Sunday, October 05, 2008

NYTimes: Another KP article - Capitalism to the Rescue

"One afternoon last May in Menlo Park, Calif., a venture capitalist named Ray Lane led me from his office to the parking lot, where an automobile had been delivered a few hours earlier by flatbed truck. The car, built in Norway, was powered by batteries and had a plug-in outlet hidden under a flip-top cover near the driver-side door. To my eye, the car resembled a generic European compact, but with some differences; the body, for instance, was made from a textured, plasticized material. In a lot full of gleaming new vehicles, some of them owned by the wealthiest venture capitalists in the United States, this car — branded the Think — seemed distinctive mainly for its lack of sparkle.

“You want to drive?” Lane asked, tossing me the key. Inside, the dashboard was seemingly made of densely woven fabric, and the seat was covered in a material that felt decidedly un-Corinthian. “The Think is 95 percent recyclable,” Lane said matter-of-factly, giving me the sense that we were about to drive a milk carton rather than a car. A turn of the key started up a barely perceptible hum somewhere under the hood. “There we go,” Lane said, sitting back with a pleased expression. I shifted into drive and hit the gas pedal — actually, the electricity pedal — a little too hard, and the Think lurched forward.

It was one of those hot, dry, cloudless days on Sand Hill Road, the wide avenue in Silicon Valley lined with some of the country’s most powerful venture-capital firms. It would have been a fine adventure to see if the Think could hit its top speed of 65 m.p.h. on U.S. 101, which snakes through Menlo Park and down into Mountain View, Sunnyvale and San Jose, high-tech towns where Lane and his colleagues at Kleiner Perkins Caufield & Byers have been financing companies (Google and Netscape, among others) for the past 36 years. But this Think, one of only three in the United States, had no license plates or registration. So Lane and I explored the private streets around the two Kleiner Perkins buildings instead. As we drove, Lane told me that if things went well — if the Think’s manufacturing process could be made more efficient, for instance — the car would go on sale in the United States in 2009. He said he hoped to sell several thousand in the first year and eventually reach annual sales in the tens of thousands, with a sticker price below $30,000. But then outcomes were hard to predict with precision, he admitted, even for venture capitalists who spend their working hours imagining the future.

It was late last winter when I began speaking with Lane and his partners at Kleiner Perkins. My conversations lasted to mid-September, just as the financial turmoil on Wall Street was leading to bank failures and jagged movements in the stock indexes. The firm wasn’t unconcerned about the crisis — problems with the markets could potentially slow down the development of some of the companies it backed. Still, most of its ventures were long-term investments. And entrepreneurs were still bringing new ideas through the door at a steady pace. “I don’t expect the credit crunch will change that,” John Denniston, a Kleiner partner, said. Indeed, throughout the summer the partnership was raising hundreds of millions of dollars to pour into clean or green technologies — in V.C.-speak, “clean tech” or “green tech” investments. By the beginning of autumn, Kleiner had financed 40 different green-tech companies and raised a total of about $1 billion to that end. Some of the firm’s fledging green ventures were evolutionary improvements on current technologies that would soon hit the market, like the electric Think car. Others I heard about promised to revolutionize various aspects of the energy economy — in, say, solar power or biofuels — much as Netscape or Google remade the Web or Genentech (another Kleiner Perkins venture) ushered in the biotechnology era several decades earlier. In many parts of Silicon Valley, it seemed misguided to regard the U.S. economy as reliant solely on Wall Street. The future still depended on entrepreneurs and innovations and green-tech businesses getting “traction,” as the V.C.’s at Kleiner liked to say."

From some of Kleiner’s competitors I heard criticisms that Doerr was betting the firm on perhaps an idealistic quest. But there doesn’t seem to be much truth to the claim. In dozens of interviews at Kleiner it seemed clear that Doerr and his colleagues were not, despite their concerns about climate change, basing decisions on where they could do the most good. They were chasing the best returns. If you look back at more than a decade’s worth of Doerr’s interviews, you’ll see that he has always called attention to the byproducts of his investments — namely, new jobs and new technologies — in an effort to stir up excitement, business prospects and perhaps benevolent public policy. Climate issues are merely the latest addition to his sales pitch about the social value of venture capital. When I asked Doerr whether he was investing to save the environment, he said, “We are ruthlessly single-minded about our job, which is to make a lot of money for our investors.” In his view, the process of making that money could change the world. But the firm was not directly pursuing a “cause.” If some of Kleiner’s investors — colleges, foundations and philanthropists — wanted to do that with their profits, he added, then that was up to them.

1 comment:

Anonymous said...

and in other news..ebay is cutting 1,000 employees.

where are we going?? who's going to rescue google, apple, rimm, ebay, amazon

VCs, PEs, Kleiner...the treasury?