Letter #99: Michael Moritz and John Doerr (2008)
Partner at Sequoia Capital and Chairman of Kleiner Perkins | Double Keynote
Today’s letter is the transcript of a double keynote between Michael Moritz of Sequoia Capital and John Doerr of Kleiner Perkins in which they take turns asking each other questions. In it, they discuss John Doerr’s propensity for carrying electronic devices, their co-investment into Google, their personal and family backgrounds and upbringings, how they met their significant others, what they did before venture and how they got their starts in the industry, the magic of Silicon Valley, learning from legendary figures such as Andy Grove and Don Valentine, areas of growth, globalization, lessons for the younger generation of investors, taking a sabbatical and getting operating experience, Mitch Kapoor, Scott Cook, Marc Andreessen, Jeff Bezos, their anti-portfolios, Martha Stewart, and more!
John Doerr is the Chairman of Kleiner Perkins. His investments include: Alphabet (Google), Amazon, Compaq, Coursera, Doordash, Intuit, Netscape, Slack, Sun Microsystems, Symantec, Twitter, Uber, and Zynga. He started his career at Intel working with Andy Grove.
Michael Moritz is a Partner at Sequoia Capital. His investments include: Alphabet (Google), Instacart, Kayak, Klarna, LinkedIn, LinkExchange, PayPal, Stripe, Yahoo, and Zappos. He started his career as a journalist, and has written four books.
I hope you enjoy this conversation as much as I do!
Relevant Resources:
Letters
Compilations
Vinod Khosla Compilation (1190 pages)
Michael Moritz Compilation (642 pages)
Don Valentine Compilation (347 pages)
Biographies
Rock of Ages: Part One (Arthur Rock)
The Transcript
Introduction: Our first keynote today is a combined keynote. And we asked two of the most successful venture capitalists in the history of mankind. Between them they have returned mega billions to investors, two fierce competitors, who in the past have teamed up to help build one of the most successful venture-backed companies in history, but have also fought one another on the proverbial Sand Hill Road battlefield. They come here today in front of you all with a no holds barred Q&A. It is my honor to invite up here The Wizard of Wales, Mike Moritz, and the man who put the hyper in hyperbole, John Doerr, my partner.
John Doerr: I was going to see how Mike would do on his own.
Mike Moritz: Well, John has packed the audience here. He has three of his partners in the front row.
John Doerr: Five.
Mike Moritz: Five.
John Doerr: In fact, I'd like to name them.
Mike Moritz: Hopelessly outnumbered.
John Doerr: May I name them?
Mike Moritz: Please.
John Doerr: So I'm very proud. I've been a partner of Brook Byers' for the longest time. Gosh, 30 years or so? Juliet Flint, John Denniston, Dana Mead's here. Wen Hsieh's here. All the rest are in the Middle East or Asia or...
Mike Moritz: Good. There's nobody on Sand Hill Road working. I'm at least a [hitter]. So I got one question, John. As you know, we emailed everybody to get solicitations of questions. And the first burning question that came in over the ether was, you have to ask John this: How many communication devices has he brought with him today?
John Doerr: Honestly? Yeah, so I got a couple of computers, the Lenovo and the Mac Air are terrific. Three phones, including an iPhone. A voice recorder...
Mike Moritz: And that's just in your left hand pocket.
John Doerr: And that'd be it. That'd be it. That'd be it.
Mike Moritz: So… do I get to go first? Okay…
John Doerr: Can I ask you a question?
Mike Moritz: Please.
John Doerr: Yeah. So I haven't prepped Mike on this question. He really, he and I've discussed this many times before. And it's a subject I should save a little bit of contention. But I think we're in front of everybody on our industry now. And we can be honest. I'm really interested in what it was that you thought when I called and referred Google to you. Fess up. Come on now.
Mike Moritz: He's been working on that one line for a very long time. I said, John, can you spell it?
John Doerr: I am grateful you joined that investment. Next.
Mike Moritz: So, I've been burning to ask you this for a very long time. I grew up in Wales. Nobody has Roman numerals after their name in Wales. That's largely because most of them all have the same last name. You have a Roman numeral three, which leads me to believe that there were two other John Doerrs at least, that came before you. Tell us about them.
John Doerr: There were, there were, there still are. There's my dad, who's my hero. He lives in St. Louis, Missouri. He's an engineer and a sales guy. Does that sound familiar? And then my grandfather, Louis Doerr the First was a mechanical engineer and an entrepreneur. Started a machine shop, invented a tugboat drive mechanism, so. All my brothers and sisters are in St. Louis and I've dropped that Third thing because it feels a little pretentious, but I'm really proud of my dad and my granddad.
Mike Moritz: So now we know what the L stands for.
John Doerr: Yeah, for Louis. Exactly right.
Mike Moritz: Good.
John Doerr: So, Mike, here's what I'm really interested in. I've got some professional questions, I've got some personal questions, and then I have some partnership questions. So these are the three P's. And the first one I want to go to is the partnership, because I've read in the press, Sequoia is hiring some money managers and I've seen you open funds all around the world. And I wonder, is that true? What's the strategy here for the partnership?
Mike Moritz: Well, Becky Buckman from the Wall Street Journal is the person, I think she's in the audience today. She seems to know more than the rest of the world knows. And we're keeping our lips very tightly sealed on those things. But the hires that were, you read about and other people read about in the in the Journal the other day are true. But it's far too early for us to want to elaborate, even in front of a friendly audience.
John Doerr: And is there more press here than Becky? Yes. All right. Thank you for that information. Personal question, what's the deal with these socks? These are argyle socks.
Mike Moritz: You need some spice in life. I just decided I, in the future. And it's rare these days, obviously, that anyone wears ties. So I just in the future, start wearing my ties around my feet. It was way easier that way. So now, let me turn the tables a little bit on you, John. So I think I, you won't remember this. But I have a very vivid memory of this, maybe now almost 30 years ago. I had just joined Time Magazine in San Francisco. And Brook'll remember this as well. I had done a little story on Kleiner Perkins. And coming out of, I was going over, I think, to see Brook or Tom Perkins to interview them. And then I saw a man in a hurry, rushing out of the Embarcadero building because your office used to be up in the Embarcadero building with a huge pile of magazines. I've never never seen anyone carry quite so many magazines under his hand. And that was John Doerr rushing away. So, but I wanted to go back a little further than that, which was to ask you, What took you to Intel in the first place? I've never...
John Doerr: My girlfriend had dumped me and, Helen was her name, and she had gotten a summer job at Intel...
Mike Moritz: A woman of obviously great wisdom.
John Doerr: Plus, I was a royal pain in the ass at the time and frantic about trying to put together this relationship. And so she came to Silicon Valley. She didn't tell me where she was going to work. I figured out that she was an Intel. So I had no job, I'd applied to work for all the venture capital firms in 1974. Only one company went public that year, I think was Playboy. So venture capitalists weren't hiring. But I figured out she was an Intel and I badgered my way ultimately into an appointment, a job interview with Bill Davidow of our industry. And he really wanted to get rid of me. So he passed me down to Jim Lally, who passed me down to [Uris Brempolus] who passed me down to Sam [Sattler]. At the end of that, I got a summer job writing benchmarks for the Intel 8-bit microcomputers. And the most amazing thing happened. They put me in an office, catty corner across the aisle from my girlfriend who wasn't speaking to me. So this is a really terrific, ruckety, summer.
Mike Moritz: In fact, you couldn't even email her.
John Doerr: I couldn't email her and she couldn't avoid me. And by the end of the summer, we put it all back together.
Mike Moritz: And it all ended happily ever after, right? Because you ended up marrying her.
John Doerr: Well, it's looking good so far. So Mike, how about your family? How did you meet your lovely wife?
Mike Moritz: I met Harriet in San Francisco. She was, she had come out from the East Coast, finishing writing a book and that was more than, almost 25 years ago now. And...
John Doerr: Both authors, both writers.
Mike Moritz: Yeah.
John Doerr: And did you meet in a library, or a bar, or...?
Mike Moritz: We met over a hot typewriter. A mutual friend introduced us, but...
John Doerr: Who's that? Who's that mutual friend?
Mike Moritz: It was a lady who worked at the New York Times.
John Doerr: And do you remember what you first said to her?
Mike Moritz: I'm late. Some things never change.
John Doerr: And she said?
Mike Moritz: I said You're right. You're late. So after you got hired at Intel, John, I think people are interested in what it was like working at Intel because I think Intel has just, watching you in action all around the valley for a long time, Intel has really colored you, in many ways. Tell everybody a little bit about the enduring lessons that you took away from those six or seven or eight years, it might have been while you were working at Intel.
John Doerr: Oh, gosh, that's a good question. I guess a lesson I learned from Intel is that culture really matters. And, to my amazement, I was a summer student there part time when I first started. And this guy, Andy Grove, who Bill Davidow told me was the guy really running the business, it wasn't Noyce or Moore, and that was true, put on this course called IOPEC for Intel Organization, Philosophy and Economics. And he said, we've surveyed the Intel culture and this is who you are, who we are. So let's be this way. And he said, we're aggressive introverts. We know how to confront problems without confronting the people. If you don't measure things, they don't matter. Everybody will write down objectives and key results every month, every quarter. We'll check those off. We want to be a risk taking kind of place. Growth really, really matters. Winning really, really matters. Integrity is a binary state. You don't ever cross over the line. But you fight really hard to win. And the other lesson that I got is that when places grow a lot, that makes a lot of opportunity, because who would have let uh, you know, maybe I was a little more than a teenager, but a kid, go into that company and train the Salesforce or develop benchmarks. So I admired the leaders, I admired the company. I think for many years, it's been one of the best managed technology companies.
Mike Moritz: And when you, before you joined Kleiner Perkins, what was your last job at Intel? What were you doing?
John Doerr: At Intel, I was the marketing manager for a failed line of microprocessors called the Intel 8800, which was 16 to 32 bits out of self dispatching multiple processor processors, we, we had a slogan for this line of processors that said, If you've got the time, we've got the machine. Fortunately, after I left, they were able to sell this to the great Siemens corporation. But Mike, I want to go into your background. Now you joined the professional world as a journalist for Time Magazine. And you interviewed Steve Jobs, wrote a famous book about Steve, and I believe your entry to Sequoia was an interview that you did with Don Valentine. Is all that true or not?
Mike Moritz: It is... it's roughly true. It's not quite as true today as it was 30 years ago. But if you had a business card that said Time Magazine on it, you could pretty much get in and talk to anybody, even Brook Byers, anybody in the world in 1978, and the people behind the desk inevitably, I always used to be amused by this, I'd be interviewing some bigwig in a company scribbling in my notebook and the telephone and go and the bigwigs would pick up the phone and he'd say, I can't talk to you right now. I'm talking to Time Magazine. And it was at that point that I realized I'd better get out of journalism. And...
John Doerr: Richard?
Mike Moritz: But that's how I first met Don and actually that was how I first met Tom Perkins as well. And Arthur Rock who wouldn't talk to me. And... Arthur Rock, and people probably don't know this. Arthur Rock along with Mussolini and Hitler is one of the three people to have appeared on the cover of Time magazine who never granted the editors of Time magazine an interview. And they got their revenge by putting him on the cover and dressing him up in a jacket. This was an artist's rendition, a jacket, just, covered in $100 bills.
John Doerr: In other words, don't mess with the people with the ink. It was in 1974 that, among others, I tried to interview with Arthur Rock. He refused to meet with me, just as he did you. So we have that in common. But one of his partners, God bless Dick Kramlich, he took the meeting. And he said, you know, John, I think you ought to get a real job. Forget about looking for venture capital. We have this tiny little chip company down in Santa Clara, California by the name of Intel. And I think you should go get a job there. And I'm forever grateful to Dick Kramlich for that.
Mike Moritz: Tell us another part of it. I've read about this again, I've never talked to you about it. Tell us about visiting the personal computer show. I think it was in 1979. Towing Andy Grove in your wake. Do recall...?
John Doerr: Yes, I do. I do recall that story. I've been with Regis McKenna lobbying that Intel ought to build a personal computer. Very much like the Compaq computer, you know, their luggable suitcase, well you guys don't know it, you're too young, with a screen. So, I wasn't getting very far. So I got Andy to agree to come up to this personal computer show with me. It was called the first West Coast PC Faire. F-A-I-R-E. There was a guy by the name of Jim Warren who was rollerskating around the place. You walked right into the first booth and there was the Apple booth with the Apple II and Don Bryson showing VisiCalc, the first spreadsheet. It was amazing. This thing would recalculate in a moment. So I took Grove from booth to booth to booth. Not for very long. He was quite an impatient man. And by the time we got to about the third booth, he said, Doerr, are you crazy? These people are a bunch of hobbyists. And he walked out. You know, it's these little plastic bags. And so for that, Intel's not in the personal computer industry.
Mike Moritz: You saved them from it.
John Doerr: I don't know. Well, perhaps. So, Mike, can we go to the professional as opposed to the partnership? What is your view of the venture capital industry today and its prospects compared to a decade ago? And you have to be really credible and honest here. I don't want to hear something as, Well, it's better than it's ever been before. Give us some puts and takes, some pros and cons.
Mike Moritz: Yeah. Well, when people, look, obviously, both Kleiner Perkins and Sequoia Capital have ventured outside the United States. I mean, we've all traveled to the same places, observed the same trends, had the great good fortune of being able to in part, look at the road ahead through the illumination of the lights of the companies in which we're in investors. So it's obvious what's happening to the world around us. But I think there are a lot of people who are prepared to write off Silicon Valley prematurely. I think it, Silicon Valley's, I think certainly in our professional lifetimes, is certainly still going to be a wonderful place to make investments. But the fact of the matter is that if you want to be an investor in the world's great technology companies of tomorrow, increasingly, the market share of the great technology companies that's contributed by US companies is going to diminish. Is it going to go to, I don't know, 70% or 50%, in our lifetimes? Probably not. But I think we also wanted to be sure that certainly at Sequoia, we didn't make the mistake that besets a lot of companies in which we invest or we have experienced with, which is to assume that tomorrow is going to be like yesterday. And obviously there are risks associated with making venture investments outside of Silicon Valley. But we thought we couldn't ignore the trends, the trends that were around us. But you know, every time people whine about there's too much money in Silicon Valley, or it's too competitive, or there are all these people doing small investments, or the big guys are coming in. Certainly, since I've been in the business in 1986, those sorts of laments have been pretty constant.
John Doerr: Through it all, yeah.
Mike Moritz: That's life. And we're still pretty darned upbeat, just I suspect, as you are, about all the opportunities that are on our doorstep. But I think this is also a business. Everybody who's a practitioner of the venture capital business knows and who's an investor in the venture capital business, like all other businesses, most of the returns accrue to a small group of firms. And I think nothing's gonna change.
John Doerr: What's the best thing about being at Sequoia and being in the venture capital business for you?
Mike Moritz: I think there are two aspects to it, one of which is having to stay perpetually young at heart, because as soon as you get too crusty or leathery or cynical, you don't believe it's possible anymore, with somebody who's 21 years old and 22 years old. And I think the other aspect, given what we're doing is, it sure beats you know, sitting at home in front of the mirror watching your hair fall out. But I think it's the stimulation, and also the fact that we've set ourselves some new challenges as well, which are real challenges. And we've got to see whether or not we can meet them. But it puts another set of goals in front of all of us.
John Doerr: You've had some storied senior partners. Don Valentine, Pierre Lamond. I've known both of them, many here have also. What do you emulate from them and not emulate? This goes to lessons learned for Mike Moritz?
Mike Moritz: I think it's a lot like companies. I remember writing, when I first wrote about Apple, and looking at the management team at Apple and there was a person from Hewlett Packard and there was a person from Intel and there was a person from National Semiconductor. And all of those, and probably some other companies and I've forgotten their names. And there were aspects of each of those companies that the management, that Steve and Mike Markkula, who was running Apple at the beginning, absorbed and brought into their company. But Apple became their own company with its own very distinctive hallmark. And I think, that's how I think about where we make investments. That's how I've always thought about Don and Pierre and other people that I've had, other partners at Sequoia Capital. You make an investment, you learn something from it, even...
John Doerr: But is there something specific about Don and Pierre that you really like or don't like?
Mike Moritz: Well, you pick the aspects that you admire...
John Doerr: And what are those?
Mike Moritz: Pierre is a ferocious competitor and Don is an incredible salesman. And there are a few, which sort of reminds me of one question I wanted to ask you as well.
John Doerr: But you haven't finished answering my question. Nice try. Oh, you are finished. So let's go here.
Mike Moritz: And, and, well, let me think...
John Doerr: You can think for a while I ask my next question
Mike Moritz: No, let me... So I think Don has got very clear communication skills. People who have been on the receiving end of some of those particular, deployment of those skills might not have always appreciated it. But clarity of communication, and message, helps tremendously. And I think, I've always admired, have never pretended to emulate or even being able to mimic, you know, Pierre's natural affinity, given his background, with people, engineers and programmers. And I've always admired that.
John Doerr: If you were starting a new venture capital fund, right now in this environment, how would you do it? How would you compete? We got hundreds, hundreds and hundreds of venture capital firms out here.
Mike Moritz: I probably would board a vessel at the San Francisco pier belonging to the Neptune Society and ask for a burial at sea.
John Doerr: Oh, really? No, you're in that position now. That's a funny, but not acceptable answer.
Mike Moritz: I'd probably go to a market where there isn't a lot of, I probably wouldn't do it in Silicon Valley. I'd probably try and pick a market elsewhere...
John Doerr: Go to a new market.
Mike Moritz: ... which is off the beaten track, probably outside of North America and try and earn my stripes there in a in a quiet fashion and do it with people who really understand the topography and domain of that particular market or that particular market niche. So let me ask you this, John. Having been on the receiving end, unfortunately, of your, and I'm not pandering or currying favor here, of your selling skills, Where have you picked up your selling skills? And I don't know if, all of you have seen John in full action, whether live or on video I suspect, and this is one of the more remarkable salespeople you will ever meet. Where did you pick them all up? And when did you start to really excel at it?
John Doerr: Well, I had a job at Intel to sell. And if I didn't sell, I would get fired. So I went to Dale Carnegie's School of Selling. Very nervous. I had a million dollar quota. And I decided the best way to sell is to be very understated. To try really hard. Those who know me know that's not true. But actually, if you solve a problem, you get an order. So for Intel, it was a very consultative kind of selling, right? If you helped them design a microprocessor into a solution, and there was genuineness and warmth, lo and behold, I walked out of my first sales call, this is 1978, with an order for $100,000. I was just flabbergasted. How did that happen? That's where I learned.
Mike Moritz: Now did they send you to Dale Carnegie? Are you allowed to go
John Doerr: No. No. I did that on my nickel. I was really afraid I wouldn't make it.
Mike Moritz: And was that usefully? The Dale Carnegie...
John Doerr: Yeah. One of the things... Certainly a lesson that I remember is when you've got the order, shut up. So where did you acquire the skills to be a great venture investor? How'd you learn that?
Mike Moritz: I, well, I'm always still a little hesitant about that. Because, as I suspect you are and everybody else who's experienced some successful investments. Because as soon as you think you know what you're doing, you get a rude come uppance, and you fall on your backside and have to pick yourself up off the mat again. And so I'm always amazed when somebody thinks I actually...
John Doerr: … are a successful venture investor?
Mike Moritz: Or know...
John Doerr: Who here thinks Mike's a successful venture investor? About 10% of the audience.
Mike Moritz: Yeah, right. There are 90% of the very wise [inaudible].
John Doerr: So what lessons do you impart to younger partners at Sequoia? If they come and say, Mike, at your knee, how do you do it? What should I do to develop to be better? In the ruthless, fierce, backstabbing environment of Sequoia Capital.
Mike Moritz: Of Sequoia Capital. That's right. Where there is... I...
John Doerr: Take no prisoners, blood on the floor.
Mike Moritz: Exactly. Blood dripping down the walls. Of course, there's no wallpaper on there either.
John Doerr: We'll get to that.
Mike Moritz: I think, I think watching and listening are two virtues that, there are a lot of opinions in the venture capital business, but watching and listening, and occasionally express sentiments often serve you extremely well in this business. Because you actually make very, very few decisions. And you've got to make sure that those few decisions, let's assume that you get deeply involved with one or two investments a year, you're in the business 15 years. You have 30 major decisions that you're gonna make. If you get half of them, right, you're okay. But if the if the balance goes the other way, you'll look back at a lifetime where you have, where you have erred. And I think, just a ruthless evisceration of the facts, and setting opinion by the door and leaving it outside the room has on the whole served us fairly well. Just looking at the facts, casting aside prejudice, casting aside opinion. Because I think, as you know full well, received opinion, the heritage of the past, all of that stuff is going to preclude you from making an investment in a new area that may be out of fashion or hasn't hit other people's radar screen yet, or would seem fairly preposterous to most people.
John Doerr: I'm reminded as Mike talks, this is just an aside, it's not a question, that I've been on boards with Mike and he's such a smart guy. I mean, the way that he uses language, and he doesn't talk a lot either. I'm getting a lot out of him in front of all of us, but in a board meeting he says relatively few things and people really listen. And I admire that you can offer advice in the form of stories, storytelling, as opposed to you should do this, you should do that, you should do that. I certainly and I think many of us here wish we enjoyed your intellect and command of the language. Okay, stop pandering.
Mike Moritz: Yes, exactly. I got a question for you John, which is a question again, one of these mail-in questions. How come the firm isn't called Kleiner Perkins Caufield Byers and Doerr?
John Doerr: I think it's not a very good idea. I like being called Kleiner Perkins, Caufield and Byers. Although I will tell you that one time Brooke went away on sabbatical, right Brook? 30 days you know, Brook is so fastidious, and while he left we actually did take his name out of the door, changed the name on the door and the business card and moved his office from the corner to a small carrol and... that was a very fun day at Kleiner Perkins Caulfield and Doerr.
Mike Moritz: So when when did you join Kleiner, which year?
John Doerr: 1980.
Mike Moritz: And how was the firm run when you joined?
John Doerr: Well, Perkins was... Eugene Kleiner had retired. Perkins was a very strong-willed partner. But he wasn't in charge. It was very clear that both Brooke and Frank were able to go toe to toe with Tom. And I don't remember exactly, but I imagine I was pretty intimidated by him. And also probably pretty pushy. So how was it run? We got around the table on Mondays and we made investment decisions. Perkins though, was remarkable. I remember in the, I think the first couple of months I was there, Genentech went public, you know, fireworks in San Francisco. That was the start of the whole recombinant DNA biotech industry. And then I noticed that Tom, in his spare time, got on the phone with people like Pitch Johnson and others, spare time, and raised about a $20 million partnership to buy the Bugatti automobile collection from a Las Vegas hotel. And, you know, I saw other venture firms try to raise money to invest in ventures, and they couldn't do it. So, Perkins certainly had a magic touch.
Mike Moritz: And what was the first investment that you got deeply involved with when you're at Kleiner?
John Doerr: Well, one of them, I think, was a company called Seek, which was some refugees from Intel, who left to make e-squared memory devices, and I remember being terrified, Frank Caufield went on the board. But Intel decided to sue me, a recent Intel refugee, and our partnership, for theft of trade secrets, you know, the usual sort of thing. And I thought I'd be fired or they'd win or something like that. And Frank Caufield stood up right to the plate and said, we're gonna counter sue them for defamation. And, you know, they would have lost, so we settled.
Mike Moritz: And then you became a director at Seek and...
John Doerr: Well, I think I was a director of Seek at the time, yeah. Gordy [Kat].
Mike Moritz: Now some years later, I've always wondered about this, after Kleiner, and I think you'd been a director of Sun Microsystems for some years by then. Someday, you must have gotten up and said, you want to go and work at Sun Microsystems. And I don't know if everybody remembers this, but you went, you took a year off or something and you went to work.
John Doerr: I took a sabbatical. One thing is when I joined Kleiner, I actually didn't want to be in venture capital. I really wanted to start a company with friends like my dad did. So a condition of employment was they promised they'd back me at a startup. And there's a reason for me telling you these two stories, if you'll humor me a bit more. We started a company called Silicon Compilers with Carver Mead down in Caltech. And I tried to be the CEO of it for nine months, for a little over a year. And I learned a lot about what I wasn't able to do and we ultimately got a better CEO than me to run the business. But I've always loved startups and felt honestly, inadequate to the task of advising entrepreneurs. That particularly got to be the case, as you point out a few years later, when some of the businesses that I'd invested in, our partnership had invested in, let me correct that, Compaq Computer, that they'd got to be really big businesses. And here was this 30 year old kid on the board of a, you know, multiple hundred million dollar company, and how could I advise Rod Canyon or some of the people, or Jim Barksdale at Netscape. I clearly couldn't. So I asked to take a sabbatical. And I went to work at Sun, because I wanted to try, to manage, try managing a large operation. They had about 4000 people in the desktop division, and suddenly, I found myself managing through managers and managers. And I didn't know the names of all the people in the group. Totally formed from my experience. I really loved it. I almost didn't come back to Kleiner Perkins. And...
Mike Moritz: Now, is that something that you would suggest for younger partners today at Kleiner Perkins or elsewhere around the venture business that they go do?
John Doerr: I don't know about around the... I guess I'd suggest it around the venture business. And I think it's super important at Kleiner Perkins. So, our partners generally have some entrepreneurial or operating experience, and one of my partners I'm really proud of Aileen Lee is on the board of a great solar company, Miasole, and at the same time, is running one of our investments called Danoo. Now, time's going to tell how that works out. But I think it's worth bearing in mind that the vet, I heard Dave Marquardt say this first, I think the venture capital business is a service business. We're trying to serve entrepreneurs. We keep that in mind. And the really successful players in a service industry, look a lot like their entrepreneurs. Not always, but usually. So McKinsey looks like the CEOs, you know what I'm saying. If our goal is to serve entrepreneurs, we're a lot better off if we've been in their shoes, when things go crazy, or are disastrous, we don't immediately panic and we can help them along the way. So I think that's, that's a good thing.
Mike Moritz: Let me switch topics. There are few people around anywhere I think who've had the good fortune of being very close to a remarkable set of individuals in different businesses over three or four different decades like you. Give us your first impressions, if you can remember back when of a bunch of different people, and I'll just throw some names that you, perhaps starting way back when at, well, it's not really at the beginning of time, but Lotus Development was a Kleiner Perkins company, an early personal computer software investment. Mitch Kapoor. Where did you first meet him? First impressions?
John Doerr: I read them in the parking lot of now torn down Hyatt Regency. Ricky's Ricky's Hyatt in Palo Alto. He had on a Hawaiian T-shirt, and looked pretty much like he was, which is a devotee of transcendental meditation who had worked as a disc jockey. That was Mitch.
Mike Moritz: Right. The wonderful founder of…
John Doerr: And he's a good friend to this day.
Mike Moritz: And I think the next gentleman is also a good friend to this day of yours. The founder of Intuit, Scott Cook.
John Doerr: Scott. Scott was a consultant and a graduate of Procter and Gamble, a superb marketeer. And he was actually a classmate of mine at business school and somehow when he did the first financing of Intuit, he didn't come to see us, but we competed for a follow on round of financing and what I remember about Scott is still Scott today. If you don't know him, he is a super smart guy. Great board member. He was on the board of Amazon, he was on the board of eBay. And very, very customer oriented, great father, also a great dad.
Mike Moritz: Yeah. Marc Andreessen.
John Doerr: Marc Andreessen. He's a big, hulking, very successful entrepreneur who loves burgers at the Creamery in Palo Alto. And I'll not forget soon, how smart he is, how fast he talks, and how he recruited a half dozen other rebels from the University of Illinois to turn the world upside down with this point and click browser, excuse me for reminiscing for a moment, but do you realize that 14 years ago, there was no web browser? This whole thing that we take for granted, click on the picture and go there is just a little over a decade ago. It's really created a lot of opportunity for all of us.
Mike Moritz: And when did you first encounter Jeff Bezos?
John Doerr: In this, he bound down from the second story of a loft, opposite the free needle clinic in a seedy part of Seattle, with his trademark hawk and laugh, and I knew that very minute before we'd looked at the business or negotiated, which was really hard, that I wanted to be in trouble with him. He was a special entrepreneur.
Mike Moritz: Had you been an Amazon customer before you met Jeff, or?
John Doerr: Yeah, but you know, what's more telling than that is when you went back in the Amazon shipping area, the books were lined up so you could see what people were buying. And there was a funny thing about it. It was the early adopters. So invariably, there was a book about a programming language such as Java, and in the same order was a book about the joy of sex. So these were clearly probably male nerds who had no social or sex life trying to get help from an online service. And I do have another piece of advice that correlates more with any other success factor that I've seen the world's greatest internet entrepreneurs. And if you look at Bezos, or you look at Andreesen, or you look at Jerry Yang and David Filo, or you look at the founders of Google, or you look at, name another great internet company. It's even true of the Sun founders. They all seem to be white, male, nerds, who've dropped out of Harvard or Stanford, and they have absolutely no social life. So when I see that pattern coming in, which was true of Google, it was very easy to decide we would invest.
Mike Moritz: I think they call that patten recognition. Here's a different question for you. Those are some of the great entrepreneurs, obviously, that America has produced over the last quarter of a century. But what about the fish that got away? The company or companies that you rue the fact that Kleiner Perkins passed on the opportunity, having had an opportunity to
John Doerr: So one that we could have invested in that we didn't?
Mike Moritz: Yes.
John Doerr: We could have invested in VMware. Vinod proposed that we do that many times. And the valuation was always too high. $60 million, $100 million, pre money and Vinod, what are you thinking? But, that's too bad. Should have done that. Should have done that. It's hard to invest with those higher valuations. So, Mike, if you could wave a wand and change anything about the industry that we're in, the way we are, the way we conduct our business, the way the world works for us, what would that be?
Mike Moritz: I think there's a lot of hot air and arrogance in the business that we would all be better off without. A lot of useless pontificating in front of entrepreneurs who are devoting their lives and working a lot harder than we are on their particular enterprises. And not enough focus on making sure that that entrepreneur feels that and justifiably feels and believes 10 years after he's started working with Kleiner Perkins, or started working with Sequoia Capital, or started working with us both. But that was one of the best business decisions of his or her life. I don't think people think like that.
John Doerr: I really like the way you say that. I feel a similar way, but it's very eloquent. And if I may, without your asking me, add something that we're doing at Kleiner, and might server industry well or not, is we're really trying to watch our language. So we don't at Kleiner Perkins refer to new ventures as deals. If I could do any single thing, I'd get our industry to stop using the word deal. Because if you're an entrepreneur, do you want to walk into somebody's venture capital shop and be known as a deal?
Mike Moritz: Well, I think there's one worse word than that. We have a similar sort of ethos and edit. But there's one word even lower down the vocabulary that tends to get used. And can you imagine how demeaning it is to an entrepreneur if you hear the business that you've dreamed about for a couple of years, and you've labored hard over being called a project?
John Doerr: For example. These are the hopes and dreams of entrepreneurs. And so if, you know, we all could stop doing that, I think...
Mike Moritz: Let me ask you a different thing, which was another mail-in question, which is everyone's very curious about the compromising photographs that Al Gore possesses of John Doerr.
John Doerr: I'm a huge Al Gore fan, I really wish he was president of the United States. I think it was a real shame that we didn't get those few hundred votes. But that's a quite political and maybe controversial statement here. When you get to know the man and I hope that you do, he's upfront and close, very warm, very personable, very smart, really good partner, he'll do anything you ask him to do, almost. And you know, he funded, he founded this investment management firm with David Blood to invest in large cap stocks. And they were going to call the thing Blood and Gore. I was hoping that when we formed our alliance, it could be Blood, Gore and Doerr. But it's not to be...
Mike Moritz: Well, it could be Blood, Gore, and Guts. So let me ask you this. I see the clock is winding down here. If you had to guess, maybe ask the audience this question about how many investments Kleiner Perkins and Sequoia Capital have made together? Obviously, everybody associates Google. Thankfully, with both of our phones...
John Doerr: Praise the Lord, it was a great referral. He's a gentleman.
Mike Moritz: Any guesses?
John Doerr: Let's get a show of hands. How many think that Kleiner and Sequoia have invested, through the history of the firms, in fewer than 20 ventures? There's 1, 2, 3, 4, 5? Oh my god, we're getting to 10, 12, looks like 12%? How about...
Mike Moritz: 20 to 40?
John Doerr: 20 to 40. How many people think that number is 20 to 40? It's another 12%.
Mike Moritz: There are a lot of non voters here. It's like Indiana last night. What about 50 or over? Ah. One. So it actually is right on fifty. And I was saying to John just before we started here, there are only six letters of the alphabet that we haven't used up yet as the starting letter of a company for, in which we should invest. So I think you and I, John, we need to find a company that begins, and if anybody has a friend who's got a company with one of these letters, could they refer them and we'll make the investment together in this company. We need a company beginning with the letter H, J, Q, U, X, Y, or Z. And that will fill out the alphabet for Kleiner Perkins and Sequoia Capital together.
John Doerr: Hey Mike, I have a final question for you. Maybe you'd ask it for me, so I know what's coming. What is it that keeps Mike Moritz going now? You've made enough money to send the kids to college, so...
Mike Moritz: Yup. Although we were recently looking at an investment in a company that sold used textbooks that I thought would be quite interesting now that I have both boys at school. It's amusing and it's fun and it's diverting and I can't imagine, maybe it's a tribute to the lack of imagination, I can't imagine anything that is more challenging, more testing, more nerve racking, that I want to do. What about you?
John Doerr: I think for me, it's informed by our priorities, which Kevin Compton wrote on a little yellow sticky outside his office. And the first priority everybody, at Kleiner shares this, is family. So we found a way to work family into our venture business. If you got to go home for something, you just do it. But the second, and the one often overlooked is partners. And so I feel, I'm sure you feel similarly. But I want to say I think it's a really great indulgence that I'm one of the custodians of this good reputation, fine reputation, that Eugene and Tom built. And I get to work with partners, help them, they certainly help me, they've kept me out of jail.
Mike Moritz: Tell us about that.
John Doerr: I will. It has to do with Martha Stewart. Maybe time will run out if I keep going. But it's an indulgence to work with these partners. They're diverse, they're smart, they're great. And what we're trying to do is have Kleiner Perkins be more than an episodic collection of some talented partners, but be something that can be, when the day comes that I'm doing something else, that they're...
Mike Moritz: Is that going to be soon? I hope.
John Doerr: I don't have any present plans—I don't think so.
Mike Moritz: Ted, what do you want to do next? Where's Ted?
Ted Schlein: You got time for Q&A?
John Doerr: We'll take, how about if we take three, it's up to you, but let's do three questions.
Mike Moritz: You're the chairman here—
John Doerr: He's the chairman. He's in charge.
Ted Schlein: Three questions from the audience.
John Doerr: Show of hands, please. Who wants a question? For Mr. Moritz.
Audience Question: I'd like to ask John Doerr, what he would say to Bill [Lerach].
John Doerr: I'd say he's an economic terrorist, and he got his just rewards.
Mike Moritz: And he wasn't even in room 871.
Audience Question: So question for you related to the DNA you're looking for in CEOs. You, being involved with a number of your companies, I've seen down to 21 years old, and then some very more senior statesman, just want to get an understanding of what you're looking for when you're making an investment or replacing a CEO.
John Doerr: Mike, over to you.
Mike Moritz: Well, John deserves all the credit for identifying and recruiting Eric Schmidt to Google. And I think Eric has the virtues of, particularly in these testosterone-charged companies that John was alluding to during the conversation here. I think it's wonderful to be able to find somebody like Eric or Dan Warmenhoven at Network Appliance or John Morgridge, who was the first CEO at Cisco Systems, who doesn't have a need to be in the limelight, understands the virtues of an incredible gifts and talents and passions of the founders. And is a calming, level influence. Who doesn't wear his emotion or her emotion on his or her sleeves. Those are the virtues that we certainly look for. We're looking for people who can make the founders even better than they were at the beginning.
John Doerr: One more? Last question.
Audience Question: Would you guys have fewer Yahoo? Would you guys have strategically moved to Microsoft?
John Doerr: Mike is an investor in both Yahoo and Google. So I think he's in a much better position than I am to offer any point of view on that. I defer to Mike.
Mike Moritz: And I'm also a close friend of Jerry's and what I tell Jerry will be between the two of us. So I'd prefer, obviously, not to answer that question. Sorry.
John Doerr: Okay, well, listen, on that happy note, I'd like to thank everybody for all you do every day to make our industry a great service industry and leadership at the NVCA. And I know for all the partners at Kleiner and at Sequoia, I can say we look forward to working with you. Let's help entrepreneurs build some great companies. Thank you.
Wrap-up
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