Struggling to cash in on the social Web, Kleiner Perkins turned to the poster child of the first dot-com bubble: Mary Meeker
Mary Meeker is sitting in the centre of the internet, literally. She’s in the big, glass-walled conference room smack in the middle of the brightly lit, high-ceilinged ski chalet that is the Sand Hill Road headquarters of Kleiner Perkins Caufield & Byers, the most storied venture capital firm in Silicon Valley. Kleiner has backed an astonishing number of important technology companies: Netscape, AOL, Sun Microsystems, Amazon, Google.
“Just look around the room,” she says, in her deep, rapid-fire staccato. Spinning her chair, the former star analyst at Morgan Stanley points to one office after another on the perimeter of the big central great room.
“You have Matt Murphy, who is an expert on mobile and helped start the iFund at Kleiner. Randy Komisar has been at a plethora of startups and helped build businesses over the years, some of which I’ve been involved with,” she says. “Ted Schlein knows as much about security as anyone around. Bing Gordon was one of the cofounders of Electronic Arts and really has a very keen understanding of user interface design and gamification.”
Meeker still seems in awe of the place, even though she joined almost two years ago as full partner. “There’s Ray Lane, on leadership. John Doerr, on thinking about big ideas, and yes, I’ve seen this movie before, yes, I can make this call and get this done ... Al Gore … Colin Powell … I could go on and on.”
The awe is real. But so is the fact that Kleiner needed Meeker more than she needed Kleiner. Though Meeker’s Hoosier conservatism would never allow her to admit it, she has played a key role in Kleiner’s bid to restore its reputation as Sand Hill Road’s top firm. Kleiner spent the post-bubble years investing, unsuccessfully, in other things: nanotech, for instance, and green energy. It brought in high-profile partners lacking any real tech experience, such as Powell and Gore, while its heaviest hitter, billionaire John Doerr, was focused on biofuels and solar cells.
That left players lower in the batting order to handle the new wave of Net startups—who missed chances to make early bets on the likes of Facebook, Twitter and Groupon. As a result Kleiner, once the undisputed king, is now just one of a half-dozen top-tier VC firms that include Sequoia Capital, Andreessen Horowitz, Greylock Partners, Benchmark Capital and Accel Partners
Meeker has done exactly what she was brought in to do: Capitalise on the big market opportunities that Kleiner was missing. Post Sarbanes-Oxley, tech startups have tended to stay private longer. Companies like Facebook, Zynga and LinkedIn stayed private even as revenues topped $100 million, preferring to raise large venture capital rounds instead of going public. Kleiner, which had always been great at nabbing hot startups in their toddlerhood, was weaker on later-stage deals.
And then along came Mary. Kleiner’s decision to lure her startled many on both coasts. It’s exceed- ingly rare for a Wall Street analyst to enter a venture firm at its highest levels. But it made sense: Morgan Stanley had taken a host of Kleiner companies public; Meeker and Doerr knew each other well. Her shift was the culmination of a 19-year run picking stocks for Morgan’s clients. Now she gets to pursue her true love: building companies.
“I’ve always wanted to invest. That’s why I started working on Wall Street in the first place, back in 1986 when I went through the Salomon Brothers training programme,” says Meeker. “My move to investing was delayed in part because I just loved what I was doing. ... I took a step back and said, ‘If I don’t do this now, I never will.’”
Kleiner put her in charge of its new $1 billion Digital Growth Fund. She and her team have already invested half of the fund’s capital in about 20 deals, with stakes in a variety of high-profile startups, including the streaming music service Spotify, the payments service Square and the online retailer One Kings Lane. The fund also caught up with deals it had missed earlier, like Facebook, Groupon and Twitter—erasing a conspicuous hole in the firm’s glittering history.
Meeker, 52, already stands out as an elite VC. For starters, she knows everyone in the Valley who matters. In a place where people actually compare Klout scores—Kleiner is an investor in Klout, by the way—Meeker has an unmatched contact list. Also key: She still approaches the world like a financial analyst. This is the woman who wrote “The Internet Report,” a seminal 1995 research piece that was so popular that Morgan Stanley actually had it commercially published and sold in bookstores. She also knows technology: Before she invests, she tries stuff out. Ergo, Meeker not only invested in the crowdsourced traffic service Waze but also has the app on her phone and checks in when there’s an accident slowing traffic on I-280.
Meeker is also willing to think big. Waze CEO Noam Bardin says that while his team was thinking bottom-up, figuring out how to sell ads against its traffic content, Meeker was thinking top-down, advising him to imagine how Waze can steal dollars from the multibillion-dollar billboard and radio markets. “She immediately saw the big picture,” he said. “Most VCs were thinking about why the business won’t work, not how big it can be. She looked at it analytically. She said, ‘Look at how much money is out there that needs to find a home.’”
She was more cautious in the bubble years than many recall—for instance, comparing the period to the 17th-century Dutch tulip-bulb mania in a 1999 New Yorker piece. “There is the same supply and demand imbalance. The difference is that tulip bulbs didn’t fundamentally change the way companies do business. But when all is said and done, there will be many stocks that in hindsight look like tulip-bulb stories.” Nailed that one, too.
(This story appears in the 17 August, 2012 issue of Forbes India. To visit our Archives, click here.)