Silicon Insider: Tech VC Goes Green

May 18, 2006 — -- The world's most famous venture capitalist is turning green.

There is a little private indicator I use to predict where the next emerging entrepreneurial society will be in the world. About 10 years ago, for one of the very first issues of Fast Company magazine, I interviewed John Doerr of Kleiner Perkins Caufield & Buyers Venture Capital. In those days, Doerr was the hottest young VC around -- and also one of the busiest. So Fast Company was thrilled to snag an interview with him.

The Q&A dealt with what criteria Doerr used when deciding in which new startup companies his firm should invest Though it was well-known here in Silicon Valley, few people outside the area appreciated that VCs basically came in three flavors: those who invested in the product, those who invested in the market and those who invested in the team.

Doerr was one of the few VCs who looked to the last, though not until he had identified a hot new market of potential. And our conversation dealt in-depth with just how John spotted a good team, what characteristics he looked for in the team members, etc. There were a few novel notions in Doerr's remarks -- join a team whose members you think you can work with through good times and bad, don't sweat the business plan, every great startup has a technical genius, good leaders are good communicators, etc. Most of this is now general knowledge.

I wrote up the interview, got my check and didn't think any more about. Nor, I suspect, did Doerr. FC published the interview as "John Doerr's Start-up Manual" -- and, truth be told, I'm not sure I ever saw it in print. By then, I had moved on to become a contributing editor of Forbes ASAP. The Doerr interview should have just gone into the box with a thousand other bylined pieces.

Doerr Questions Come Flooding In

But then the strangest thing happened. In the years that followed, regularly every month or two, I would get an e-mail from some MBA student or young business professional asking about the Doerr interview. Some asked advice on business plans, others wanted to get in touch with John and were hoping for an introduction, and still others wanted to know if I thought anything had changed in the lessons of the original article.

What was interesting about these e-mails was that their point of origin seemed to change by the year. The first e-mails came from the U.S. Then from Europe. After that, China. And recently, Southeast Asia. But consistently, year after year, the most inquiries came from India. Long before the news accounts of the last few years describing the entrepreneurial explosion occurring in places like Bangalore, my e-mails told me something spectacular was going on.

Thus, there was a kind of symmetry when, a month ago, Doerr called to ask if I would be willing to do another interview with him, this time on stage. It seemed that he had been asked to give a keynote address at the annual convention of The Indus Entrepreneurs, the global association of (mostly) Indian entrepreneurs, and instead Doerr wanted to present an informal conversation on stage.

I reminded him of our last such conversation and asked if he still remembered the article that resulted from it. "Are you kidding?" he replied. "I can't seem to escape that thing. Whenever I Google myself, that damn article still comes up first most of the time."

It turned out that all of those e-mails I'd gotten about the article were merely from those budding entrepreneurs who hadn't figured out how to get to Doerr directly. My occasional missives had been nothing compared to the endless wave of e-mails and letters that had landed at Kleiner Perkins over those years. And those letters played no small part in convincing the firm that something extraordinary was taking place in the Subcontinent. These days, K-P has a major presence in India, and, at home, the firm is no longer the sea of white male faces I saw that day in 1997 when I visited.

Entrepreneur Group Explodes

TiE has changed too. I remembered it as a small, rather insular affair made novel by the ethnicity of its membership. I knew that had changed last Friday morning the moment I got waved away from the full Santa Clara Convention Center parking lot and sent instead a quarter-mile away to a parking lot at Paramount's Great America.

Indeed, TiE now has 45 chapters in 10 countries and is the world's largest nonprofit organization for entrepreneurs. TiEcon, the event I was attending, is the world's largest single gathering of entrepreneurs. There were 5,000 people waiting for us in the convention hall, all with dreams of entrepreneurial glory.

And that was just Americans of Indian descent. Back in India, schools like IIT are graduating 300,000 new engineers per year. If you believe, as I do, that in our technological age the economic race goes to the country with the most engineers and entrepreneurs, you'd better pray all of those Indian-Americans in the audience decide to stay here. And all of that potential financial power was the reason that this year's TiEcon saw visits from both DNC Chairman Howard Dean and California Gov. Arnold Schwarzenegger -- they know where future campaign contributions will be coming from.

Onstage, Doerr was his usual smart and passionate self. As was noted in his introduction, over the past 20 years he has been responsible, through his investments in companies as diverse as Sun, Amazon and Google, for the creation of 20 new jobs per day -- a better record than Europe -- and the creation of untold billions in wealth. No wonder then, that this historic gathering of entrepreneurs -- the very folks who dreamed of asking Doerr for truckloads of money -- hung on his every word, hoping like teenaged boys for that magic word guaranteed to be answered with an unconditional "yes."

But if the audience came looking for insight into the next enterprise software company or dot-com opportunity, they must have been surprised -- because Doerr, the uber-VC, is taking venture capital into markets where it has never been before:

Greentech -- For Doerr, this is the greatest business opportunity of this generation. "There has been no innovation in green technology -- things like clean energy and water -- for the last 30 years. A small change now can make a difference." That's especially true in light of the threat of global warming, rapid urbanization and the world's unending addiction to oil.

Where are the opportunities? Anywhere you can counter the predicted 1 degree to 5 degree global temperature rise in this century (and the rising ocean levels expected to accompany it). That means alternative energy sources, such as biofuels; reducing carbon production; increasing the GDP that can be obtained from a unit of energy; computer simulation of natural processes; nanotechnology; unique new materials; biomimicry (efficient designs inspired by nature). For Doerr, the "Greentech" boom could prove to be as big, and far more important, than the trillion-dollar digital electronics business.

Pandemic prevention -- Kleiner Perkins has created a venture fund specifically to invest in business opportunities relating to the identification and treatment of pandemic diseases. This year's avian flu epidemic was a wake-up call, says Doerr. We now know where the horrible pandemics, like the global influenza outbreak after World War I that killed tens of millions -- come from. Should such a pandemic break out now, it would not only kill hundreds of millions, but wreck the global economy. And once the disease breaks out there will almost be no way to contain it. So, the pandemic fund is targeting investments to firms specializing in computer modeling, disease vector surveillance tools, low-cost mass produced testing devices, new vaccines and antiviral agents.

Social Entrepreneurship -- Though by definition social entrepreneurs are individuals who use entrepreneurial tools to create systemic social change, usually in nonprofit enterprises, Doerr believes that even here venture capital has a role to play ... and that traditional entrepreneurs can find a fulfilling career. Social entrepreneurs, he believes, are among the most important people, and some of the most significant changemakers, on the planet.

What is crucial, Doerr says, is to recognize that traditional, commercial notions of Return on Investment cannot be strictly applied to social enterprises, such as Grameen Bank in Bangladesh (which gives 'micro' loans to the very poor) and Approtech in Kenya (which sells low-cost water pumps to small farmers). Rather, investors in social venture funds need to look to a combination of financial return, social good, personal satisfaction -- and someday, perhaps, tax credits and other rewards. Social enterprises, Doerr believes, are too important to the world to be left out of the standard economic model -- and it will be the challenge for both venture capitalists and entrepreneurs like those in the TiEcon audience to figure out how to bring them in.

Before the interview, Doerr had asked me to be as tough on him as I would with a normal news interview. So, after he'd finished talking about global warming, pandemics and social entrepreneurs, I asked him if he was just getting soft in his old age, and whether, especially with Greentech, he was starting to make investments with his heart instead of his head.

He didn't even blink. "This," he said, "Is the mother of all markets."

Given his record, I wouldn't easily dismiss Doerr's predictions. And if I can bet on who will be the Bill Gates or Steve Jobs of the Greentech revolution, I'd say it will be someone who was sitting in that audience last week at TiEcon.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called the Boswell of Silicon Valley, is one of the nation's best-known technology writers. He has covered Silicon Valley and high-tech for more than 25 years, beginning with the San Jose Mercury News, as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, the Economist and Fortune, and for two years he was a columnist for The New York Times. He was editor of Forbes ASAP, the world's largest-circulation business-tech magazine, at the height of the dot-com boom. Malone is best-known as the author or co-author of a dozen books, notably the best-selling "Virtual Corporation." Malone has also hosted three public-television interview series, and most recently co-produced the celebrated PBS miniseries on social entrepreneurs, "The New Heroes." He has been the ABCNEWS.com "Silicon Insider" columnist since 2000.