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Kleiner perkins7/10/2023 ![]() ![]() And it’s a reminder that something as elusive as identifying early-stage winners from the pack of wannabes doesn’t get easier, even after more than four decades of practice. It’s about just how much succession planning matters and the ramifications of not adequately grooming the right successors. What happened next is another age-old tale in the business world, of how a once-proud stalwart found itself on the edge of irrelevance. These days it’s just one of many firms trying to compete.” Says Ilya Strebulaev, a Stanford finance professor who studies venture capital: “Twenty years ago, Kleiner Perkins was at the pinnacle of venture capital. ![]() Worse, a class system developed inside Kleiner, evident to the outside world as well, notably among entrepreneurs mulling accepting Kleiner’s money: Team Meeker was a top-tier operation while the venture unit was B-list at best. Meeker, not the venture capital investing unit, was landing stakes in the era’s most promising companies, including Slack, DocuSign, Spotify, and Uber, breeding resentment over tension points as old as the investing business: Who gets the credit and, more important, who gets paid. Yet Meeker’s investment team outperformed the venture group overseen by longtime Kleiner leader John Doerr and a rotating ensemble of lesser-known investors who joined and left him over the years. “Growth” investing, with its more developed companies, should be somewhat safer than “venture” investing and would also earn commensurately lower returns. But this time its whiffs came with a perverse twist: Kleiner was succeeding wildly with a new strategy centered around Meeker, who ran a separate fund within the firm focused on more mature private companies that required capital to grow as opposed to merely establish themselves. Now, in the 2010s, it was failing again to make early-stage investments-the traditional meat of venture capital investing-in the most sought-after startups of the day. Kleiner had sat out on another generation of technology investments, the crop of so-called Web 2.0 companies, including Facebook in the 2000s. The inability to get in on a hot startup’s ground floor, only to subsequently pay a far richer price, was all too common for the once-storied firm. Under the sponsorship of famed Wall Street analyst Mary Meeker, a Kleiner partner since 2011, the firm that had failed repeatedly to invest at increasing levels now participated in the $363 million funding round, valuing Robinhood at $5.6 billion. By then Robinhood had made such a splash in the brokerage world that Fidelity, TD Ameritrade, and Charles Schwab had cut fees in response to the upstart’s zero-commission offering. It wasn’t until early last year that Robinhood and Kleiner finally connected, according to accounts from dealmakers on both sides. By 2017, when Robinhood became a “unicorn” valued at $1.3 billion as it raised an additional $110 million, it was the startup doing the snubbing: It excluded Kleiner from the list of venture firms that participated in its funding. Then, in mid-2015, when Robinhood was looking for another $50 million at a valuation of $250 million, Kleiner passed again. The firm sees lots of opportunities, however, and it chose not to bite. Kleiner-its singular name is as sufficient on Sand Hill Road as Oprah is in Hollywood-was interested. ![]()
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