Market Mover

Market Mover
By Margie Wylie
Staff Writer, CNET NEWS.COM

John Doerr is blur. The lean venture capitalist virtually bounces off the walls of his airy Palo Alto office, fielding faxes, phone calls and email, wheeling, dealing, and schmoozing with fierce concentration.

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Considered one of the best connected people in Silicon Valley, his secret is simple: No one is beneath this Missourian's affable attention. Maybe that's why the venture capitalist can put together crack start-up teams in record time, a skill that brought him many hits including Compaq, Sun and, most recently, Netscape.

As he sat down to talk with NEWS.COM in August, he was putting the finishing touches on a presentation he would make to President Clinton. It worked. Doerr was instrumental in getting Clinton out of the Silicon Valley doghouse by securing the president's official opposition to Proposition 211, a California initiative that would let shareholders personally sue the employees and officers of a corporation when profits don't live up to expectations. It is an issue Doerr has a great personal, as well as professional stake in opposing, since he sits on the boards of many of the start-ups he's funded.

Doerr's lack of pretension and his obvious delight in his 5-year-old daughter don't peg him as a Type-A thrill seeker. In the investment world, though, that's exactly what he is. You see, he thinks that the Internet isn't overhyped. Doerr is an Internet optimist who puts his money where his mouth is, investing in start-ups like Netscape and recently starting a special fund to invest in companies just building applications and tools around Sun's Java Internet programming language.

NEWS.COM: What do you think of all of the venture capital being thrown at the Internet?
Doerr: You've got to look at the capital relative to the size of the opportunity. Right? From 1980 to 1990, the PC was the biggest thing that happened. The new companies in the PC industry went from zero to $100 billion a year in revenues. $100 billion! Just the newcomers. I'm not talking about the Hewlett Packards and the IBMs, but the new PC companies. That's almost the single largest creation of value or wealth that we've ever seen on the planet. Regrettably, recreational drugs is bigger. The OPEC oil cartel briefly surged to be more than that. But I'm trying to put it in some kind of perspective. That's phenomenal.

Now, fast forward to today. Since June of last year, which was the beginning of, not the PC revolution, but what I call the Net revolution, the new Net companies--not the old ones, not the Suns, not the Microsofts, but the new Net companies--are worth $20 billion in a year. I'm talking about Yahoo!, Netscape, UUNet, everything involved with the Internet and the Internet structure. I'm among the few crazies who say the Internet has not been overhyped, that we are genuinely involved in something bigger than the PC. If the PC was $100 billion, I think this is going to be at least three times that. The Internet market will be three hundred billion in value.

The stock market is saying that these companies are worth all these billions but that can change fast. Lately, we've even seen some stocks drop.
Well some have gone up and some have gone down. That's usually what happens with stocks. But the real Internet companies, the ones that have got real revenues and real growth prospects are doing just fine, thank you.

NEXT: Silicon Valley investing

Silicon Valley investing

What's the difference between being a venture capitalist in Silicon Valley and any place else in the world?
Venture capital is happening here. You know, within five miles of where you and I sit is half of the world's venture capital and more than half of the world's great entrepreneurs and great economic opportunities. So we have a lot to be thankful for, and I don't mean the weather. It's the educational environment: the universities where this started. It's the role models that we have, whether it's a Hewlett Packard or an Intel. And it's part of the culture. It's in the air. Venture capital plays a role, but it's a minor one. It's like offstage. It's the entrepreneurs and the companies and the markets that make it happen.

Profitability aside, what's been your favorite investment ever? Something you derive some personal satisfaction from.
It's hard to say. I've been really lucky to work with a lot of companies. I'd say if you force me to pick one, it would be Netscape. The way that team came together in 120 days and the impact that they've had on the Internet, I think is fabulous. I think it's been less than two years since Netscape shipped its original product. They have 40 million users. One of their big advantages besides having a good product was they were the first market mover. They had this first market advantage. So 40 million is a very big number. That's as many users as there are for Windows 95 or Microsoft Office, for example. And I think one of the huge advantages is a sense of urgency. So, that's also the best single investment I've made. It's not the best single investment our firm has made. I like the team a lot. I think they're great people.

And so Netscape was the instigator of the Internet year and the Web week. Did they push everyone else to this accelerated timetable?
I think time has compressed enormously because of the Net. With credit to Bill Gates who coined the phrase, it's a sort of friction-free economy. How else can you get 40 million new customers in less than two years? The Web is it. It changed everything.

NEXT: Clinton

Clinton

Has the ardor for Clinton cooled in Silicon Valley?
I think there's a tremendous interest and fascination still with Bill Clinton. There was a lot of disappointment when he vetoed the securities reform legislation. And the hottest political issue in this state right now is Proposition 211 which is this Lerach initiative that basically would allow eight greedy law firms to indiscriminately go after companies and their employees, as well as their officers and directors if the stock price falls. So that's a very serious matter that has Silicon Valley, the whole state of California, and, in fact, the country, all white hot. I'm personally involved in that campaign because I think it's wrong. What these securities lawyers do is nothing short of economic terrorism. I've seen it cost companies jobs. Radius had a $17 million suit against them and then they laid off 300 workers. For three companies I'm on the board of--Compaq, Sun Microsystems, Symantec--it has cost $120 million. These companies aren't run by criminals. They're not run by crooks. So I mean what we're talking about is an initiative that was written by and for greedy securities lawyers. So anybody who reads it comes to the conclusion they ought to vote no on 211. It's really outrageous.

And it's just in California.
Actually it affects every company in the country. Not many people appreciate that. The legislation reads, if you have a single California shareholder, you can't indemnify your officers and directors against these kinds of suits. You can bring punitive damages. It undoes all the federal reforms. CEOs are going to resign. It's just wrong. He's an economic terrorist. But that's not our topic, right?

NEXT: Being John Doerr

Being John Doerr

What drives you personally?
I really get a lot of satisfaction out of two things. First and foremost, my family. They mean a lot to me. That's how I make meaning out of life. And then second, I like to see teams come together and win. And so I take a great deal of satisfaction out of that.

I noticed in a bio you mentioned some interest in both the Internet and education. Is there some place where those come together?
You know, for the last twenty years, people have thought technology would solve our problems in schools. And I have to tell you, it won't. I mean, I've been in really rich schools with lots of computers and no learning happens, and in very poor schools where they've got no computers and lots of learning happens. So what I think is true is that education happens when the parents, the teachers, the kids, and the administrators--those four--come together, and as a community own that process.

So what's the role of the Net?
The right role for the Net is to build that community, to extend the length of the school day to let the kids take home the project that they're working on, and involve the parents in it. I mean the sad truth about education in America is that if you're an urban family in our nation, the odds are 50-50 you're in a single family home. So you go home and your mother, who is typically the caregiver, doesn't have time to help you with the homework assignments because she may be holding down two jobs. And we lose a large part of our population when they don't learn basic math, basic symbolic skills. That's the ticket to a knowledge-based job in our economy. So we've backed two different companies--the Lightspan Company for K-12 and Academic Systems for colleges--to try to help use the technology to build community and get ahead on this very important agenda which is education. I think you can do good and make money at the same time.