From Venture Capital To the Nation’s Capital –

Floyd Kvamme made 10 trips to Washington, D.C. in the past 12 months. Scouting new investments for Kleiner Perkins Caufield & Byers? No. Kvamme, a partner emeritus at KP in Menlo Park, Calif., is the co-chairman of the President’s Council of Advisors on Science and Technology (PCAST).

If you’re wondering how Kvamme fits into a science advisory role for “W.” you’re probably unaware of his EE degree and the 25 years he spent at National Semiconductor (starting in 1967), as one of the founding team of five with Charlie Sporck. He once headed up semiconductor development and later led the National Advance Systems Division for National Semi. That was quite a while ago, however. Most people think of Kvamme as a VC and with good reason; he’s been with KP since 1984.

Of course in the world of political appointments, it’s less about how much you know than how much you give. Kvamme, his wife, and his business/social circle are amongst the largest political donors in the nation. He and his wife donated a total of $240,000 to Republican causes in the last few years, $100,000 of that to the campaign of George W. Bush. Kvamme is also a co-founder of TechNet, a non-partisan advocacy and lobbying group based in San Jose that represents CEOs of Silicon Valley companies in Washington. Kvamme’s profile was so high in the Bush camp that he was given serious consideration for appointment as the Secretary of Commerce, a position eventually given to one of Bush’s longest standing and closest personal advisors, fellow Texan Don Evans.

As for PCAST, the advisory panel was originally created by President Bush (senior) and maintained by President Clinton, who appointed John Young of HP fame as chairman of the group. Upon his ascension to the presidency, George W. made Kvamme’s appointment an early priority; even before naming the Science Advisor to the President. Kvamme and Michael Dell had headed the Bush transition team’s task force on IT, another high-profile role. It didn’t hurt that Kvamme had become chairman of Empower America, the Washington D.C. not-for-profit home of Republican thought leaders William Bennett, Jack Kemp, Vin Weber, Bill Cohen and Jeane Kirkpatrick; in addition to his financial clout, he had philosophical credentials so important to inner Republican power circles.

Kvamme downplays the possibility of having been named a cabinet secretary, saying that while the story was widely aired by the media, he was never a serious contender. He says he was asked if he was interested in an ambassadorial appointment, something he quickly declined.

After all of that you might have the impression that Kvamme is some kind of political sycophant. Decidedly not. A San Francisco native, he comes from blue-collar stock. His father, a Norwegian immigrant, was a carpenter and his mother was a domestic worker (in addition to being a homemaker). Kvamme spent his vacations and summers helping his father in the construction business, earning his tuition through physical labor. Reflecting back on those years, Kvamme says that after “slinging a 16-pound sledge all day long” he could go home and sleep pretty well.

It is that background that shapes conservative Kvamme more than anything else. He was the first member of his family to attend and graduate from a university. His at times reflective or wry demeanor is closer to that of a fellow Norwegian, Garrison Keillor, than to any of the political pundits with whom he associates.

Given that background, how does someone like Kvamme end up giving science policy recommendations to a sitting president? The intent of President Bush (senior) in creating PCAST was to gather the most experienced private sector, institutional and government representatives to advise the president on technology issues. Kvamme has weighed in on a lengthy list of issues: the use of technology in homeland security, recommendations for federal R&D spending in science and technology, the build-out of broadband systems in the United States, nanotechnology, science and engineering education and workforce issues in science and technology. The agenda for day-long meetings of PCAST in Washington at the old executive building adjacent to the White House may include a drop-in presentation by Secretary of State Colin Powell or presentations from a handful of the nation’s most notable nanotechnology scientists.

Kvamme is the co-chair of PCAST, along with John H. Marburger III, the president’s Science Advisor and director of the Office of Science and Technology. Marburger is a former director of the U.S. Department of Energy’s Brookhaven National Laboratory and is presently on a leave of absence from the State University of New York at Stony Brook in order to work for the president.

One of Kvamme and Marburger’s first meetings of PCAST was a session with Vice President Dick Cheney and the cabinet in which Cheney told that group that the White House did not want any surprises coming from technology during the current administration.

Pretty heady stuff for an elder statesman of an industry that for decades eschewed contact with Washington. So how did Kvamme get here? You have to start with Kvamme’s second life as a venture capitalist or the story is simply too long. From 1963 to ’84 Kvamme played an important role in the most visible and powerful companies in Silicon Valley, making him an ideal candidate for the world of venture capital. When he arrived at Kleiner Perkins, Eugene Kleiner was still in the office, but he was largely retired. Tom Perkins, John Doerr, Frank Caufield, and Brook Byers were still working out of the firm’s San Francisco office, but by 1989 the firm moved to Menlo Park because Silicon Valley was clearly where the action was.

Kvamme’s first job at KP was to join the board of Lotus Software, an important investment for KP II. He had joined the firm as KP III was being raised and helped invest that fund into portfolio companies in his areas of expertise, including Metaphor, Triquint, Power Integrations, and MassPar. He was on five boards in KP III, but by the peak of his role at Kleiner he sat on 10 boards. “Seven to eight is our maximum now,” he says, “although at one point Ben Rosen was sitting on the boards of 17 companies. That was crazy.”

Kvamme was active in investing through KP VI, but he made just a single investment in KP VII and has not been active in investing KP VIII to X. KP X is currently only half invested.

Kvamme is matter of fact about how he went from VC to D.C. “Bush loves entrepreneurs,” he says. “He understands that startups have to be funded. He knows that ideas developed in our universities have to leave the universities and that you have to have the right people to form new [technology] companies. So entrepreneurs and venture capital are tightly related.”

Kvamme says that past administrations did not have that fundamental understanding of the relationship, so while there were organizations with a role similar to PCAST, the head of those entities was either a scientist or an industrialist. Kvamme likes to remind people that George W. is the first president of our nation with an MBA. In a similar vein, Kvamme says that he is the first technology VC with such a high-level role in Washington.

Just in time. According to Kvamme, there is a spotlight on PCAST’s work; President Bush attends three to four of the group’s meetings per year. “It’s not like the old days of the Office of Science and Technology Policy (OSTP), which would never have touched issues …[like] the double taxation of dividends or R&D tax credits,” Kvamme says. With Kvamme present in Washington, however, it’s clear that he brings such issues not just to PCAST meetings but also to meetings with high-level Bush Administration figures, like Undersecretary of Commerce Phil Bond. For example, Kvamme is working to encourage technology exports that slowed in the aftermath of 9/11.

Despite his new focus on policy development, Kvamme is not likely to forget his roots in technology or venture capital. Talking about the current downturn in VC, for example, Kvamme remembers the dip in the industry after 1987, when the amount of fund-raising declined to $1.5 billion in 1991. “Looking back, some of our best investments were made in that time; we had fine opportunities presented across a wide spectrum of industries,” says Kvamme, clearly comparing those times to the investments KP is considering today.

“Some of the [bubble VC] firms won’t raise another fund,” he says. “Some VCs will merge, some will go out of business. … The $100 billion-plus we raised and invested in 2000 was too much. But dropping to single digit [billions] in 2002?” he says, shaking his head slowly. “The question is how much is the right amount?” He’s certain that the industry will figure out that number and, while returns for the bubble years will be low, the venture industry will continue to chug along.

As for the downturn in the U.S. economy and criticism of President Bush’s lack of a clear plan to get the country-and Silicon Valley, in particular-back on a growth path, Kvamme responds in an email: “I think the President HAS put forward a very aggressive domestic policy and a budget to support it. It is true that the press is so occupied by the war (which could be expected) that the President’s plan is not well known. Look at the Stimulus package-many thought the economy didn’t need a stimulus when he first proposed it-does anyone think there is not a need today? There is every indication that the need is at least as obvious today as it was when the President suggested it.

“As for the budget, a strong economy is the BEST solution to any budget issue. For those of us in technology, a stimulus that encourages investment in equities is very important to us. Again, specific to the tech sector, the President’s plan is to bring improved productivity to government with a $58 billion Information Technology budget that has a large eGov component. In summary, I think the President’s growth package shows a strong commitment to the domestic economy and hope the Congress comes through.”

What does the future hold for Kvamme? Sitting in his redwood tree-shaded office at 2850 Sand Hill Road, surrounded by pictures of family, Kvamme spends part of each day taking care of KP portfolio companies and part of the day reviewing policy documents sent from the White House. At a youthful 66, Kvamme has the chops to make a strong senatorial or gubernatorial candidate in California’s next election, but he doesn’t raise such issues. For now, Kvamme seems happy with his half VC/half D.C. role. Stay tuned.