Online Extra: Doerr to the Environment
By Justin Hibbard
On a March afternoon, the halls are empty and littered with papers on the lower level of the San Francisco Marriott, where the Cleantech Venture Forum is under way. Organizers of the four-year-old alternative-energy conference moved this year's event from the intimate Mark Hopkins hotel to a convention-sized venue to accommodate a 30% jump in attendance from last year.
But right now, the site looks deserted because nearly all 550 attendees are packed into the hotel's 40,000-sq.-ft. ballroom to hear a keynote speaker who, like many of them, is making his first appearance at the annual gathering.
Inside the room, L. John Doerr, celebrated venture capitalist at Kleiner Perkins Caufield & Byers, stands before the crowd, a crisp suit and tie hanging from his rail-thin frame, his dishwater blonde hair neatly combed. To admirers, Doerr, 55, is the creator of untold wealth, the Johnny Appleseed of Silicon Valley who supplied capital to such hits as Google, Intuit, and Amazon.com.
To critics, he is the consummate salesman whose merchandise too often fails to perform as advertised. He has been the target of shareholders' ire for such disappointments as Excite@Home, Drugstore.com (DSCM ), and Martha Stewart Living Omnimedia (MSO ), all of which lost millions of dollars for investors after the Internet bubble burst.
Doerr is in full persuasion mode before the crowd at the Marriott as he pitches his vision of a world gone green. "As investors, we have all been here before," he tells the attendees. "We've seen periods of time when it appears there are really large disruptive changes. The most recent of these big discontinuities was the Internet."
Back then, Doerr famously said on many occasions: "The Internet is the greatest legal creation of wealth in the history of the planet," a line so often quoted after the dot-com bust that he later recanted it. Yet he's now given to publicly pronouncing green technology "the largest economic opportunity of the 21st century."
The narrative he wove in the late 1990s pitted heroic Internet entrepreneurs against villainous phone companies and bricks-and-mortar retailers. Now the heroes are ethanol producers and fuel-cell makers, and the villains are coal-fired power plants and big oil companies.
In the early 2000s, Doerr all but hid in a bunker—an uncharacteristic move for a man who has spent much of his career publicly promoting The Next Big Thing. The appearance at the Marriott is part of his reemergence. "We're seeing alignment now of the environmental interests, auto makers, the agricultural industry, the security and energy independence proponents, even the evangelical Christians," he tells the Marriott audience. "When did all those come together before in our lives for a market this enormous?"
From 2001 through this year, KPCB quietly committed more than $100 million to nine green-tech ventures, two of which have raised more than $200 million each in other venture capital rounds. Their products range from ethanol to portable batteries to coal gasification. At least one of them, Ion America, is preparing a high-profile launch of its fuel cell later this year. (For a list of KPCB's green investments, click here.)
In February, KPCB announced that it had earmarked at least $100 million of its new $600 million fund for green-tech investments. "We decided the time had come to be public about this and say it's a priority," Doerr says. Shortly afterward he began a series of public appearances to preach the gospel of green.
Doerr and KPCB have been able to use some powerful connections to get that message across. Since 2000, E. Floyd Kvamme, partner emeritus at KPCB, has been co-chair of President Bush's Council of Advisors in Science & Technology, giving the firm coveted access to the Administration.
"We worked to get the notion of oil addiction and cellulosic fiber into the President's State of the Union address," Doerr casually drops. That's right: Bush's famous words, "America is addicted to oil," and his reference to ethanol made from switchgrass came from Doerr and his partners through Kvamme.
KPCB's influence also pervades the U.S. Congress and its committees that set energy policy. In the past year, Doerr and his partners have discussed energy with Senators Richard Lugar, Barak Obama, and Joseph Lieberman. The firm is working to pass the McCain-Lieberman cap and trade system, which would place mandatory limits on greenhouse gas emissions and motivate companies to use new clean energy technologies such as those made by KPCB's portfolio companies.
At the state level, in California, the Clean Alternative Energy Act is an initiative funded largely by Doerr and fellow venture capitalist Vinod Khosla. Thanks to them it will appear on the state's ballot in November as Proposition 87. The measure would tax the production of oil in the Golden State and use the $4 billion in proceeds to fund research in alternative energy, which could be turned into intellectual property for venture capital-backed startups to exploit.
The measure has been criticized partly because the venture capitalists who backed it stand to profit from commercializing taxpayer-funded research—a charge that dogged Doerr's financing of a 2004 California ballot initiative that created a $3 billion state-funded stem-cell research institute.
With their formidable influence, it's easy to forget that Doerr and KPCB are newcomers to the energy industry. Over the past five years, the partners were hitting the books and cultivating contacts at the same time they were pouring millions of dollars into the sector.
"It was a new field for us, and so we spent a lot of time talking with a lot of different people and saw many companies," says John Denniston, a KPCB partner. A network of contacts is like gold to venture capitalists, since it attracts entrepreneurs and affords access to choice deals. But it can take years to develop a good one.
To speed the process, KPCB created the Greentech Innovation Network event to bring together its contacts for some good old-fashion networking. The May gathering at the Four Seasons hotel in San Francisco assembled an impressive group, including José Goldemberg, Environment Secretary in São Paulo, Brazil, where more than half of new cars sold last year ran partly on ethanol made from sugar cane.
Rajendra K. Pachauri, chairman of the U.N. Intergovernmental Panel on Climate Change, traveled from India to talk about greenhouse gases. Other guests represented the U.S. Energy Dept., Royal Dutch Shell (RDSB ), Boeing (BA ), and Wal-Mart Stores (WMT ).
Doerr is darting around the room meeting people. He decides that rather than risk boring this group with his usual monologue, he'll start by taking questions. The crowd doesn't let him off easy. "How are you going to convince people that these are money-making opportunities?" asks Daniel M. Kammen, a professor in the energy and resources group at the University of California at Berkeley.
With the questions listed on a large screen behind him, Doerr launches into a skull session on the major trends behind KPCB's green-tech thesis. First and foremost is urbanization. "By 2050, we'll have the equivalent of 400 megacities, each with 10 million people or more," he says. "That means we'll be building the equivalent every year of eight new Manhattans. If this is not done right, we will suffocate, we will be overrun, and we will pollute and poison this precious planet. This is not just about making money. I think we're here on a higher mission." The audience listens in rapt silence.
MONEY VS. MISSION.
During the session, Doerr lets slip how he got interested in green tech. "It was Dean Kamen who turned me on to this clean water, power, and transportation effort," he says.
Kamen is chairman and founder of Segway, maker of the eponymous electric scooter that generated colossal hype before its 2001 debut. Doerr had said the invention could be more significant than the Web. After initial sales didn't live up to the grandiose prologue, Segway became fodder for critics, as did Doerr's decision to fund the company, which raised over $100 million before releasing its product.
The inventor's passion made an impression on Doerr during a period when he and his partners were doing some soul searching. The Internet bust was an ugly chapter in Silicon Valley history, and the KPCB partners were yearning to recapture some lost innocence.
"We sat back and said, among the really miracle efforts in computing, what was common about their culture, their innovation, their values?" Doerr tells his guests at the Four Seasons. "In two words inspired by Randy Komisar, we decided it was the difference between mercenaries and missionaries."
Komisar, a long-time Silicon Valley entrepreneur who joined KPCB last year as a partner, coined the terms in his book on entrepreneurship, The Monk and the Riddle. "The missionaries have passion," Doerr says. "Mercenaries are in it for the short run. It's the difference between lust for money and the lust for making meaning and money."
Coming from an accomplished money-maker, that may be hard to swallow. But after 26 years as a venture capitalist, Doerr has made his fortune and now seems more interested in making his mark.
Hibbard is a correspondent with BusinessWeek in San Mateo