Live: Kleiner Perkins Unveils The $250 Million sFund With Facebook, Zynga, and Amazon

We’re here today at Facebook’s headquarters in Palo Alto, CA. But it’s not a Facebook event. Well, it’s not totally a Facebook event. Venture capital firm Kleiner Perkins Caufield & Byers has summoned the press here for an announcement. What will it be? Judging by the signs posted around here, it’s called the “sFund”. And Facebook, Amazon, Zynga, are major partners with Comcast, Liberty Media, and Allen & Co. are on board to help out as well.

You may recall that in 2008, Kleiner Perkins announced a $100 million iFund, to spur iPhone app development. In March of this year, they doubled that down with another $200 million. They haven’t announced the size of this fund just yet, but we’d guess it’s closer to the latter amount. And judging from the name, I think it’s a good bet that this fund will be all about social applications.

Update: Sure enough, it’s a $250 million fund being led by Kleiner partner Bing Gordon and built around social applications.


Below, find my live notes (paraphrased):

John Doerr: We’re here for the future of the social web. The social web as defined by entreprenuers. And we have some great ones here today. Jeff Bezos, Mark Zuckerberg, and Mark Pincus. We’re on the third wave now. This is about the social web.

One company is just company out of stealth today Cafebots. Another is Flipboard, the first social magazine. Jive Software — it has 15 million users already. Relying on Facebook relationships. And the fourth is Lockerz. It aims to be the homepage for teens and young men and women.

These companies are re-imagining a social web. It’s about relationships. Alan Kay said the best way to predict the future is to invent it. At Kleiner we think that extends to funding it too.

Today we’re announcing a $250 million fund called the sFund. It’s like a quarter billion dollar party. A social one.

Mark Zuckerberg: Our view for the next few years is that every industry is going to get fundamentally rethought and built around people. If you look at our photos product, it wasn’t great to start. But it was social. That made it. Events and Groups are the same.

Look at what Zynga has done. It’s not just games you’re playing with your friends, they’re designed to be social. This is going to keep happening. And this fund is going to help that. Having a firm like Kleiner behind this is powerful.

I think there is going to be an opportunity in the next few years to pick any industry and re-do it.

We decided to invest in a platform. It’s about helping people build out these great applications. We want to continue that with this fund.

Marc Pincus: We are at this point in time where there are so many platform changes and disruptions happening all at once. Things are changing in front of our eyes with apps and social. You can log in to something and it will know you. This is new for the web.

It’s one of the few times in history where venture capitalists and entrepreneurs are behind the curve. I think on the consumer side, I’m bugged that there isn’t a great travel service. Why don’t I have an app that knows I’m at the airport and knows my flight is cancelled? It could recommend things, other options to me. Or games (laughs).

On the infrastructure side, memBase is a great example. And we hope you’ll fund a company that reinvents customer support for all of us. We’re entering this new world of free services but customer expectations are still based on the paying services. We were outsourcing, we brought it in house and it’s better. But we don’t want to be in this business.

For me, the big thing to learn has been knowing how to run a company at scale. Seeking out coaches and mentors has helped a huge amount. I’ve looked to Jeff Bezos here the most.

Jeff Bezos: The most important advice is to use Amazon Web Services (laughs). Most of that $250 million should be spent on that — a lot of reasons to be excited.

But seriously, these social applications tend to be viral. They can grow violently. The cloud helps that. All three of the top Facebook companies are using AWS, so thanks for the business.

MP: We couldn’t have scaled Farmville without AWS.

JB: This guys are a great example of huge growth. It’s an interesting phenomenon. It’s this rich solution of people who are connected already. You don’t need a lot of marketing to get these things to grow.

For investors, I’d say to get a damn good ROI (laughs).

If I were coming out of school today, I would be passionate about genetic life. It’s about solving green and social issues. There have been golden ages — like TV in the 50s, aviation, so on. This probably is the golden age of social apps. But I’d be in the future. We’re right on the edge of being able to do things with synthetic life.

Bing Gordon: I think social is just beginning. We have a billion and a quarter people worldwide — in four years it’s going to be 5 billion, I think. I think average friend counts are going to go to 500. Social connections are going to skyrocket. The social graph is going to explode. 30 minutes to an hour per day per person connected to social in the future. We’re just getting started.

JD: What about 5 years from now?

BG: The most exciting part of the social graph is when members of your family post something. Marc Pincus in five years your kids are going to be on Facebook. It changes everything.

MP: What excites me most is that so much of our time right now is spent on getting the network wired. In five years, everybody will always be connected to each other, instead of the web. It will be so frictionless. I think of these services as dialtones. Facebook is the dialtone on top of it. Pandora is the music dialtone. We hope to be the gaming dialtone.

MZ: A lot of people building social apps now will be at scale by then. A lot of companies require DNA for special areas. I don’t think Facebook could ever make games, for example. That’s why we partner with Zynga. I’m most excited about what we’re going to be able to do with partners to build out our entire graph.

There are a lot of companies that add social on. But the things that make the apps work is that things are built in to the product, that they are social. There are going to be two kinds: ones that layer the social on top, and the ones built from the ground up. The ones that slap it on on top and check the box are going to lose, I think.

JB: We’re launching a bunch of new things that will help all of this growth for the future.

BG: You have to learn from your peers. We bring CEOs together to talk to one another. Like the people on this stage.

————————– Q&A —————————–

Q: You started the iFund early, there was a Java fund. Facebook is in its 7th year now — what took you so long?

JD: Zynga exploded about a year and a half ago. We realized the application opportunity was going to be enormous. That’s when we set out to make the fund.

Q: Where are you going to draw the line between social and not social? What is social to you guys?

BG: 5 years from now, if you don’t have a lot of friends, you’re not going to have any. You either build social from the ground up or you slap it on. Those slap on people will get shorter meetings.

Q: Do you intend to add other partners?

BG: We love partners. I suspect people will come in for more discussions. There are finance laws for how to add new partners, but it’s a party.

Q: Social responsibility — how do we stop apps from leaking data or being friendly with children?

JD: We don’t control how people run their businesses. But we agree that users ought to own their own data.

Q: Are all of these companies putting cash into this fund?

JD: Yes.

Q: Why not called it the fFund? What about aFund for Android?

JD: This is not the fbFund, this is more than that. But Facebook is the big social network.

Q: Are you folding these guys into the sFund — are these new investments?

JD: We have invested in Cafebox already. The rest would be in the sFund, but instead they’re in our regular portfolio.

Q: Is this media investments or tech investments?

BG: Yes. I think content without technology is boring.

Q: What monetization models do you favor?

MP: I believe we are underinvested in the user-pay economy. I think there’s a wrong assumption that we’ve built stuff on that things have to be free with ads. We believe in a model that is supported by users. I think my wife’s company, One Kings Lane, is a great example of what’s going to be the next big online economy.

Q: Can you talk more about customer service?

JB: I’m in favor of it. It’s a good feature. It’s going to be different for every business.

Q: Reports of Amazon launching an App Store. Comment?

JB: You’ll just have to stay-tuned. Nothing to announce today.

Q: Are these going to be advertising-based companies?

MZ: Our view is that there are going to be a lot of different models. I think companies will match what their customers want. We’re pretty sure there will be new social versions of things across all industries.

MP: I think that before this new chapter there was an oddly inverse relationship between tech and monetization. It’s about going to a new depth of engagement now.

And now it’s time for a Bing Gordon poem.