A Conversation with John Doerr

L. John Doerr (MBA '76) is widely recognized as one of the country's preeminent venture capitalists. A partner in the California VC firm Kleiner Perkins Caulfield & Byers (KPCB), he is known for backing startups that presaged entire industries in computing, software, and the Internet. Doerr recently spoke with the Bulletin from his San Francisco office.

HBSB: How would you compare the work of the entrepreneur with that of the venture capitalist?

Doerr: To win in this era, when industry-transforming discoveries seem to occur on a weekly basis, you need more than brilliant, single-minded entrepreneurs. You need well-led, superbly executing teams. The great entrepreneurs know how to assemble outstanding teams, but, more than that, they also know how to inspire and grow them over time. In fact, the best entrepreneurs are exceptional educators as well as leaders.

Venture capitalists should help entrepreneurs assemble great teams. But VCs don't manage, inspire, or lead. We're off stage, behind the curtains, funding the production, and maybe adjusting some spotlights. Venture capital is a supporting role.

HBSB: What do you look for in potential ventures?

Doerr: At KPCB, we've found that five characteristics distinguish outstanding ventures. Most ventures will have only two or three of these when they come to us, so we work with the team to add the missing elements.

The characteristics are technical excellence; outstanding management; strategic focus on a large, rapidly growing market; and a set of financings reasonable for all parties. Fifth, and most important, is a tremendous sense of urgency. We want to back ventures that are the first or second entrants in their markets, so speeding the product to market in advance of the competition is absolutely crucial.

HBSB: What do you recommend as preparation for a career in venture capital?

Doerr: The best preparation is operating experience in a well-managed, high-growth, high-tech company. Without that it's hard to support great entrepreneurs and teams.

HBSB: What should HBS as a business school be doing to prepare its students?

Doerr: What's in the shortest supply is great marketing talent for technology-based companies. So in addition to entrepreneurship, HBS should emphasize education and research into understanding and marketing technology products and services.

HBSB: Apart from the Internet, what do you see long term Ñ and please define what long term means in your industry Ñ as the next major developments in business?

Doerr: We do a long-term strategic plan that looks ahead three years. We used to prepare it once a year, but now we do it twice annually because the world is changing so rapidly.

We're building a new technology-driven economy in which the education and talent of the workforce and networks of collaboration between universities, businesses, and support communities (like venture capital) will determine our nation's competitiveness.

That's not to say that the old, traditional economy will go away. However, this new economy offers the best opportunities for high-wage jobs, upward mobility, and wealth creation. There's never been a better time than now to start a new venture.

HBSB: Are there any clouds on the horizon?

Doerr: There are plenty of ideas, entrepreneurs, venture capital, markets, and technologies out there. What's lacking are great teams. So a key service from venture capital has become team-building and recruiting. Management skills are absolutely crucial to the quality of teams, and quality teams are what set the winners apart from their competitors.

HBSB: What gives you the most satisfaction in your work?

Doerr: Helping great teams come together, led by a terrific entrepreneur, and having them create new products or services that change the world.