John Doerr's Plan To Reclaim The Venture Capital Throne

By Connie Guglielmo and Tomio Geron
Flipboard recently unveiled a new version of its successful tab­let magazine app as the entire staff stood around their Palo Alto, Calif. office gawking at the traffic numbers. As the needle starts moving, the room gets giddy, and the few dozen employees gather for a group snapshot. In the middle of the scrum: John Doerr, the 61-year-old billionaire venture capitalist who for years was the undisputed king of Silicon Valley, a Flipboard T-shirt over his button-down.
Doerr has been Flipboard’s champion. His legendary firm, Kleiner Perkins Caufield & Byers, is the company’s biggest booster, and Doerr went so far as to introduce Flipboard cofounder Mike McCue to Steve Jobs a few weeks before his product launched on Apple’s App Store, to great fanfare, in 2010. “I thought he was going to rip it to shreds,” says McCue. “But instead we got into a fascinating conversation about the state of journalism.” Despite Doerr’s trademark roll-up-the-sleeves advocacy, Flipboard is one of the precious few hits he’s backed lately. On this year’s FORBES Midas List of tech’s top investors ranked by the size and volume of big deals, Doerr has fallen from No. 12 to No. 26 (The Midas List will be published May 8). He hasn’t seen the top ten since 2009.
And Kleiner, a 41-year-old firm known for backing some of tech’s biggest IPOs, missed getting early into Facebook, LinkedIn and Groupon. In 2012 it was virtually a no-show on the roster of firms with sales or IPOs of venture-backed companies worth more than $200 million. Sequoia Capital led the way with nine. Accel had six. Greylock, five. Kleiner? Only two, and not big ones at that.
When asked how the past year has gone, he goes into reflexive spin. “Fantastic, really fantastic,” he says. But Doerr can do the math—from Netscape to Google he’s racked up enough home runs over the years to swell his net worth to $2.7 billion. He pauses before continuing and recalibrates. “It’s also been a very ­challenging year.”
He’s referring in part to the sexual harassment and gender discrimination suit filed in June of last year by Kleiner partner Ellen Pao, Doerr’s former chief of staff. He also readily cops to the firm’s high-profile missteps in green tech investing. So he sat down with FORBES for what he says are his most extensive discussions ever about the firm, to discuss what’s gone wrong and how he’s righting the ship.
He also opened up his Rolodex, a raw display of power, as he quickly arranged for interviews with the heaviest of hitters, who stood ready to heap on the praise. “I’ve known John 30 years, and he’s still the kinetic guy trying to find the next new thing,” says Bill Gates, who, FORBES has learned, is also a Kleiner limited partner. “And no, not with a 100% batting record. But better than most.” Gates credits Kleiner for introducing him to Aquion Energy, a battery company he’s subsequently invested in on his own.
“John always sees the future first,” says Google CEO Larry Page. “And he’s tenacious about pushing everyone to move faster and be one order of magnitude more ambitious.”
“Kleiner’s No. 1 competitive advantage is John Doerr,” adds Intuit Chairman Bill Campbell, the press-shy consigliere to half of Silicon ­Valley. “He’s one of the great product-pickers of our time. It was what Steve Jobs was fantastic at, too.”
And so it goes, with similar kudos from everyone from Genentech’s Art Levinson to Google Chairman Eric Schmidt.
But the most trenchant comment came, not coincidentally, from the youngest and newest member of this billionaire cavalcade, Jack Dorsey, of Twitter and Square. Dorsey readily agreed when Doerr asked him to address Kleiner’s partnership in January. “John said, ‘Be extremely frank and tell us where we’re screwing up.’ ” Dorsey in turn cautioned Kleiner’s partners to be careful about dismissing small ideas. “When you’ve only known these massive successes,” says Dorsey, “how do you know to look for these smaller things that could go big?”
The irony is that the man whose name has been synonymous with venture capital throughout his 33-year career has to prove himself all over again.
John Doerr doesn’t make many public speeches, so the few he’s given are memorable. Above them all: a TED talk in 2007 on the threat the planet faces from climate devastation. In it Doerr choked back tears, as he described a desire to create a better planet for his daughter to live in.
This fervent belief transferred to his investment strategy for the firm. Hoping not only to save the world with his personal dime, he also tried to position Kleiner to profit from it.
Trouble followed. Solar-power-materials startup MiaSolé raised upwards of $500 million from Kleiner and others and was once valued at $1.2 billion. But the firm couldn’t make money in the face of cheaper imported panels from China. It was sold to a Chinese firm last year for just $30 million.
Still worse: luxury electric carmaker Fisker Automotive, which raised $1.4 billion in funding from Kleiner, U.S. taxpayers and investors, including actor Leonardo DiCaprio. The company was badly mismanaged and recently fired most of its staff. In March its founder resigned, and in April Congress grilled its executives, Solyndra-style, over how Fisker got its federal loans. (Doerr sits on President Obama’s jobs council, and Al Gore is a Kleiner partner.) PrivCo, a research firm that examines private companies, says Fisker may turn out to be the “most tragic venture-capital-backed debacle in recent history.”
The other debacle for Kleiner is what it missed while focusing so heavily on green. Social, local, mobile—all were creating some of the biggest scores in the history of Silicon Valley. And just as success begets success—a fact that Kleiner has wielded to great effect for most of its history—sitting on the sidelines leads to more sitting on the sidelines. Paul Graham, founder of the Y Combinator incubator, was recently quoted as saying Kleiner is no longer at the “top” of founders’ minds, though he declined to comment for this story.
While Kleiner remains an elite firm, having to answer for itself is an unprecedented circumstance.
Kleiner was founded in 1972 by partners with impressive tech credentials by Silicon Valley standards: Eugene Kleiner was a founder of Fairchild Semiconductor, a pioneering chip designer, and Tom Perkins, who oversaw Hewlett-Packard’s early efforts in computing.
Doerr arrived at Kleiner in 1980 after a successful stint as a salesman at Intel. The St. Louis native grew up in a close-knit, middle-class family with five children. Doerr’s father, a mechanical engineer and entrepreneur, pushed all his kids to study hard. Doerr excelled at science and got undergraduate and master’s degrees in electrical engineering at Rice University and an M.B.A. from Harvard. Soon after joining the Kleiner partnership he cemented his reputation as the Valley’s premier VC with a string of spectacular calls in tech, backing the likes of Compaq Computer, Netscape, Sun Microsystems, Amazon, Intuit and Google. He was either No. 1 or No. 2 on the Midas List from 2005 to 2009 and first appeared as a billionaire on The Forbes 400 list in 1999.
Thus it was an unusual scene in February, when Doerr and senior partner Ted Schlein went on a road show to reassure limited partners the clean-tech missteps were behind them. It was the culmination of a top-to-bottom introspection at Kleiner. After the Pao lawsuit, which “makes me very sad,” says Doerr, who stresses that Kleiner has more women investing partners than any top VC firm in the Valley, the entire partnership came together off-site to define collectively what Kleiner stands for and how it wants to work with entrepreneurs and limited partners. The list covers big things (like how to do a better job servicing entrepreneurs) and small things (like not doing e-mail during meetings).