Letter #215: Kevin Compton (2021)
KPCB Partner and Radar Partners Founder | Behind the Scenes with a Silicon Valley VC
Hi there! Welcome to A Letter a Day. If you want to know more about this newsletter, see "The Archive.” At a high level, you can expect to receive a memo/essay or speech/presentation transcript from an investor, founder, or entrepreneur (IFO) each edition. More here. If you find yourself interested in any of these IFOs and wanting to learn more, shoot me a DM or email and I’m happy to point you to more or similar resources.
If you like this piece, please consider tapping the ❤️ above or subscribing below! It helps me understand which types of letters you like best and helps me choose which ones to share in the future. Thank you!
Today’s letter is the transcript of an interview with Kevin Compton. In this interview, Kevin shares his story in venture, beginning with how he got into the world of venture capital, how he transitioned from being a “geek” into an investor and how he knew it was time to transition, whether is ever had big disagreements with John Doerr, KPCB’s decision-making process, being at the right place at the right time, Jeff Bezos’ Amazon pitch to KPCB, Jeff Bezos as an entrepreneur, how quickly he makes decisions, listening to the product, Bezos’ distinguishing characteristics, and balancing courage and confidence with humility and coachability, being wrong on investments, and how being early is a disaster, not exciting.
He then shifts into how Covid impacted the venture world, coaching and investing in entrepreneurs, his initial read of how Covid would play out, how he evaluates whether a leader is doing a good job leading through Covid, the biggest pivot he saw in the companies he invested in during Covid.
After the Covid discussion, he zooms out into a broader Silicon Valley conversation, starting with Silicon Valley’s foundation atop a culture of risk-taking, what sticks out to him as distinctive of the way people in Silicon Valley think about leadership and entrepreneurship, the importance of founding teams, Silicon Valley culture, whether Silicon Valley will lose its status as the cradle of innovation, whether there are more or less startups being started, and what church leaders can learn from Silicon Valley.
Kevin Compton is the Cofounder of Radar Partners. Prior to founding Radar, Kevin was a Partner at KPCB, where he served on the boards of companies such as Citrix and Verisign. Before joining KPCB, he was Vice President and General Manager of the Network Systems Team at Businessland (which was then acquired by JWP then Entex then Siemens), where he helped increase company's sales from <$70mn to >$1.4bn. Kevin joined Businessland via the acquisition of a startup he joined after finding his calling with computers while working at a Ford dealership.
While Kevin has had a storied professional career in building and investing that may seem smooth-sailing in hindsight, his life started out as anything but—in fact, it’s a miracle that he’s even alive at all. Skip Vacarello shared:
Kevin and his friends were playing army at a construction site near his home in rural Missouri. When he jumped off a rafter in the house under construction to surprise a friend below, a steel rod punctured his leg and traveled up to his intestines and tore them up. Somehow his friends helped him the three blocks to his home. His mother, seeing the profusion of blood, rushed young Compton to the hospital.
The attending physician miscalculated the severity of the injury and simply patched up his leg. That evening the boy’s body started turning black and he experienced great pain. His parents rushed him back to the hospital. A young internist, who was on duty, properly diagnosed the extent of the injury, but gave Compton’s parents little chance for their son’s survival. The young doctor “broke every rule in the hospital” according to Compton and operated while his parents prayed. He was anesthetized for hours beyond the considered the maximum at the time.
After the operation, the doctor indicated that Compton would likely not last long. And if he did, he would not walk, certainly not run and not live a normal life. A miracle happened and Compton survived. Not only was he able to walk, but as a teenager he ran the 100-yard dash as a Junior Olympian and even played football.
…
While in college Compton worked at a local Ford dealership. He describes himself as one who “liked to fix things.” So it was not surprising that when in the mid 70’s the dealership acquired its first computer, Compton was asked to “make it work.” At that point, Compton says, “I found my calling.”
Kevin has an amazing story and is someone I’ve learned a tremendous amount from, and I found this conversation particularly illuminating.
Related Resources
KPCB
Faith-related
Transcript
Host: I'm here with my friend, Kevin Compton, who is the founder of Radar Partners, and a venture capitalist who's invested in many great leaders. I've had the privilege of having a number of conversations with Kevin, and always walk away -- just my mind blown, challenged, and inspired to lead at a higher level. So Kevin, thanks so much for investing in us to help us get better as leaders.
Kevin Compton: It's my honor to be here, Andy. And I think you're truly an example of a great leader, a very, very great leader.
Host: Thank you, Kevin. And I'm curious, just -- your story, I'd love to unpack. You've been at Radar now for a while, but prior to that, I know that you were at Kleiner Perkins. And I'd love to hear how did you actually get started in this whole venture capital world?
Kevin Compton: So I came out here in the mid 80s, when the company I was working for was acquired. I grew up in the Midwest, and the company was acquired by a California-based firm that was backed by Kleiner Perkins. And I ended up with a job in the in the technology evaluation area and running the field technology group. And through that process, I got to meet John Doerr and Vinod Khosla and Tom Perkins, who were all partners at Kleiner Perkins. And little did I know, I was basically a unpaid, unrecognized diligence person for them in the late 80s as they were looking at technology ventures. I was close to the customer, I was a geek. And they just were using me, and abusing me, and I didn't know it. And then our company was about to enter another transaction, and they approached me and said, Hey, why don't you come to Kleiner Perkins? And I said, Who are you? Which of course now seems funny, and to a lot of people at the time, seemed funny. But I didn't know. I wasn't paying attention to that stuff. I could tell you the feeds and speeds on personal computers, and what was happening in network operating systems, but I didn't know who Kleiner Perkins was. And I had the most interesting response. One of the partners said to me, that's why we want to talk to you. We have a series of highly credentialed people standing outside the door who want to work here, but you, you're 28 years old, and you've built two companies. We'd like to talk to you. And so we went through a process and I basically said, No. And they basically said, That's not how it works. And I said, Okay, well, I want to start another venture. And they said, Okay, now you're talking. So here's what we'll do. You don't know anything about starting a company with money in the bank, you've always started them -- the two you've done -- bootstrap. So what we're going to do is, we will fund you two years from now, but you need to come here and see how it's done and learn all the things you don't know. And I said, That's a deal. And then I never found the deal to do, so I ended up staying for a decade and a half. And loved every minute of it. Loved every minute of it.
Host: So talk about that process of when you leap from -- almost like an intern, or quasi-helper, like you said --
Kevin Compton: Yeah, geek.
Host: Into actually being an investor? How did that work?
Kevin Compton: That's an interesting part because if you looked at the first couple years I was there, it was really spending almost all my time within the portfolio of companies. I was living and breathing at Citrix a lot and trying to help the management team there and a couple of other companies that have done very, very well. And I was doing it there, and what the Kleiner partners saw was that my operating experience and my entrepreneurial experience was very advantageous to the portfolio companies. And then of course, because I can't control my mouth, I would weigh in on things they were investing in, and say, Well, that's a dumb idea, all this kind of stuff. And they basically called my bluff and said, Well, if you're so smart, you should do it. And I did have a great interest in the investing side, but I started out more hands on, more operating within the portfolio companies and then moved my way into leading in the investing side.
Host: That's incredible. So how did you know -- what was that decision making process like for you to know it's time to transition? I'm a part of this, now I should move forward and do my own thing.
Kevin Compton: It was really based on a decision that, after 15 years of investing on behalf of other people, and being very, very lucky, and being in the right place at the right time in many ways, I had the opportunity to take a step back and be with my partner, who I am very close to, and we could invest our own capital, and have much more control of the outcome of what happened to the proceeds. And that was very, very important to me at the time, as I wanted to be much more involved in where the money went -- that we were fortunate enough to make. And that was my motivator.
Host: That's really good. So I'm curious -- John Doerr. He's one of the icons, right?
Kevin Compton: Absolutely.
Host: So did you ever have like big disagreements with him on what to invest in when you were there?
Kevin Compton: I think there was one day we agreed on something. But otherwise, it was almost always a -- no, I mean, that's part of the culture. You got to share your difference of opinions. But no, most of the time we very much were aligned. But we also had differences of opinion, which was very good. That didn't mean we did it, that didn't mean we didn't do it. But by the way, we had a culture of, for the partners, one no was a no. And the reason that was so important on making an investment decision is because basically 100% of startups get in trouble sometime in their first three or four years, and you couldn't just sit back and say, Well, I'm not going to help that firm because I didn't want to do that investment to begin with. I told you it wouldn't work. You can't say that. Because we wouldn't have done it if somebody had said no. And by the way, you don't have to defend yourself, you just say No, I don't want to do this. And it's over. So everybody -- it's all it's all hands on deck once we write a check.
Host: Wow. That's really fascinating. So you, in essence, any investment has to be total consensus.
Kevin Compton: It did. Yes. And that's the same thing we do at Radar. And that's the only way to do it, really. Because these things are a lot of work. And they take 7-15 years, and you need to be -- everybody needs to be signed up for it.
Host: Yeah. So you've never had an instance where like, even in your current situation where you you think, Oh, I'll just invest in this by myself, or --
Kevin Compton: Against the rules.
Host: Okay.
Kevin Compton: Yeah.
Host: That's fascinating. So it's almost similar to the tension that an entrepreneur would have before they start -- or a church planter...
Kevin Compton: Or a church planter named Andy Wood, entrepreneur.
Host: Yeah.
Kevin Compton: Yeah.
Host: That's awesome. So you were a part of some pretty significant transactions, or investments, early on at KP.
Kevin Compton: We were. We were very lucky. We were right place, right time. We saw the PC revolution, we saw the Internet revolution, we saw the genomics revolution. And so, it was very lucky.
Host: Yeah. So were you in the pitch for Amazon, with Bezos?
Kevin Compton: I was. We sat right there at the table together. And then we did a lot of things together in the early years.
Host: So talk about what that was like, as you're sitting there listening to that pitch. What's going through your mind? What did you see at that moment?
Kevin Compton: World-beating entrepreneur. If anybody says that it was about the bookstore, they weren't in the room at the time. Because it never was. Certainly he was going to be excellent at that, but he was just -- is just a world dominating entrepreneur. And he is motivating, he is charismatic, he is insightful, he is bold beyond belief. He has tremendous, tremendous confidence in what he does. Which is essential in any of these roles.
Host: Yeah. That's incredible. So I want to do a double click on that. You've literally sat through tens of, probably thousands of these conversations. How quickly can you say, within the first three minutes, five minutes, 10 minutes -- I'm in, I'm out?
Kevin Compton: I'm guilty on two fronts. First of all, I married my girl I met at church camp when we were 15. And I never really wanted to marry anybody else. And it took me a while to convince her, but that's a whole other story. And most of the decisions that have been our best decisions were obvious decisions. And I separate obvious decisions from your question of how long did it take? It usually didn't take hardly any time at all because it was just so obvious. The ones we did poorly on -- which my therapist still won't let me talk about some of them -- yes, because I mean, we pour our life into these things, and they don't work, it's like, Ugh. And the entrepreneurs certainly pour more -- they're certainly more into the trenches than we are, and I just feel so bad when it doesn't work. But the obvious ones were the best ones, and the best ones were the obvious ones. You just knew when you saw that entrepreneur get up and talk about their company that this was something different than anything else.
Host: So are you are you listening through the product? How important is the product to you?
Kevin Compton: If I can give you, Andy -- one of the things I do, and I take great pride in is, I keep everybody's first presentation they make to us. And then 5-15 years later, when there's an IPO, or the company sells, or they throw me off the board finally, or there's some kind of thing in the future that -- a big event -- I bring out the first presentation and show it to them. And I've done this dozens of times. And these people, they just put their heads in their hands, and they go, What were you thinking? Why did you back that? And every time, I'm always so thankful I get to say, We didn't back that. We backed you. And we were right.
Host: Wow. So how do you -- you're sitting there, and you're listening to a presentation -- and so going back to the Jeff Bezos example, you say one of the distinguishing characteristics is his confidence.
Kevin Compton: Yes.
Host: And at the same time, there's a teachability aspect to it. So if you have a young 25, 35 year old -- and by the way, I just want to say this -- one of the agreements for the interview with Kevin was that none of our listeners would try to ping him for a pitch so we can dive into it at a deeper, more authentic level. But let's say you have one side that has the courage and the confidence, and then the other's the humility and teachability aspect of it. So how are you calculating that mix of those two characteristics as you're -- maybe there are people that have a ton of confidence, but they're not going to receive your coaching or your mentorship to go to the next level?
Kevin Compton: It's a great question, Andy, and it's one of the most important questions. Because they do need both. And usually, the truth is, what you'll see is, early on, they will, with a level of sincerity that you can appreciate, they'll say, Look, I can get money from anybody. We've got five term sheets. We want your partnership to be the one who backs us because of the experience that you guys have. You're entrepreneurs, you're not just financial guys, you're not spreadsheet jockeys. You've done it, you know what to do, you know how to help me. And you feel the authenticity. And then their next sentence is something that's bold and audacious, and you just go, Okay, there you go. There's that impossible to describe balance. But you have to believe that they want to learn and be part of it. And by the way, the lessons I've learned far exceed the lessons I've taught in this role. So it's got to be both ways. And they have to know that you're willing to be a partner with them, that you're willing to go through the lumps and bumps with them. We have a saying that we care way more who we invest with than what we invest in. Because the who is what makes the difference in the long term?
Host: Yeah. So if you look back -- one of the things I can very quickly tell, even from our initial conversations -- you're very intuitive. Have you had times where your intuition -- you look back and your intuition on an investment was wrong?
Kevin Compton: Of course. Sadly. I'll say -- when I'm wrong, I'm usually wrong about product, not people. And when I'm wrong on product, I'm usually not wrong by a few years, I'm usually wrong by 15 years. Like I'm way wrong. But I haven't been as wrong on people. Now here's an interesting thing when you're an investor for Kleiner Perkins. You're representing other people's capital. And so if you think this person is going to be a success, even if it'll be a brutal board seat, and being with the person won't be pleasant, you have some level of responsibility to do it because your job is to, on a risk adjusted basis, create above market returns with the capital you've been entrusted with. At Radar, we don't have to do that. If we don't think that person is going to be an enjoyable experience, we can pass. But that just tells you how important the reading of the person is. But I can -- give Tom -- thank my parents. They gave us that curiosity to ask people questions, and just kind of have that gut instinct.
Host: So are you with product -- are you ahead or behind?
Kevin Compton: Ahead. But by the way -- ahead means -- that sounds exciting, right? Ooh, you're way ahead of your time. No, no. That's a disaster. Because you then have to spend millions of dollars until it finally happens. And that doesn't usually work. Like I won't -- like I said, my therapist has gotten me -- no, no. But I -- literally there's been things we've been 15 years ahead of, and we just laugh and go, Oh, now that's happening. Good. We had a version of cloud computing in 92 -- problem was there was no cloud. And just things like that.
Host: That's incredible. It's so fascinating to even see -- you're unique in your -- venture capitalists -- even I think -- I also had on the podcast, Henry Kaestner. He's another good example of somebody who's similar. He's an entrepreneur, moved into venture capital. So how about -- talk a little bit more about -- even this season, how COVID is impacting the venture capital world and what you're seeing with entrepreneurs as you're working with them now.
Kevin Compton: So the the interesting thing about our job is we are as productive behind the Zoom screen in many ways. So it didn't really matter. We moved quickly. One of the boards I'm on -- they have a company that's -- already a larger company -- it's more than $100mn in revenue. One of the top admins in the company said, I love this. Getting you guys on Zoom calls with no logistics, no hotels, no airplane travel for a board meeting is -- she said -- her quote is: It's easier now to schedule a board meeting than it used to be to get a conference room. Because it's just -- you don't have all those logistics involved. So I think for the most part, it's been no change. What I missed dramatically, is most of our entrepreneurs are very young, first time executives. And I miss that warmth, that sitting in the room, that feeling of the empathy, trying to help them work through problems. One of the most important things we do is help them recruit talent. And that's been harder to do with Zoom. So I think our losses have not been in communications or in productivity, but they've been in empathy and recruiting.
Host: Wow. So you're -- a good chunk of what you do is coaching and investing in the entrepreneur, right?
Kevin Compton: Correct.
Host: So basically, what you're saying is some of that role has been shifted and changed. So I could imagine, though, even a lot of the entrepreneurs that you're working with -- the amount of changes that they've had to make, the political landscape that they've had to deal with, the complexity of -- so how are you leaning into that now? Like with coaching? And what's that looking like for you?
Kevin Compton: Yeah, and I'll wordsmith you a little bit, Andy. It's more encouraging than coaching. And one of the most encouraging things we do for them is tell them, We've seen this before at this company. And they go, Oh, that's who I want to be, and -- Yup, they had these exact same things. And we have a phrase we tell our entrepreneurs. We say, We're rounding down -- we're rounding down a little bit, but rounding down, about 100% of our companies get in trouble at least once. So when you tell them, that's actually quite encouraging to them, because they're always thinking that these companies that they hear about that's a great success, that's on the NASDAQ, that was standing up ringing the bell or something like that, that it must have been just, Wow, they just did everything right. You go No, no. No, no. No. In fact, the exact same error we're facing right now, they did nine years ago. And that is encouraging, as well as coaching.
Host: Yeah.
Kevin Compton: Now, you can't tell them many of them had to send every employee home for a year, so this is a new problem. But they've all figured their way through it.
Host: Yeah. I've thought about even your -- there have been a few times where we've sat down, like when we hit some pretty crazy hiccups in our church, and you've always -- you kind of helped me level out in your response to that. And even from the beginning of COVID, I'm guessing -- What were you thinking when you saw COVID hit in the first 6-8 weeks? Did you anticipate that this would be a multi-year journey?
Kevin Compton: No, no, no. So two short things. One is, at day 35 or so of -- we went home on -- the people at Radar make fun of me because on Monday the 16th of March, when we got the stay at home order in California, I said, Look, everybody go home -- and at our office, getting people to leave and not work is really hard. No, no, you have to leave. You've got to go home. So I sent them all home, and I said, Don't come in tomorrow. And of course, all their eyes got really big, like don't come in tomorrow? And I said, On Wednesday, we'll get this figured out. So the big joke at Radar is, everybody keeps saying, Is it Wednesday yet? Is it Wednesday yet? But anyway, at about Day 35, I wrote a memo, because I went back and did my calendar homework, and I had not been out of my office 30 business days in a calendar year ever. For business travel, vacation, ever. Anything. And I had not been away from my desk 10 days straight but one time. And that was in 2000. I've been away from my desk now 35 days, and guess what, the world was still spinning. It was shocking to me. I thought everything would fall apart if I wasn't sitting behind my desk. So there's a lot of learnings for me too. But the biggest thing we had to keep doing, and I mean this, the biggest thing was encouraging people and telling them: I have no idea what's going to happen, but we're not pulling your funding. We're here for you. We'll be as available as we've ever been. Tell us what you need and we'll make it happen. And there were a couple companies that probably shouldn't have gotten some incremental funding that got it, because they just didn't have a way to tell their story in May of 2020.
Host: That's really good. So your consistency, I'm sure, leveled and stabilized entrepreneurs that otherwise would have gone crazy, maybe even thrown in the towel, maybe even not been able to continue their journey. And when you look at the different portfolio of all the leaders that you're working with -- so prefacing this question, one of the things I've said to our team is, In a lot of ways, we won't know if we've done a good job leading through COVID for probably another 5-7 years.
Kevin Compton: So true.
Host: So how are you evaluating whether or not a leader is doing a good job during this season?
Kevin Compton: One of the things we're doing is -- a lot of companies, as you know -- this was a business boon for them. They happen to be in the internet infrastructure place, or the online tools place, or something that made remote work better. Or a home entertainment like Netflix. They were in their in the right categories -- Zoom is an example. There's just lots of examples where they were in the right place. But let's say we had a company that was adjacent to one of those or should have benefited from what was happening and didn't. Well, then, you got an entrepreneur that's not performing properly. But let's say someone was in a consumer facing product that required everything to be done face to face, in person -- it was a travel agency, or something like that -- well, they could make 500 right decisions and it wouldn't have moved the needle 2%. So you just had to see what was the factset that around that entrepreneur's opportunity set, and were they taken advantage of the opportunity the best way they could? And we saw, for the most part, most of them did very, very creative things. Some took advantage of it to reset and re-evaluate what the company was doing. Some of course were in the right place at the right time. Some scaled back, and some are four times bigger than they were in March of 2020.
Host: Wow. What is the biggest pivot that you saw in the companies that you invest in?
Kevin Compton: Understanding that the world had changed. And they understood it very quickly, and they weren't hoping that it was going to be over in three or four weeks like I was, like probably most people were, and saying, No, no, this is a fundamental change. We need to react and we need to do these things now going forward. Or there's an opportunity now for our technology to play out in this way. One of our companies does online video games. Well, guess what? Yeah, exactly.
Host: Way up. Yeah. That's so good. So okay, I'm gonna throw you a couple other things that you've said throughout the years that have really helped me. Okay, this wasn't in my questions I sent you, but one of the things you said one time was you went to the Middle East and you had a conversation -- I think it was -- there was a group of people, venture capitalists. They wanted to start a Silicon Valley. And you actually --
Kevin Compton: Oh yeah. They actually came to me, but your story is correct. Take the title of Secretary of Commerce, whatever that was going to be, like we have, but every country has some version of that that's responsible for bringing entrepreneurial growth and business growth to their local economy. Or their country's economy. Or big city's economy. Well, many, many times, especially after the internet, when -- and we were fortunate enough to be behind Google and Amazon -- just lots of great companies in that era. Netscape, Citrix, and VeriSign, and just winner after winner. People said, Hey, we want to build a Silicon Valley in our country. Or in our big city. And I'd say, Okay, well here's the story. And I ran on this story by accident one time, but then every time I told it after that, it was -- 100% I promise you, 100% had this outcome. I'd say, Okay, your son in law, who you already don't like because they married your daughter, is working and has a good job at your favorite company -- whatever that company is -- it's a nice company in your community. They have 2.3 children. He's a church board member and he is at the country club and everything's just going right. Nice kids, nice family, nice marriage. Looks like he's going to get another couple of promotions. It's just all up and to the right. He or she leaves the current great job and takes a job at a high profile startup. That high profile startup burns through a whole bunch of cash, has a big vision, tells the world they're gonna do the biggest things and change everything and do all this kind of stuff -- and then it fails. And it hits the wall. Literally fails. Not quietly goes into the sunset, it hits the wall at 100 miles an hour. At the next -- in the United States, we have Thanksgiving, you guys all have your family social gathering of some kind that's an annual event -- at the next family social gathering, does that son in law come? Every one of them said, No, no, no. Heavens, no. There would be a lot of reckoning and reconciliation and time we'd have to have before they could just come back into -- it'd be... no, no. Oh, what a disaster. I said, Well, in Silicon Valley, not only are they welcome at the Thanksgiving dinner, the brother in law who never really liked him gives them a high five and says, Hey, sorry it didn't work. Nice try. I'm proud of you for trying. And we just have that place where we're not looking for failures, we're not accepting or encouraging failures, but we appreciate risk taking, and we have a tolerance for -- a higher tolerance for failure than others do. In the name of risk.
Host: Yeah, that's great. So one of the distinguishing factors here in Silicon Valley versus the rest of the world is a much higher tolerance for risk, for failure, and the realization that that's a part of the process of starting great companies. What other things would you say stick out to you as distinctive of the way that people in Silicon Valley think about leadership and entrepreneurship?
Kevin Compton: A confidence to hire people smarter, more gifted, more diverse than you. That's one of the big telltale signs that if you're building a company that you're going to build a big company. It's that you look around at the first three or four hires an entrepreneur's made, and they're all superstars. And they're all -- like this person doesn't think they're going to be the best at accounting and best in finance and the best coder. They went and got the best coder, they got the best finance person, they got the best marketing person. And they have the confidence to know that any one of those people probably is more qualified to run the company than that entrepreneur is, but they for some reason didn't either have the idea or the entrepreneurial skillset to get it started. And that's what I appreciate most out here, is the quality of the teams you can build.
Host: So how does that play out? When you look at some of your companies that you've funded, what percentage roughly, of the leaders, are five, seven years in with that same group of people that they started with?
Kevin Compton: Oh, I don't know the number, but I will tell you, it's the vast majority. It's 80%, or north of that. I'm having a hard time thinking of many that didn't go that long. So the vast majority.
Host: So they picked the right people in order to be able to scale on the front end.
Kevin Compton: Yeah.
Host: That's really good. Any other things that stick out in your mind that are distinctive of Silicon Valley culture?
Kevin Compton: Well, the curiosity. The What could we do better? The How can we make it better? How can make it different? And not just at a startup. But if you look at what Google releases, what Apple releases -- with these great companies out here, release, you go, Wow, wow. So there's a level of curiosity and a level of confidence that it can be done. We just have to apply enough talent and resources to it. And that's one of the great things of software versus any other time in history is, with software development, you really can do almost anything with enough time and talent.
Host: That's great. So when you look at the landscape of Silicon Valley right now, like you've been through multiple different waves, here, of new forms of technology. And if you chart out the next 10 to 15 years, there's so many great companies that are now moving out of the Bay Area, and moving headquarters. How do you see entrepreneurship changing here locally? Do you see it just filling back in, and it's like Silicon Valley's still going to be the leader? Or do you think that it's going to shift?
Kevin Compton: So I will not mention any company names, because that would be both offensive and inappropriate. But I see a lot of good companies moving out. I don't see a lot of great companies moving out. This is still the major leagues. And some of those companies that are moving out have to move out, because are you going to go to an old tired company? Or are you going to go to Google, Facebook, Snowflake, Uber? Just keep going -- of all these great companies that are out here that are taking all the good talent away. And Apple has been able, and Google has been able, as mature companies, to continue to draw great talent with their culture and the way they allow for innovation. But some of those companies that are leaving didn't -- weren't able to do that. They weren't able to compete for the talent in the big leagues, and so they had to go find a place where they can find talent.
Host: That's good. So you you see it not diminishing or dropping in the next decade or so here.
Kevin Compton: If anything, the opposite.
Host: Yeah. What are you seeing now in terms of rate of new companies trying to be started? Is that greater, consistent, or less than the last decade or so?
Kevin Compton: I would say it's up dramatically, because there's a higher interest in young people to be entrepreneurs and to have -- and it's so much less, so much cheaper to start a company than it was 20 years ago. You can put everything up on the Amazon cloud and have infinite scalability in your computing backend in 24 hours where it used to take engineers and years and millions of dollars to do that. Well, now that's not the case. So it's cheaper to do it, it's easier to do it, it's a bigger -- everybody understands how big the market is. The phrase that every company is a technology company now, whether it's FedEx or Safeway or a health care company -- that they have to be a good technology company, is true. And a lot of people want to sell into that transformation that's happening.
Host: Well, I'm sitting here thinking part of the reason why Stacey and I moved to the Bay Area with several friends to start Echo Church is because we really do believe that the things that happen here change the whole world. And for lack of better ways of saying it, in many instances, Silicon Valley is the epicenter of so much that happens globally. And it's just a good reminder for entrepreneurs, for church leaders, for business leaders, that this culture is shaping so much of what people are thinking all over the world. And it's not going to change.
Kevin Compton: It's not going to change. There's no reason there can't be others, but there's something here in the culture that there's a reason that the vast majority of the value created in the NASDAQ the last 20 years is in a 30 or 40 mile radius. If you just take Apple and Google and Facebook -- just take five or six of those companies that are all within a few miles of each other, and it's a big percent of the market cap of the NASDAQ. And there's a reason for that.
Host: Yeah. Kevin, I'm always challenged and inspired by your wisdom. And one of the things that I know about you and your journey spiritually, you've been significantly involved with churches, with nonprofits. About half of the people that listen to the podcast are involved in the church world. What would you say is the prime -- and this is probably a good question for us to wrap it up on, but what would you say is the primary thing that you would wish that church leaders would learn from Silicon Valley?
Kevin Compton: A couple things. One that their job is to not be another place for the employee to strive. They need to be a place where the employee or the congregant can come and be refueled, and refreshed. That they need to come in, not say, Wow, you guys are creating this, and I need you now to create this. No. I want you to come here and be refreshed. I want you to come here and be taught. I want you to come here and be grounded. I always tell people -- I've been asked this question or similar question many times, and I'm very thankful for my faith, about how my faith has helped in my journey. And I say, Well, it really, really helps in the really, really bad times, and it really, really helps in the really, really good times. Because it brings you back to center both times. And that's where we all need to spend a whole lot more time. And that's where our country needs to spend more time. Because the vast majority of people are centrists. But we allow ourselves to be pulled to extremes. And that's not good. And when things are really bad in my world, meaning that startup is failing, and people are having career crises, and all the things that happen, it's not as bad as it feels because my faith has not been challenged, my family has not been challenged. And when I feel like I've just invented the next great thing, I have to realize I didn't invent anything, I just wrote a check and encouraged them a few times. And it's recentering. And then I go and hear the stories in the Bible stories, and I hear the chance to help people in the world, and it's really, really, really important. And that's what I hope churches realize. That their job is not to try to replicate what we do every day, but to be a refuge for us.
Host: That's great. That's really good. Anything else that you would add?
Kevin Compton: That I'm thankful for young, entrepreneurial pastors like you who bring the word to the people. I grew up in an environment where I -- to be a member of the church, it was really focused on what you didn't do. We don't do this, we don't do that, we don't do this. And I've learned, with with like you, to watch -- it's really about what we do, not what we don't do. Are we going out and making a difference? And, you talked about companies out here making a difference -- well, you've made a difference in thousands of people's lives. And that matters.
Host: Well, Kevin, I'm grateful for you. I'm grateful for your wisdom, your investment, all that you do to invest in so many leaders, and for you pouring into our community today. This has been a great episode.
Kevin Compton: Bless you, Andy. Thank you. And thanks, everybody, for listening.
If you got this far and you liked this piece, please consider tapping the ❤️ above or sharing this letter! It helps me understand which types of letters you like best and helps me choose which ones to share in the future. Thank you!
Wrap-up
If you’ve got any thoughts, questions, or feedback, please drop me a line - I would love to chat! You can find me on twitter at @kevg1412 or my email at kevin@12mv2.com.
If you're a fan of business or technology in general, please check out some of my other projects!
Speedwell Research — Comprehensive research on great public companies including Constellation Software, Floor & Decor, Meta (Facebook) and interesting new frameworks like the Consumer’s Hierarchy of Preferences.
Cloud Valley — Beautifully written, in-depth biographies that explore the defining moments, investments, and life decisions of investing, business, and tech legends like Dan Loeb, Bob Iger, Steve Jurvetson, and Cyan Banister.
DJY Research — Comprehensive research on publicly-traded Asian companies like Alibaba, Tencent, Nintendo, Sea Limited (FREE SAMPLE), Coupang (FREE SAMPLE), and more.
Compilations — “An international treasure”.
Memos — A selection of some of my favorite investor memos.
Bookshelves — Collection of recommended booklists.