Web 2.0 – A Conversation with John Doerr
Partner, Kleiner Perkins Caufield & Byers
Interviewed by John Heilemann
10/5/04 John Heilemann (JH):
Everyone is talking about Google and we know you were involved with their IPO. People thought you were nuts 5 years ago to invest in Google. Do you attribute your success to wise-all knowingness or blind luck?
John Doerr (JD):
I’m nuts. I’m lucky in my investments more than wise. Search was the 2nd most used thing on the web. They had revenues and Stanford dropouts.
JH:
There was some reluctance about being a public company and how comfortable they would be with the changes. What types of discussions did you have about that?
JD:
Google waited as long as they could. They didn’t need the cash, but they had an implicit agreement with the employees that they would go.
JH:
Google seems to want their cake and eat it too. Do they feel beholden to the shareholders now?
JD:
Their behavior has changed. They have a long term view of business and opportunity. The 30 year old cofounders will be there for a long time.
JH:
Tell us about the process of going public and its high and low points.
JD:
The process worked out well. The high was raising $1.7 billion. The auction seemed to work well. There was a fear that if we had an auction and the price discovery didn’t work, the price may go way down. The democratic stock auction seemed to work well.
JH:
Google scaled back on their price and size of their offering and the price discovery seemed to have worked. Was that an embarassment or the virtue of the auction system?
JD:
Yes.
JH:
Where is Google headed? Are they future oriented?
JD:
Up and to the right. They want to offer more comprehensiveness in search and their results. They want to offer access to more information that’s not currently available on the web. Better international coverage. More personalized – a Google that knows you. And a deeper advertising network with more products.
JH:
Can you be more specific in a more concrete way for the short term? Most people anticipated your announcement earlier today (inside the book type of searches).
JD:
It should be deployed in the next few weeks.
JH:
What type of defense of Google is involved in that? Web 2.0 idea that it’s more complicated than the second iteration…?
JD:
When you apply string theory to the web, you see a different way to categorize things. You have the near web, which is pcs, far web (tv, web), here web (mobile), weird web (3D, VRML, talk to it and it talks back), b2b web, d2d web, kimbo web….
Browsers are going to come back. Google has the ambition to serve most users with the most information and serve advertisers who pay for users to get the information.
JH:
Are Google and Amazon in direct collision course?
JD:
Perhaps.
JH:
What’s the next big thing?
JD:
Clean distributed energy. Clean water. Cleaner transportation. Sequencing DNA. Finding a cure for cancer. And web services.
JH:
Can you expand on web services?
JD:
Targeted services for handheld web devices. Tracking services so women can track their spouses. Upgrades of the Internet backbone to fiber and all optical switching. Filters based upon 3 million people on mobile phones so that you only get the most relevant information. Storage and computer power are going up and prices are coming down.
JH:
Non-web opportunities?
JD:
Aggregate all backlist information for videos. Be wary of getting in the way of large companies.
JH:
What about the controversy with Google in China? Do you see forsee that conflict with more businesses?
JD:
Yes. The Chinese government shut down Google by controlling the routers in China. If you want to be a robust partner in countries, you have to observe the rules inside those countries. Google is committed to democracy. People who have left China want unfiltered information. Google wants to become the search engine for democracy.
Questions:
Importance of politics on society and businesses. Current role of the web on the election cycle. What type of disintermediating impact does the web have on politics?
JD:
Howard Dean showed the power of the web. Kerry had a record day with the Howard scream. The McCain legislation put the caps on the DNC and RNC. Policy really matters even if you’re nonpolitical so pay attention even to global bills.
Q:
Can you give us an example of b2b rss field?
JD:
Wikis which companies use to build or promote their products.
Q:
Most web innovation in the past has come out of US companies. What extend do you see international companies participating in web 2.0 or leading the way? What VC are you investing in?
JD:
In Web 2.0 most innovation will come in global companies that have presence in China or India, but the innovators will come from the US. In Web 3.0, innovation may come from others. US educational institutions are not performing well. That puts the sand in the gears of innovation. We’re not welcoming foreigns into the universities, and if they do get in, they often leave. If you staple a green card to every diploma, you may get more of them to stay. So we have some big policy problems to address for Web 3.0.
Q:
I have some privacy concerns with Gmail. But what is the difference in how Google respects Germany and China?
JD:
China is not respecting international law, it’s respecting executive law. Google is not censoring the Chinese audience, it is just complying with the Chinese executive law. It feels that if it is going to help the citizens in the future, it needs to be able to be there. To do that, it needs to comply for now to get the foot in the door.