Kleiner Perkins
Based on Wikipedia: Kleiner Perkins
In the summer of 1999, a small optical networking company called Cerent sold to Cisco Systems for $6.9 billion. Kleiner Perkins had invested $8 million in the company. When the deal closed, that stake was worth around $2 billion. A return of 250 times your money in a single investment would be career-defining for most investors. For Kleiner Perkins, it was just another year in what has become the most consequential run in venture capital history.
The Firm That Built Silicon Valley
Kleiner Perkins—originally Kleiner Perkins Caufield & Byers, often abbreviated to KPCB—is an American venture capital firm that specializes in backing technology companies from their earliest stages through growth. Since 1972, the firm has invested in more than 900 companies. That portfolio reads like a history of the modern technology industry: Amazon, Google, Netscape, Sun Microsystems, Genentech, Electronic Arts, Twitter, and dozens of other companies that have shaped how we live and work.
But numbers alone don't capture what makes Kleiner Perkins significant. To understand this firm, you need to understand what venture capital actually is, why it emerged when and where it did, and how a handful of partners operating from a modest office on Sand Hill Road helped create the template for an entire industry.
What Venture Capital Actually Means
Venture capital is a specific type of investment that fills a particular gap in the financial system. Here's the problem it solves: when a company is brand new—just a few people with an idea and maybe a working prototype—it's almost impossible to get traditional financing. Banks won't lend money to a company with no revenue, no assets to use as collateral, and a high probability of failure. Public markets are out of reach because you can't sell stock in a company that doesn't really exist yet.
Enter venture capital. A venture capital firm raises money from wealthy individuals, pension funds, university endowments, and other institutional investors. The firm then deploys that money into young companies, taking equity stakes in exchange for capital. The key insight is that while most of these investments will fail—often completely—a small number will succeed spectacularly. If you invest in twenty companies and nineteen go to zero but one becomes Google, you've made extraordinary returns.
This is fundamentally different from other types of investing. A mutual fund buying shares of established companies is looking for steady, predictable returns. A venture capitalist is looking for outliers—the rare company that grows from nothing to a billion-dollar valuation. The math only works if you can identify those outliers early, help them grow, and occasionally hit returns of 100x or more on your investment.
The Founders and Their Pedigree
Kleiner Perkins was founded in 1972 by four partners whose backgrounds explain a lot about why the firm succeeded. Eugene Kleiner was one of the "traitorous eight"—a group of engineers who left Shockley Semiconductor Laboratory in 1957 to found Fairchild Semiconductor. That company became the seedbed of Silicon Valley, spawning Intel and dozens of other semiconductor firms. Kleiner understood the technology industry from the inside because he had helped create it.
Tom Perkins came from Hewlett-Packard, where he had been an early executive at one of the companies that defined the tech industry's culture of innovation. Frank Caufield and Brook Byers (who joined in 1977) rounded out the founding team, though the firm was initially just Kleiner Perkins before adding their names.
This combination mattered enormously. The partners weren't just financiers—they were technologists and operators who understood how companies actually worked. When an entrepreneur walked into their office with a new chip design or a software concept, the partners could evaluate both the technical merit and the business potential. This operational knowledge became a Kleiner Perkins signature and a model that other venture firms would later copy.
Sand Hill Road: Creating a Cluster
Kleiner Perkins claims a distinctive piece of Silicon Valley geography. The firm was the first venture capital company to open an office on Sand Hill Road in Menlo Park, California. Today, Sand Hill Road is synonymous with venture capital—a stretch of low-slung office buildings housing many of the most powerful investment firms in technology. But in the early 1970s, it was just a road.
The location wasn't arbitrary. Menlo Park sits at the northern end of Santa Clara Valley (what we now call Silicon Valley), close to Stanford University and the growing cluster of semiconductor companies that had spread outward from Fairchild. By establishing themselves there, Kleiner Perkins positioned themselves at the center of an emerging ecosystem. Other venture firms followed, and over time the road became a destination for entrepreneurs seeking funding.
This clustering effect is important to understand. When entrepreneurs, engineers, lawyers, investment bankers, and venture capitalists all concentrate in the same geographic area, they create what economists call "agglomeration effects." Knowledge spreads faster. Deals get done over lunch. Someone who leaves one company immediately knows someone at another company who's hiring. Kleiner Perkins didn't just benefit from this ecosystem—by being the first venture firm on Sand Hill Road, they helped create it.
The Early Bets
The 1970s were not easy for venture capital. The stock market crashed in 1974, making investors wary of risky investments in unproven companies. But Kleiner Perkins stayed active, funding companies like Tandem Computers, which pioneered fault-tolerant computer systems—machines designed to keep running even when components failed. In industries like banking and air traffic control, where downtime was unacceptable, Tandem's computers became essential.
By 1996, Kleiner Perkins had invested approximately $880 million across around 260 companies. That might sound like a lot, but spread across two decades and hundreds of investments, it averages out to relatively modest checks by today's standards. The genius was in selection—finding the companies that would matter.
Compaq was one such bet. In the early 1980s, the personal computer market was dominated by IBM, whose PC had established the standard architecture. Compaq built IBM-compatible machines—computers that could run the same software but were often better designed. Kleiner Perkins backed them early, and Compaq went on to become one of the largest personal computer manufacturers in the world before merging with Hewlett-Packard in 2002.
Genentech represented something different: biotechnology. Founded in 1976, Genentech was one of the first companies to commercialize recombinant DNA technology—a technique that allows scientists to insert genes from one organism into another to produce useful proteins. Their first major product was synthetic human insulin, manufactured by bacteria that had been genetically modified to produce the hormone. Before Genentech, insulin for diabetics came from pigs and cows. After Genentech, it could be made in industrial fermentation tanks. Kleiner Perkins' investment in Genentech showed the firm's willingness to back revolutionary science, not just computer companies.
The Rise of John Doerr
In the venture capital world, certain individual investors become legendary for their ability to identify winning companies. At Kleiner Perkins, that partner was John Doerr, who joined the firm in 1980 and would go on to make some of the most successful technology investments in history.
Doerr's background was technical—he had worked at Intel on memory chips before transitioning to venture capital. But his real skill was pattern recognition. He could see which technologies were about to become important and which entrepreneurs had the drive and ability to build major companies around them.
His track record speaks for itself. Doerr led Kleiner Perkins' investments in Netscape, Amazon, and Google—three companies that, taken together, represent the foundational infrastructure of the commercial internet. He was an early advocate for the importance of the World Wide Web at a time when many people still thought of the internet as an academic curiosity. He pushed for investments in electronic commerce when most people couldn't imagine buying things through their computer screens.
Doerr also popularized a management technique called Objectives and Key Results, or OKRs, which he had learned at Intel and introduced to companies like Google. The basic idea is simple: set ambitious objectives, then define specific, measurable key results that would indicate you've achieved them. Review progress regularly. This framework became deeply embedded in Silicon Valley management culture, and its spread can be traced largely to Doerr's influence.
The Netscape Bet
In 1994, Kleiner Perkins paid $5 million for approximately 25% of a young company called Netscape. To understand why this mattered, you need to understand what the internet looked like at the time.
The World Wide Web had been invented by Tim Berners-Lee in 1989, but it was still mostly used by academics and enthusiasts. To access it, you needed software called a browser, and the early browsers were crude, difficult to install, and limited in capability. A team at the University of Illinois had created a browser called Mosaic that was more user-friendly, and two members of that team—Marc Andreessen and Jim Clark—left to start Netscape.
Netscape Navigator transformed web browsing from a technical exercise into something ordinary people could do. The software was fast, attractive, and available for download (an unusual distribution method at the time). Usage exploded. Within a year, Netscape had captured the majority of the browser market.
When Netscape went public in August 1995, something extraordinary happened. The stock was initially priced at $14 per share, then doubled before markets opened. By the end of the first day, shares were trading at $75. A company that was barely a year old, with minimal revenue and no profits, was suddenly valued in the billions. This IPO is often credited with launching the dot-com boom—the period of frenzied internet investment that would dominate the late 1990s.
For Kleiner Perkins, the $5 million investment turned into hundreds of millions. But more importantly, Netscape proved that the internet was going to be big business. The firm positioned itself at the center of what was clearly becoming the most important technology transition since the personal computer.
Google: The Biggest Bet
In 1999, Kleiner Perkins invested $12.5 million in Google. The company had been founded the previous year by Larry Page and Sergey Brin, two Stanford graduate students who had developed a new approach to search. Their insight was that the importance of a web page could be measured by how many other pages linked to it—essentially using the structure of the web itself to determine relevance. They called this approach PageRank.
Search engines already existed. AltaVista, Excite, Lycos, and Yahoo all offered ways to find things on the web. But their results were often cluttered with spam and irrelevant pages. Google's results were cleaner, more accurate, and updated more frequently. Users noticed immediately, and Google's market share grew rapidly through word of mouth.
What wasn't obvious in 1999 was how Google would make money. The company had no real business model beyond being useful. It wasn't until 2000 that Google launched AdWords, the advertising system that would turn search into one of the most profitable businesses ever created. The basic idea: show small text advertisements alongside search results, and charge advertisers only when someone clicks on their ad. This "pay-per-click" model aligned incentives—advertisers only paid for actual customer interest—and generated billions in revenue with extremely high margins.
As of 2019, Google's parent company Alphabet had a market capitalization of approximately $831 billion. Kleiner Perkins' $12.5 million stake from 1999 became worth billions. This single investment would justify an entire career in venture capital.
Amazon: The Everything Store
Kleiner Perkins was also an early investor in Amazon.com. Jeff Bezos founded the company in 1994 with the idea of selling books online. Books were ideal for early e-commerce: they were standardized products (a copy of a given book was identical to any other copy), they didn't need to be tried on or tested, and the existing retail infrastructure for books was inefficient—most bookstores carried only a small fraction of titles in print.
Amazon grew rapidly, expanding beyond books into music, movies, electronics, and eventually almost everything. The company famously prioritized growth over profits for years, reinvesting every dollar into building infrastructure and customer base. This strategy was controversial—Wall Street analysts frequently criticized Bezos for not generating profits—but it allowed Amazon to achieve a scale that competitors couldn't match.
On an $8 million investment, Kleiner Perkins generated returns exceeding $1 billion. Again, the numbers are almost absurd. An 8,000% return turns every dollar invested into $80. Very few investments in any asset class have ever achieved anything comparable.
Beyond the Big Wins
Not every Kleiner Perkins investment became a household name, but the breadth of the portfolio is remarkable. Electronic Arts became one of the largest video game publishers in the world. Sun Microsystems built the workstations and servers that powered much of the early internet (and created the Java programming language). Intuit made software like TurboTax and QuickBooks that millions of people use every year.
More recent investments include companies like Twitter (the social media platform), Square (payment processing), Snap (Snapchat's parent company), and Slack (workplace communication). Each represents a bet on how technology would reshape some aspect of life or business.
The firm also made investments outside its core technology focus. Beyond Meat, a company making plant-based meat substitutes, received Kleiner Perkins funding. Coursera, the online education platform, is another portfolio company. These investments show a willingness to follow technology into adjacent industries—food production, education, healthcare—wherever software and innovation could create new businesses.
Growth and Evolution
Over time, Kleiner Perkins expanded its activities. In 2008, the firm launched the iFund, a $100 million initiative focused on applications for Apple's iPhone. The App Store had just opened, creating a new platform for software distribution. Kleiner Perkins doubled the iFund to $200 million the following year, backing companies building mobile applications.
In 2010, the firm created the sFund, a $250 million fund focused on social media startups. Facebook, Zynga, and Amazon were co-investors. This was social networking's ascendant period—Facebook had recently surpassed 500 million users—and Kleiner Perkins wanted exposure to companies building on social platforms.
The firm also invested heavily in "clean technology"—renewable energy, electric vehicles, and other environmentally focused businesses. In 2008, reports emerged that Kleiner Perkins was raising a $500 million fund specifically for growth-stage cleantech investments. This reflected a broader belief that environmental challenges would create enormous business opportunities.
Partners of Note
Kleiner Perkins has attracted partners with unusual profiles. Colin Powell, the former Secretary of State and Chairman of the Joint Chiefs of Staff, joined as a "strategic" partner in 2005. Al Gore, the former Vice President who had become an environmental activist, joined in 2007. His involvement came through a collaboration between Kleiner Perkins and Generation Investment Management, a firm Gore had co-founded to focus on sustainable investing.
Vinod Khosla, who co-founded Sun Microsystems, was a partner at the firm for many years before leaving to start his own venture fund. Bill Joy, another Sun co-founder and the creator of important software tools like the vi text editor and the C shell, also spent time at Kleiner Perkins. These technical luminaries brought credibility and insight that purely financial investors couldn't match.
Mary Meeker, an analyst famous for her influential annual "Internet Trends" report, joined the firm in 2010. Her reports had become required reading in the technology industry—a comprehensive annual survey of how the internet was evolving and what it meant for businesses. She departed in 2019 to found her own firm, Bond Capital.
Challenges and Controversies
Success doesn't protect any institution from difficulty. In 2012, Ellen Pao, a junior partner at the firm, sued Kleiner Perkins for gender discrimination. Her lawsuit alleged that she had been passed over for promotion and ultimately fired because of her gender, and that the firm maintained a hostile environment for women.
The case went to trial in 2015 and attracted enormous attention. Silicon Valley was facing increasing criticism about its lack of diversity, and the Pao lawsuit became a focal point for those concerns. After a month-long trial, the jury found against Pao on all claims. She filed an appeal but dropped it in September 2015.
Regardless of the legal outcome, the lawsuit exposed tensions within the venture capital industry. Women remained underrepresented at major firms, and Pao's willingness to litigate—and the subsequent attention—contributed to broader conversations about inclusion in technology.
Reorganization and Renewal
By 2018, Kleiner Perkins was facing questions about its future. The firm had seen several high-profile departures, and some observers wondered whether its best days were behind it. In September of that year, the firm announced it was spinning out its digital growth team—the group focused on larger, later-stage investments—into an independent firm.
In January 2019, Kleiner Perkins announced what some called a "reboot." Mamoon Hamid and Ilya Fushman, two investing partners who had joined in 2017 and 2018 respectively, took leadership positions. The firm raised $600 million for its 18th fund and announced a renewed focus on early-stage investments in consumer, enterprise, hardware, and financial technology companies.
This pattern—reinvention following periods of struggle—is common in venture capital. The industry is highly competitive, and the best entrepreneurs have many options for where to raise money. Firms must continuously demonstrate that they can add value beyond just writing checks. Kleiner Perkins' long history gives it brand recognition and networks, but maintaining relevance requires ongoing effort.
The Mathematics of Venture Capital
To appreciate what Kleiner Perkins has achieved, it helps to understand the mathematics of the venture capital business. A typical fund has a ten-year life. The firm raises money from limited partners (the investors who provide the capital), invests it over the first few years, manages the portfolio companies through growth or failure, and eventually returns whatever value remains to the limited partners.
Returns in venture capital follow a "power law" distribution. This means that a small number of investments generate the vast majority of returns. In a successful fund, one or two companies might provide most of the profit. The winners more than compensate for all the losers. But you have to be in the game—you have to make enough investments to have a chance at hitting the big ones.
By 2019, Kleiner Perkins had raised approximately $9 billion across 19 venture capital funds and four growth funds. By 2024, that had grown to 21 venture capital funds and six growth funds. Each fund represents a fresh opportunity to find the next Google or Amazon—and each failure is absorbed as part of the expected cost of searching for outliers.
The Firm's Current Shape
Today, Kleiner Perkins operates from headquarters in Menlo Park, with additional offices in San Francisco and Shanghai. The Shanghai office reflects the growing importance of Chinese technology companies; JD.com, one of China's largest e-commerce platforms, is among the firm's investments.
The current leadership includes John Doerr as chairman, along with founding partner Brook Byers. Al Gore remains involved. Mamoon Hamid and Ilya Fushman lead day-to-day investment activities. Ted Schlein focuses on cybersecurity investments, an area of growing importance as more business and personal activity moves online.
Recent investments include companies working on artificial intelligence (TogetherAI), workplace tools (Glean, Rippling), financial services (Robinhood, Plaid), and various other sectors. The firm continues to make bets across a wide range of technology-enabled businesses.
What Kleiner Perkins Represents
Venture capital is often described as an industry that funds innovation. That's true, but it's not the complete picture. Venture capital is also a mechanism for concentrating risk. Most people cannot afford to put their savings into unproven startups that might go to zero. Venture capital firms pool money from investors who can afford that risk and deploy it into the companies most likely to change the world.
Kleiner Perkins, across five decades, has been among the most successful practitioners of this art. The firm's investments have created millions of jobs, generated trillions of dollars in economic value, and produced technologies that billions of people use every day. Whether you've searched Google, ordered from Amazon, used Netscape (or its descendants), played an Electronic Arts game, or taken biotech medicine, you've been touched by companies this firm backed.
The venture capital model has its critics. Some argue it encourages companies to grow too fast, prioritize metrics over sustainability, or pursue exits over building lasting businesses. Others point out that the benefits of successful investments accrue disproportionately to already wealthy limited partners and carried interest (the share of profits that goes to the venture capitalists themselves). These are legitimate debates about how the system should evolve.
But whatever its flaws, venture capital has proven remarkably effective at identifying and financing transformative companies. And no firm has a longer or more successful track record at this than Kleiner Perkins. From the first office on Sand Hill Road to investments in artificial intelligence startups today, the firm represents the template that the entire venture capital industry follows.