VC legend Doerr: Tech is booming, not in a bubble

At TechCrunch Disrupt, John Doerr points out that today's tech venture capital environment is just about a third of what it was a decade ago. He also unveils a new social network: Erly.

SAN FRANCISCO--In a "fireside chat" at TechCrunch Disrupt today, Silicon Valley venture capital guru John Doerr announced the launch of Erly, a new social network built around "experiences."

Doerr, the Kleiner Perkins Caufield & Byers partner who is considered among the most important VCs in Silicon Valley, said during an interview by TechCrunch founder Michael Arrington that Erly was built around the idea of "a different kind of interaction, an experience graph." Erly was founded by Eric Feng, the founder of Hulu (who was also a Kleiner, Perkins partner).

Kleiner Perkins VC John Doerr, speaking at the TechCrunch Disrupt conference today Daniel Terdiman/CNET

Erly's first product is called Collections, and is designed to give people a way to contribute all kinds of content around events--such as a baseball game, for example--to a shared archive that anyone can edit, but no one can delete.

On its Web site, Erly says of Collections that it is "the fastest and easiest way for a group to build an album together. Everyone contributes by easily bringing together photos, notes, videos, and links from across the Web into a beautifully designed layout. Your pictures, stories, and digital memories are meant to be shared, not buried in hard drives, e-mails, and feeds."

Erly also says on its site that its next product will be focused on "future events."

Tech and government
During the conversation, Arrington asked Doerr to weigh in on the idea that an explosion in green tech is being fueled largely by government investment. Doerr's take on that was that Arrington was "partly right, but mostly wrong."

In part, Doerr suggested, worldwide energy markets are large, and regulated. But he said that capitalism is what's governing those markets, whether one talks about biofuels, batteries for electric vehicles, or other green-tech products. And he pointed to parallels between earlier technologies and today's hottest areas. "The solar market is very, very competitive," Doerr said, pointing out that competition in that market is similar to what happened in PCs and storage: there were initially dozens of competitors, and only a small number ended up surviving.

But Doerr also wanted to strike down the notion that the IT industry sprouted organically without help from the government. For example, he said, "We have this myth that the IT industry got started on its own. That's just not true. There was deep governmental involvement in the Internet protocols...The whole field of computer science was invented by DARPA. [We shouldn't] kid ourselves about the lone entrepreneur in the garage."

Boom or bubble?
As someone who has just launched his own investment fund, the CrunchFund, Arrington wanted Doerr to say whether he felt that today's tech industry is in a boom or bubble period. Doerr was very clear that he feels it's a boom, and that things are under control.

"I want to make two big points about now and 2000," Doerr said. "In 2000, there was only one big thing, the Internet, and it was about to crest. [It] had a couple hundred million users. Today, it's not just the Internet. We have social, local, and mobile, all three tectonic changes, earthquakes, that are combining to create a tsunami of opportunity, change, and disruption [and are] doing it at a time when 5 billion devices can talk to the Internet. There's almost a billion people on Facebook."

Doerr pointed out that investors in Silicon Valley are restraining themselves in ways that they didn't prior to the dot-com bust of 2000, explaining that while there were about 8,000 new ventures funded in 2000, launched with $99 billion of venture funding, today, there are just 3,000 new ventures funded with about $23 billion of capital. That means, he said, that today's tech venture capital environment is just about a third of what it was a decade ago. "I prefer to think of these periods as booms instead of bubbles," Doerr said. "Booms may lead to over-investment, they lead to full employment, and they lead to lots of innovation. There's going to be failures, and that's OK."

But what matters, he added, is that the industry produces a lot of innovation, and "big durable companies," and that's what's happening, he argued. Companies like Zynga, Groupon, Facebook, and LinkedIn all have real revenues, real growth, and in some cases, real profits, Doerr argued. "These valuations are crazy," he added, "but that's always going to happen."

 

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