In a nutshell, The Silicon Boys and Their Valley of Dreams is a history of
the Valley, from the time when Stanford professor Frederick Terman
encouraged David Packard and Bill Hewlett to establish their own company to
when Sequoia Capital invested $1 million in a startup founded by Jerry Yang
and David Filo. In between are the many Valley legends, including Fairchild
Semiconductor, Intel, Kleiner Perkins, Apple, Oracle, and Netscape--as well
as some of its most notable failures and tragedies, such as William Shockley
and Gary Kildall. Among other stories, interesting tidbits include legendary
VC John Doerr's cell phone built into his ski helmet and an entire chapter
("Profits") dedicated to Doerr & the VC firm, Kleiner Perkins Caufield &
Byers.
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Q: I've met one or two of these Valley 'legends' and I have to say, I just
don't see it. You'd think from the articles that they'd be floating or air
or have visible auras. What separates these people from the rest of us?
Dkaplan: $$$ ... I think many of them are like you and me. What separates
them -- and the honest ones will admit this -- is that they were in the
right place at the right time. There is no doubting the genius of a Steve
Jobs or Gordon Moore but particularly in the age of the Internet it's about
a great marketing idea and coming up with it at just the right time.
Q: David, considering the virtual nature of the Internet, why does it seem
so tied to Silicon Valley? What are the challenges for those who want to
grow an Internet company elsewhere?
Dkaplan: Silicon Valley has been around for 60 years, though it's only been
called that since the 1970s, but you're right that some of the ingredients
for success can be found in your garage or basement. The genius of the
Valley is that it has managed to bring together entrepreneurs, academics,
venture capitalists, scientists, etc. in this very small space.
Q: How did some of the newer Silicon Valley Boys get their start/funding,
and which of those methods are most prevalent today?
Dkaplan: Many, but not all, got their funding from the venture capitalists
along Sand Hill Road. The access and visibility that those VCs give you is
invaluable. But there is so much money chasing deals these days that there
are more funding sources than ever.
Q: Who are some of the up-and-coming entrepreneurs to watch and how will
they make their fortunes?
Dkaplan: I'm not sure that I could give you 10 entrepreneurs to watch that
you haven't heard of and I don't want to seem like I'm plugging one person
rather than the next but you could take a look in the newspaper most days of
the week to see a hot, new IPO -- though I guess today isn't a good day to
be looking at the stock market.
Q: In your book, many successful venture capitalists have training in
engineering and business management, would that be a path to take for a
student who wants to be wealthy?
WSJ_Host: Note, the key point here is ... "to be wealthy"
Dkaplan: The best way, of course, to become wealthy is to inherit it or to
marry it. Next to that, apart from being able to hit a curveball, in the
Internet world today a marketing and business background is more important
than a grounding in physics or engineering. As a former lawyer, I can tell
you all of these will suit you better than going to law school ... ha, ha.
Q: What are some of the techniques that startups have used to start a
bidding war among venture capitalists?
Dkaplan: I don't think it's any different from any good sales job. Show them
a little, they'll want to hear more. Make them think that somebody else is
about to get the deal and they'll want in. Of course, the venture
capitalists have played this game a lot longer than the entrepreneurs, so
good luck fooling them.
WSJ_Host: How have the "Silicon Boys" responded to your book?
Dkaplan: I've heard from some of them. Some have liked it. Some have even
been gracious enough to post comments at Amazon and send me a note. I have
so far received no virtual pies in the face. I would mention the names of
those who have been complementary, but it's not like I want to be promoting
my book, right?
WSJ_Host: Ok, then let's talk about those who have been critical of your
book. Who are they and what is their criticism?
Dkaplan: Some people in the town of Woodside think that my opening chapter
discussing the town -- which was excerpted in Newsweek and got a lot of
attention -- unfairly centered attention on the town. But the fact that no
one has yet claimed any factual inaccuracies leaves me comfortable with that
chapter. I thought and continue to think that the new wealth and excess of
Woodside is emblematic of the new Silicon Valley. The Valley's culture is a
lot more than microprocessors and Java applets -- despite what some
high-tech reporters would tell you.
Q: What do you think about the current 'open-access' debate, regarding AOL
wanting to have access to AT&T's cable lines?
Dkaplan: I think it's entertaining to watch three Goliaths -- Microsoft, AOL
& AT&T -- go at each other. What a sympathetic bunch.
Q: Which is the true heir to H-P's long tradition, the PC maker or the new
spin-off, Agilent? Does it matter?
Dkaplan: I think HP is still one of the two or three most admired companies
in Silicon Valley. I'm not sure that there is any Internet-age company that
could be similarly thought of. Apple is certainly iconic, Cisco has
breathtaking success, Oracle has cool-looking offices. But I'm not sure over
the long arc of the Valley that they measure up to HP or Intel.
Q: I'm an engineer at my second successful startup near Boston. The Silicon
Valley vs. Boston area question always intrigues me. I believe the relative
bigger successes in the Valley is due to the lack of traditional culture in
the Valley which burdens the free spirits here. Do you agree?
Dkaplan: Yes, I think Silicon Valley's long-standing lack of interest in
vertically-integrated companies has helped it. A good book to take a look at
on this subject is "Regional Advantage" by Annalee Saxenian. My book spends
some time on this in the early chapters (Yes Mom, this is a plug).
Q: Is Silicon Valley too big and crowded for its own good?
Dkaplan: Silicon Valley still works, phenomenally so. But its success has
created ridiculous real estate prices, commutes that make Los Angeles seem
like Wyoming, and at a certain point the success of the Valley will turn on
itself. You already see some Valley companies looking to move and smart
entrepreneurs looking to start up companies someplace else.
Q: I am an entrepreneur trying to raise money for an Internet startup ...
Are other entrepreneurs who have successfully raised money, willing to help
people like me, who are where they were? It seems that once they become
successful, they are inaccessible and one can't even talk to them or
approach them.
Dkaplan: I think you can look at the Web sites of lots of the VC firms in
Silicon Valley and they'll give you a way to contact them. But you're quite
right that VCs like to fund those they already know. The notion of two kids
in a garage getting John Doerr to show up at the house serendipitously are
over.
WSJ_Host: A large part of your book discusses John Doerr and KPCB as whole.
Have you heard a response from KPCB or John Doerr on your book?
Dkaplan: I've gotten no response from John Doerr. Perhaps he is still
reading it. I have also gotten no official response from KPCB ... Go figure.
I guess they just love the book.
Q: I've heard of venture capital consultants who can help you swim with the
sharks. What's the best way to find the best ones?
Dkaplan: Good question. I don't know.
Q: David, how are things different in the Valley vs. 10 years ago? Has it
really changed that much?
Dkaplan: I think it has. I think the Valley is much more about commerce than
it used to be. Hewlett and Packard, Gordon Moore and Andy Grove, Steve Jobs,
they wanted to make money and build a business. But I don't think that was
the primary motivation. It took HP 18 years before it went public; today it
sometimes feels like it takes (a company) 18 days. But it wasn't so much the
fixation on making money that interested me -- as much as people telling me
it WASN'T about making money. You don't hear people in Hollywood or Wall
Street tell you this. It was the disconnect between the reality and their
protestations that I wanted to write about. The 19th time that I heard that
it wasn't about the money I decided that it probably was.
Q: How has the VC consultant role evolved in lining up startups with
funding?
Dkaplan: Well, since the early 1970s the VCs have played a crucial role in
providing capital to startups that no bank or traditional lender would go
near. In that sense, Tom Perkins and Gene Kleiner were as important in the
history of the Valley as a Gordon Moore or Dave Packard. The irony is that
with so much money chasing deals the VCs today may be losing a little bit of
their primacy.
Q: How does the culture in the Valley compare to the culture in Silicon
Alley in NY?
WSJ_Host: The Valley definitely has better weather this summer ...
Dkaplan: Silicon Valley has better weather, golf, access to skiing, but I
think the food is still better in and around lower Manhattan. I think the
big difference between the two is that Silicon Alley is a tiny enclave
within big, bustling Manhattan, whereas Silicon Valley is a big company
town. In that sense the Alley may be a more vibrant, fresher place to be for
some -- the palm trees notwithstanding.
WSJ_Host: What trees?? ;-)
Q: If we go to a VC Web site and follow the directions and submit a plan, it
falls into a black hole. We don't know John Doerr or any other VC. How do we
get startup money from a VC? How did the successful ones do it?
Dkaplan: Are you asking me to give their home addresses or something? But
seriously, finding that kind of access is always the hard part -- getting
financing, getting a job at a big newspaper -- of just about anything in the
corporate world. While the VCs really do take a look at all the business
plans that come in, your best bet for entree is through an established
entrepreneur or a law firm or somesuch. You also might take a look at
garage.com for some notions.
Q: David, is there or can there be a new Silicon Valley?
Dkaplan: Bob Metcalfe, inventor of the ethernet and founder of 3Com, likes
to say that the only place in the world not trying to be like Silicon Valley
is Silicon Valley itself. Different places will have varying degrees of
success -- I think Silicon Alley will do better than, say, Japan, whose
business culture is antithetical to Silicon Valley's. I think places like
Silicon Alley in New York, Austin and Seattle will become increasingly
important high-tech hotbeds, but my guess is that Silicon Valley will be
pre-eminent for the foreseeable future. The Valley, as everyone likes to
say, is a state of mind as much as it is a place. I tried to write about
both in my book (last plug of the day).
WSJ_Host: Folks, we must let David return to his day job at Newsweek, where
he is a senior writer. Thank you for joining us this afternoon, David.
Dkaplan: Thanks to all. It's always nice to know that somebody out there is
reading the book
Tushar J. Mehta
email: [email protected]
voicemail: (206) 405-2335