It's impressive that they have the cojones to admit the extremity of their oversight. Kleiner Perkins Caufield & Byers would have had a much easier time of it to simply maintain their laser focus on green tech, pandemic and life sciences. They could have continued to ignore the sizable exits that have been achieved by all of
the Web 2.0 companies that they disregarded and kept on talking about the massive markets their hard to understand portfolio companies are targeting.
Problem is, those massive markets aren't translating into
massive exits. Sure, that time may come, but no one knows when that will be. And while Kleiner Perkins has been amassing a portfolio of cash-hungry green tech and life sciences startups, Sequoia Capital, Benchmark Capital, Accel Partners and others have been cleaning up on the consumer Internet the past three years. YouTube, Gaia Online and Facebook are just a few of the most successful startups in those three rival firms' recent portfolios.
Kleiner Perkins has made a
selective few consumer Internet investments in recent years into companies such as Platial and Aggregate Knowledge, but if he had wanted to, John Doerr could have gained access to many of the most promising consumer Internet companies on the strength of his name alone. Don't forget, this is the man that backed Google and Amazon.com.
I think Kleiner Perkins finally started to realize the severity of their absence from this investment movement last year. The first concrete sign of their return to Web 2.0 was the hiring of Chi-Hua Chien from Accel, where he helped source the Facebook deal. They didn't bring him in to originate cellulosic ethanol dealflow.
Now, the Kleiner Perkins name will be put to the test. It used to be peerless, but that's no longer the case. You can't miss one of the most lucrative investment booms in that past seven years and still be considered the best. And, the experience that other firms such as Charles River Ventures have gained in this area shouldn't be dismissed. Just as Kleiner Perkins established itself as the best communications equipment investors in the late 1990s, others have made a name for themselves as the best consumer Internet investors now.
That said, what made Kleiner Perkins the best is its willingness to place big bets on a few areas it masters. Its chosen a fifth area now with
iPhone applications. It would have been one thing to focus the fund on mobile applications, but to tie its fate so closely to one company makes this the firm's riskiest move yet. It's just the sort of thing that could return Kleiner Perkins to the top of the venture heap.
-- Joshua Jaffe
Joshua Jaffe is general manager of TechConfidential.com
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