I spotted this piece of investor lore earlier today in a blog:
Came across an obituary of Eugene Kleiner while browsing. He is the K in the famous VC KPCB. Eugene Kleiner was a part of the “traitorous eight”, who left their jobs at Shockley Labs and co-founded Fairchild Semiconductors. Eugene played a major role in attracting initial venture into the project. After the success of Fairchild Semiconductors, Eugene turned into a venture capitalist himself. What really inspires me about Eugene is the fact that he played all three parts necessary in a successful technology company, viz. the inventor, the entrepreneur and later on the venture capitalist.
He laid out certain rules for VCs, which are commonly referred to as Kleiner’s laws:
- Make sure the dog wants to eat the dog food. No matter how ground-breaking a new technology, how large a potential market, make certain customers actually want it.
- Build one business at a time. Most business plans are overly ambitious. Concentrate on being successful in one endeavor first.
- Risk up front, out early.
- The time to take the tarts is when they’re being passed.
- The problem with most companies is they don’t know what business they’re in.
- Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good.
- It’s easier to get a piece of an existing market than to create a new one.
- It’s difficult to see the picture when you’re inside the frame.
- After learning some of the tricks of the trade, some people think they know the trade. This reflected some of Eugene’s own humility; he recognized that many venture capitalists thought they were experts when they had just a bit of knowledge.
- Venture capitalists will stop at nothing to copy success.
- Invest in people, not just products. Eugene always respected founding entrepreneurs. He wanted to build companies with them not just with their ideas.