E63: How Mamoon Hamid and Ilya Fushman Continued Kleiner Perkins’ Legacy

Welcome back to Turpentine VC, the podcast where we discuss the art and science of building successful venture firms, VC to VC. This week, we're releasing my 2023 interview with Mamoon Hamid and Ilya Fushman, partners at Kleiner Perkins, the storied 52-year-old venture firm. In this conversation, we uncover new ground and insights as to how KP functions as a firm and partnership, including how they go about decision-making, the majors and minors framework, the craftsman approach to venture, and the value of discipline. Now let's hear from Mamoon and Ilya.

Mamoon Hamid, Ilya, welcome to the podcast. Thanks for joining.

Thank you, Eric.

So take us to— I don't know if it's 2015 or at some point where people are realizing, hey, we need to take a different track. Maybe we need some new blood in who's making these decisions and, and take us through like what happened. Yeah, it's also an insight into how venture firms work and how partner transitions work.

Yeah. Yeah. So there at the time, there were a number of partners, so general partners, some who were dedicated to specific funds and some were who were across different funds. But I would say, you know, the, the person who I owe a lot of credit, you know, in terms of recruiting me is touchline. Got it.

And does he make the decision or is there a committee who makes it?

It's a team. It's a partnership, right? And that's the beauty of Kleiner Perkins, the 51-year-old partnership. It's— there is no CEO. There is no one person who makes a decision. And I think that is the beauty of a feature of a partnership. It's like, you know, you have a group of smart individuals who get to make decisions. And so Ted was really the person who recruited me and, you know, there's lots of other folks in the background who I would spend time with and who are really important to the decision-making. I would say it's like if they're just like a company, if there are two people who just don't want to support hiring a person, you're not going to hire a senior hire, right? And so that's sort of how things work over here as well. But in terms of folks, Ted Schlein had been helping sort of figure out what the future of the firm would look like and what the team that could help him enable, uh, accomplishing that would look like. And that's where some of the young blood came in.

Yeah. So, um, you guys were having conversations many years ago about what building a firm from the ground up could look like. Talk about what, what that, what that vision was and what some of the conversations about, you know, what that could look like.

I mean, I think it's kind of like what we are building here, which is a craftsman approach. Craftsman approach. I mean, we've both been apprentice inventor, right? Working for others for a while, absorbing the business, learning how it's really done. Because it's not a business you can learn from a textbook, right? You kind of have to have reps on companies. You have to spend time, you have to really be in it to understand it. But generally speaking, it is kind of what Kleiner Perkins used to look like in that golden era, which is a small team of people who really understand what company building is about, who've ideally practiced the craft of building or being in a company, whether it's early stage or late stage, and you have empathy for, you know, what it takes to really do that and really what matters at every stage of company, right? What's critical at any given juncture. And you can be a great advisor to an entrepreneur who's trying to do that, and you can actually discern what's a good idea and what's a good entrepreneur and what's, what's a good market and what's not and preserve that small group and furthermore, keep it focused, right? So, you know, KP was first of many, first of many to growth, first of many to do China, first of many to do, you know, a Java fund, an iOS apps fund, other types of programs. But at the end of the day, what really matters is you did the Series A of like the consumer company or the enterprise company. Exactly. And you've, you've then kind of had the foresight to know, hey, this is, this is working and let's really concentrate and let's try to build up as big of a position as possible to sort of help the company grow as much as possible. And that's kind of what we try to espouse here, which is small team. Everybody has majors and minors. So major is something you really understand and really good at. Could be enterprise software, could be consumer, could be something else, could be AI. For some of our newer hires. And the minors are domains of interest, right? It could be financial services for somebody, it could be consumer for someone else, it could be enterprise productivity for somebody else. And those majors and minors kind of overlap, and that's how we can become good partners to each other, because that's when you can really help somebody build conviction or help somebody sort of, or, you know, push on their conviction and really test it. And, you know, personally, I The way our process works, I've been on both sides of it, where sometimes I come in and I'm sort of like gung-ho on a deal, and folks ask me really good questions, and it makes me take a step back and reassess. I've also been in the situation where I feel like I'm on the edge, and my partners are asking me, hey, if you didn't do this deal and the company does really well, how would you feel? And that makes me kind of lean forward and do the deal. And that's really the dynamic you want, and I think that's the dynamic that results in the best outcomes. We have trusted partners, small groups. Everybody really understands what everyone is doing and you have the shared context in between.

Talk about how you guys do decision-making at Kleiner and how that's maybe different from how we see it at other firms or the different approaches maybe.

Yeah. So we, so we have two funds now. We have a venture fund, currently $800 million, and a growth fund. It's about $1 billion. On the venture side, we're really partner conviction driven. In the sense that anybody, any partner can come in and propose a deal. Our job as partners is again to test or reinforce that conviction, but we don't have a formal vote. And in practice, the way it really settles out is you look across the room, and if everybody looks really skeptical, you know, they're probably— your partners are smart and they probably have a reason to be skeptical, but you could still do that deal. Now you could do that only so many times because eventually once you do a bunch of deals that nobody likes and they turn out to be bad, uh, it's kind of shame on you. Um, but you know, a lot of times you, you have the conviction and folks ask good questions and you still believe in it, so you do the deal. So we try to basically give people the— as much agency as possible to make these decisions because the best deals out there aren't obvious, right? Uh, and they do typically come out of dissent and, and sort of discussion and, and some conflict, right? Because sort of tried, right? The obvious deals would be pretty obvious. So we try to foster that on the venture side. On the growth side, you know, we do want to be a lot more rigorous. We have to be a lot more rigorous. These are bigger, bigger checks. And so we do have a formal process for data deck, for understanding the model, for valuation. And then we do require unanimity. So everybody has to vote positively on that, on that deal. Yeah.

How is the growth fund different from the growth fund that existed when, when you came here and that team, even just the approach and strategy?

Yeah. So we call our growth fund Select. It's meant to be selective. So it'll have anywhere between 12 and 15 logos in it over the lifecycle of that fund. So in some cases it'll get very concentrated and it's meant to really be a high conviction vehicle. A lot of the companies will be companies we've backed out of our venture fund, or we see something from the inside that gives us the conviction. And some will be companies we missed or didn't see or didn't have the conviction on at the early stages. But ultimately, we want to have a very strong position in any company we back out of the growth fund. And so that's kind of it. The main thing about the growth fund today versus the prior iteration is that it's much closer to venture. So it's sort of an extension of venture into the later stages than it is a standalone growth fund. And having a growth fund that's sort of hyper-growth-oriented versus more venture-leaning probably would require a big separate team, which is not something we want to have. We want to have one team that looks at all the deals, that has shared context, and folks who maybe are more growth-leaning will still do a Series B or a Series A. Right? Um, because we, we want this to be one partnership. One of our core values is, is one team, one dream. And you can't really have that core value by having, uh, very separate teams. So it's sort of a venture plus model, uh, and it's really meant to pick off and concentrate in companies that are just going to be outsized mega winners. Yeah.

So I look at you guys and Jason Horowitz as playing just like a very different game or a very different approach to that game. I'm curious if you look back at Kostler Index Is it like the same game with some minor variations, or how do you kind of compare the, the firm approaches to the craft?

I mean, I think everybody has their own approach, right? I'd say I think we've both kind of learned a lot and borrowed from places we've been at before. You know, I think, for example, at Index, we had a separate separation of vehicles between venture and growth, but they're still very much the same team. I think that works very well. Um, Khosla has a slightly, you know, different, fairly similar but a little bit different structure. Um, but both are actually relatively similar in the sense that generally focus on a smaller team, uh, and kind of a, a sort of small partnership venture model, uh, versus it may be a more multifunctional, multi-product, uh, firm. So again, like more of the roots of Kleiner Perkins, uh, and, and, you know, taking it back to that.

Yeah.

And is it a— it feels like, you know, when, when, when people do a bunch of— or when companies do a bunch of different things, some of them work, some of them don't work. It's, it's often, you know, easy and maybe accurate to say, hey, you spread too thin, it's time to retrench. But then when you retrench and things are really working, it's tempting to, to do other things again.

It's a fundamental challenge of venture capital. You raise funds and The obvious next question is, what are you going to do with it? Who are you going to hire? What other things are you going to invest in? And you have to be really disciplined to keep focus. And I think, again, it comes back to these outsized outcomes are randomly occurring, independently distributed events that happen every 1 to 5 years. And you just have to be ready for them. The main thing that matters is you did the Series A or the Series B of one of these amazing companies, and then you have the right and the opportunity to concentrate into it with growth. And if you can do that, you can sort of generate the types of returns that, you know, KP generated in its early days.

Totally. Um, Mamoon, talk a little bit about the social capital approach, because that was very similarly to maybe Kleiner in the beginning. Like it was first in some ways, like social capital felt like it was really trying new ways of approaching venture, a data-driven approach. They were also getting into different asset classes. When do you categorize some of the experiments that you guys ran at Social? And what is your perspective on, on them going forward in terms of how you think about how you may or, you know, anything you may want to adopt as you think about Kleiner going forward?

I would say that our earliest days and including all the way through 2017, were focused on early-stage venture capital. It was own substantial amount at the earliest stages, join the boards of these companies, you know, work hard for these companies for a long period of time before you see much of any return. So very, I'd say, traditional early-stage venture capital. We did employ some, some tools around. We had a data science team that would help our portfolio companies with data efforts. And at one— at some point, I think there were a bit more data-centric ways to actually be investing in companies. That was sort of after my time. But I would say the most of the time that I was there, it was a very traditional sort of, yeah, early-stage venture capital model.

Yeah, that makes sense. I mean, it's, it's interesting when you take a detached look at the ecosystem and you see something like a Y Combinator that has just taken a drastically different approach to venture, right? Or an Andreessen Horowitz, which has also taken a pretty drastically different approach to firm building. And it's interesting, one is tempted— I mean, in this conversation we've been talking about going back to Kleiner's roots, but there's always also the question of like, hey, does venture evolve or does it kind of like, is it more of a craft that stays the same over decades and, you know, you just get better and better at it? But really what's important is, is getting back to basics. Or is it, hey, just like the industries we invest in, they, you know, evolve using software or some other dislocation effects. I say that to ask like 20 years from now, you know, do you think it's going to look pretty similar? How do you think about that? Just like the craftsman approach versus like the product?

I think we voted with our actions, right? Which is We believe in the craft approach, which isn't too dissimilar from the approach from 30 years ago, 40 years ago. Do we employ tools that allow us to do our jobs more efficiently, better, like have a software that didn't exist 20 years ago? Absolutely. I think that there— and do we run our back office? Do I do— do we do our portfolio management with software and analytics that allows us to be better stewards of the capital we manage? Of course we do. So there's all that. But, but I think when you talk about the craft of investing, it's that we're a small team. You know, Ilya said one team, one dream, which is to invest in the, in history-making companies. And we strongly believe in less is more. And I think some of the other examples of firms that you mentioned, which are different just from an approach standpoint, you know, we're 7 partners today and we, we may not be more than that, like, ever. I don't know. Not much more than that. Right. So I think there's a breaking point. And we always talk about— we, we do our team meeting in the room next door here and we talk about how can we make really good decisions together as a team sitting around on the table, which is maybe the Amazon two-pizza thing, but it's our own version of it, which is like that conference room table.

And you're all based here.

We're all based here in the Bay Area. We all meet here in person. Every Monday we're here together, then the rest of the week we split between San Francisco and Menlo Park. But we, we see each other like multiple times a week. And that's, again, that's by design. And yeah, we don't hire outside of the Bay Area. It's, it's all centered on how do we really, how do you make good decisions?

Like the, you know, the business obviously is evolving. I mean, what are the things that are changing? What's easier to start companies than ever before? Right. There's just more information out there. more industries are accessible. There are more consumers for, you know, different types of products, whether it's consumer or enterprise software. Um, and so you have more companies to, to look at, and there might— there will be probably more and bigger winners, right? If you look at some of the, the companies that have grown in the past decade, you know, 20 years, they become bigger and they grow faster than ever before. So what do you need to do to adjust as a venture firm? Well, one is you need to see more. Right. And so you can build tools for that. You can build scouting programs, right? Like we have a scout fund as well, uh, to earmark some of these investments. You can process the pipeline a little bit more efficiently with tools and signals from the app store, payment data and things like that. But at the end of the day, it's about meeting that entrepreneur, assessing, you know, their ability to build a, you know, giant kind of history-making outcome company. And it's about the relationship that you can establish with them to convince them that, hey, you are the right partner for them. So it's, at the end of the day, it's still a human connection type of business, and it should be because that relationship goes on for a very long time, right? If you're successful. And then, you know, the other thing that happens is these companies, um, are staying private longer and generating bigger outcomes than before if they are winners. So you have the opportunity to actually invest more or deploy more capital into a winning company than ever before and generate an outsized return relative to what you could have done. And that's That you can address through fund size and fund construct. You can have a venture fund and a growth fund the way we do. You can do other things. But at the end of the day, it really all still comes back to that initial point of contact between you and the entrepreneur, and your team and the entrepreneur, and how they perceive the brand, how they perceive your ability and the firm's ability to help them grow. And that you can address through folks that help with go-to-market, with marketing, with talent. And those are the types of teams and the types of constructs you build around this small investment team to help it scale. But at the end of the day, it's, it's still a very small investment team that has to make those critical decisions and really arrive at the right ones.

Totally.

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What is your methodology for coming up with $800 million instead of $500 or $1.5 or how do you think about that?

I think it's really indicative of the, the environment in which we're investing.

So I was going to ask to what extent does macro play a role in it?

Yeah, it's a decent role. So in the last 5 venture funds that we've invested out of, we've had exactly 35 investments. And, and so we size a fund based on can we do 35 investments out of this next fund and get to the level of ownership that we're accustomed to for a fund this size? And so 35 is like a good sampling of like statistically like generating returns that, you know, we'd want our LPs to see from us. So it's— so the last fund, $800 million, actually feels a little large to us, but it's at the time when we raised it in 2022, early '22 was 35 companies with X amount of ownership with X amount of dollars, Y amount of dollars in. Is about $800 million.

Yeah, that makes sense. And so going back a little bit, I want to hear how you guys think about partner construction. Maybe we'll start with you, Mamoon Hamid Hamid, because you were given the keys, so to speak, alongside the team and saying, hey, you know, rebuild this, this once great and still great franchise. What's going through your mind in terms of how you're thinking about, okay, who do I need on my team with me?

Yeah. So just going back to August of 2017, got to work right away, which was, hey, who would you want to have on your team? Early-stage venture team. And I literally put together a spreadsheet, still have it, and of folks that I knew in the industry who could just be great partners, had a domain expertise, were technical, like had some operating backgrounds that mattered. And, and I'm not shitting you here. Should I say that?

Yeah, you can.

Yeah, but, but Ilya was like the number one person on that list. So, but I went down about halfway down that 50-person list, and I think I talked to probably 25 or 30 of the folks on that list over that 2 to 3 month, month period, uh, including Ilya. And it was, yeah, with, with Ilya we had a working relationship through the Slack board, intercom board, arch nemesis, the Dropbox guy. But it was a— here's someone who has just insane amount of founder love in the areas that actually I invest in as well. And it was like a little bit annoying actually that Ilya was so competitive.

Yeah, I heard Stewart was trying to hire you originally and then when he couldn't, he said, I got to have him, you know, on my board.

Exactly. Exactly. And it was like, wow, I can't have this guy just be out there investing for some other firm. He's got to be part of this team. So and so, yeah, we— it was a you know, kind of just an instant match in terms of his personality, like what we saw in terms of what we could do at KP together. So there was a rationale to it, especially in like the first few folks that came on board in this, in this new, for this new generation. And I'll give you the other example of our partner Bucky Moore, who joined actually a few months prior to Ilya, but we had sort of a big gap in enterprise infrastructure and developer tooling. And that's where Bucky played. And so where he continues to play, you know, almost 6 years in. And so that was another— here's a type of background we need and we need to invest in this area because it's going to produce a lot of really incredible companies over the next decade. And so, you know, Bucky joined, I think, like 4 months into my time here. So that was sort of the, the early team. In fact, actually, if you go through the whole team here, The average tenure of us working together at this point now is of the 7 folks, like 5+ years. So we really— long-term partnerships— we sort of hired that team in 2017, '18 and have been together since then. So, you know, this has been, you know, the team that we've had a chance to build together. And a lot of the folks have, like us, actually been groomed from within. You know, Ilya mentioned that both of us were groomed in venture, associates became principals, became partners at other venture firms. And similarly, we've had, you know, our partner Josh Cohen, AnyCase, you know, joined as associates, became principals, and became partners here. And that's just a model that's worked really well at Kleiner Perkins. In fact, you know, John Doerr joined as an associate, Brooke Byers joined as an associate. And so these folks in Touchline joined as an associate. So we've seen that model of apprenticeship and venture really work well. And so we continue to invest in that.

Yeah. And when does someone become a partner? Like, what do they have to— what is the path?

I'd say you become a call for founders in your domain. So if you're working on developer tools, it's like you— folks are seeking you out. Like, I want to talk to Bucky at Kleiner about my Seed or Series A, because, you know, most of our investments that we make are founder referrals and our founders.

I hate—

you have to talk to Bucky. He is the man when it comes to new databases or pick a thing, vector databases in, in AI. And so, and I think that's sort of the virtuous cycle that and to become a partner, I think is like you are one of the calls because you've demonstrated that you are a really great thought partner to an early-stage founder in helping them build a business.

Yeah. And Ilya, what was the pitch that got you to join Kleiner that— or KP— that didn't get you to join Social Capital?

Was it, hey, build it?

Was it for many reasons? But was it— was it build this firm with me or—

Rav Mamoon was great. But yeah, look, I mean, so I Candidly, leaving Index was a really difficult decision for me. I mean, it's a phenomenal firm. It's phenomenal people who took a bet on me coming out of Dropbox. I wound up bringing in and hiring a bunch of folks as well that I used to work with. So it was very much like a family and one that I helped sort of build and be a core part of. So I wasn't looking for a different venture job. But, you know, look, the, the opportunity to take the, you know, the storied brand of Kleiner Perkins, which frankly is the brand in venture capital, and build its future, it's really a once in a lifetime, next, next level opportunity. Right. Uh, and to me, um, you know, that was a huge, uh, draw. Obviously the other part of it was, you know, really the, the relationship and the conversation with Mamoon Hamid Hamid is like, hey, we can do this together, and we can do it the way we think is the right way to build it, right? Where you're not trying to mold and shape a firm that's sort of got its momentum and has some scale. It's really fundamentally, you can really kind of chisel away, you know, take a block of granite and chisel away the, the parts that are unnecessary and start with this kind of perfect core. And if you can do that, and if you can than be a winning team and a winning firm. Like, you really created something truly bespoke. Like, you're part of that creation process, and you get to, you know, generate real, like, real upside. And, you know, uh, for not just personally but really for, for the industry. Because if you look at the body of work that this firm has produced, like, it's really technology and companies we touch and we work with and we live with every day. And that, that, that ultimately why you're in this business, because you get to really be part of that building process. So that to me was like, holy crap, you get to do that? That's amazing. I think we've over the years talked with a bunch of folks, and I'm always the— to me, the opportunity was obvious. It was sort of like, hey, this is a no-brainer. It was hard. It was a hard decision, but it was such an obvious decision that I had to make it. And I think sometimes where we— You know, when we talk to folks, I'm like, you know, it's a freaking no-brainer. Like, yeah.

Yeah. So you guys team up and you say, okay, we're going to make this a world-class firm. We're going to build it from the ground up, just like we've been talking about for years. Presumably the first thing you guys think about is who else are we surrounding ourselves around the table? And, you know, if I use some NBA analogies, you know, some teams try to build super teams. They try to get a number of different stars, big personalities, and hope it works out. Some teams like, uh, like the Miami Heat, you know, they have maybe 1 or 2 stars and then they have these diamonds in the rough or kind of, they take bets on people early and, um, they've proven they, they grow them within the team and they, they've proven, and it seems like you've taken a, a hybrid where, where you two teamed up and then you said, hey, let me, let's find some up and comers or people we really wanna take bets on and, and help them rise up within that ecosystem. Is, is that accurate? And then I'm curious how you do that, how, how, how you find those people. What are, what are you really looking for? I, I noticed you had 2 people from Founders Fund. join, join, um, and, and join in promotion capacities. So you're willing to, to take early bets and, and, you know, bet big. Um, why don't you talk about how you think about partner selection?

Yeah.

Well, one of them is technically from Kleiner Perkins originally.

Oh yes.

Everett.

Yeah.

So you got him back. Yeah. We got him back.

Yeah.

Yeah. We knew, we knew he was great.

Yeah. I, I think the NBA analogy is, uh, is a great one actually. Uh, you know, teams of 5, you know, I think, uh, and for a while we were actually 5 partners. So thinking about, well, who do you need to draft in the next draft coming up here? And which I would say is more the associates. Who do you groom? And so we have a couple folks in that camp for us even here. And then you have, who do you trade for? But I think in order to win championships, you need to have someone who's pretty dominant in every position. You know, you need to have a dominant power forward, shooting guard, guard, point guard. The equivalence within venture, like positions, like as I do think about it, I think about its domain sectors like, you know, someone who's deep in enterprise software applications, in infrastructure, consumer, digital health, fintech. These are all areas that we cover.

Here.

So, so it's the very much like in order for us to be at the top performing firm and fund, we need to have folks who are the first, second, maybe third call for a founder in each one of those categories. And I think you, you have to construct a partnership that is able to fulfill, fulfill that. And so for in some cases we've grown from within. So, you know, Bucky worked for a couple of firms before he joined us at KP, but he came in as a principal and very quickly became a partner here and, you know, has been able to really capture the hearts and minds of lots of incredible infrastructure founders. And on the other hand, we, we hired Annie Case, who had a background from Uber, and she came, came in to do consumer investing as well as digital health investing, which is also part of her background. And so in that case, you know, she's risen from within from to principal and now partner, and she leads investments for the last 2 years now across digital health and consumer. And so again, and she very quickly was able to demonstrate that she was getting the call from founders in those areas, in those spaces. And, you know, we can go down the list of all our partners, including Josh, who I'd put that in his, you know, he's more fintech oriented as well as enterprise. And so Uh, but that's, that's really what you're trying to accomplish is, is, uh, are you the first, second, or third phone call for, uh, any, an awesome founder?

Yeah. And do you worry about kind of the specialist firms? Like, let's say Josh competing with like Ribbit or something like a world-class specialist firm. Like, I assume that, that they're, that they're the first call. I could be wrong, but like, how do you think about, um, you know, generalist versus specialist firms?

It depends on, it depends on domain, and frankly depends a lot on the type of business that you build. I mean, if you look at the, again, the biggest outcomes out there, they're typically businesses that evolve over time and they grow over time. And specialization is maybe important at a particular stage of that business, but later on you're just trying to build a massive company with scale, with the best people in all the functional areas, and you kind of want expertise of doing that, the brand that'll help draw in that capital, people to you. And so there's— it's kind of cooperative, right? Like a lot of firm, you know, a lot of companies will early stage raise like seed stage raise from a specialist fund, right? Because they need that domain expertise. But eventually you're building a business and most businesses kind of fit into certain patterns and then you just want the best brand, you want the best company building experience and you want the best network. And you're going to go probably for the more generalist firms in that sense.

Yeah, I mean, just there are lots of edtech firms out there and who do great work, let's say, at seed, Series A. But if I look at our edtech portfolio of Series A investors in Chegg and Coursera and a little bit later in Duolingo, but like I would say, if you look at just edtech and the successes there, just as an example, Kleiner had a hand in a number of the best outcomes in edtech. I could draw that similar analogy to, let's say, like digital health early in Livongo, Series A in Progeny, Vis.ai, Modern Health. This is— these are all, you know, some of the best digital health companies. And again, there are specialist firms that may be involved in some of these businesses, but how do you sort of use the compare and contrast every company that comes through your, your doors in across all domains and assess the best founder quality as well as the founder market fit and the TAM of the market rather than just looking at specific domains and making— trying to make the best call in that domain. And I think that actually is a benefit of the way we're constructed.

Yeah, if you look at, at our funds, about half of our investments are enterprise software, all flavors of it, everything from infrastructure to productivity to vertical SaaS. And then the other half kind of fluctuates depending on fund vintage between consumer, financial services, digital healthcare, some more hardware-oriented investments. And so we're able to play across those domains and we cooperate and we partner with vertical-specific funds. But technology generally evolves on like a 4 or 5 year timescale. Like you have massive new trends and the sort of the benefit of having a more generalist structure is you can actually adapt to those, right? So we have partners like Bucky and now Lee Marie who, you know, have a background in enterprise infrastructure and AI. And now that the AI wave is here, we were very well, you know, sort of set up for, for investments there. You don't necessarily have to be a specialized firm to be able to capture those.

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How do you think about playing these new waves? Like when Web3 was, was, was really on all the rage and, and now with AI, you know, some firms go all in, build big teams or specialized funds. Some are much more prudent. Let's, let's wait this play out. These valuations are crazy. Are you guys somewhere in the middle? Like how have you kind of played these waves or how you think about this, this newest one?

Yeah. I mean, the biggest thing for us is we're a small team. Yeah. So it's very hard for us to spin up a specialization. And again, we kind of go back to having people with great fundamentals who have, let's say, minors in these emerging domains or ability to shift into them. You know, everybody we add here from the youngest folks, we kind of want to add with the intent that, hey, they have the potential to eventually become a partner here. We don't do the kind of 2-year-in-and-out program because you really need to have conviction to do venture the right way and you have to have commitment. So we tend to have folks who will shift and explore, and, you know, we, we tend to probably be thoughtful about how we, how we jump in, right? Again, we have a fixed fund size that'll target 35 core companies, and every dollar has to compete for just the best investments, right? And so we take that approach. So we don't, we don't try to index. We try to really kind of go deep and test out, hey, is this going to be a winning company? Is this going to be the N of 1 company, right, in that space? And if so, like, let's try to get into it and then, you know, get into it in venture and get into it at growth.

Yeah, I think Ilya alluded to it. All of us have majors and we have minors, and minors allow us to sort of shift into things that might be bubbling, emerging, because there's always a new thing. And I think our job is to make sure we know what the new thing is and have a prepared mind and then make a deliberate decision to not go deeper or pass on the opportunities we're seeing because we think it's a passing fad or to sort of like really lean in and make investments because you think that that's where, you know, real history-making companies will get built. And I think what we look for also in our— on the team is dynamic range. Like I would say we're all technologists here. We love technology. We always have. And It's like our true passion. And this, you get, we have the, you know, the luck of working, having this job. And so I think with that comes this desire to continue to sort of look at what's upon the horizon, what's next, and just have this dynamic range of like thinking about different things that, the things that technology will do to change the course of humanity. And I think that's sort of like a core element. I think we look for when we're, bringing people on or even grooming from within is that, that dynamic range to have a variety of interests but still have a dominant major.

Yeah. And in terms of identifying that talent early, like I'll give you one example. A bit over a decade ago, I was interviewing at Founders Fund for a potential like principal role or something. And one thing they told me at the time is we're not going to hire anyone who's interviewing at other places. Like we hired different types of people and maybe that was a you know, or people that other firms wouldn't hire. And maybe that's a rhetorical flourish or something, but there was, there's some sort of ethos there about they just hired different. And I'm curious, you know, um, for example, like maybe you, someone like Leigh-Marie perhaps was maybe underrated at another firm or something. You give her, you know, you thought, hey, we'll give her a bigger platform here. That's just a random example. But like, what are you seeing that's different than in other firms? How are you evaluating talent differently? What are you looking for here at Kleiner?

I'll give you my take. So one, it's like the passion for technology, like typically associated with a technical background of some sort. Could be math, could be physics, could be engineering, could be finance even, but something where you kind of think about the world in a structured way, and you really do have an appreciation for technology, right? You look for just people who are learners, who've demonstrated the ability to learn and kind of develop over time, right? So Annie is a good example. She did Rock Health, then she did, Uber, so she's kind of gone through and seen a bunch of different domains and companies. Lee Marie was obviously at Scale. Uh, you know, Lee Marie was easy, by the way. We heard from a bunch of founders like, this is the person you got to talk to, and that's like the best, the best signal ever. Um, but it starts with that, like zest for technology and a technical underpinning and ability to, to learn and sort of develop as a, as an individual. Um, and then the second piece you try to really suss out is, do you want to be a venture investor? Like, do you want to do this? Do you want to do this for the rest of your life, potentially at some point, right? Like, hey, things might change, but do you have the— what it takes to do that? And do you really want to work with entrepreneurs? Do you want to invest in companies? Do you love the thrill of the chase of the investment process, right? Do you actually love working with companies and trying to help them? You know, do you have a demonstrated ability of doing that? Uh, and do you have the conviction to, to really do this for a long time? That's kind of what we look for. And then obviously there's team fit, you know, sort of culture fit, team dynamic. You know, the best hires, it's easy. You go to a dinner, like, it felt really easy. You feel like you've had a great interaction. You feel like you've learned something. You feel like you could do this again. And by the way, that's really important for founders as well, right? Because if that is easy for us, it should be easy for founders. And that's a bond that you can create that'll give you the advantage in this Yeah, yeah, I think Ilya said pretty much all of it.

I think we're, you know, a services industry, so we're here to serve founders. And I think, uh, just acknowledging that we're here for that purpose and founders get the spotlight, we're here in the background trying to help where we can. And I think that is something that we really hone in on, is like, do you have that low ego to do the job. Just there's lots of different things to do. And, and if we do our job right, like, you know, returns will be great. But I think that's an important part of— and also I think you mentioned, you mentioned your Founders Fund interview and how they didn't want the typical person looking for a venture job. I'd say we're looking for people who want to be great investors, like in order to be a great investor, you have to, have to want it. And I think we want people to want it. We don't want to twist someone's arms into venture capital. It's not the worst job in the world.

Benchmark famously hired Scott Belsky, and then he realized, you know, a year in that, hey, he actually prefers earlier stage investing or operating. I mean, you want people want the job.

Ventures are really— I mean, it looks, you know, nice and sort of fun from the outside, right? Like dinners and conferences and that's all the wrong stuff, by the way. Podcasts.

Yeah, exactly. Yeah. Yeah, exactly that.

Hey guys.

But it's hard, right? It's hard because you are in this, as Mamoon said, you are in the services business. If a founder says, hey, I got a term sheet, can you meet? It's like 10:00 PM on a Thursday, and I have to drive up to the city, or if I were in the city, drive down to Palo Alto, or hop on a plane, you do it. You know, it's not, it's not the sort of fun, you know, hangout job that you see from the— it's actually really hard. Uh, it has very different timelines. It has a very different social dynamic in terms of how you, um, socially interact, um, than, you know, versus being in a company, let's say. Um, so you have to have people who understand that, accept it, and actually love it.

Totally.

And that's not everyone.

Yeah. Talk about what makes great partnerships. We've all been in partnerships that have been great, been in partnerships that have been challenging. Venture partnerships are their own unique beast, right? Talk about what's key to really get right, maybe some misconceptions people have about what it takes to get it right, maybe how it's evolved. What do you just share about partnerships?

I mean, I think it's great partnership starts with respect, right? So, and respect for the people around in the partnership, the respect for people's opinion valuing people's opinion and making sure everybody has essentially an equal voice, right? Independent of what their level is and what their tenure is, right? Ideally, everybody has something to contribute, and that's why they're there, and you want them to contribute. I mean, for us, it's low ego, high humility, positive intent. We all, at the end of the day, the only thing that matters is we back the best companies as early as possible. And help make them successful, right? That's how we as a firm win, and it's really taking, in my view, the firm and the partnership above the individual, right? Because that's the only way, frankly, as a firm you can sustain and sort of have these generational transitions and have a legacy, right? Where the brand of Kleiner Perkins should endure for the next 51 years because we've assembled a team that has backed the best companies, and those companies reinforce the brand, and the future entrepreneurs want to emulate the best companies, and so they come to Kleiner Perkins first and foremost. And as long as we're not stupid enough to say no to them, like, that cycle goes on. So I think it's, it's kind of that. Um, I think it's— and then, you know, you can unpack each one of those dimensions. The respect obviously again comes back to you have to kind of know what you're talking about or have demonstrated the ability that you really dug in and really understood something. Um, you have to have the respect of the— not just the partnership with the ecosystem, which is why we care so much about founder references for people we bring onto the team and how we operate. Um, and just kind of, um, again, like the ultimate alignment of, hey, we're all in this together to, to do the same thing.

You guys have been doing this for 6 years, um, together at Kleiner. Talk about the different, um, phases you've had even in the 6 years or some of the big decisions you've had to evolve the firm? Um, when you share some of that.

Yeah. So, uh, when I started and even earlier, I think, uh, uh, we had, uh, still a, a clean tech fund, like a green growth, a green fund. Uh, we had a China fund, we had a digital growth fund. Uh, and we had a biotech practice. We had things that we don't have today. And so I would say a lot of the changes happened in that first 12, maybe 18 months. But, but you had to come in as an outsider and assess due to the assets and the liabilities.

Yeah.

You said this is just too much. They're great people, great firms, but Yeah, amazing people.

Like, and by the way, everyone's doing incredibly well.

Yeah.

Everyone who was there at the time and no longer here have their own firms, other things, doing incredibly well. So, and we had a chance to go back to the future, which is the core of Kleiner Perkins, early stage focused. And so I would say the first 12 months were where the action happened, maybe 18 months. But it had to happen very quickly because if we both of us came in and we were sort of subsumed, subsumed by the what it was and not make enough change, I don't think it would be where we are today.

Pretty much. Yeah. Like, I mean, there was— it was hard, right? Because you had all these great assets. You had a great growth practice which became Bond Capital. And, you know, you had a bunch of these things under the umbrella. That if I look back at the history, kind of drifted a little bit apart. Like you had a bunch of things under Kleiner Perkins, but they weren't working well together. And frankly, yeah, they weren't one team and they frankly are doing much better now that they're broken up. But to do that breakup and to kind of shift away from the Kleiner Perkins umbrella is really hard. Right. And that's, you know, it's a lot of difficult decisions and conversations. So that was probably the most difficult piece. You know, we were investing at the same time. That was kind of just a lot of pressure to do this and invest. And then probably the next big inflection came when we decided to raise this, the first Select Fund, sort of say, hey, we're gonna branch out a bit out of the just pure early stage focus. And mostly that was really driven by just the opportunity in the portfolio. We looked at a bunch of our companies where we did the Series As that had matured over time, and we sort of thought, shame on us if we don't allocate more capital because we're very active on the boards. We're spending the time. We're really involved. And we just see the opportunity that this presents for ourselves and our investors. And there are There were temptations along the way, like, should we do China again? Should we do other things?

Well, I'm curious about the evergreen, the thing that Sequoia did, because you're on the board the whole way. If they go public, you know about the company. Should you do that too? Should you not?

Yeah, there's always like, I mean, again, you raise funds and people sort of say, hey, you know, should you do this or that? And there's always a temptation to do, you know, hey, should we raise a seed fund? Should we, you know, do China again? Should we, um, you know, raise a dedicated, you know, crypto fund when that was the sort of the topic du jour? Um, you know, there you just kind of come back to the core, like, of what matters. So those weren't— I wouldn't say those were decisions, but I wouldn't say those are like pivotal or critical decisions.

Yeah. And tell us a bit about how governance works at venture firms in the sense of when a firm does this transition and people like you come in and now run the shop, do you still have this sort of like, you know, uh, collaborator decision makers who work with you on firm-wide decisions from the previous era? Like, you know, Ben Horowitz told me that him and Mark just run the show completely and that that's just how the firm is structured. That's different from how other firms are typically structured. I've always been curious in the YC transition, does like Paul Graham still, you know, decide what happens? Firms are typically vague about how this operates. So I'm curious. Yeah. How governance works at venture firms when transitions happen.

Yeah, I would say we were fortunate beneficiaries of an incredible legacy of a firm that had just a track record like no other, where folks who were running the firm prior to us just wanted to see the best outcome for the future of the firm with the right people involved. And so it was not an economic grab of sorts, like, how much can I keep for myself? And it was none of that. So we were just, I would say, uniquely in a unique position where that was not an issue. Where it was not about economics for anyone. It was just about doing the right thing. And so we almost in a way have like our, you know, we touchline Brook Byers and John Doar, our folks who were, I would say, the prior two, last two generations of the firm who really led the firm. And what's their role today?

We advise them.

Advisor.

Advisor here. Yeah.

They run through the office every once in a while.

Yeah. They have actual physical offices here and we'll see them here and there. And advisors.

Yeah.

So, and, and that's, it's almost like, you know, venture firms don't have like governance, like a board of directors or anything. It's almost like you have a board of advisors who are like founders and folks who've been there for like 40 to 50 years.

That's fascinating. I mean, going forward, like, or even now, how do you determine whether you're winning? Like, how do you think about, hey, are we really competing with the Sequoia, Benchmark, whoever, like, how do we know what we're doing?

Yeah, we look at our— every Monday, today's Tuesday, but we looked at it today. We look at the prior week of seed and Series A's and Series B's that got done by our, our peer set, and we just mark it as, did we see this one or did we not see it? Simply. And then over the course of a quarter, we aggregate that. I think for us, that's a way of assessing whether what's happening on the ground this, this week, this quarter, and are we seeing what we think are interesting companies in every company that we look at? You know, it's like, here's what it does, here are the founders, here's— and we have a discussion around it. And then we sort of kick ourselves for not having seen something that someone else invested in and then making sure we see the next round. And so it's a, it's a way of, of us sort of in real time assessing how, how, how really dangerous and how are we truly the first, second, or third call? And then you aggregate that over a year and so on and so forth. But that is a way of in real time assessing how relevant are we to the top companies that are getting funded today.

Yeah, I mean, the ultimate truth are going to be the eventual outcomes, right? But this is a good top of funnel leading indicator. And then the other thing we look at is just win rate. Yeah, we, we try not to write term sheets that we don't want to win. And so we try to keep that quite high.

How about firm-wide initiatives in general? Like, you see some firms doing a ton of stuff, some firms do nothing. How do you think about, for your guys' firm, what is the right set of firm products, or besides just the partners, that really add value and make sense in today's ecosystem?

Yeah, I mean, we look at it as, if you did this, if you Let a Series A in a company, what are the main things that you would need to, to do in order for that company to become successful? Number one is you probably try to hire the best people, uh, and number two is, uh, especially if it's a company with sales, you try to one, stack the sales team, and two, figure out the right customer set, get introductions, figure out the right sales strategy, drive demand generation, uh, and make sure that that's a well-oiled machine that can fund the the growth of the business. And then eventually you'd want to market and announce and do some comms around the business. So those are the basic things, and that's the functions we have. Our take on it is a little probably different than other firms in the sense that for most companies, if you look back at the early days, there are probably 1 or 2 or 3 pivotal moments. It's a first hire that really drove the growth of sales, right? Or it's the first engineering leader that really kind of helped the engineering organization grow. Or it's like that one product leader who's really made, uh, the, you know, an inflection in the product roadmap. Or it's that one, you know, one or two deals, or it's, you know, a few candidates closed. Um, and so you try to generate these kind of non-repeatable moments. Um, but you don't need to be all-encompassing, right? You don't need to staff the whole team. You don't need to do kind of IC engineer hiring, although sometimes we help with that. And so you try to build a supporting team or functional team that's really great at jumping in, quickly assessing what's critical, and making one or two of those pivotal sort of points of impact, and then moving on to the next company. And that's kind of our approach, because again, if you like think about early company building, it's not— nothing is truly repeatable. You have playbooks, but there's singular moments that just wind up happening and altering the trajectory of the business. And if you can have a team that knows how to engineer those, you can help your companies win disproportionately. So that's kind of our approach on those teams. And one thing to call out is we do have a really unique product in Kleiner Perkins Fellows. For a decade now, over a decade? Just about a decade, yeah. Since almost—

11th year, yeah.

Yeah. Yeah, yeah, yeah. Which is now almost 1,000 fellows. These are engineering product design fellows who were the top grads who've gone through internships and obviously have now worked. And those are the folks that we can actually help connect with our companies. And 10% of them start companies. So we try to make sure we see them. Um, and then those are the kinds of things that we try to orchestrate.

When you look at other venture firms, there's some firms that, um, sort of transition phenomenally well, some, some that struggle. And you've done your, your own here and it's gone phenomenally well, it seems. What, um, what separates the ones that go great from the ones that just good or, or actually struggle? What's key in making these transitions work?

I'd say we strongly believe that we are here to serve the organization, which is Kleiner Perkins. And Ilya said it already, which is if we want another 51 years, uh, we have to continue to have that mentality of serving the organization. It's not about any one of us. Uh, it's not about our own egos. It's about the returns for Kleiner Perkins, which will allow it to sustain itself. And I think that's what it really boils down to is How do you have people in our organization who ascribe to that belief system, right? That it is about Kleiner Perkins has a magnetic brand for founders and hopefully will continue to have that. I think if we continue to operate in that way and I think, you know, you can either get defocused and have lots of different product lines, multi-stage, multi-sector, multi-geographies, even multiple offices. I think that's part of why we're so deliberate about, you know, all of us being here in the Bay Area and still believing that we can invest in some of the best companies that are not based in the Bay Area. But I think part of that is how do we make the best decisions together? And continue to have this culture of serving the organization, Kleiner Perkins.

Just thinking about it kind of at a higher level, I think these decisions have to be, um, deliberate and in many ways absolute. Like, you can't sort of partially generationally change, right? You kind of have to decide that we're going to do it, and you have to have the right off-ramp and on-ramp for the folks who are kind of phasing out and the folks who are coming in. And I think you want to be very clear about it. And ultimately though, you need to have the people on the team, as Berman said, who are able to be that next generation, which is why it's, for us, important to have partners who we think are going to be long-term investors, venture capitalists, and we want to see them in action and we want to have the conviction that they will be the stewards of Kleiner Perkins for the years to come.

Yeah, pause the podcast for a second. This is a great place to wrap, but I just want to make sure— 2 minutes left— is there anything I didn't get to that is burning on top of your mind?

If not, I think you covered it all.

Well, perhaps lastly, I've been told to ask you, uh, which one drinks more coffee?

Oh, I think cares more about the office coffee amounts.

Yeah, equal.

We love coffee.

Funny thing, by the way, is one of the first major changes we enacted at Kleiner Perkins was to get a high-end espresso machine.

Two high-end.

One for the San Francisco office.

So our coffee setup is we have a La Marzocco GS3, both offices. We have a pour-over right next to it, which we've replicated in our homes as well because we love coffee so much. Yeah. So who drinks more coffee? We drink coffee together here mostly.

So, well, that's a nice metaphor. Yeah, it's a great place to wrap. Ilya Moon, you guys have done a phenomenal job here at Kleiner. Thanks so much for sharing your your lessons and wisdom with us.

Thank you so much.

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