New Ventures for the Queen of VC

Parul Arora - 3B Computer Engineering
Posted on: September 26, 2018

If you knew you could predict which companies would be successful, what would you do about it? One firm decided to rightfully make the woman that could a partner. Mary Meeker joined Kleiner Perkins in 2010 after creating her legacy as an industry analyst with her famous “The Internet Report”, written at Morgan Stanley in 1995, which served as a “Bible” for investors during the Dot com boom.

Venture Capital (VC) firms are investment firms that provide funding to companies in which there is generally substantial risk involved. There is no single formula for success – securing an investment from a VC can be based upon anything from the product, the vision of the founders, the market potential, or a combination of these factors and more. The risk, the competitive nature of the career, and the barriers to entry make the field difficult – in short, there is no complacency in venture capitalism.

Kleiner Perkins Caufield & Byers, often abbreviated KPCB and commonly referred to as Kleiner Perkins, is a VC firm that provided funding to companies in early stages of growth. The founding partners came from relevant backgrounds – with Kleiner founding Fairchild Semiconductor and Perkins having been an early Hewlett-Packard executive. In 1999, Kleiner Perkins, along with Sequoia Capital, provided 24 million dollars in funding for 20% of a small company aiming to make profit using a page ranking algorithm that had been a part of their thesis at Stanford University three years prior. This company would later become Google, and have a market cap of $827B as of 2018.

Early stage investments cemented Kleiner Perkins into financial history books, marking the firm’s prestige. On a very basic level, they leveraged the start-up culture in their region (the Bay Area) and stood to make an unfathomable profit, back when Silicon Valley resembled more of a shallow trough than the revered region it is today. Their tactics provide legitimacy to the notion that high earning potential exists along speculated geographical corridors, especially ones technologically esteemed to be peppered with an abundance of start-ups.

Google went public in 2004, having investment banks Morgan Stanley and Credit Suisse as underwriters for the IPO. At the time, Meeker was a research analyst working for Morgan Stanley. Her reputation was built on her ability to compile industry reports with massive data sets that provided comprehensive insight into the direction of the industry. There was no public hesitation on her behalf when Morgan Stanley went through a rough patch in 2005 nor when she decided to leave her position as a managing director there in 2010.

When the woman revered for acting based on industry data says it’s time to leave it is not so unreasonable to believe that others are likely to follow suit. Her departure from Kleiner Perkins in 2018, on the basis of disagreeing with investment strategy, has most certainly raised eyebrows of the investors who believe a strong board is indicative of financial stability. Meeker’s desire to focus on late stage ventures raises early alarm bells warning of safer investments being found in established companies. As she leaves Kleiner Perkins, she takes with her three other colleagues, now all former partners at Kleiner Perkins.

Partners leaving firms often reflect poorly – Social Capital having recently been the subject of eco-friendly watercooler talk when three partners left within a short time frame. Despite its reputation, even Kleiner Perkins is not immune to the effects of this warranted public scrutiny. In this shroud of uncertain times, the departure of partners yields a meek outlook for Kleiner Perkins, along with a Meeker-less future.

Meeker remains optimistic – “we’re happy with the investments we made” she says. Putting aside any curiosity about the nature of the profit, there is more of an inherent disbelief raised from the existence of a venture capitalist’s happiness. If not for the money, happiness is so rarely found that maybe following Mary Meeker’s departure wasn’t such a bad idea after all.

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