Kleiner Perkins has been through the wringer since the go-go dot-com days of the late 1990s. After making a bundle on Google, the storied venture firm raised too much money from investors and grew too ambitious in scope before dramatically retrenching a few years ago — but not before being hit with one of the highest-profile lawsuits in venture industry. (It won the case, which centered on gender discrimination, but it took a beating in the process.)
To restore its former glory, the firm is largely transformed from the firm it was a dozen years ago. For starters, it has undergone some major casting changes. Only one of its five general partners — Ted Schlein, who leads Kleiner’s investments in security and some of its enterprise investments — has been with the firm throughout all the tumult, having joined the firm 20 years ago. Meanwhile, Beth Seidenberg, who focuses on everything from life science to digital health, joined Kleiner in 2005; Wen Hsieh, who focuses on enterprise and hardware deals, joined in 2006; Mike Abbott joined in 2011 to focus largely on enterprise deals; and Eric Feng, a former CTO for both Hulu and Flipboard, joined last October to lead the firm’s consumer investing.
Kleiner, which is currently raising $1.3 billion across two new funds, has also taken a page from the playbook of Benchmark and some other smaller partnerships, and its partners now enjoy equal partner economics. (Kleiner has also five associate partners, as well as a separate growth investing group.)
To get better insight into the firm and how it operates today — as well as where it’s shopping — we talked yesterday with Feng. Our chat has been edited for length.
TC: You joined KP in October, but you’ve been close to the firm for years.
EF: I first joined as a partner in 2010, doing two things. One was helping with traditional investing. The other was as [former Vice President] Al Gore’s chief of staff, mostly focused on climate change, which is something I’m personally very interested in. I had almost no professional background in that space, so it was very generous of Kleiner and Al to let me work with him on that.
After one-and-a-half years, I incubated a [platform for sharing personal content] called Erly that sold to Sean Parker’s Airtime. John Doerr was on my board at Erly, and as I was looking around for what’s next [in 2013], John said, “You should stay in the family, and here’s a company [Flipboard] that needs a head of engineering and that would fit your background.” Then last summer, we started to talk about next moves, and it was John and Randy who brought forward this idea of bringing me [back] into the partnership.
TC: As many readers will know, Doerr has stepped away from Kleiner’s day-to-day management to become its chairman. Meanwhile, Randy Komisar, who joined Kleiner in 2005, is now largely coaching the firm’s general partners.
EF: Randy is very actively involved as our coach and he’s still actively managing his portfolio companies.
TC: Before you joined, Kleiner seemed to be following in the footsteps of Andreessen Horowitz and forming a much bigger services platform. But I gather it has scaled back those efforts. Is that right?
EF: I’d say Kleiner very early on pioneered being a full-service, company-building venture firm. We’re the first firm that brought in a full-time recruiting partner, and I think over the last six or seven years, the whole industry has jumped on that trend. Everyone has marketing and recruiting and business development and a lot of these services.
We’ve always had services, but VC isn’t scalable, as we learned, so we’re almost surgical, helping our portfolio in highly targeted, high-value ways, as opposed to being a factory where we have every service under the sun. We do have two people doing marketing. We have three doing recruiting. But we don’t want to get to the point where we have a 10-person division doing recruiting.
TC: Has Kleiner’s decision-making process changed in any way?
EF: It’s an equal partnership. Everyone has equal votes. Beth expects me to cast my vote in a life sciences company, and similarly, I expect her to cast her vote in a new messaging company. If you think about venture, the product that we create is our investment decision process. We’re really looking for outliers, and the way to get that is to give diverse people a forum to voice their opinions.
TC: When you say an equal partnership, may I ask: Do you also mean the economics are equal?
EF: Equal economics, equal votes. It’s evolved and gone through peaks and valleys. If our product is a great investment decision process, we want to make sure everything is done to [support] equality with diverse thinking around the table.
TC: I don’t think people realize you’re now leading KP’s consumer investing practice. What’s interesting to you right now?
EF: It’s an interesting time for consumer [investing]. We may be in the middle of a platform shift. We’re seeing the mobile platform lose a bit of its momentum, and people are wondering if it’s time for a new platform. But it’s a little uncertain, what’s next. Five to seven years ago, when mobile was really starting to take off, a lot of investors’ attention was focused on mobile apps and anything related to messaging and media and social. That was the pool all the investors were fishing in. Now, investors are fishing in various pools. There’s the [artificial reality] and [virtual reality] pool, the ambient computing pool, the cars-as-a-platform pool. There’s little consensus. Everyone is taking their own approach.
TC: What’s yours?
EF: Well, I don’t doubt that VR an AR will be successful. There’s no doubt cars or ambient computing represent huge opportunities. These are the right pools. The question is timing. I don’t have enough conviction yet to say where the outsize outcomes will come in the next 24 months, but we’re looking at every single deal we can to figure it out.
We are seeing a lot of interesting enterprise applications for these tools, like VR for training and conversational [AI] for customer support.
TC: Have you made any bets yet? Also, did you make bets as an angel investor before joining Kleiner?
EF: I’ve [led one investment] in Handshake, which is building a new career services recruiting platform for college kids. It’s a $4 billion [total addressable market] annually, college recruiting. But if you earn a college student their first job, you’re in prime position to address their second, third and fourth jobs, which brings you into the $25 billion overall recruiting market, and we think there’s a window of opportunity for Handshake to be very disruptive.
As for angel investing, I’ve backed mostly either people I know and want to work with, or areas I’ve wanted to learn more about, including hardware. At Flipboard, for example, I invested in Tile, the Bluetooth tracker that lets you find lost items like your car keys or backpack.
TC: What do you make of e-commerce? Earlier this week, VC Jennifer Fonstad noted at the Bloomberg Tech conference that e-commerce bets make more sense at the beginning of a boom cycle. Do you agree?
EF: We have a good healthy internal debate about it all the time. I think there can be great companies formed at all points of the cycle. But it’s very hard to predict winners. Either a brand resonates or it doesn’t. So we try to think more about the enabling tech and services that are independent of the brand.
TC: What about social networks? Do Facebook and Snapchat just get bigger or will we see the rise of something new?
EF: Everything can be reinvented. I see that trend replaying in all areas of tech. I think one of the most exciting trends we’re going through is a generational one, from baby boomers to Gen Xers to millennials, who aren’t just the largest demographic in the U.S. but are now the largest demographic in the workforce, meaning they have strong purchasing power. So every purchase, every brand, the way things are consumed, from media to other products — it’s all up for grabs. Nothing is static.