don’t be afraid of technology if your
not an engineer or a technologist. Dive in there, audit those courses. Figure out the publications
you want to read. Bill Gates graduated from Harvard
without a degree at all and he self taught himself to
be an expert in vaccines. So you can do this. What are the new spaces? The big wide open ones that
we’re looking for anyway. Well, I’m not going to tell you about all
those, 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,
he`s even further than the rest of us, he looks around corners. But in each of the areas that we work in,
for example in health care technologies, we think it is possible now to build
very targeted therapeutics with something we call a tiger team. Where our venture doesn’t go through
the long, expensive clinical trials. But takes a technology,
right up to that point. And then sells it in a very novel
way to large pharmaceutical company. That’s exciting. So, as I said already is digital health. In the area of energy innovations,
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 means it would weight 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 looked promising. I don’t know if any of
them are going to work. But it’s show time, we’re going to
figure out in the next year or two. I think the biggest
opportunities though are in and around the digital technologies,
the mobile and the web. And you can just see hints of
what those transformation are. When you hang around Google or
read the technology press. 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’d like it outside your apartment or
dorm room and it appears. The safety, 35,000 people in the United
States die in traffic accidents, the congestion on the roads. God bless Larry Page, he’s got and
Sergey, he’s got a great big vision. We believe that these wearable devices,
whether they are smart bands or Google Glasses or gathering more data,
watches are going to be quite big. There’s going to be
a big opportunity there. In many cases I think they’ll take
the place of the smartphone that you carry around with you. 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 schools in our country, we are killing the kids. They do literally design where
they’re going to put prisons around the neighborhoods where
the academic performance is terrible. Bill Gates says every life
ought to be created equal, I think every kid ought to have
an opportunity to a great education. I’ve been working in this field,
with Stanford, GSB, Ed School Alumnus Kim Smith,
to create a venture fund called the New Schools Venture Fund
and encourage entrepreneurs and fund them. I think only now, can we begin to see
something that will 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 now have 2 and a half million
students who’ve signed up for 3 and a half million courses,
that come from 58 universities, with a course catalog of I think
it’s something like 300 offerings. And they have good competition
also in this field. So finally, one of the last
bastions resistant to change, the education system, the ones dominated
by teachers unions or higher ed, which has the benefits of
tenure are extraordinary. I remember when John Hennessey
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. The can’t get enough really great faculty,
they can’t get great curricula. But if you can take the mainstream or
even the specialty courses and offer that to US community colleges,
that’s a great deal of good. And I haven’t said anything
about education globally either. Okay, payments and NFC. I confess I should know
more about this than I do. I think there’s very little doubt,
we can all agree that these devices, this Android, which has NFC in it,
are going to 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 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 licence,
your social security cards, so payments wasn’t enough for him. Fortunately I’m really proud we’re
able to back Jack Dorsey and his company Square, where my
partner Mary Micker’s on the board. And they took a particular part of
the unserved payment system which is very small merchants. Said we’re going to sweep through there
with an innovation, and then partner with large retailers like Starbucks to
transform the purchase experience. So how many of you use
Square on a smartphone? Okay, so maybe 30% of us. Where 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 history
of what you’ve bought before. And I think that will spread. Yep, 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 will be multiple winners. Let’s go to venture capital for a moment. This notion about, it takes $25 million
to start a VC fund, as I said before, I think it takes $25 million to train
a good Venture Capitalist, which is to say that the business that we work
in is one with risk and their 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, several ventures that will deliver
ten times, or 30 times, or 50 times. And those will cover for
the losses of other ventures. 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 very, very special to
the culture and economy of this place. The long feedback cycles
Are incredibly frustrating. What I will say, the long feedback cycles
in venture capital, in backing a team. What I will tell you, is along the way
you can measure project progress. Any growth says if you don’t
measure it doesn’t matter and I’m definitely of that religion. You can have ventures that will lay
out goals by audience, by revenue, by technical progress, and talk to
your partners about how that’s going. At Kleiner, every quarter,
we have very detailed operational review. Sometimes there’s not much to it because
we’re trying to build a breakthrough battery, but other time it’s
what’s the audience now for Path? How engaged are the Path
users in using this service? What is their engagement rate? How do the cohorts stay engaged or not? So, 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 going to be on
the order of five, four, six years. It was five years after we invested in
Google that it became a public company. It’ll be 13 years after we invested in
Bloom Energy that it’ll be a bigger than billion dollar profitable energy provider. Somebody asked who my favorite CEOs were. 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. I’m a big fan, as you can imagine,
of Larry and Sergei and Erik Schmitt. What those three guys did, when they
welcome, or the two founders did when they welcomed Eric into their team, in
the next decade they built from nothing, a quarter billion dollars of
value in technology company. And through that period of time our hope
was that Larry would be ready to take over from Eric,
which tuned out to be the case, so, great team, great CEO as their founder. I really admire Jack Dorsey. Here’s the guy who was
the founder of Twitter and the founder of Square,
incredible sense of taste. Some people say that Elon Musk is
going to be the next great CEO. 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. [LAUGH] So, there’s something going
on there that’s quite important. Who else? Who else thinks there’s a great
CEO out there who you admire? Just put your hand up and call it out. We’re not going to get any takers here? Come on, yeah.>>[INAUDIBLE]
>>Pat Romano, okay. Any others? Yep.>>[INAUDIBLE]
>>Marc Benioff.>>I think Marc’s fantastic. Among the new generation of CEO’s, I’m a
huge fan of Mike McHugh over at Flipboard, and Dave Mooren, he’s one of the younger
CEO’s that we backed at path. I’d watch these companies and
I think they’re going to do very well. Hey, Tony Fadell, who built Nest Company
and did the iPod before that. Favorite CEOs, disruptors. What do you do if you’re going to be in a
venture that’s got saturated competition? Lots of good entrenched competitors, do you then obsess on the competition
instead of on the customer? I’d suggest no. I’d suggest you do something else,
you know. 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 page rank system, that they were running out of
their dorm room at Stanford, and it was growing so rapidly that Stanford decided
they were going to throw them off campus. It was a real load on the network, so they went down University Avenue to
the office above the ice cream parlor, and the rest is history, but
I really think there’s wisdom in this. Jeff Bezos says this, I’m going to obsess
on my customers, not my competition, because if I serve those customers better
than the competitors, I’m going to win. Jeff’s a very disciplined
in his communications. You’ll notice the only words
that come out of this 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,
he was going to build the world’s most customer-centric company,
that was his goal. And I think to a large measure,
he’s achieved it. Payments. Natural gas, a word or
two about natural gas. This is a big disruptor,
nobody forecasted this. And 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 going to mean
manufacturing comes back. It’s a very good thing for our climate. The greenhouse gas emissions
from an equivalent unit of energy are about half of what
they would be from coal, which means we aren’t building
new coal fired powerplants. It 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 powerplants but clean energy, great advantage in
having cheap, reliable natural gas for a long period of time. What’s the role for venture capital
in these kinds of innovations? Look, we’ve learned some
lessons along the way. We started investing 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 made mistakes. But others that are capital
intensive like Bloom Energy, I think they’re going to be huge winners. So you remember that slide
I put up at the end? Ideas are easy, execution is everything,
it takes teams to win. A great difference between the successful
ventures, and the not successful ones in green, whether or not they are capital
intensive, is how they execute. Elan Musk executed with Tesla incredibly
well in a capital intensive car company. It’s worth $4 billion today. So, execution is everything. Nonetheless, I think if you’re going to
invest as a venture capitalist in this field, you better pick the low capital
projects and you better build the 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. This is the personal one,
that was mostly hot stock tips and, so the question 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
going to be able to help with that. The dinner with the president, what was
the advice to the president that came. Not so much for me, but all the executives
who were around the table who included Carol Barts and Larry Schmidt and
Mark Zuckerberg and Steve Jobs. We put Mark on the right of Steve,
I asked him to not wear sandals [LAUGH]. And on his left was Steve, and
it was a very free ranging conversation with an incredibly bright
leader of the country. As I recall, Art Levinson argued for
changing the regiment for approving drugs based on the new molecular
understanding that we have of diseases, with the FDA having slowed up. Let’s see, Reed Hastings made
some impassioned arguments in favor of public education. Larry Ellison. He went on a real terror
around immigration. This whole idea that we have a staple and green card to the Diplomas of foreign
nationals who were educated and the difficulty, 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 I think there were themes that you
would know about and resonate with. What was impressive is that he came
here to learn about technology and 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 first that I really cared about
was reforms and how you go public. So you’re not subject to the withering
criticism that GroupOn, for example, had to endure. Now you can file,
not have all that information be public, until you decide you’re really
going to go out for an offering. They also changed some of
the over reaches, I believe, from the Spitzer era around disclosure and
analysts. There’s a couple other
parts of the Jobs Act that it’s going to remain to see what happens. There’s people who are predicting
there’ll be a lot of abuses when any entrepreneur can raise $1
million 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 think any corrections that need to be
made can be done on a regulatory basis. 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
answer them right after you pose them. You’ve got a mic there, thank you.>>Hi, my name’s Josiah. I’m a second year MBA. You mentioned and you showed us the growth
of smartphones and then tablets. I’d be interested in your thoughts on what
you think the next screen’s going to be and how far behind we are in terms
of that next growth trajectory for that specific screen,
whether it’s home television, Google Apps.>>So I think the next great screen
is going to be the second screen in the living room. And Apple does not yet
own the living room, neither does Comcast. We batch entrepreneurs who
hope to build services in advance of those screens coming out. Maybe they’re going to 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
Luxview that’s figured out a way, did you know 90% of the power that
goes into a screen today is wasted? There’s this backlit 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 ten 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 Luxview is making and
building, and it’ll transform the biggest source
of power consumption in the devices. Thank you.
>>Hi John, I’m Lance, I’m a PhD student here, and I’m curious to
know what you guys aren’t interested in. Either because you think
there’s been over investment or because the impact of
technology’s overstated.>>Hm, that’s a good question. 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.>>[LAUGH]
>>We’ve ruled those out. We can’t do everything. So there are some venture firms
that are focusing on, for example, retail technologies. There are venture firms that are investing
broadly in diagnostic devices, which we did at a period of time,
and we’ve stopped investing it. We’re generally not investing
in new hardware, but NIST would be a counter-example. Whatever rules I tell you,
I want to tell you are just guidelines. 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 first meetings,
those 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 are competitors at May. We do a six month retrospective. There’s a half dozen competitors
we pay attention to. We are seeing right around 50% in
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. I’m not going to reveal that number. [LAUGH] 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 a coverage in
better decision making. I’d like to close with two thoughts. The first is that, for
those of you who would some day 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
going to help you serve the entrepreneurs you’re working with. It’s going to help your judgement, it’s going to help you compete to
win the opportunity to advise them. You can’t buy a position
on the board of directors, you want to earn
the opportunity to do that. because you can hopefully add some value
to what the entrepreneurs are going to 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 startup. It may or may not work in your career,
but this explosion of technology that I described, the fact that the market of
Internet users is a billion people, I kind of pinch myself. I can’t believe I’m alive at this time,
working in this place, with 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 [email protected] with your
three favorite books. And I’ll send you the slides and
three of my favorite books. Before I sign off, I want to tell you
three that I’ve read recently and that I’m enjoying a lot. The first is Al Gore’s The Future,
a very unpretentious name, [LAUGH] where he’s describing
six global drivers of change. And it’s really worth reading,
maybe a chapter at a time. 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 then the third, if I can promote it, is Cheryl Sandberg’s book that just
came out today called Lean In, which is about women,
work, and the will to lead. Thank you very much for the time.>>[APPLAUSE]
>>I look forward to hearing from you.>>[APPLAUSE] [MUSIC]

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