>>>Where is Amazon going to obtain the cash to continue operations?<<<
Maybe from KPCB.;)
www0.mercurycenter.com
>>Thirty-six stories above the placid blue waters framing Alcatraz Island and the Golden Gate Bridge, Thomas Perkins fidgets in his chair. If conversation lulls, his thumbs twiddle impatiently.
He is a man driven by ambition. Perkins, 69, has turned his Silicon Valley venture capital firm, Kleiner Perkins Caufield & Byers, into the most successful VC firm in the world. By some accounts, Kleiner Perkins has returned more than $30 billion to investors over its 30-year history.
But Perkins' impatience comes from his latest, unexpected challenge: the bitter battle over the proposed merger of Compaq Computer with Hewlett-Packard. As a board member of Compaq -- and former executive at H-P, the Palo Alto computer firm where he cut his teeth more than four decades ago -- he has become one of the most outspoken backers of the merger.
But some H-P heirs -- sons and daughters of founders William Hewlett and David Packard -- have signaled their intent to vote down the deal, saying a merger doesn't make economic sense. They also say the layoffs likely in a merger threaten to ruin H-P's vaunted tradition, the so-called H-P Way, which they say emphasizes company loyalty.
So Perkins, an original venture backer of Compaq, has come out from semi-retirement to do battle again -- the first time he has gone public on behalf of one of his companies in over a decade. He believes the heirs have misunderstood the H-P tradition, and says he wants to set the record straight.
Perkins jumps out of his armchair, and looks at the magazines on his desk. He's disgusted by a headline that reads, ``Can Compaq Survive as a Solo Act?''
By nature, Perkins likes to bet the house. His success came partly from a willingness to risk everything he had -- literally -- to get his way. He showed this brinksmanship through the start-ups he funded, but also at his early employer, H-P. There, he butted heads with founders Packard and Hewlett, and forced them to devote special resources to the company's computer division. With good results: The division grew into the firm's biggest.
``The whole H-P computer thing wouldn't have happened without Tom,'' says Jimmy Treybig, an entrepreneur who worked at H-P for Perkins during the early days. ``H-P had to change.''
Over the past month, Perkins has become one of the highest profile supporters of the merger. The two companies complement each other in most divisions, he says. A merger will create a mammoth company that can take on giant IBM -- and beat it.
H-P and Compaq, he explains, have better ties with Microsoft and Intel -- two other key protagonists in the computer industry drama. Together, he says, the foursome create an industry standard that can easily outdo IBM. ``Microsoft will be the software department, Intel will be the hardware department, and HP-Compaq will be the marketing-customer delivery department,'' he says. ``Wouldn't you go for it?''
In part, Perkins is fighting for Compaq. But he is also fighting for his right to interpret the legacy that Packard and Hewlett left for Silicon Valley.
Perkins says his convictions stem from a time when he first met the two H-P founders, at an electronics trade show at the New York Armory. He worked for a competitor, but they soon offered him a job. Though Perkins had an engineering degree from MIT, he also had an MBA from Harvard -- a first for H-P, and he was viewed with suspicion. To his surprise, they placed him in a machine shop on a lathe. Perkins, charming and social, worked his way up, but became restless and left to work at a series of other jobs.
Later, in 1963, the two founders invited Perkins back to run the company's research department, including the nascent computer division. From the beginning, though, the odds were stacked against him. Each H-P salesperson sold equipment from all of the company's 15 divisions, and Perkins realized that they couldn't grasp the complexities of the computer. After a year of trying, not a single computer had been sold.
When Perkins joined, he started pushing for computer salespeople. ``In picking me, they consciously chose to mix it up,'' he said.
Turf wars broke out. A vice president said he couldn't lay carpet in the computer divisions, which Perkins wanted for his software engineers who liked to walk around without shoes. Perkins stood his ground, saying he'd pay for the carpets himself. The VP relented.
He did battle with Packard himself. When Perkins pushed the founder to discount computer prices for major customers, Packard refused. Such marketing tactics were foreign to H-P. In one altercation, Packard pounded the table and left the room, Perkins recalls. Perkins then brought in legal advisors, and slowly Packard was convinced. ``That was the way Packard was. You persuaded him, and he readily accepted the evidence.''
Over time, Perkins' fight for more resources for the computer division -- higher salaries, special analysts, mathematicans -- paid off. Computer revenues grew 15 percent a month, taking just seven years to equal the revenues from HP's largest instrument division.
Perkins also wanted to bring more immediacy to the H-P Way. ``We were desperate to sell computers, but nobody would pick up the phones. I'd just have a fit,'' he recalls. ``At one point, I jumped over the desk and picked up the phone.'' Employees learned to answer the phone within three rings.
When Packard left to serve in the federal administration for a time, Hewlett brought in Perkins to help him run H-P. Perkins also started moonlighting, sarting a company that built low-cost gas lasers, in which he risked his life savings of $15,000. Later, he sold the company for almost $2 million.
When Packard returned from Washington, Perkins realized his time was up leading the company, and he left for the world of venture capital.
There, Perkins' spirit dominated the formation of a fund, Kleiner Perkins, that revolutionized the venture industry. When they started in 1972, Perkins and his partner, Eugene Kleiner, were one of the the first VC teams to boast hands-on experience. Most other VCs had financial backgrounds.
The Kleiner Perkins formula (read KP Way) took on a mythology of its own, and was chronicled in a book, ``The Silicon Boys.'' Author David Kaplan, like others, concluded that Perkins was the driving spirit behind KP's magic. ``This was pretty much Tom's firm,'' agreed Gary Morgenthaler, a partner at another VC dynasty, Morgenthaler Partners.
Perkins hand-picked Kleiner Perkins' next two partners, Frank Caufield and Brook Byers. Perkins also gave the firm its penchant for marketing, another first for the then-starchy VC world.
In contrast with Kleiner, who was quiet and modest, Perkins had flair and played the San Francisco social scene. He liked classic yachts and vintage cars. A model of a Bugatti made by his first wife, who died of cancer in 1994, still adorns his office. In 1998, he married romance novelist Danielle Steel, though it didn't last: ``It was a great relationship ruined by marriage,'' he says.
But one of his biggest successes was masterminding the two deals that first put Kleiner Perkins on the map: biotech giant Genentech and Tandem Computers.
Genentech was one of the nation's first biotech firms. Perkins invested $1.5 million in Tandem, and the stake was worth more than $220 million by 1981. In both cases, Perkins pulled off a succesful merger or acquisition later in the company's development. The big one came in 1997, when Tandem was acquired by Compaq for $3 billion. Perkins reportedly made $70 million in the deal.
Perkins says he believes the proposed HP-Compaq merger is consistent with Packard's philosophy. The family's opposition makes it an uphill battle. But he grabs the newspapers on his desk again, and says: ``The good news is, we can change this.'' |
