Russ Siegelman

Russ Siegelman

A weeklong electronic journal.
Nov. 17 1998 3:30 AM

Russ Siegelman

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       Up at 5:30 a.m., at the gym by 6. On Monday mornings I play basketball with a crowd I've got to know at the Pacific Athletic Club. Seems like half of the guys are venture capitalists and the other half are in high-tech companies. Though I play mostly for the exercise, there is nothing like getting the competitive juice flowing at 6 a.m. to start the week. Good day--my team won three of four games, and my shooting was on.
       I'm showered and on the road weaving through heavy traffic by 8 a.m. Most of the drivers seem to have cell phones to their ears and their feet to the floor--no one drives the speed limit in Northern California, and everyone has someone they need to talk to right now.
       My firm, commonly known as Kleiner Perkins, or KP for short, is a venture capital partnership. Like most VC funds in Silicon Valley we invest in early stage high-tech startup companies. Our business is helping entrepreneurs build and grow their ideas into lasting, successful companies. We typically invest when the companies have incomplete teams, no products, and sometimes not even a business plan. We make money when they go public or get acquired by a large company.
       Monday is historically the partner meeting day for VC firms in the Valley. Attendance is mandatory, because most partnerships require a unanimous or near unanimous vote before investment decisions--which can run in the millions--are made. KP partners spend most of Monday's meeting addressing partnership business and hearing from promising companies that we are considering investing in. Though my firm has a strong culture of working together, venture capital is for the most part an individual practitioner business. Partners sit on the boards of the companies they have invested in, and for the most part, you are responsible for your companies. As a result KP partner meetings sometimes take on the feel of 10 staff meetings all being held at once--each partner has an agenda and needs to engage a critical mass of partners in support of something they want done. The art of building support, and all that entails, is a necessary skill.
       Today we started out with a presentation from a company we invested in a couple of years ago that now needs more capital. After a 40 minute presentation the partners unleash a barrage of questions, which the CEO and the team respond to. After they leave the partners discuss our decision for another 30 minutes, discussing the pros and cons, our impressions of the presentation, and what we view as the risks. Although there is some disagreement, we finally decide to invest $1 million.
       Through lunch we spend another couple of hours working through partnership business. We review about five new opportunities that partners want to make others aware of--the beginning of the process of building support. We discuss key senior management openings in our portfolio companies and help each other with ideas for candidates and recruiting firms.
       At 2:30 the second company presentation of the day starts. This company is a seed investment opportunity--meaning it is at a very early stage, with no management and no business plan. That means deciphering the company's prospects is tougher than typical. In this case it is doubly hard because the company is proposing to develop a product for which there is no market today, and to build the device it will have to overcome significant arcane technical problems--none of which the partners really understand. After the company finishes the partners have a vigorous debate about the merits of this opportunity. Some believe it is a worthwhile project, but it is too early and too uncertain an outcome, while others think it is just the kind of risk/reward trade-off that we should be seeking. By 4 my head hurts; we wrap up, I go back to my office and do e-mail and phone calls till 6, then head home to see Max, Jake, and Beth.