For this episode, we’re revisiting my 2007 interview with Tom Perkins, who was one of Silicon Valley’s most successful venture capitalists. The firm Tom co-founded, Kleiner Perkins, is responsible for funding some of the most well-known companies of the past four decades, including Google, AOL, Genentech, Sun Microsystems, Compaq and Tandem Computers. With that track record, Tom’s name is now almost synonymous with venture capital. But he actually cut his teeth as an entrepreneur. Educated at MIT and Harvard, Perkins first made his mark by managing the initial growth of Hewlett-Packard’s computer business while simultaneously inventing the first cheap and reliable laser. The company he built around the laser, University Laboratories, made him independently wealthy and allowed for the creation of Kleiner Perkins. But more than just the money, his time at HP gave him the opportunity to learn from a “giant” of business, Dave Packard. Packard, Tom told me, operated like a venture capitalist within HP and gave him a model to emulate when he started his firm.
Though Tom wowed the business press for much of his career, later in life he gained national attention for having a key role in a 2006 Hewlett-Packard board scandal, briefly marrying Danielle Steel and building the world’s largest privately owned sailing yacht. When I spoke with Tom, he was busy in “retirement,” serving on a number of corporate boards of directors, including News Corp’s and HP’s. He’d also stepped back into the media spotlight with the publication of his memoir, Valley Boy: The Education of Tom Perkins. This episode offers a fascinating glimpse into the mind of the outspoken and pioneering venture capitalist. Tom died in 2016, but his advice for entrepreneurs remains as relevant as ever.
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Highlights from this episode:
“Dave Packard taught me everything I ever learned about entrepreneurship. He was a giant, and certainly the most important influence in my career.”
“Our fund was the largest fund in the world for venture capital…It was $8 million.”
“What impressed me so much was, here are these two guys whose names were on the company, and they were doing the physical work to set up their booth…they were just exciting guys — geniuses, very demanding, but extraordinary.”
“I persuaded Packard to let me start a laser company as a moonlighting enterprise on nights and weekends at the same time I was doing the computer business. And I think maybe Packard was the only individual in the world that would have given me that permission, because it clearly interfered with my efforts for Hewlett Packard but he trusted me enough to let me do it.”
“Really, Packard and Hewlett founded Silicon Valley, you know, and the alumni from that organization are just everywhere.”
“I just found [the computer business] so much more interesting than my laser company, which was making me a multimillionaire, but I’d still rather work for Hewlett Packard.”
“It was the laser company that helped me realize that I personally could do this sort of venture capital that maybe that Dave Packard was doing, because I consider Packard to have been a venture capitalist.”
“I thought, and so did Kleiner, that we could do venture capital, the way Dave Packard was doing it at Hewlett Packard, with a very hands-on, deeply involved approach, starting with the idea and trying to get the risk out of the idea, then developing the team, hiring the people, doing the financing, taking it public if necessary, but still staying with it, and on and on into the future.”
“When Kleiner and I did it, we were absolutely the first, and our fund was the largest fund in the world for venture capital. Now you’ll be shocked when I tell you how big it was. It was $8 million, which shows you how things have changed.”
“I think we were somewhat immune from the pressure to invest, which was fortunate because we saw a bunch of really bad ideas.”
“Our philosophy was, you find the idea, not the individual. Good ideas come from good individuals, but the idea is the most important thing, and then build the enterprise around that idea with that individual, whether or not the individual has had previous management experience.”
“Over the years we’ve had very very good luck. backing individuals that, on paper, had no reason to think they would succeed except that their ideas are so good.”
“In our case, when it dies, we stop the flow of money, which is like cutting off the life support in the ICU, and maybe that’s brutal. But if you don’t do that, you fall into the syndrome, you know, enough time and enough money will solve all problems. And you can just end up so far into a bad deal that it’s, it’s awful.”
“There’s always been too much money in venture capital.”
“I suppose one of the most interesting recent events is the acquisition of Dow Jones…You can question, well, newspapers are dying, aren’t they? Why would you spend so much money to buy a newspaper?”
“Like Donald Trump said on the cover of his book, ‘What a brilliant book this is.’”
“I wanted to present snapshots of quite different things that I’ve been involved in.”
“The book is fairly frank, and it’s interesting to read the reviews on Amazon. I mean, the good ones obviously get the book and understand it, and the bad ones — it was over their head.”
“After you’ve got the best education you can get, don’t go to Wall Street. And don’t try to become a venture capitalist, at least not in the beginning.”
“To be an entrepreneur, you have to gain experience. Go try to find your own Dave Packard; they’re out there. Go to work for a dynamic company—not too big, but not too small—where you will learn as much as possible…then, if you’re still so inclined, become an entrepreneur, building on what you’ve learned.”