If there is one thing Fred Wilson and John Doerr can agree on, it is that we are in the midst of another Internet bubble.
But that’s where the merging of the minds ends. In the opinion of the mischievous, sometimes outspoken Wilson, a managing partner at Union Square Ventures, the current investment excess is leading to unreasonable startup funding and copy cat business models—a disaster in the making.
In the view of indefatigable optimist Doerr, a partner at Kleiner Perkins Caufield & Byers, it’s all good.
The two VCs met on stage last month at the Web 2.0 Summit in San Francisco.
“There are some crazy things going on,” puffed Wilson. “It’s getting overheated.”
Startups with three people are getting valuations that top $30 million, he noted. And Facebook’s supposed $41 billion valuable is far from rock solid (since it is based on a constrained secondary market), he grumbled.
“We’re in another bubble or boom,” concurred Doerr. But “I think booms are good.”
By Doerr’s reasoning, excess funding gives more companies the opportunity to experiment and create new business models. More experimentation leads to more innovation.
Doerr’s stance wasn’t terribly surprising, given that KP just announced a $250 million fund that will invest in social media startups. The spark for the fund was the realization that social gaming company Zynga is the most profitable and fastest growing KP portfolio company ever, he said.
Already, the fund has received 600 proposals and “we have six ready to invest in,” Doerr said. He withheld additional details.
On top of this, the IPO window is open, Doerr said. Perhaps this is a period of normalcy, where good companies can get out and bad ones can’t.
Or maybe neither want to, said a disbelieving Wilson. “There is clearly a reticence about going public.” Businesses such as Facebook and Zynga could go public, he said. Instead a secondary market offers them some liquidity.
Despite some differences of opinion, Doerr and Wilson clearly admire one another. Toward the end of the discussion, Doerr tried to keep a straight face when he said that “Union Square Ventures and Kleiner Perkins Caufield & Byers have merged. You heard it hear first. And Fred is leading the East Coast operation of the combined firm.” That drew a big laugh from Wilson.
SF Rejects Moritz-Funded Measure
It was a tough election for rich people who spent their own money to influence the ballot box.
Billionaire Meg Whitman, former eBay CEO, couldn’t win the governorship of California, despite shelling out $119 million from her own pocket to defeat Governor-elect Jerry Brown. And venture capitalist Michael Moritz ended up on the losing end of a San Francisco ballot measure that he and his wife supported with close to a quarter-million dollars.
Moritz, a general partner with Sequoia Capital, was a central supporter of Proposition B, a controversial measure that would have required San Francisco city employees to fund a larger share of their pensions and cover half of their family’s health care coverage out of their paychecks. Unions fought hard to defeat the measure.
Moritz and his wife, Harriet Heyman, gave $245,000 to the Prop B campaign to enable it to collect the approximately 76,000 signatures that were submitted to qualify the measure for the ballot, according to Ballotpedia, an election tracking site. Angel investor Ron Conway also supported the measure.
In the weeks preceding the election, Moritz defended himself against critics who questioned the appropriateness of a billionaire critiquing compensation for city employees. In an editorial in the San Francisco Chronicle, he acknowledged that he had drawn flack for supporting the measure, noting: “I have been accused of wanting to destroy working families, been labeled a ‘speculator billionaire,’ had my face plastered on unflattering placards and watched several hundred protesters yell abuse outside my home.”
Welcome to politics, Mr. Moritz.
Kamra Likes His Sleep
Canaan Partners’ invitation-only Web After Dark party is a much-anticipated event that’s held each year during the opening night of the Web 2.0 Summit.
This year’s party, held at The Bently Reserve in San Francisco, was bedecked in an “Alice in Wonderland” theme, complete with large mushroom statues and an entrance shaped like a keyhole.
The only thing that could have made it better for Canaan GP Deepak Kamra is if it had started a bit earlier. The event started at 8 p.m. for VIPs and ended at midnight. “Many of us wish it started at 6 p.m.,” Kamra said. “Some of us like to go to bed at 10 p.m.”
Looks like Joe Lacob is going to cut back on his time Kleiner Perkins, where he has been a partner since 1987. Lacob and Peter Gruber officially completed their $450 million purchase of the Golden State Warriors basketball team last month. Sports Illustrated reported that Lacob “has stepped back from [KP] in order to devote most of his time to running the Warriors.” Lacob has made no official comment on his status at Kleiner Perkins. …
, co-founder of New Enterprise Associates, last month was honored with the “Innovation Catalyst Award” by VC Taskforce. The award was for Kramlich’s “outstanding contribution, dedication and leadership in the venture community.” …
Last month, venture capitalist Rick Snyder, a self-described nerd, won the election to become the next governor of the state of Michigan. Snyder was a political unknown when the race began. He previously co-founded Ann Arbor-based venture firm Ardesta. …
Christine Herron has left First Round Capital, where she has been a principal for two years, to join Intel Capital’s consumer Internet team as a director. Before First Round, Herron spent two years at Omidyar Network, where she focused on Internet and new media investments. …
InsideVenture founder Mona DeFrawi has launched a stealth startup called Equidity. “It has been a year since InsideVenture’s acquisition [by SecondMarket], and the capital markets’ structure that supports the growth of terrific venture-backed companies is still broken, with very few IPO successes to claim,” she told VCJ. Equidity will “provide liquidity and valuation solutions for growth companies to succeed in today’s capital markets,” according to DeFrawi’s LinkedIn profile.