By a reader of my blogs I was recently sent, and subsequently “flew through” the presentation by Mary Meeker, a partner at renowned Venture Capital firm Kleiner Perkins Caufield & Byers, from her Internet Trends viewpoints at the recent Web 2.0 Summit.
I do not visit startup and technology conferences because they harbor and promote a herd mentality that is the antithesis to finding the outliers of innovation and thus regressive in producing viable investment returns to Limited Partners in Venture. And protecting Limited Partner interests in Venture is my business.
But the hiring and role of Meeker at KPCB is the water that overflows the bucket as to how such a venerable Venture Capital firm is slipping down the slippery slope of start-up commoditization and dragging with it the subpriming of the Venture asset class.
Here is why:
- Trends are the antithesis of viable start-up strategies, the minute something is “discovered” as a trend its opportunity is well gone.
- Trends are (downstream) statistics, and with statistics, anything (you are biased to) can be proven.
- Trends are hindsight, while the most differentiated asset of a Venture Capital firm is unique foresight.
- Proximity to hindsight does not yield more disruptive foresight.
So, while the background and skills of Mary may have been well suited to address the needs of companies, investors and the public to drive the scale of companies after they crossed the chasm, they have no decisive place in the discovery and identification of those that are before. Private Equity skills are diametrically opposite to Venture Capital skills, just like hindsight and foresight are.
- Everybody wants to be an entrepreneur, and those who use these conferences as their guiding principles by definition are not.
- Institutional Investors struggle to yield returns from Venture, gobble up trusted “fast-food hindsight” to feed the hunger for foresight and become even more unhealthy.
- Venture Capital firms with the ability to raise funds, without verifiable merit can make hungry wannabes (on either side of the innovation marketplace) dance their dance.
- Vinod Khosla left the firm a few years back, stating he wanted to go back to real Venture investing and raising Billions in the process.
- Ray Lane switched from digital focus to green tech, to now more focused on what I believe is his core strength: drive operational excellence (at HP).
- KPCB raised an iFund, and sFund uninformed Limited Partners cannot possibly say no to, allowing for the usual post-close re-interpretation to hide their flawed principles.
- KPCB wrote USA Inc. telling the government how to run the country while the government is trying to arbitrage start-ups (Startup America is a bad idea). Both should stick to their knitting.
- KPCB as perhaps the leading Venture Capital firm, has provided no visible leadership to Limited Partners to fix the problems with Venture on its turf. Limited Partners are still struggling with no viable correction plan for Venture from VCs. Hence further departure and lack of support for groundbreaking innovation are imminent.
- KPCB, as a Venture Capital firm put dramatic emphasis on green-tech which I predicted correctly then (in 2008), would never yield Venture style and vintage returns (unless you change the definition of Venture to fit your needs).
Large Venture Capital firms have the investment networks (with stacked or parallel funds) to under the darkness of in-transparency, smooth out investor returns and stay in business for a long time. KPCB hiring people like Colin Powell and Al Gore will make Limited Partners feel warm and fuzzy inside, and stop many from asking the fundamental questions.
I would love to see how KPCB’s fundraises and returns in Venture Capital stack up with the real benchmark in innovation; the pace of technology adoption in an 80% global green field. And the many, sometimes frantic lateral moves of KPCB over the years make me very suspicious that if I were given access to its performance, the firm might appear to be far from the domain expert or catalyst in technology innovation it is so often given credit for or implied today.
In building traction for the financial support of groundbreaking innovation, the initial role of KPCB in Silicon Valley was undeniable. But just like the asset class as a whole, I have sincere doubts that the economic model under which the firm operates, and protects so staunchly, will allow it to grow up healthy, and remain the unquestionable catalyst of innovation it could and should be.