Al Gore investment partner ‘panicked’ over green energy; ‘We don’t have the technology’ to cut emissions as needed
"The days of huge returns are most definitively not over," said John Doerr (above), one of the best-known venture capitalists. At the FortuneBrainstorm TECH conference, Doerr, a general partner at Kleiner Perkins Caufield & Byers, discussed emerging areas for "disruption," defended the role Silicon Valley plays in American society, and confessed he is "panicked" about energy technology and climate change.
Doerr said it is "day zero," referring to the fact that enormous new markets are being born that were not possible three or four years ago. He noted that 1.8 zettabytes (billion trillion bytes) of data will be created this year, more than was created in all previous years combined. Perhaps we will look at one percent of that data, he said, but maybe 20 percent has value.
Doerr said Kleiner Perkins is focused on information technology, biotechnology, and energy technology, "wherever we can find disrupters for transformational change." We'll have failures, but when we succeed, it will have a big impact, he said.
He was enthusiastic about the rise of tablets, and described Amazon's upcoming push into daily delivery as the "mother of all battles," putting the e-commerce retailers in competition with local retail stores.
But the two largest areas he identified as ripe for transformation were health care and education. Health care accounts for $2.3 trillion in expenditures, he said, and only in the past three years have we started moving medical records to the cloud. If we can do that and change how people use the information, he predicted we can take 30 percent out of the cost of the U.S. health care system. In addition, with the ability to map individual human genomes, we can not only discover drugs, but develop ones that are targeted to specific pathways, improving medical care.
In education, he was very enthusiastic about startups like Kahn Academyand Coursera, which can create audiences of millions of students, and can complement or supplement teaching. This could especially have an immense impact on the 13 million community college students, as community colleges are facing funding cuts and having difficulty finding faculty and resources.
Venture capital is at a "steady state" with about $11 billion to be invested this quarter, Doerr said, and lots of companies are getting funded. "Good companies are able to go public; bad ones can't," he stated. One change he pointed to was the JOBS Act, which removes many of the restrictions on companies filing for IPOs and allows crowd-funding; he says this will let more U.S. companies enter the public markets.
Asked about some of his higher-profile failures, Doerr said the common thread is that, "you can only lose one times your money, you can make many times that." Execution is everything, he said, noting how Fisker Automotive, which he funded, was out-executed by Tesla Motors. As for Zynga, where he sits on the board, he admitted the company had "missed a beat" but said he thinks it was "right at the takeoff point of mobile computing."
Doerr was most passionate in talking about green technology. The green companies Kleiner Perkins has invested in, including Silver Spring Networks, Enphase Energy, and Bloom Energy, did $1.4 billion of business in 2011; last year, the same companies did $2.4 billion.
"There are reasons to be optimistic, but I'm still basically panicked," Doerr said in thinking about energy and climate change.
Science tells us that by 2050 we need to reach 20 percent of today's carbon emissions and to do that we need to get the developed world to zero percent using technologies such as solar, wind, hydro, and nuclear power. "We don't have the technology," he said.
The government is spending only $4 billion on energy research—about the same as Americans spend on potato chips—and Doerr would like to see that doubled to $8 billion. For comparison, he noted the government is spending $80 Billion on border security.
Moderator Andy Serwer of Fortune (above, right) asked Doerr about recent criticisms of Silicon Valley, particularly a recent New Yorker article by George Packer that describes the Valley as being disconnected from normal Americans and disdainful of government, spending money on politics that would help increase the gap between the richest and poorest people.
Doerr said he has been in the Valley for decades and while some entrepreneurs are disdainful of government, most have respected and encouraged government investment in R&D and many have been involved in social causes. He noted that when he first got involved, the country was concerned about the Japanese taking over the semiconductor manufacturing business, and Silicon Valley executives such as Intel's Robert Noyce stepped up to head a government initiative to develop chip-making equipment in the United States. He discussed how the DOD's DARPA funded GPS, CAD, most of the major computer science departments, and of course, the Internet.
More recently, he noted the involvement of many well-known Silicon Valley entrepreneurs in education, pointing toward Netflix's Reed Hastings who served on the California State Board of Education, Facebook's Mark Zuckerberg who gave $100 million to Newark schools, and Salman Kahn who created free online classes through his Kahn Academy.
Therefore, he said, the thought that Silicon Valley leaders are unconcerned with the country is untrue.
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